Archive for May, 2010

Recent Findings from the 2010 Big Broadcast Survey

broadcast industry technology trends, broadcast industry trends, Broadcast technology channel strategy, broadcast technology market research, Broadcast Vendor Brand Research, Top Broadcast Vendor Brands | Posted by Joe Zaller
May 26 2010

Recent Market Research Findings from the 2010 Big Broadcast Survey

.

The Top 30 Broadcast Technology Vendor Brands, Ranked by “Overall Opinion,” Globally and Regionally

An overview of how broadcast technology vendor brands were ranked for “overall opinion” in the 2010 BBS. Results are shown globally and regionally

.

What factors most influence the purchase of broadcast technology products?

Regardless of how broadcast technology products are purchased, what many in the industry want to know is why they are bought, i.e., what is the most important factors that influence the decision to buy one product over another.

When it comes to selling broadcast technology, there are several strategies that vendors have adopted. This includes positioning their offerings as having the best technology, the best feature set, the lowest cost, the best value, the best service, the most recommended, etc. But which factor is the most important to the most buyers?

.

Purchasing Preferences of Broadcast Technology Buyers – “Best-of-Breed” or “One-Stop-Shop?

How do buyers of broadcast technology products prefer to purchase: using a best-of-breed approach (evaluating products from multiple vendors) or a one-stop shop where one vendor provides a complete solution?

.

How are broadcast technology products typically purchased — direct from vendors, through an SI or a dealer?

This article examines the way broadcast technology products are purchased, i.e., what purchasing channels are typically used by buyers of broadcast technology products.

.

NAB 2010: NAB: Stations Focus On Web, Mobile, HDTV (TVNewsCheck Interview)

In this interview conducted by Harry Jessell of TV News Check, Joe Zaller discusses the major trends that are impacting US broadcasters, including the transition to HDTV, multi-platform content delivery and 3D.

.

What Broadcast Buyers Are Evaluating for Purchase in 2010

This article focuses on the products that are being evaluated for purchase this year by broadcast professionals.  We presented technology buyers with a list of relevant product categories, and asked them to indicate which product type they are currently evaluating for purchase.

.

Where is Money Being Spent in the Broadcast Industry? — A Review of Major Projects Being Planned

In the current environment, everyone in the broadcast business wants to know which parts of the industry are doing well, where money is being spent and what is driving this spending.

.

Broadcast Industry’s Largest Market Study Reveals Most Important Technology Trends

This article looks at how respondents ranked a variety of technology trends in terms of importance to their business. This article presents the answers to this question in two ways: as a global trends index and by the percentage of respondents who indicated the importance of each trend to their business.

The Top 30 Broadcast Technology Vendor Brands, Ranked by “Overall Opinion,” Globally and Regionally

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast Vendor Brand Research, Top Broadcast Vendor Brands | Posted by Joe Zaller
May 24 2010

This is the first in a series of posts about the how the brands of broadcast technology vendors were ranked by respondents to the 2010 Big Broadcast Survey.

.

Each year as part of the Big Broadcast Survey (BBS), I ask respondents to rank broadcast a number of technology vendor brands on a wide range of metrics.  This information is used to create a series of reports, which through benchmarking and industry “league tables” enable these vendors to understand their competitive position in the market.

More than 5,600 people in 120+ countries participated in the 2010 BBS, making this the largest ever and most comprehensive study of the broadcast industry. In addition to measuring a variety of broadcast industry trends, more than 100 vendor brands (in 27 separate product categories) were evaluated by respondents.

This post looks at how broadcast technology vendors were ranked by respondents in terms of their overall opinion of these vendors.   Research participants were asked to rank their “overall opinion” of broadcast technology vendor brands on a scale of 1-10 — with 10 being best in the market, and 1 being worst in the market.

Results are shown in two ways:

  • An overall industry “league table” that shows the 30 highest ranked vendors for the metric “overall opinion.”  The data in this chart is broken out globally and regionally. 
  • An analysis of the “frequency” of appearance in the “overall opinion league table”

 

The top 30 ranked brands for overall opinion are shown below for both the global sample of all respondents as well as for all respondents in each of the geographic regions.  

 

Please note that in all cases, these results are shown in alphabetical order, NOT in the order in which they were ranked by respondents to the survey.         

   

Question: Please rank your overall opinion of the following brands on a scale of 1-10, with 10 being the best in the market and 1 being the worst.         

  

 

 

Interestingly, a total of 46 broadcast technology vendor brands are included in this table, which demonstrates that there is strong variation in opinion based on geographic segmentation of respondents.  

In terms of frequency of appearance in this table:  

  • 17 brands appear four times, meaning they were ranked in the top 30 globally and in each geographic region. It is possible
  • 9 brands appear three times
  • 5 brands appear two times
  • 15 brands appear once, which demonstrates that some brands are strongest in one geographic area

   

Analysis of the data shows that are some clear market leaders on a global basis, while others are strong on a regional basis.   

A breakdown of how many times each company appears in the ranking shows how many times each brand appears in the chart above.  

