Archive for July, 2009

Where do broadcast technology vendors see sales growth over next 2-3 years?

broadcast industry technology trends, broadcast technology market research | Posted by Joe Zaller
Jul 30 2009

In previous posts, I’ve looked at technology trends in the broadcast industry from the point of view of both broadcasters and vendors, including how an analysis of broadcast industry technology trends shows that vendors and broadcasters do not always have the same commercial interests.

As part of the 2009 Big Broadcast Survey, I have also studied trends that are specific to broadcast technology vendors.  For example: where do broadcast technology vendors sell products today;  how do they see their geographic sales mix changing over time;  where they plan to open new sales offices in order to capitalize on future growth potential; and what they would like to improve in their organizations by ranking a list of eight potential issues. 

Nearly 550 broadcast technology vendors responded to these questions, and my next couple of posts will look at these findings. To start, let’s look at where vendors think they will see the most sales growth over the next 2-3 years.

I asked vendors to choose the geographic territory where they think will see the most growth over the next 2-3 years.  The results are summarized in the table below:

Question: Which territories do you think will see the most sales growth over the next 2-3 years – in percentage terms?

Vendor Market Growth Expectations

The vast majority of vendors believe that China will be the fastest growing region in the next 2-3 years, an average of 20%.  This view is held by vendors across the world.

Asia-Pacific, Europe and North America are also expected to grow strongly, each by an average of 13-14%.  Although less developed, the Middle East and Latin America are expected to grow by less (an average of 10%).  The least developed region, Africa, is considered to be the territory with the least potential for growth (an average of only 6% in

Asia-Pacific, Europe and North America are also expected to grow strongly, each by an average of 13-14%.  Although less developed, the Middle East and Latin America are expected to grow by less (an average of 10%).  The least developed region, Africa, is considered to be the territory with the least potential for growth (an average of only 6% in the next few years).

 

 

 

 

 

 

  

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EVS announces Q2 results, says “The worst is behind us”

Broadcast technology vendor financials | Posted by Joe Zaller
Jul 16 2009

EVS reported their results for the second quarter of 2009 yesterday.

y/y numbers showed revenue decreases in all geographic regions.  Compared to Q208, EVS revenues were as follows:

  • 2Q09 sales of EUR 18.7 million, -45.8% vs. 2Q08 (-47.9% at constant exchange rate), but a sequential improvement compared to 4Q08 & 1Q09
  • Europe down 49.2%
  • Europe down 49.2%
  • America down 16.5% (27.2% at constant exchange rate)

 

But the good news is that the company’s CEO, Pierre L’Hoest, says in the earnings press release that “the discussions that have taken place over the last few months are confirming that the worst is behind us.”  Let’s hope so.

To find out more, it’s worth reading their presentation to analysts, which provides some very interesting insights as well as market statistics.

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Let the broadcaster beware…. Business interests of broadcasters not always aligned with those of vendors

market research, technology trends | Posted by Joe Zaller
Jul 14 2009

I have written several times about technology trends in the broadcast industry, including a look at how trends vary by geographic region, and what technology trends are most important to broadcasters.   Having done this, I decided to look more deeply at the trends that are the most important to broadcasters, and then compare this to others in the supply chain. What I found is that there are important differences between the business interests of technology suppliers (vendors and SIs) and technology buyers (broadcasters).

To get this data, I presented the nearly 5,000 people who responded to the Big Broadcast Survey (BBS) with a list of 15 industry trends and asked to choose three trends from the list (ranking them 1-3) that they feel will have the most significant impact on the way they do business over the next 2-3 years. Because this question is about what’s important to the business of the respondents, it reveals much about their motivations. 

The results, which are summarized in the chart below, show that the commercial motivations of those supplying technology (vendors and systems integrators) are not always aligned with technology buyers (broadcasters).

