The custom integration industry did not look like itself last year. Though, the big question from this 2025’s CE Pro State of the Industry report for CI is whether the trends will continue along this path or if 2025 will be different.
In a nutshell, the exclusive research — conducted via survey in November and December — found the median integrator took in $1.065 million revenues in 2024, which on the whole marked a 3.8% dip for the industry last year from $1,107,143 in 2023.
Remember, median is calculated as the middle data point at which half of the responses are over and half are under; that resulted in the $1.065M estimate for 2024.
More than half (52%) of the integrator community reported earning between $500,000 and $2 million. Meanwhile, almost 1 out of 5 companies (19%) raked in over $5 million.
So, let’s dig into these plus other details and takeaways from 2025’s State of the Industry research results.
Lightapalooza took place in late February, and the growth of the event has mirrored the rapid ascension lighting fixtures and controls.
Last year, 60% of integrator respondents indicated positive growth, and throughout the history of the State of the Industry survey-takers have tended to be very optimistic. However, those reporting a down year doubled from 2023 to 2024 to 24%. Still, for 2025, CI dealers in the State of the Industry report are predicting it will be relatively promising with an albeit somewhat conservative 6.1% growth.
At least half of respondents (51%) are anticipating growth of 6% or greater. On the high end, the industry is likely to remain healthy, as 21% of dealers predict growth to increase 21% or more.
But it’s the makeup of that figure that paints the story of the industry’s apparent facelift. The revenues were almost evenly split between residential and commercial with a slight edge to the latter even. Those calculations as well as other responses in the survey point to a continued surge in commercial/resimercial work as well as a big push into the middle market on the residential side.
In fact, commercial revenue actually accounted for more than residential in 2024, comprising over half of integrators’ income. Out of the total integration revenues, roughly $500,000 came from residential jobs and $565,000 came from commercial/resimercial.
This not only carried over, but also put an exclamation point on the biggest trend in last year’s State of the Industry report for CI, which saw a marked rise in commercial work. This year’s data is a 20% swing on both sides of the industry in respective opposite directions, shifting from about two-thirds residential and one-third commercial in 2023.
The market share of residential and commercial/resimercial projects is about the same breakdown as last year with residential new construction custom homes and retrofits leading the way, and new production homes lagging far behind. These days, new construction builders are becoming more amenable to tech amenities, especially higher-end lighting fixtures for their custom homes.
Commercial work is evenly divided between new and retrofit. Among the most eye-opening responses involved the vertical markets in which custom integrators gained significant traction in 2024 compared with the previous year.
Really, in general the corporate office spaces and bars/restaurants have been the two most common sectors of the commercial market where dealers have always played. But last year, office jobs seem to have languished, while projects in the hospitality/hotel space and houses of worship picked up swiftly.
Clients in both of those verticals undoubtedly capitalized on the increasing demand for digital signage or other large-format displays, distributed AV, live and post-production AV, lighting, shades, climate, security, network, and more technologies.
In 2023, integrators reported doing 61% of their commercial/resimercial projects for offices, where systems might include microphones, soundbars, video cameras, lighting, meeting room controls, ultra-short-throw projectors or 4K TVs, and more. On the flip side, last year, only 20% reported similar work environments.
At the same time, the percentage of hospitality/hotel sector projects essentially doubled from 30% to 59% year-over-year, and large houses of worship facilities rose nearly 10 points, from 21% to 30%.
Integrators continue to step up their commitment to supplementing their revenue with RMR, providing a safety net for their business in case the economy does take a big downturn. Service contracts became the clear-cut way to do so in 2024, as one-third (33%) of respondents now do, which is a leap from 22% last year.
Another strong indicator that the commercial market maintained its upward trajectory in 2024 showed in the other types of ways dealers earn RMR. Security monitoring checked in at No. 2 (15%) in a tie with remote/cloud video storage, which often serves larger-scale projects, while commercial remote managed services (12%) followed.