Brands appearing four times:  

  • Adobe, AKG, Apple, beyerdynamic, Cisco, Dolby, Genelec, Grass Valley, Neumann, Panasonic, Rohde & Schwarz, Sennheiser, Shure, Solid State Logic, Sony, Studer, Tektronix

   

Brands appearing three times:  

  • Aja Video, AMS-Neve, Harris, Lawo, RED, Salzbrenner Stagetec, Snell, Tandberg, Yamaha

   

Brands appearing two times:  

  • Clear-Com, Electro Voice, Evertz, Ikegami, JBL

   

Brands appearing once:  

  • Audio-Technica, Avid, Barco, Calrec, EVS, HP, Klein + Hummel, Mackie, Omneon, Prism Media, Quantel, Rhozet, Riedel, RTS Intercom Systems, TVIPS

   

 

 

Analysis of the Frequency for Each Brand in the “Overall Opinion” League Table:  

In order to provide a better understanding of which brands were most higly ranked in each geography, the data has been provided in the table below, which shows the global and regional performance for each brand in the top 30 ranking of overall opinion.   

  

The frequency chart shows some interesting geographic variation in the data.  

Appearing in the  top 30 “overall opinion” ranking globally + one region  

Four brands managed to achieve a top 30 ranking in the global overall opinion league table , despite being in the top 30 of only one of the three geographic regions.  

Electro Voice (Americas), Evertz (Americas), Ikegami (Americas), JBL (Americas)  

The following 15 brands did not make the top 30 in the global league table of overall opinion, but they did appear in the top 30 overall opinion ranking in one of the geographic regions:  

 

Appearing in the  top 30 “overall opinion” ranking only in EMEA  

EVS, Klein + Hummel, Prism Media, Rhozet, Riedel, T-VIPS  

   

Appearing in the  top 30 “overall opinion” ranking only in Asia-Pacific  

Audio-Technica, Calrec, HP, Omneon, Quantel  

 

Appearing in the  top 30 “overall opinion” ranking only in the Americas  

Avid, Mackie  

.

Please keep in mind when reviewing this information that all data these charts are presented in alphabetical order, not in the order brands were ranked by respondents to the BBS.  Also, the charts in this posting measure the responses of all 2010 BBS respondents, regardless of their company type, company size, geographic location, job title and budget for broadcast technology products.   

In order to get full value from this data, it is necessary to evaluate these results on a granular basis.  If you would like more information, please contact Devoncroft Partners.

 

.

This article is based on the findings from the 2010 Big Broadcast Survey (BBS), a global study of industry trends, technology purchasing behavior and the opinion of vendor brands.  With more than 5,600 people in 120+ countries participating, the 2010 version of the BBS is the largest and most comprehensive market study ever done in the broadcast industry.

     

Devoncroft Digest for the w/e May 21, 2010 – Echolab Liquidates, Earnings Season Continues, Bankers on Broadcast, Google Gets into TV

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
May 23 2010

Devoncroft Digest – Recap of the week ending May 21 2010

It was a busy week in the broadcast & digital media world.  Echolab was forced to liquidate, multiple companies reported their quarterly earnings (which were mainly positive), two investment banking houses published notes on the broadcast industry, and Google made a little announcement about their plans to transform the TV viewing experience.

Here’s a recap of some of the things that caught my attention this week

.

Echolab goes into liquidation

Long-established broadcast production switcher vendor Echolab announced via email this week that the company has been put into liquidation by its owner.  Echolab, which has been in business since 1974, had been on the ascendance recently under the leadership of company CEO Nigel Spratling.   

Spratling revamped the company’s product line-up, which culminated in the launch of the Atem production switcher family.  At NAB 2010 Echolab announced that it had signed an OEM deal for the Atem line with the broadcast communications division of Harris (who has now removed the press release about the deal from their website). 

The email from Spratling said the company’s primary investor was no longer prepared to fund the company, and that the news was a great show to everyone.  

Read the full text of Spratling’s email.

 

.

Viewcast losses narrow

Streaming technology provider Viewcast announced their results for the first quarter of FY’10. The company’s reported that their losses narrowed. Revenue for the quarter was up slightly versus the previous quarter, but down 13% versus the same period a year ago.  The company also filed an 8K with the SEC this week, detailing the compensation plans of their CEO and CFO.

 

.

More Broadcast M&A — Tektronix acquires Mixed Signals 

Test & measurement leader Tektronix announced this week that it is acquiring Mixed Signals, a provider of digital content monitoring including digital services, transport streams, ad insertion, switched digital video and interactive content.

According to said Eben Jenkins, General Manager of the Tektronix Video Business, “The acquisition of Mixed Signals, Inc. brings to Tektronix a strong team that has delivered leading innovation to the video monitoring market. The combination of Mixed Signals and Tektronix accelerates our ability to provide unmatched next-generation video test and monitoring solutions to our customers.”

 

.

Continued growth for Ross Video

Privately held Ross Video said in a press release Ross Video that the company had achieved 7% growth in the first half of its fiscal year.  Although private, Ross has been vocal about their success in the face of the economic downturn of the past 18 months.  During the IBC show last September, company CEO David Ross told the IBC Daily News that the company had continued to grow during the recession.  In the most recent press release, Ross says “We continue to buck the downward trend and have enjoyed some record months.”

 

.

Vizrt posts operating profit on big revenue gains

Broadcast graphics and asset management vendor Vizrt reported that their revenue grew by 38% in the first quarter of 2010 versus the same period, but fell 9% versus the previous quarter.  The company made an operating profit of $200K during the quarter, versus a loss of 2.4m during the same period a year ago. Company CEO Martin Burkhalter issued an upbeat statement saying that “broadcast markets are slowly recovering and … that CAPEX budgets and discretionary spending are being restored.”  Burkhalter, who recently stepped into the role of CEO after the death of Bjarne Berg concluded by saying “In terms of revenues, we believe that we are heading back towards the levels we achieved prior to the global downturn and anticipate to reach these levels in the coming nine to twelve months.  With this recovery, we expect our profitability to improve as well.”