 Question: Please rank in order (1-3) which of the following technology trends are most important to your business, with 1 being most important

Trends -- Broadcasters vs Vendors & SIs

 

Here’s a quick round-up of the differences between what’s important to technology buyers versus technology suppliers:

More Important to Technology Buyers (Broadcasters):

  • Transition to HDTV operations
  • Transition to tapeless workflows
  • Automated workflows
  • File-based workflows
  • Multiplatform delivery

 

More Important to Technology Suppliers (Vendors and Sis):

  • IP content delivery
  • Advanced encoding techniques (e.g. h.264)
  • Video on Demand
  • Transition to 3Gbps operations (1080p)
  • On-line advertising
  • 3D TV
  • Set-top box PVR/DVR
  • 4K production
  • Network DVR
  • 2K production

 

Looking at this, it seems to me that:

  • the trends that are most important to broadcasters are about finishing what they started and making it work in practice (transition to HD), becoming more efficient (tapeless, file-based, automated workflows) and increasing revenues (multi-platform content delivery)
  • the trends that are most important to technology suppliers are about new technology

 

Let’s look at this in another way… The table below depicts this, expressed as the difference between the average for each respondent group and the overall global average.  As you can see there are some major differences between broadcasters and their suppliers, particularly when it comes to transition to HDTV, tapeless workflows, automated workflows and the transition to 3Gbps:

Trend Variation -- between broadcastes and vendors

Broadcasters believe that refining workflows and gaining efficiencies, particularly through digital file management, is very important to their business, whereas vendors and systems integrators place more importance on next generation technologies such as 3Gbps operations.  Similarly broadcasters do not currently view IP content delivery as a stand out issue, whereas vendors and systems integrators believe this is to be the second most important trend influencing their business.

These findings are in-line with what Roger Crumpton of the IABM said at their market workshop recently — i.e. that broadcasters in today’s climate are focusing on completing existing projects (e.g. HDTV transition) and increasingly risk averse when it comes to new technology unless it can make them more efficient in some way (e.g. automated workflows).

So what does all this mean?   If a technology suppliers can more fully understand what’s most important to their customers they will have a better change of success, but only if they listen to what their customer is telling them and adjust their sales approach accordingly.

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HDTV… just a “pause” on the path to transition to IT-based broadcasting?

Uncategorized | Posted by Joe Zaller
Jul 13 2009

I had an interesting conversation recently with a broadcast technology vendor about how the transition to HDTV has impacted the move to IT-based broadcasting.

Their proposition was this:

Before the move to HDTV really took off, the broadcast industry was moving towards IT / file-based workflows.  Then a variety of  external structural forces (e.g. government intervention, analog switch-off etc) caused it to change course and focus on the transition to HD.

This caused the industry’s focus shifted away from IT / software-based systems and back towards hardware, which was better able to handle the increased data rates of HDTV.   This was good news for traditional hardware vendors, many of whom saw big spikes in their businesses, and some of whom managed to go public on the back of this trend.

Fast forward to today.  The transition to HD is well underway, and completed in many areas.  Broadcasters who have made the move to HD are now are looking for ways to increase their efficiencies, and do more with less.   At the same time, IT-based systems have made tremendous strides, and have in many cases caught up with hardware systems. 

So, this vendor concluded, we’re at a major industry inflection point, and the next transition in the broadcast industry will be driven by software, not hardware.

If this vendor is right, (and they very well may be), it’s going to be an interesting time for the hardware-oriented vendors who don’t have fully-fledged IT-based solutions that deliver what today’s customers want — the ability to do more with less, the promise of greater efficiencies, and above all a way to increase revenues.  It’s doubtful that “traditional” vendors will go away, but it’s likely that we will see new leaders emerge, along with an increase in M&A activity.

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Brand Schizophrenia? Regional/customer variations in perception of broadcast vendor brands

Broadcast Vendor Brand Research, market research | Posted by Joe Zaller
Jul 09 2009

Last week at the IABM’s market workshop meeting in the UK, I presented an overview of  the Big Broadcast Survey.  During the presentation, I talked about how there is dramatic variation in the perception of broadcast industry vendor brands, based on factors such as geography and customer type. 

I used an example of how the perception of one company whose brand I studied is very different based on who you ask, and where the people you ask are located.   A number of people contacted me after the presentation to discuss this topic, so I am posting the charts from this part of the presentation here.  

