Published in April 2004

Educational Markets Graduate to Big Business
By Neal Weinstock

The IT/AV trend is strong in education, with AV spending ceasing to exist in education unless it is part of an IT project.

      A study of educational markets for AV technology was completed recently by my firm, Weinstock Media Analysis (WMA). We didn’t go into this project thinking it would have much of anything to do with IT/AV, but the trend turned out to be particularly strong in both K-12 and higher education. In fact, our market researchers now believe that, for many applications, AV spending has ceased to exist in education unless it is part of an IT project.

Trends, Apps, Numbers
      The overarching trend we’ve found in educational spending on AV is that it has become largely a subset of IT spending. This is the case particularly in teaching and display applications—but we identified four other application areas for educational AV spending, and the same trend is spreading there, too.
The five apps into which we segment educational AV spending are
1. systems used to teach students about AV content creation
2. installed AV presentation systems in concert halls and theaters
3. multipurpose AV production and post-production facilities
4. broadcast facilities for distance learning and/or public broadcasting stations and, again,
5. systems used in teaching and displaying information to students throughout a campus.
      WMA concluded that US educational AV spending as a whole was worth $1.014 billion in the 2002-03 school year, down from about $1.126 billion the previous school year and the first decline in such spending since 1993-94. These data do not include service revenues or AV program sales or licenses, but do include all hardware, content creation/distribution software and blank media. We forecast continuing modest declines in strictly defined spending on traditional AV devices and media through 2006, while unit sales remain essentially stable.

      This will, however, be offset by gains in software sales and especially by gains in IT infrastructure that takes on AV functions without use of AV devices or media. In other words, for example, streaming media over IP networks, seen on computer monitors, is replacing broadcasting gear, video routers and TV receivers; storage on generic hard drives and SANs is replacing videotape; presentation control systems written as Windows or Linux code are replacing proprietary AV control hardware and software systems, etc.
      Primary and secondary schools and school systems for kindergarten through 12th grade accounted for just $410 million in spending. The rest, $604 million, was spent on the college and university level. That imbalance is leveled somewhat when one considers that almost all of the broadcast-facility spending came from PBS affiliates that are also affiliated with higher education. It is also important to note that the broadcast spending is driven largely by upgrades to high definition as mandated by the FCC.

Other Key Trends
Among other key trends:
      • The chief technology categories that are maintaining high unit pricing are loudspeakers, video displays (with LCDs and plasmas replacing CRTs) and several types of software. Probably more important than any particular sales tactics, companies that focus on producing, selling or integrating the categories that maintain the most value will dominate the entire educational AV market as other product categories decline in value.
      • Public-school spending is greater, but private schools are often high-profile application leaders. Spending is significantly greater overall, both in kindergarten through 12th grade and on the college/university level, in public as opposed to private schools. This is attributable to spending on distance learning, many more partnerships with and ownership of not-for-profit radio and TV stations, the availability of public funding earmarked for internet connectivity and associated equipment, the existence of typically larger campuses in public vs. private higher education and thus more need for public-information systems and AV systems for large lecture halls, and other factors.
      • Even in applications other than teaching and display (Apps 1 to 4), few of our more than 3000 survey respondents, few of the policy-makers, buyers or other influentials we interviewed; and little of the published material reviewed for our report focuses on AV technology that can stand apart from computing and computer networks.
      Yet this is not to say that IT/AV integration in education is an unqualified success. In fact, the IT/AV technologies of video servers and AV databases are starting to show some of the over-promising and under-delivery that seems to be either a root cause, or a symptom, of the decline in spending on older, stand-alone AV technologies.
      Educators are forced to work with “cumbersome servers unsuited to the tasks to be done,” stated Richard Cornell, professor emeritus at the University of Central Florida. In fact, the server may seem to be the problem, but it may be a focal point for problems throughout the network. Many complaints point to schools simply not being up to the highly complex tasks of keeping track of materials in an accessible database, or managing a large and all-too-heterogeneous network. These issues are exacerbated in an environment that includes all too many students who are most interested in using the network for just those things that system administrators don’t want them to do: swapping illegal files, playing games, hacking security codes.
      Whiteboards are the biggest source of complaint, of any particular technology, followed by those servers and databases and the network as a whole. “Why can’t these things be as easy to use as our old VCRs and PA system?” are words we heard over and over again.
      Computer technology is no panacea. It only still feels like one, while AV long ago ceased to be viewed that way.