 

.

Autodesk M&E revenue declines by 4%

3D animation leader Autodesk (the parent company of Discreet and others) posted strong revenues for the first quarter of 2010.  In the earnings press release, which breaks out financials by industry segment, the company revealed that revenue for its Media & Entertainment group was $46m in the quarter.  This is basically flat with the previous quarter and represents a 4% decline versus same period a year ago

 

.

Trouble at JVC Kenwood

The Wall Street Journal also reported that JVC Kenwood Holdings fell 21% to Y38 on heavy volume after the company’s Friday announcement of its plan to submit a resolution for 1-for-10 reverse stock split at its upcoming shareholders meeting. One brokerage manager, citing past reverse stock split scenarios, said that without fundamental business improvements, it would be hard to expect the company’s stock to show long-term appreciation.

 

.

DG FastChannel added to S&P SmallCap 600 index

Standard & Poor’s announced this week that it is adding DG FastChannel to its S&P SmallCap 600 Index.  DG FastChannel, who recently raised $100m in a secondary public offering, has been on a tear recently.  The company’s stock has more than doubled in the last eight months, and it recently reported record results for its first quarter based on increased advertising revenue. 

 

.

Ascent Media CEO dies at age 44

Ascent Media this week announced the sad news that Jose Royo, the CEO of the company’s AMG subsidiary had died at age 44.  “José was a thoughtful and caring business leader, mentor, partner, and friend,” said William Fitzgerald, Chief Executive Officer of Ascent Media Corporation. “José played a significant role in the media services industry, where he left an indelible mark. He was truly passionate about Ascent, its customers, and its people. José was a wonderfully devoted husband to his beloved wife, and father to his two young children. Our thoughts and prayers are with them at this difficult time. José will be missed.”

 

 

Google, coming to a TV near you soon?

As covered extensively this week, Google has unveiled a strategy which it believes will transform the TV viewing experience by combining it with the web. The company has partnered with Sony, Intel and Logitech to create a new type of TV experience.  Watch this space.

 

 

TiVo and Technicolor Team Up to Offer Integrated PVR Solution

I have been a big fan of Tivo since buying their very first PVR in 1999 (which still works great, and in my opinion provides a significantly better experience than the alternative from my pay TV provider), so I was interested to see that the company has teamed up with Technicolor (formerly Thomson) for a new set-top box solution.  You can read the details here…

 

 

Two Investment bankers weight in on NAB 2010 and the broadcast space

Two boutique investment banks, Silverwood Partners and Pharus Advisors have recently published notes to clients detailing their impressions of the NAB 2010 show.  Both companies gave me permission to re-publish them here.

Silverwood has been involved in a number of broadcast M&A deals includingBlackmagic / DaVinci and Avid / Euphonix. Prior to the 2010 NAB show the company published, which is worth reading to get their full perspective on the broadcast market.  

Pharus has also been involved in a number of industry transactions including Neural and Virgin Media / Two Way Media. The company published their post-NAB thoughts in their industry newsletter, which also includes a summary of recent M&A transactions in the digital media space, and a comparison of publicly traded companies.

More info on this here…

 

 

3D news

Broadband TV News reports that UK satellite broadcaster BSkyB is bullish on 3D.  An article on the website says that Sky says there could be up to 1m 3D screens in UK by

Speaking of 3D, the Schubin Café website posted a link to an article which says that watching 3D can make you sick. 

 

 

Market Research Note of the Week:

What factors most influence the purchase of broadcast technology products?

Regardless of “how” broadcast technology products are purchased, what many in the industry want to know is “why” they are bought — i.e. what are the most important factors that influence the decision to buy one product over another.

When it comes to selling broadcast technology, there are several strategies that vendors have adopted. This includes positioning their offerings as having the best technology, the best feature set, the lowest cost, the best value, the best service, the most recommended etc.

But which factor is the most important to the most buyers?

To find out we asked several thousand broadcast professionals around the world what is most important to them when buying broadcast technology products.

You can see the results, including a chart that ranks 10 different factors that influence the purchase of broadcast technology products here…

Echolab Goes into Liquidation

Broadcast technology vendor financials | Posted by Joe Zaller
May 20 2010

Long-established broadcast production switcher vendor Echolab announced via email today that the company has been put into liquidation.   

Echolab, which has been in business since 1974, had been on the ascendance recently under the leadership of company CEO Nigel Spratling.   

Spratling revamped the company’s product line-up, which culminated in the launch of the Atem production switcher family.  At NAB 2010 Echolab announced that it had signed an OEM deal for the Atem line with the broadcast communications division of Harris (who has now removed the press release about the deal from their website). 

The email from Spratling said the company’s primary investor was no longer prepared to fund the company, and that the news was a great show to everyone.  

The full text of Spratling’s email is below:   


    

From:Nigel Spratling [mailto:nspratling@echolab.com]
Sent: Thursday, May 20, 2010
Subject:Echolab closureDear all (distribution list concealed for privacy),   

It is with much sadness that I have to tell you that yesterday (May 19th) Echolab was put into liquidation. Our primary investor who had negotiated the recent agreement with Harris was no longer prepared to fund the company through the transition and decided that this was his only course of action; it was a great shock to us all.    