I didn’t name the company during the IABM presentation, and I am not going to name it here.  The reason for showing this is not to single out one vendor (believe me, there are plenty of similar examples).  Instead, it’s to highlight the fact that brands may be perceived very differently in different parts of the world.  The broadcast industry, like many B2B markets, is global and vendors (large and small) need to be aware of the regional differences.

Keep in mind that when looking at these charts, they all show the perception of the same company’s brand — just from different perspectives. 

 

Let’s start by looking at how this company is perceived by broadcasters.  

I surveyed more than 1000 broadcasters about a variety of topics, including their perception of vendor brands.  The resulting broadcast industry brand status “league table” is shown below, with the company in question highlighted in red.

 

Regional Variations -- broadcasters

 

 

So what do broadcasters think of this company?

As you can see, this brand:

  • is very well regarded by broadcasters in the Americas
  • falls to the middle of the pack with broadcasters in EMEA
  • is not held in a particularly high regard by broadcasters in Asia

 

 

Next, let’s look at how a different group of respondents, systems integrators, view this company based on the same criteria. 

Here are the results:

Regional Variations -- systems integrators

 

SIs are an important partner for any broadcast technology vendor, and in some cases their opinion of a company can mean the difference between winning and losing a lucrative deal.

To sum up this one: 

  • SIs in the Americas like this company a LOT.
  • SIs in EMEA regard it as being in the middle of the pack
  • SIs in Asia appear to not think much of this company

 

 

Finally, let’s move away from brand status, and look at a key brand driver, customer service.  Rather than look at customer service from the perspective of a specific customer category, I’ve summarized the rankings on a regional basis. 

Once again — as shown below — this company is perceived very differently in different parts of the world.  They rank #2 in one region and #11 in a different region.

Regional Variations -- customer service

So what’s the take-away from this?

Vendors need to understand that the perception of their brand is one of the things that can drive their business, so they need to pay attention to the way they are perceived.

If you’re interested in reading more about this, be sure to download the free summary report from the Big Broadcast Survey.  It’s 26 pages long and gives a good overview of some of the broadcast industry’s leading brands, broken down regionally. 

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Do broadcast technology buyers prefer to purchase from a single supplier or from “best-of-breed”?

Broadcast technology channel strategy, market research | Posted by Joe Zaller
Jul 07 2009

Vendor consolidation in the broadcast technology market is on the rise.  The reasons often quoted for these deals include increased scale, greater operational efficiencies, broader market reach, better use of existing sales infrastructure, and of course the opportunity to sell integrated solutions. 

This all makes sound business sense, particularly the ability to sell complete solutions — after all if a vendor can reach “critical mass” it may be able to capture more, or even all, of large contracts. 

Buying from a “one-stop-shop” makes sense for the customer too.  It’s easier to deal with a single vendor;  and if there’s a problem with a system the customer has one number to call and has better assurance that there will be no finger pointing between multiple vendors.

In the interest of finding out whether this seemingly sensible proposition is widely accepted by technology buyers,  I asked almost 4,000 people who participated in the 2009 Big Broadcast Survey the following question:

When purchasing broadcast technology products, do you prefer to buy from a single “one-stop-shop” or select “best-of-breed” solutions from multiple vendors?

  • Where possible from a single supplier
  • Evaluate individual suppliers and select best of breed
  • Don’t know

 

The responses to this question are summarized in the chart below.  It appears that despite the clear benefits of  buying from a single vendor, the majority of broadcast technology buyers prefer to evaluate and purchase “best-of-breed” solutions from multiple vendors.

Best of breed preferred purchase method

The responses to this question were consistent across geographies, with the responses from all regions more or less mirroring the global response show in the chart above.

Interestingly, government and educational buyers exhibited the strongest preference to purchase from a single supplier.  This appears to conflict with the answer these same buyers gave to a different question that I wrote about in a previous post, when they said they prefer to buy from dealers.  However, it’s likely that these buyers consider dealers and systems integrators to be single suppliers.  If this is the case, it highlight the importance to vendors of developing and maintaining strong relationships with third-party players in the distribution channel.

