You may have noticed a spurt in e-mail offers on used lighting equipment lately. In the wake of a trend toward more live performance and the shift to LED-based products, a combination of smaller, more regional lighting equipment providers seem to have sparked increased activity in used equipment. And used equipment in any industry is a kind of bellwether for where the economics are headed next.
“Used equipment prices are what enable [start-ups] to get a return on their investment quickly enough for a new company to get some traction in a market,” says Mark Rowlands, owner of Lightbroker.com in Burbank. Sophisticated lighting technologies that come with higher initial costs have created a fundamental financial change. Rowlands recalls that in the mid-1980s, he could amortize the cost of a unit in 10 weeks at a standard 10% of capital cost per unit per week. “Today, to do that for a [Martin] Mac 2000, you’d have to have it out for a year, not including the cost of replac-ing the bulb,” he says.
Rowlands adds that Chinese manufacturers’ entry into the U.S. market has brought barrier entry costs downward over the last few years, helping build a foundation for regional start-ups. But used equipment remains a staple of that end of the market, more so now that it’s expanding.
Market Expansion
Expansions in the regional theatre and church markets are a big part of what is growing the demand for used gear, according to Mike Mancuso, di-rector of used sales at Usedlighting.com, the on-line division of 4Wall Entertainment Lighting in Las Vegas. “There’s an entertainment dynamic driving churches right now, and that’s made them customers for lighting to an extent we didn’t see in the past,” he explains, adding that the same imperative is driving demand from regional and local theatre and schools, all of which are not known for over-the-top budgets.
In fact, this expanded demand has created a positive and self-sustaining cycle in the industry: Entry-level customers like churches acquire lighting systems that take them up a notch with equipment other customers and rental companies consider dated. This enables more sophisticated buyers to move their existing equipment and inventories down the pipeline through used brokers, clearing the way for upper-end customers to purchase new lighting equipment.
“Absolute rock-bottom pricing… can be a huge benefit to a consumer to be able to source used gear in great condition,” says George Studnicky, president of Creative Stage Lighting. “Occasionally, when huge blocks of used gear are made available, it interrupts the new equipment sales cycle, but this is always temporary.”
New vs. Old
New-equipment makers and brokers often work together. “Sometimes the big manufacturers call me and tell me what’s available so that I can broker the sale of the existing equipment, giving the seller the downpayment on the next generation of technology they can buy,” says Rowlands. “These are sales that a company like High End wouldn’t have made anyway, so this kind of cycle is good for the industry as a whole. The more ac-tive the used market is, it’s an indication of the overall health of the industry itself.”
That’s just fine with the manufacturers and distributors of new equipment. “We’ve never lost a bid to used equipment,” states Jack Kelly, president of Group One Ltd., owner of the Elektra-Lite brand and distributor for Pulsar products exclusively in the U.S. Kelly says that isn’t necessarily the case among the high-end brands. Recalling his experience distributing Clay Paky equipment several years ago, he remembers that it sometimes helped to bring used brokers into the picture to help sell a prospective customer’s existing equipment to make room for and partially capitalize new purchases. “It’s a market mechanism that can help make the sale,” he says.
But this inevitably changes the dynamic within the domain of resellers and brokers. Oshine Najarian, who owns used equipment brokerage Solaris in Atlanta, says resellers and brokers lately have become more aggressive in terms of marketing and pricing of used lighting equipment. “There’s a lot more equipment on the market now as the industry transitions to LED technology and more automated systems,” he explains. “Intelligent light-ing has been around long enough now that there’s a big base of equipment available on the market. But with more equipment coming in from China, the used market has to be competitive with that.”
Najarian says the Internet also has stimulated growth of used gear sales. In the process, researching pricing is easier and faster, which affects used pricing. This has spurred brokers to offer better warranties — Usedlighting.com now offers warranties of up to six months on some equipment, and Creative Stage Lighting warrantees for up to 60 days and updates any necessary software. This can be factored into the price to a certain extent, but will ultimately be reflected in the overall margins, Mancuso acknowledges. “What customers have to understand is that they have to deal with repu-table brokers, and we have to educate the market about that,” he says. “There’s far more stuff out there now, and more people selling it. That can create issues.”
What the newly resurgent used equipment market is doing is creating growth and forward momentum for the lighting industry at a time when the emphasis in the entertainment industry is shifting to live performance-based revenues. Who says you can’t time the market?
Contact Dan at ddaley@plsn.com.