I am truly sorry that this action leaves many unemployed, suppliers with unpaid bills and customers with unsupported products. The recent introduction of an expanded Atem switcher family look set to take us into growth and profit as the market reception was excellent and our sales funnel had grown by $2M as a result. We had been sustaining a run rate of about $5M and the addition of Atem was set to double that.    

I truly believe that our small team had created the very best of breed in small and medium sized production switchers and at a price point that provided exceptional value and margin, facing the loss of these efforts is difficult for everyone involved.    

The liquidation company will be trying to sell the companies assets, product IP and inventory in order to pay creditors over the next few weeks. Hopefully they will be successful in their efforts.    

Naturally there are now some good people looking for jobs (including me), so if anyone is hiring please let me know.    

Best regards,

Vizrt and Ross Video Report Increased Revenues

broadcast industry technology trends, broadcast industry trends, Broadcast technology vendor financials | Posted by Joe Zaller
May 20 2010

As earnings season continues, two broadcast technology vendors reported some good news this week.

Yesterday, broadcast graphics, asset management and online vendor Vizrt posted their Q1 results for 2010. The company said its revenues rose 38% versus the same period last year, while its backlog increased by 78% versus last year.  In the earnings press release, the company’s CEO said that “broadcast markets are slowly recovering and … CAPEX budgets are being restored”.

Today privately held Ross Video issued a press release highlighting continued growth.  The company said its revenues for the first half of its fiscal year rose by 7% versus a year ago. In the press release, company CEO David Ross said “We continue to buck the downward trend and have enjoyed some record months.”

While the earnings of broadcasters have been generally positive this quarter, reflecting increases in advertising and political spending, the fortunes of broadcast technology vendors have been mixed.  It will be interesting to see when (whether) the pick-up in broadcaster revenues and profit translates into increased technology capex, and therefore revenue and profit increases for broadcast technology vendors.  Watch this space.

Two Investment Banks Offer Post-NAB Thoughts, Insight on Broadcast Industry

broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
May 18 2010

Two boutique investment banks, Silverwood Partners and Pharus Advisors have recently published notes to clients detailing their impressions of the NAB 2010 show.  Both companies gave me permission to re-publish them here.

 

Silverwood has been involved in a number of broadcast M&A deals including Blackmagic / DaVinci and Avid / Euphonix. Prior to the 2010 NAB show the company published a 40 page report about the broadcast industry for their investment banking clients, which is worth reading to get their full perspective on the broadcast market.  

Pharus has also been involved in a number of industry transactions including Neural Audio / DTS and Virgin Media / Two Way Media. The company published their post-NAB thoughts in their industry newsletter, which also includes a summary of recent M&A transactions in the digital media space, and a comparison of publicly traded companies.

 

 

Silverwood NAB Perspectives:

Revenue Flow versus Work Flow.  Broadcast and media customers are principally focused on sustaining advertising revenue from traditional outlets and driving incremental revenue over emerging outlets. The focus over recent years on cost containment through automation and technology efficiencies has been eclipsed by the need to adapt technology infrastructure to a changing business model.  The Newspaper industry provides an instructive lesson on the need to be responsive to external challenges to traditional business norms.  Technology vendors are faced with customers that have shifting purchasing priorities and that are scrutinizing expenditures on conventional broadcast infrastructure.

 

3D will not Reverse Industry Revenue Decline.  While 3D may drive some additional short term revenue, widespread adoption is still in question because certain content will never lend itself to the 3D medium.  Furthermore, with the exception of large screen environments showing purpose produced content (Avatar, Alice in Wonderland), the current 3D experience requires additional improvement.  There are no clear standards for end user devices (TVs and glasses) so mass end-consumer device adoption – if it is to occur – will take time.  Consider that the ongoing HD transition began with the first HDTV broadcast in 1998 and is still only 40% complete in the US market.  Lastly, production methods themselves must also adapt to the creation of 3D content – there is no consistency in the content acquisition process, much of which is based on trial and error and research.  3D requires a new approach in the creative production process as fast switching and cuts can prove to be nauseating to the viewer.  There are also concerns that poorly produced 3D will lead to negative customer perceptions in the near term which will slow adoption and the long term success of the medium.

 

Pricing is Collapsing.  Years of substantial profitability for media and broadcast customers masked poor cost discipline in the sourcing of technology.   Recent weakness in the advertising market and the broader economic disruption has caused customers to focus on capital budgets and look for more cost effective solutions.  Compounding this challenge, inexpensive general purpose IT infrastructure continues to replace purpose built hardware solutions, creating good enough solutions at attractive prices for many use cases.  This is putting pressure on margins for many traditional Broadcast technology vendors who organized their cost structures for the high price, ‘boom’ years and cannot adapt quickly enough to the changed industry circumstances.

 

Value Separation: Software, Hardware, Connectivity.  Historically, broadcast and post-production customers purchased purpose built solutions where the discrete software, hardware and connectivity components were blended within a hardware solution.  As the hardware portion becomes increasingly standardized, vendors will need to focus on defensible segments of the value chain, particularly within the software layer.  In many cases specialized hardware vendors are effectively software companies burdened with a legacy hardware orientation.  It is expected that vendors will need transformative change rather than evolutionary adaptation to address the fundamental changes in the media technology industry. 