 

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How do broadcast technology buyers typically purchase — direct from vendors, through an SI or a dealer?

Broadcast technology channel strategy, market research | Posted by Joe Zaller
Jul 06 2009

It’s a big world and in a global industry like broadcast technology hardware and software, even the largest vendors must rely on a mix of direct and indirect sales channels.  

As part of the 2009 Big Broadcast Survey, I asked technology purchasers how they typically buy broadcast technology hardware and software — direct from a vendor, or through a third-party channel like a systems integrator (SI) or dealer. 

The results are interesting because they highlight that there are some times when it makes more sense for vendors to use a channel than go direct.  They also show that there are some types of buyers who are more used to buying through the channel versus direct.

It turns out that overall, about 2/3 of customers purchase through a third-party supplier (dealer or SI), with the rest buying directly from the vendor.

However, when you break the results down by the type of customer (as I have done in the chart below),  you quickly see that there are differences between the typical purchasing habits of various customer types, and this information has important implications for vendors.

Question: How do you typically purchase broadcast technology products?

how_do_you_typically_purchase

Out of six different customer types, only “cable/satellite/IPTV operators” (companies like DirectTV, Sky, Comcast etc) and  ”cable programmers” (companies like Discovery and HBO) typically buy more than 50% directly from vendors.  Perhaps this is because there are not that many of these customers, and they tend to be large. 

These customers also appear to rely heavily on systems integrators to plan and impliment their projects.   Many of these projects are large end up being “all or nothing” for vendors, so they are clearly paying special attention to these customers, and fighting for the business.

At the other end of the spectrum, customers in post production, government and education typically buy through  a dealer.  There are probably a variety of reasons for this:

  • In post production there are specialized local dealers who have both in-depth knowledge of the market and deep relationships with this (relatively small) customer base.  For many vendors, it makes sense to sell through these dealers rather than pay for a dedicated sales effort.  The downside of this is that it concentrates the power with dealers since they “own” the relationship with the customer base, increasing the risk of substitution.
  • Government is another category that requires strong relationships, and in some cases specialist credentials such security clearance and/or extensive operational experience.  Selling to the government (at least at the national level) can be lucrative for vendors, but it can also take major effort to break into this market.  At the local government level (e.g. every town hall in a country), the market is enormous but very disparate, and therefore often left to local resellers. In aggregate this is a large market, but most vendors are not geared up to go after it direct.
  • Education is arguably the largest market of all — after all there are many more schools than broadcasters and/or town halls — and yet only 20% of these customers typically buy broadcast technology hardware and software direct from vendors.  it’s likely that because of the size, not to mention huge diversity, of this customer base that a specialist dealer with deep relationships at the local level will always be best positioned to win this business.

 

This leave “broadcasters / TV station” customers in the middle of the pack.  There are likely a variety of reasons for this.  For example, this is broad category that encompasses state / national broadcasters as well as local players.  Vendors with limited resources (e.g. just about all of them) who are after large sales will tend to concentrate their efforts on the biggest part of the market (in value terms) and leave the rest to dealers.  Also there are certain regions (like parts of Asia and South America) where the most efficient way to sell (even to the largest broadcasters) is through third party distribution.

I should point out that this question does not ask about the value of product purchased from each category, but if I did I think that it would further highlight the important role of systems integrators and consultants.    As customers look to cut cost they often eliminate technical staff positions, effectively outsourcing their technical design and installation to third party consultants — systems integrators in particular.  SIs were found to play a strong role in all categories — and particularly in those which tend to have large, complex projects.  After all, if a broadcaster is buying a replacement part for an existing system it’s easy to go to a dealer; but if they are building a disaster recovery facility as part of a major strategic initiative, they are likely to go with an SI.

These finding highlight that it’s important for suppliers to tailor their approach to different markets and customer types.  It also demonstrates that the third-party distribution channels are a crucial part of their business, because they account for a significant portion of the market access that all vendors need to survive and thrive.

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