Overpromise, Underdelivery: Cause or Symptom?
      In education, there have long been many, easily cited examples of AV underdelivery: TV monitors used to deliver canned lectures to hundreds of university students at a time, amounting more to babysitting than enlightenment; video actually used as babysitting in primary schools, when teachers don’t show up and substitutes can’t be found; AV production taught with equipment so old that graduates are totally unprepared for the job market. And so on.
      AV spending in education used to be mostly about cameras and VTRs, video monitors and projectors, and broadcast transmitters. It was stripped-down TV production, shooting lecturers and preserving their spiels on tape for showing to hundreds of kids in lecture halls, or distance learning achieved by broadcasting over specially reserved educational frequencies to stay-at-homes.
      In the process, AV production students would learn the craft. Many of them would go on to find work as AV administrators and AV teachers, or at companies that would find lucrative markets in selling AV stuff to schools. That “stuff” gradually broadened to include well-produced educational videos, as well as designs and installations of fancy AV-equipped theaters and halls and public-address systems.
      Did all of this stand-alone AV overpromise or underdeliver? Certainly it did. Almost all technology does, in the short term, even as some technology, every so often, so vastly overdelivers that it makes us all believers in tech’s transformative powers.
      Why is IT now so trendy in education? Partly because standalone AV is no longer trendy. AV has largely failed as a panacea in education, so some new panacea (other than vastly higher spending for many more teachers and books) must be found.
      Other reasons: The internet happened, and holders of purse strings were able to perceive a need to fund the connection of schools to it. (For public schools, we all pay for this with a targeted tax on telephone service.) In 1994, about 35% of public schools had access to the internet; that number is now well over 90%.
      Ditto, in a more gradually rising curve, purse strings have loosened for spending on computers in general: Knowing something about computers seems to many more people to be an intrinsically important educational goal than knowing something about AV (not that most people can yet set the timer on a VCR, but they seem to
have given up trying).
      Meanwhile, streaming or digital file transfers of AV materials allowed computer networks to replace the functionality of much dedicated AV, while allowing far greater interactivity with the older media than ever before. And, in recent years, political demands for large-scale standardized testing have generated some funding of IT solutions.
      Interactivity and data management—interrelated features, to be sure—are indeed key to many educational apps. AV was never very good at delivering these features until it recently began to get married to IT.

From Synchronous to Asynchronous
      In fact, this marriage was predicted by Eric Peters, founder of Avid Technology and one of the inventors of nonlinear video editing. “There is an historical progression in video and audio away from live performance, through a long stage we went through of recording live performances, toward ever more asynchronousness. We want to create productions asynchronously, with random access to stored pieces of the work, and we increasingly want to view them that way.”
Or in the words of one of our survey subjects: “Teachers hate being dependent upon scheduling for video broadcasts,” said Joni Rathbun, a librarian in North Las Vegas.
      These thoughts seem especially true for learning, research and creative re-use of found materials. AV in business is far less of a learning and creative environment, in contrast, so that integration of AV and IT does not go to the heart of the institutional mission to anywhere near such an extent. In education, even when the application is sound support and video display in a large hall, interactivity and network access from many if not all seats are frequently involved.
      But many teachers are far from comfortable with new technology and, for many, asynchronous viewing preferences are served most easily by checking out tapes from a library and popping them into a VTR. Says Rathbun, “We have abandoned the media retrieval system and will only be using part of it to support broadcast. We can’t afford the upkeep.” Just because the new technology is in demand doesn’t mean it is easy enough for large numbers of non-specialists to use.

AV Is Dwarfed by IT
      WMA didn’t sum up educational spending on IT in general, just spending for AV technologies. We didn’t need to do so, because lots of other people are, if not on top of this, trying to be on top of this. In fact, this very situation—lots of people interested in IT spending, relatively few interested in AV—speaks volumes about where AV technology fits into education today.
      By way of comparison with our AV tech totals, the market research group Quality Education Data (QED) reported that public schools spent more than $5 billion in school year 1997-98. Even bigger, a 1996 RAND study estimated the cost of providing technology-rich learning environments in all schools at between $10 billion and $20 billion per year.
      These numbers should be compared to a fairly solid estimate from the US Department of Education that an average of $10,766 per student is spent annually on all educational expenses in the US. That adds up to a total of more than $700 billion spent on education annually (or about 7% of US gross domestic product), so only as much as 2.8% of the educational spending total is needed, according to RAND, to do right by technology needs. Only some 0.7% of educational spending is actually spent on technology, according to QED. And, by WMA’s estimates, just 0.1% of all education spending is on AV technology. In other words, IT spending is seven times greater than AV spending.
      Both the QED and RAND estimates include AV technology within IT spending. Both of these estimates, too, come from the boom years of the 1990s, so some salt might be taken with them now. But education is such a big beast, with almost 70 million full-time students in this country, in some 70,000 schools, that up-to-the-business-quarter numbers are simply not available.
Still, we know that the federal government has increased education spending significantly in recent years, and we know the growing (and exact) number of dollars coming to IT spending in education is from telecommunications taxes. So educational technology spending is probably up a few points over 1998, even though state and local spending on education probably have declined a bit.

IT Spending Is Down
      But IT spending, like AV spending, is down from the previous year. Not only do about a third (36%) of our survey base report lower budgets last year vs. 2001-02, most (52%) expect current-year budgets to come in below last year’s. These data are echoed by IT spending information from the 2002 Campus Computing Survey. Fully 20% of the 2002 survey participants report mid-year budget cuts this past year, up from 8% in 2001 and 5.3% in 2000. As above, public universities were most affected by the mid-year cuts: in 2001/02, 45.2% experienced mid-year IT budget cuts, compared to just 13.1% in 2001 and 10.9% in 2000. The mid-year budget rescissions in public universities averaged 3.4% in A/Y 2002, compared to 4.3% in 2001 and 2.9% in 2000.
      Still, there’s a pretty nifty message for AV vendors in our numbers. Survey participants think streaming media over their IT networks is a major set of requirements and a large share of near-term future IT purchases. They have IT budgets that are indeed shrinking a bit, but that are seven times greater than AV budgets. There has to be many ways for AV vendors to get some of that pie.

Table 1: Educational Purchasing of AV Technology, Per User Group and Application (opens separate window)

Neal Weinstock, editor of Sound & Communications’ IT/AV Report, is the founder and president of Weinstock Media Analysis, a market research firm. He helped found BridgeCo, a Swiss maker of audio networking semiconductors, has authored two books on computing and design, edited magazines including TV World, and has written hundreds of articles.