 

Growing Software Opportunity.  It is expected that software companies will continue to be a growing presence in the media technology industry.  Differentiation from IT solutions for incumbent vendors resides in the software layer.  Well-positioned companies have software solutions that extend and leverage basic IT functionality, which will continue to improve in speed and capability.  From a product perspective, technology vendors should examine their product portfolios to identify and extract the unique software functionality that is truly differentiating their offerings.  In addition, the increasing use of standardized IT platform technology is creating a growing market for software vendors that can use the standardization to scale efficiently. 

 

Commercial Opportunity: Customer Diversification.  Well-positioned companies are diversifying and selling to a broader customer base, particularly customers outside the traditional broadcast market.   Targeting other industry verticals is not feasible with a customized hardware solution and an industry focused direct sales model.  In contrast, software solutions that extend standardized hardware and that are deployed through VARs and channel partners can be more easily adapted to large, adjacent industry verticals (Medical, Military, Enterprise).

 

Business Model Disruption.   For NAB exhibitors there remains fundamental weakness in the traditional broadcast technology industry.  The reduction in industry revenues will highlight one of the principal difficulties for many NAB exhibitors: sales and marketing expense is too high for revenue levels.  With pricing pressure, many vendors will need to change to a distribution model or become part of a larger solution that can support the fixed sales expense.   Well-positioned, well-capitalized vendors will have a unique opportunity to acquire established, respected brands with large user bases over the coming year.

 

Service Opportunity – Revenue Flow.  Broadcasters and media companies are faced with a proliferation of technologies and monetization possibilities, and an accelerating rate of technology change.  Historically, broadcasting challenges were solved by buying incremental technologies to plug into an existing well-understood technology infrastructure.  Current business challenges require business model innovation coupled with technology platform innovation to drive revenues across a growing range of end-point devices and outlets.  Given the lack of clarity on the optimal revenue model and the rapid pace of technology change, broadcasters and media customers are reluctant to invest in standalone technology purchases.  This is creating an attractive service opportunity driven by the ability to provide incremental revenue growth with a low barrier to entry, a receptive customer and an attractive ROI.

 

 

 

 

PHARUS ADVISORS

PUBLIC MARKET AND M&A UPDATE ON MEDIA AND BROADCAST TECHNOLOGY INDUSTRY

NAB OVERVIEW

We recently attended the NAB 2010 conference in Las Vegas. We came out of the conference feeling the media and broadcast technology market is experiencing a healthy recovery from 2009. The recurring comment echoed by many industry players was that the deals in the customer pipeline that were stalled in 2009 are now morphing into real opportunities. The RFP activity is showing decent improvement, however, the sales‐cycle continues to be long and spending not completely flowing.

Even though the network spending in North America, which was driven by conversion to HDTV over last few years, is slowing, other factors like changes in customer preferences, and pressure to generate new sources of revenues and reduce costs are expected to continue to drive technology capital expenditure for networks. These new developments are adding new dynamism to the sector, which can be witnessed by the plethora of vendors and solutions.

Here are some of prominent themes that we witnessed at the NAB show this year.

  • Emergence of 3D television broadcasting: As expected, this was the major theme at NAB similar to what was the case at CES earlier this year. TV manufacturers continue to be enthusiastic about this trend. CES expects 4.3 million 3D TV sets to be sold in 2010, with about 25% of total TVs sold in 2013 to be 3D‐enabled. Even though some major players (like DIRECTV, Discovery, IMAX, and etc.) have made announcements over last few months about launching 3D content, a lot of the content producers and broadcasters are still not sure about how quickly this market opportunity will grow in the near term. As a result, they tend to be reticent to make investment in this area at this point.

 

  • Development of multi‐platform content distribution (broadcast, web and mobile) capability: The spending on TV advertising is gradually declining. According to Yankee Group, the TV ad market declined 21.2%, from $52 billion to $41 billion, between 2008 and 2009. During this same period spending on Internet advertising grew as a result of consumers spending more time online and less time watching TV. With more and more eyeballs consuming video content on Web and mobile devices, broadcasters are investing in technologies which enable delivery of content over multitude of platforms.

 

  • Adoption of file‐based workflows: One of the important areas of investment for broadcasters remains implementation of file‐based workflow infrastructure. This is viewed as important by broadcasters to augment flexibility in day‐to‐day operations, facilitate reduction in operational costs, and enable efficient multi‐platform content distribution.

 

Emergence of Over‐the‐Top (OTT) Video and convergence of TV and Internet: The other recurring trend at the show was the focus on growing convergence between broadcast TV and Web video. Internet users are increasingly interested in streaming full length video directly onto their TVs and as a result variety of models are appearing to provide consumers with this capability. According to report by Tender Research from October 2009, about 7% of households will forgo Pay TV subscriptions by 2012 in favor of OTT services and free over‐the‐air television. OTT market is moving very fast with proliferation of enabling devices like Roku, Xbox, and a range of new HDTV models and growth of online video sites such as Hulu, Netflix,

What factors most influence the purchase of broadcast technology products?

broadcast industry technology trends, broadcast industry trends, Broadcast technology channel strategy, broadcast technology market research | Posted by Joe Zaller
May 17 2010

This is the third in a series of posts about how broadcast technology products are purchased.

