Market

The market for services in connection with events and film and television productions consists primarily of the provision of technical services on connection with the conduct of events (trade fairs and conferences, corporate events, sporting events, concerts, tournaments and festivals, musicals, theater and opera performances, etc.) and the production of television shows, cinematic and television films, television series, advertising films and music videos.

The proliferation of television sets and internet access has generated increased demand for program content, as well as allowing advertisers to reach more and more people. Since a significance percentage of television productions and events are financed from company advertising budgets,
PROCON MultiMedia AG may benefit from this trend. Moreover, companies are increasingly making use of multi-media techniques e.g. for product presentations, trade fair exhibits, motivational seminars, shareholder meetings and similar events.

PROCON MultiMedia AG divides the services it offers into the following categories:

(1) lighting equipment;
(2) sound equipment;
(3) video, LED and presentation equipment;
(4) camera equipment;
(5) stage and traverse systems;
(6) film and recording studios;

each including consulting, operation, servicing, assembly, dismantling and transport, as well as leasing of supplementary equipment, such as power generators, fork lifts, chairs, etc. The market for services in connection with events and film and television productions also includes other segments, in PROCON MultiMedia AG's view (such as post-production, broadcasting equipment and broadcasting vans). However, these services are not provided by PROCON MultiMedia AG on a large scale.

There are often additional areas of specialization within each of these categories. In the lighting equipment market, for example, there are providers specializing in computerized effect projectors or special lighting for cinematic, television and advertising film productions.

PROCON MultiMedia AG operates as a technical service provider in equipment categories (1) through (6). PROCON MultiMedia AG's services and equipment pool allow it to meet most of the technical requirements for events and film and television productions within those categories. PROCON MultiMedia AG is one of the leading providers in the world, in the Company's view.
Other than PROCON MultiMedia AG, only a limited number of large companies and numerous small and mid-size companies operate in the market of relevance for PROCON MultiMedia AG. The small and mid-size companies frequently specialize in one or more of the equipment types mentioned above. Customers frequently award contracts for services in one or more of the categories mentioned above to provider which are unable to provide all of those services on their own. As a result, the provider purchases the services which it is unable to provide from other providers, acting as sub-contractors. Due to this unique feature of the market, PROCON MultiMedia AG's competitors are often its customers at the same time.

The demand for comprehensive technical support for the execution of events and film and television production requirements is a product of new requirements with respect to the quality and, above all, the profitability of their technical implementation. Because of these new requirements, the technical equipment for productions and events is routinely leased from third parties like PROCON MultiMedia AG. This development is attributable in part to the following reasons:

- Events and film and television productions take place for a limited period of time, usually very short (such as sporting events, trade fairs, film productions and concerts), or their duration is not known at the start (such as for theater performances or musicals, television series or television shows whose airtime depends in part on the success of their content). Therefore, it usually does not pay for the organizers of these events and productions to purchase costly technical equipment.

- The equipment needed to implement events and productions is very expensive. As a result, the organizers of such events and productions would undergo a considerable investment risk were they to actually purchase this equipment, since their own events or productions would not ensure full utilization of this equipment in order to justify the investment. This risk can be avoided by leasing the necessary equipment and, possibly, with a flexible lease term.

- In general, only outside specialists can provide the necessary technical skills in view of the complexity of today's technologies and the need for collaboration between specialists in various fields (engineers, lighting designers, programmers, etc.).

- In general, only outside specialists can provide state-of-the-art equipment, i.e. the best equipment in each case, despite continuous advances and the need to provide the associated services rapidly (e.g. timely assembly and disassembly for concerts/tournaments).

The Company expects the technical requirements for productions and events to become more and more demanding in the future, creating increased demand for PROCON MultiMedia AG's services.