The Czech AV market is enjoying government spend in education and digital cinema. But, while the state continues to hinder private businesses with bureaucracy, is it friend or foe? Anna Mitchell explores the market with Petr Barcal, founder of AV Media.
Czech AV integrator AV Media virtually shares a birthday with the foundation of the Czech Republic. Petr Barcal started the company late in 1992 just weeks before January 1, 1993 when Czechoslovakia peacefully dissolved into its constituent states, the Czech Republic and Slovakia.
Barcal’s 18 years heading one of the most successful AV integrators in the country has allowed him to watch the market evolve, transform and develop. The business has spawned a number of daughter companies including enterprises in Germany and Poland but its core focus remains serving its home market.
The company’s focus is diverse. It provides services to multiple segments including K-12 education, universities, public sector institutions, cultural institutions, digital cinema and hotels as well as providing rental and staging services and residential solutions.
Today, the country is providing good business opportunities in the cinema and education marketplaces but Barcal notes there’s a challenge in persuading clients to invest heavily in new technologies. Furthermore, despite economic reforms he argues that the country’s economy can still hinder business.
“The Czech economy has never been strong since the Velvet Revolution [in 1989]. When you compare [it] to West European economies, the gross profit per head, or the income per head is still very low. Our clients tend to buy low cost solutions. It’s sometimes very difficult to show them the importance of value added solutions.”
Barcal says further barriers are presented by a government that is not particularly helpful to private enterprises. “Our country is known for its bureaucratic barriers. [They’re] quite high when compared to European standards and certainly above the average.”
However, he concedes that the situation has improved slightly during his time at the helm of AV Media. “There are now some electronic ways you can do part of the administration processes. Some taxes are decreasing slowly but it’s certainly not perfect.”
Despite the obstacles and barriers Barcal is positive about AV in the Czech Republic. “K-12 education, universities and digital cinema are currently our strongest vertical markets,” he explains.
Education in the Czech Republic is of a high standard and Barcal says there’s a definite drive from the government that’s resulted in an increase in education spend. “There is government policy and there are also some structural reforms [with money attached] that are coming from the European Union. These reforms are pushing K-12 toward new technologies, particularly interactive technologies and content that works with interactive technologies.”
The education market also proved robust during the darkest days of the global economic crisis. “The global economic crisis affected us worst in the corporate segment,” says Barcal. “It has been very slow for the last two years but we have found success in the other segments. 2009 was the worst year for us but 2010 was better and we seem to be surviving pretty well. Education market helped us in 2009, it’s been a stable business.
“The corporate market is still very reluctant,” he continues. “We do have a lot of projects in the pipeline either in project design phase or prior to the project design phase or after the project design phase. Very often these projects are delayed by clients are waiting with decisions. We can see signs of growth in the market but the companies are really careful and they would probably like to see more evidence prior to deciding about the investments.”
One of AV Media’s daughter companies, Glance Media, develops software for digital marketing solutions which would indicate Barcal’s team believes there’s a strong Czech market for signage solutions.
“We do work in digital signage but we are not satisfied by the progress we, or the overall market, has made,” explains Barcal. “It’s true that many companies talk about it and there are some companies active on the market. But, some of them are in big trouble. [Through Glance Media] we are quite close to the market but we are not very happy with how it is developing.
“To tell the truth I don’t know where the market is going. I wish I could understand it more but at the moment I do not know. I believe it will improve but when and how? I don’t know. There’s no clear pathway at the moment.”
The digital cinema market in the Czech Republic is very interesting. “We see [the government] supporting single screen cinemas,” notes Barcal. ”[These cinemas] are still mostly analogue. If we wish to keep cultural life in small cities or villages we have to support the local cinemas because otherwise people would leave the cities or villages for larger cities where they have multiplex cinemas. If we want to keep the cultural life there we have to find a way to support the cinemas in the process of digitalisation. It’s quite expensive for the local authorities [who often run the cinemas] so the government supports them with conversion to digital to make it possible for the cinema to access the latest content, whether that’s movies or alternative content.”
The Czech market appears to be largely in-line with global trends in AV. Predictably, Barcal is anticipating and preparing for a world where his business will become more and more closely aligned with the IT industry. “We try to have this(IT) knowledge under our wings. So we are about AV/IT integration and we educate our people about this starting from project managers, through sales people and technicians. So we try to improve in this. It’s a clear trend. We’re having to incorporate IT integration into our business.”
Furthermore, Barcal reels off a list of trends he expects his business to be aware of: “Definitely AV content delivery over network. In specific verticals 3D could get some importance. In control systems the expansive touch control interfaces will be replaced by iPad like devices. High definition videoconferencing. Social media will be more used in marketing. We’re talking more about green AV and there will be more involvement of LED projectors, LED backlit, LCD flat panel displays.”
Despite a reluctance to embrace the newest or most expensive technologies the Czech Republic has provided plenty of opportunity for AV Media. Barcal himself says despite some struggling sectors the diverse company emerged relatively unscathed from the economic crisis that grasped the world throughout 2009.
But certain sectors have been fickle. From AV Media’s beginnings in the corporate and education marketplace the company has diversified to span most major verticals leaving it in a fantastic position to adapt its offerings to successful areas. Less advanced companies have either already failed or will struggle to survive in a country where projects take longer to sign off and sectors grow and contract, sometimes without apparent explanation. But, as Barcal has proved, for those able to handle the conditions there’s plenty of opportunity.