Previously I have looked the purchasing channels typically used by different types of broadcast technology buyers, as well as whether these buyers prefer a best of breed or one-stop-shop approach when sourcing broadcast technology products.  The information in these posts reveals that there is considerable variation in the way different types of buyers purchase broadcast technology products.

Regardless of “how” broadcast technology products are purchased, what many in the industry want to know is “why” they are bought — i.e. what are the most important factors that influence the decision to buy one product over another.

When it comes to selling broadcast technology, there are several strategies that vendors have adopted.  This includes positioning their offerings as having the best technology, the best feature set, the lowest cost, the best value, the best service, the most recommended etc.

But which factor is the most important to the most buyers?

To find out we asked several thousand broadcast professionals around the world what is most important to them when buying broadcast technology products.  The results are shown in the chart below.

Question: When purchasing / evaluating broadcast technology products, which of the following are the most important factor?

These results show that in a highly technical business like the broadcast industry, when it comes to purchasing broadcast hardware and software products, technical specification and technical performance is the most important factor for the majority of today’s buyers.

In fact, technical performance in the broadcast industry is so critical, that at least three times more respondents cited technical performance / specification than the next most important factor.  It looks like in this case “the only race is for second place.” 

Having said that, other factors such as operational features, service and support, total cost of ownership, and purchase price are also seen as very important criteria for product purchase. 

The challenge for vendors is to deliver sufficient technical performance that is “fit-for-purpose” for the customer’s application and then work to differentiate their offering through the factors that are seen as most important to each type of customer.

They key to this is understanding how these results can vary when broken out by demographic factors such as organization type, company size, job title, and kind of product that is being evaluated for purchase.  Indeed a granular breakdown of this information shows that there may be considerable variation in purchase criteria based on a number of these factors.

If you would like more information, please contact Devoncroft Partners.

This article is based on the findings from the 2010 Big Broadcast Survey (BBS), a global study of industry trends, technology purchasing behavior and the opinion of vendor brands.  With more than 5,600 people in 120+ countries participating, the 2010 version of the BBS is the largest and most comprehensive market study ever done in the broadcast industry.

Devoncroft Digest – Week Ending May 14th 2010. Earnings Season Continues

broadcast industry technology trends, broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
May 16 2010

Earnings season continues with good numbers from broadcasters, and mixed results from vendors.

Broadcaster Earnings Continue to Rise

Broadcasting & Cable reported that Gray Television reported first quarter revenues of $70.5 million, up 15% from the revenue it announced in the first quarter of last year. Gray said the number exceeded its initial expectations.

B&C also reported that Scripps saw its revenues rise 11% y/y. The company is also forecasting strong results for its second quarter.

US Satellite broadcaster Dish Networks was in the news several times last week.  It posted its Q1 results at the beginning of the week, which showed revenues rise by 5 percent, but net income fall by 26 percent.  The company also said it was prepared to shut down its DVR service if it loses its protracted patent battle with DVR pioneer Tivo. But then on Friday a US federal appeals court said the case between Dish and Tivo. This sent Tivo shares down by more than 40%.

 

 

Broadcast Technology Vendor News

EVS Reports 5th Consecutive Growth Quarter, Disappoints Analysts

Broadcast server and storage vendor EVS reported its Q1FY10 numbers this week.  According to the company’s press release to company reported its 5th quarter in a row of growth.  However both the revenue and profit were below the expectations of analysts, and the company’s stock price fell by 10% to a 10 month low following the announcement.  A Reuter’s article quotes analyst Nico Melsens of KBC as saying “the order book was okay, first quarter sales were okay, but the gross margin was below consensus forecast.”                        

Harmonic Holds Analyst Day, Discusses Omneon Deal

Following the release of its earnings last week, Harmonic held meeting for analyst day during which the company’s CEO and CFO presented an overview of the company’s business to equity analysts. One of the topics of interest was the company’s recent acquisition of broadcast server and storage vendor Omneon.   You can listen to a reply of the analyst presentation here.  Information on the Omneon deal is presented at the 21.5 minute mark, as well as in the Q&A. 

Sony Expects to Return to Profit

According to an article in the Wall Street Journal, Sony says expects to return to profit this fiscal year after two straight years in the red, as painful restructuring measures give way to an improved outlook for its troubled television and video game units. Sony said its restructuring is finally paying and that it expects its television business, which has lost money six years in a row, to return to profitability, boosted by 3-D TVs which it hopes will drive new interest and slow the price declines that eat into profits.

Vizrt CEO Passes Away

TVB Europe reported the sad news that Vizrt CEO, Bjarne Berg, has passed away suddenly at the age of 59.   

New CMO at Chyron

Broadcast graphics vendor Chyron announced that it has hired a new VP and CMO.   Bonnie Barclay comes from The Branding Iron, LLC – an Atlanta-based television and branding company.  She has also worked at Scripps, Cox, and Belo.

 

 

Market Research Note of the Week:

Purchasing Preferences of Broadcast Technology Buyers – “Best-of-Breed” or “One-Stop-Shop?

How do buyers of broadcast technology products prefer to purchase: using a best-of-breed approach (evaluating products from multiple vendors) or a one-stop shop where one vendor provides a complete solution?

To find out, we canvassed the opinions of several thousand broadcast professionals around the world as part of the 2010 Big Broadcast Survey.