Revenues are fairly evenly spread across various phases of a project, but equipment still accounts for the most revenue, at nearly one-third (31%), while installation labor (25%) and service/recurring revenue (23%) both represent about one-quarter of 2024 income.
The breakdown of buildings integrators worked on last year was basically identical to 2023, with new construction roughly 6 percentage points more than retrofit/remodel work. As housing starts keep declining, retrofit opportunities may also be something CE pros can take advantage of to shore up their business in 2025.
As for product categories that integrators expect to be hot for CI in 2025, home networks, security, and cybersecurity came up time and time again throughout the State of the Industry report. Networking, of course, skyrocketed during the pandemic and will only increase in importance as more enterprise-grade products hit the channel, while video surveillance cameras plus more cybersecurity vigilance also rank near the top.
Dealers performed fewer residential installations (40) than commercial (52) last year. However, the residential projects brought in nearly $2K more apiece to balance out what amounted that roughly 50/50 financial split between the two markets.
Targeting the middle and more entry-level markets seems to have been a theme for 2024. If buying group insights are an indication , that could be because the larger-scale project pipeline dried up a bit and dealers pivoted to a wider customer pool.
The number of residential jobs represented a 33% jump from the previous year, but the median price of $12,500 was a 39% decline from the 2023 cost of $20,357.
On the commercial side, the same story occurred regarding the falling project price, but the number of jobs increased. In 2023, median commercial project price was $19,167 but last year that dropped to $10,824 — a 43.5% difference.
Based on other CE Pro research in 2024, projects around single home entertainment and media rooms are becoming more popular. According to the 2024 CE Pro Home Entertainment Report, those performing 11-20 dedicated home theaters rose 4% last year, while multipurpose media rooms experienced a 6% rise in the 6-10 installation segment.
Again, simpler installs involving turnkey systems for clients have likely influenced the end-user project costs.
On the flip side, businesses are beefing up to handle the additional smaller jobs and commercial work. A solid 10% have joined the ranks 31-plus staff sizes. On the flipside, the amount of survey-takers responding only 1-4 employees sank from 36% to just 13%. The median number of employees is 11.
Meanwhile, finding and hiring that extra personnel remains a sizeable industry challenge. Labor shortage shot to the top of survey-takers’ challenges heading into 2025 as one-quarter (25%) noted.
Other major hurdles include competing with DIYers and so-called trunkslammers and their negative reputation, which ranked second and third, respectively. Emblematic of another pervasive industry trend in 2024, manufacturer consolidation/fewer product choices was fourth after doubling from 7% to 14%.
Dealers appear to be receiving more help than ever, though, when it comes to collaborating on projects and assisting with closing sales. Integrators have the most “say” on projects a tad over half the time (52%), which is a large decrease from past surveys.
In 2024, interior designers, builders and architects all experienced double-digit gains regarding their influence, while consultants/specifiers ranked third behind the integrator and homeowner.
“Specifiers” are more traditionally utilized in the commercial market as a go-between for the integrator and end client. Specifiers and designers more than doubled their percentage points from last year’s survey.
Despite all these extra personnel, the percentage of dealers who use their own homes as offices, typically with technology showcases, more than doubled from 7% to 18%. On the other hand, those with home offices but no showroom halved from 30% to 15%.
This research paints a picture of an industry that is evolving to meet new challenges and opportunities. While revenues took a slight dip, the increase in project volume and the shift toward commercial and middle-market residential work demonstrate the resilience and adaptability of custom integrators. With more dealers embracing service contracts and recurring revenue models, the industry is building a solid foundation for the future.
Of course, there are numerous trends and variables that will be at play in 2025. Consider the transition of governmental power, ongoing global conflicts, impending tariffs, lingering inflation, continuing labor shortage, and more.
Looking ahead to 2025, integrators remain cautiously optimistic on the State of the CI Industry. By addressing labor shortages, fostering collaboration with designers and specifiers, and focusing on key areas like networking and security, integrators are well-equipped to navigate the shifting landscape and seize the opportunities ahead.
The post 2024 Lighting Controls and Fixtures Report appeared first on CEPRO.