There are a huge number of vendors in the broadcast technology space, and the industry’s vendor community is fragmented. Major international trade exhibitions such as NAB and IBC often have between 1000 and 1500 exhibitors at their shows.

On the one hand are the many vendors who are relatively small and specialize in one or two product types. There are also a small number of large international vendors who produce dozens of product types. There are obvious advantages that come with the scale that large companies have achieved, but small companies often argue that their more nimble, focused approach results in superior products.

This has led to an ongoing debate within the broadcast industry about whether it’s better to buy so-called best-of-breed solutions from a variety of suppliers or go to one large company and buy everything from a single vendor.

There are pros and cons to each approach. Dealing with a number of companies may indeed enable buyers to assemble a best-of-breed system, but this approach may introduce interoperability issues and potential finger pointing between vendors if things go wrong. Dealing with a large one-stop shop gives buyers the peace of mind that interoperability issues have been solved, that there is one phone number to call if things go wrong and that there will be no finger pointing.

To see the results of this research, including a chart with a breakdown of different types of buyers, click here.

Purchasing Preferences of Broadcast Technology Buyers – “Best-of-Breed” or “One-Stop-Shop?

broadcast industry technology trends, broadcast industry trends, Broadcast technology channel strategy, broadcast technology market research | Posted by Joe Zaller
May 11 2010

In previous post, I looked at the purchasing channels that are typically used by different types of buyers when broadcast technology products.   This reveled that there is considerable variation in the way broadcast technology products are purchased.

Today I am going to look at how buyers of broadcast technology products prefer to purchase – a “best-of-breed” approach (evaluating products from multiple vendors) or a “one-stop-shop” where one vendor provides a complete solution.  

There are a huge number of vendors in the broadcast technology space, and the industry’s vendor community is fragmented.  Major international trade exhibitions such as NAB and IBC often have between 1,000 and 1,500 exhibitors at their shows.

On the one hand are the many vendors who are relatively small and specialize in one or two product types.  There are also a small number of large international vendors who produce dozens of product types.

There are obvious advantages that come with the scale that large companies have achieved, but small companies often argue that their more nimble, focused approach results in superior products.

This has led to an ongoing debate within the broadcast industry about whether it’s better to buy so called “best-of-breed” solutions from a variety of suppliers, or go to one large company and buy everything from a single vendor.

There are pros and cons to each approach.  Dealing with a number of companies may indeed enable buyers to assemble a “best-of-breed” system, but this approach brings the possibility of interoperability issues and potential finger-pointing between vendors if things go wrong.  Dealing with a large “one-stop-shop” gives buyers the peace of mind that interoperability issues have been solved, that there is one phone number to call if things go wrong, and that there will be no finger pointing.

To find out what the market thinks about this issue, respondents to the 2010 BBS were asked 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?

 

In an era when vendor consolidation is on the rise, it’s interesting to note that where possible, the majority of traditional broadcast technology buyers prefer to evaluate and purchase so called “best-of-breed” solutions from multiple vendors.

Broadcasters, as well as cable programmers, playout, and centers cable / satellite / IPTV operators showed the strongest preference to select best-of-breed solutions. These customers typically have large-scale operations requiring large amounts of technology products.  They also tend to have significant technical resources to evaluate and select best-of-breed solutions.

Conversely, film studios, government and educational buyers exhibited the strongest preference to purchase from a single supplier.  This reflects the fact that there are several strong dealers who cater specifically to the Hollywood studios; and it’s likely that government & educational buyers may consider local dealers and systems integrators to be single suppliers.

Once again, these results show that there is considerable variation in the broadcast technology purchasing process, based on customer category.  They also highlight the importance to vendors of developing go-to-market strategies that encompass direct sales, while at the same time developing and maintaining strong relationships with third-party players in the distribution channel.

This article is based on the findings from the 2010 Big Broadcast Survey (BBS), a global study of industry trends, technology purchasing behavior and the opinion of vendor brands.  With more than 5,600 people in 120+ countries participating, the 2010 version of the BBS is the largest and most comprehensive market study ever done in the broadcast industry.

Devoncroft Digest – Week Ending May 7th 2010 — Broadcasters Earnings Improving, Will it Lead to Increased Capex? Vendors Report Mixed Earnings. Harmonic Buys Omneon.

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
May 09 2010

There was a lot of action last week.  Earnings season continued with several broadcasters, broadcast service providers and broadcast technology vendors reporting their numbers. 

There was also a big broadcast M&A deal announced, with Harmonic scooping up Omneon for $274m in cash and stock.

Earnings of Broadcasters and Broadcast Service Providers

A number of broadcasters and broadcast service providers reported their quarterly earnings this week.  For the most part, the news was positive with revenue and profits improving thanks to an improvement in the advertising environment.

News Corp posted strong numbers for its Q3, with revenue growth of 19% versus the previous year.  However revenues from satellite broadcasting declined.

Sinclair Broadcast Group announced that their Q1 revenue increased 12.7% versus the prior year period.  Sinclair reported that political advertising had increased sharply, and that 8 of its top 10 advertising categories were up in the quarter – with automotive up 35.6%, and services up 10.1%.  Sinclair gave a positive outlook for their Q2 and also said that they expect their capex to be $19m in 2010, including $8m in the current quarter.

TVB reported that Belo’s revenue increased 15.6% in the first quarter. Like Sinclair, Belo’s results  including a big jump in political revenue.

Liberty Media announced positive Q1 results, lifted by a strong performance at QVC.

Revenue at Cablevision grew 5.2%, but income more than doubled.  According to the Motley Fool website, the company’s “telecommunications services – which includes basic video, interactive optimum video, high-speed data, and voice, along with commercial data and voice service and the programming segment — chalked up a 20.6% growth in operating income. Keeping in step with its cable brethren, the company also posted a 35.1% jump in cable advertising.”

Ascent Media did not fare as well in their first quarter.  The company posted a loss of $11.1m as its revenues declined by 9% versus the previous year. Nevertheless the company’s earnings press release was relatively optimistic, noting that as advertising markets improve the company has been involved in the creation of “more than 800 television commercials and a substantial number of this year’s episodic television pilots…[and] are currently working on a solid pipeline of 3D features. Ascent CEO William Fitzgerald  said the company is “beginning to see stabilization in the global advertising and media markets.”

  

  

Broadcast Technology Vendor Financial Results

Several reported earning this week, including Miranda, DG FastChannel, Chyron, QuStream and Harmonic. 

Broadcast technology vendor results were mixed, with DG FastChannel, Harmonic and Chyron posting increases in revenue, while Miranda and QuStream fared less well.

 

DG FastChannel reported record Q1 results which the company’s CEO Scott Ginsburg attributed “Stellar growth in both traditional and online advertising, the continued adoption of the high definition (HD) advertising format, and the advent of a hotly contested year in politics.” The company’s revenue increased by 31% versus the same period last year, and EBIT increase by 71% y/y.  Investors liked the news and sent the company’s shares more than 12% higher following the announcement.

  

Harmonic announced strong Q1 results that saw revenues climb by 25% versus the previous year,  The company achieved a net income of $5.3m versus $18.8m loss last year.  The company also announced that it has agreed to acquire 100% of Omneon (see below).

Broadcast graphics provider Chyron said its revenue increased by 10% versus the same period last year, and that its service revenue accounted for 33% of total.  Nevertheless the company posted a net loss of $.7m during the period.  In Chyron’s earnings press release, company CEO Michael Wellesley-Wesley said he expects revenue and earnings to climb in 2010.  

Broadcast infrastructure provider Miranda Technologies reported first quarter results that were below the expectations of equity analysts.  The company’s revenues were down 13% versus the same quarter last year, and 19% versus the previous quarter. Revenue from the US market was down 50% y/y, while revenue from Canada and international markets both rose sharply.  In the company’s press release, Miranda CEO Strath Goodship said: “We continue to believe that broadcast markets have stabilized, however the timing and strength of a rebound remains uncertain. Sales momentum in International markets continues to build and we are seeing signs of a broad based recovery. Sales activity in North American markets, particularly the USA remains constrained, although we are hopeful the heightened product interest seen at NAB will translate into stronger revenues in these markets going forward. The new products introduced at NAB, along with a number of sporting and political events in 2010 should help drive revenues and position us for growth.”

Routing switcher and pro-AV vendor QuStream (Pesa) posted a net loss $1m.  Sales for the quarter were $1.7m, a decline of 29% versus the same period a year ago.

  

 

Harmonic Buys Omneon

In addition to announcing pretty good numbers for Q1, Harmonic also announced that it has signed a definitive agreement to acquire 100% of broadcast server and storage vendor Omneon.

Much of the Harmonic conference call was dedicated to the acquisition, and Omneon CEO Suresh Vasudevan presented the company to analysts (many of whom were clearly unfamiliar with Omneon and its business).  Here is a link to the replay of the Harmonic earnings conference call, which provides details of the Omneon acquisition   You can also read a transcript of the call here.

I spoke to Omneon SVP Geoff Stedman minutes after the announcement was made public.  He told me that the deal grew out of partnership talks that Omneon and Harmonic had started more than a year ago.  Stedman also said that the Omneon name will continue for the foreseeable future, with Omneon CEO Vasudevan becoming the president of the Omneon division of Harmonic.  Much of Omneon’s key leadership team will also remain in place, and continue to report to Vasudevan, who will report to Harmonic CEO Patrick Harshman.  In my view, this is a good move.  Omneon has a strong, execution-oriented executive team who understands their market well – and there is a very, very big difference between the cable / satellite market (where Harmonic plays) and the broadcast market where Omneon plays.

According to the press release, Harmonic agreed to pay $274m for Omneon.  Investors did not immediately warm to the deal… the AP reported that, Harmonic’s shares plummeted 19% following the announcement of the deal.

 

 

Other

Finally, broadcast business management specialist VCI Solutions has appointed Robert Furlong as its new president & CEO.  Furlong is an industry veteran and former VCI customer.  He has been a TV station GM with both Freedom and Meredith

 

 

Market Research Note of the Week:

How are broadcast technology products typically purchased – Direct from vendor, SI or dealer?

As part of the 2010 Big Broadcast Survey I asked several thousand technology buyers (including broadcasters, playout centers, cable/satellite/IPTV operators, education, film studios etc) in 120+ countries how they typically buy broadcast technology products – direct from a vendor; through a systems integrator; through a dealer; or some other way.

It turns out that there is considerable variation in the way broadcast technology products are purchased, with each category of buyer exhibiting different purchasing preferences. 

These results help readers to better understand the channel structure in the broadcast market.  They 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.

To see the results, including a chart that breaks responses down by company type, please click here.

%d bloggers like this: