Archive for August, 2010

As Rumored, Blackmagic Announces Purchase of Echolab Assets

broadcast industry technology trends, broadcast industry trends, Broadcast technology channel strategy, broadcast technology market research | Posted by Joe Zaller
Aug 12 2010

As predicted here last month, Blackmagic Designs announced today that it has acquired “all the assets of Echolab,” putting Blackmagic in the production switcher business.

Echolab was forced into liquidation a few months ago when its primary shareholder stopped funding its operations.  The company had been in business for more than 35 years, specializing in low-end production switchers.

Blackmagic is buying Echolab for the latter’s ATEM product line, which was introduced about two years ago and has been continuously upgraded since under Echolab’s former CEO Nigel Spratling, who apparently not part of the Blackmagic deal and has now joined Ross Video in a marketing role.

This is great news for the affected Echolab employees, who were left jobless in an instant when the company shut its doors in mid-May.  It’s also good news for the industry, because the ATEM switcher product line, which looks like a pretty good product, will continue to be available through Blackmagic.  In fact, Blackmagic has said that it is adding to the engineering team responsible for ATEM.

It will be interesting to see how Blackmagic approaches the production switcher market, which is different than the company’s core post production market.  The part of the production switcher market where Echolab is active has considerable competition. In addition to Echolab, Sony, Panasonic, JVC, For-A and Ross Video are all very active players in this space.   

In addition to the competitive aspects of the deal, it seems to me that selling production switchers is a bit of a departure business-wise for Blackmagic.  Production switchers are a “high-touch” product category.  They are mission critical elements of the live production workflow, and as such they can require extensive demonstrations and training.  The majority of Blackmagic’s products are plug-in cards or stand-alone units, which are sold primarily through third-party dealers.  

At this point, I am unsure whether Blackmagic’s all-dealer sales approach is a positive or a negative for Echolab.  On the plus side, the compact HD production switcher market is a large and somewhat amorphous, running the gamut from broadcasters to corporation, to churches to education –  so it requires a large dealer network, which Blackmagic already has in place.  On the other hand production switchers require a specialized sales approach. Every buyer wants a demonstration, which typically involves shipping equipment and people, thereby increasing the cost of each sale.  Blackmagic will probably have to augment their approach somewhat in order to be successful selling production switchers.

Still if they can get the distribution right, Blackmagic may have a good chance of making their purchase of Echolab a success.  Blackmagic most likely paid very little for Echolab’s assets, and since it’s buying the assets and not the company, it gets a brand new HD switcher line, but not 35 years of legacy products that need support.  And Blackmagic does have experience buying distressed “traditional” vendors and changing their approach.  Last year, Blackmagic acquired leading color grading vendor Da Vinci Systems, and proceeded to radically change Da Vinci’s market approach, not to mention its pricing, turning a $200,000 hardware product into a sub-$1000 product according to TVB Europe.

Arguably however, Da Vinci’s color grading products (which are used off-line in post production) were easier to port to software platforms – and they still require a very expensive hardware controller.  Live production switchers are a different kettle of fish than off-line color grading systems for post production.  They are the key element of any live broadcast production, and they are still a relatively expensive hardware platform that requires specialist sales and support.

Blackmagic CEO Grant Petty is obviously familiar with this.  In the company’s press release that announced the deal he said: “I have been using live production switchers since I was in school where we covered local theater, sports, racing and bands. I think it’s the most exciting way to do production because it’s all live and thousands of people are watching what you are doing! Production switchers need to be powerful while also being familiar and easy to operate.”

Petty also said that “Since the acquisition, we have already dramatically expanded the engineering team working on ATEM. This fresh engineering team, which is a combination of new as well as experienced EchoLab staff, will allow us to move faster in adding new features to the ATEM product.”

Blackmagic will be displaying the ATEM on its booth at the IBC show next month. 

Here is a link to the full press release announcing the deal.

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When it Comes to Purchasing Broadcast Technology, Who are the Most Important Decision Makers Today? Who Will it be in the Future?

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

I recently wrote an article called Broadcast Industry’s Largest Market Study Reveals Most Important Technology Trends, which shows that the move towards “file-based / tapeless workflows” is one of the most important issues to broadcasters today.

But how will this shift affect how broadcast technology products are purchased, not to mention who buys them?  Traditionally these products have been purchased primarily by engineers.  Will this be the same for products that are increasingly IT-based, or will there be a new set of buyers?

Broadcast vendors need to know this because a new set of buyers may require a new market approach.

To find out we asked the nearly 800 broadcast technology vendors who responded to the 2010 Big Broadcast Survey who they feel is currently the most important decision maker in the sales process, and who they feel will be most important in 2-3 years.

 

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The Most Important Decision Makers Today

Let’s start with the most important buyers today. Respondents were asked “when selling your products / services, which category of customer is typically the most important decision maker today”

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Today, broadcast tech vendors see engineering staff as their most important customers, followed by operations, IT, and finance personnel.  Engineers are clearly seen as the most important decision makers, with operations staff a distant second.

These results are fairly consistent with vendors of all types, but as the table below shows, a look at these results in detail does highlight some variation.

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Vendor respondents based in Americas, along with those who primarily sell hardware products, currently see engineering staff as the most important technology purchasing decision makers.

Large vendors, and those that primarily sell software products, see engineers as marginally less important.  But even so most of these vendors still see engineers as their top customers today.

 

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The Most Important Decision Maker in the Future

When these same respondents were asked who they feel will be the most important decision makers in 2-3 years time, the results were different.  As the following table illustrates, broadcast technology vendors are anticipating a shift in the type of decagons maker they will be targeting in the future.

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In a fairly dramatic shift, operations staff are predicted to become the most important decision makers in the broadcast technology buying process, eclipsing engineers.  In these results, engineers fall from 48% to 31%, while operations increases from 28% to 33%.

Engineers will still be a very important part of the buying process, but vendors are predicting that the power of the engineer as decision maker will be diminished in favor of not only operations, but also IT and finance personnel.

These results are once again fairly consistent across all types of vendors, but there are some variations when one looks at the detail.

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Once again, those vendor respondents based in the Americas along with those who sell primarily hardware products, continue to view engineers as the most important decision makers in the future, albeit it at a reduced percentage versus today.

Respondents from EMEA along with those who primarily sell software, or a hardware/software mix, see engineers as much less important in the future.  Instead, these respondents view operations and IT personnel as their most important targets.

Respondents from Asia-Pacific see operations personnel as the most important decision makers, in contrast to those from the Americas where engineers are still seen as the top target.  Indeed 42% of respondents from the Asia-Pacific region see operations staff as the most important decision maker in the future (up from 31% today), while just 21% of respondents from the Americas see operations staff as most important. 

These findings are consistent with the industry trends that are most important to broadcast technology buyers, which I mentioned earlier.  As technology buyers complete their HD build-outs, their commercial focus is shifting towards achieving operational efficiencies and generating new revenue streams.  Thus operations, IT, and finance personnel will become an increasingly important part of the decision making process at broadcast technology buyers.

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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.

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Ascent Media Reports Lower Revenues, Higher Losses for Q2 2010

broadcast technology market research | Posted by Joe Zaller
Aug 10 2010

Digital media service provider Ascent Media reported increased losses and lower revenue for the second quarter ended of 2010.  The company attributes the lower results to market volatility and lower capital spending by customers. 

Revenue for the quarter dropped 13% to $99.5m, while revenue for the first six months was off 11% to $204m.  The company said that the decline in second quarter and year-to-date revenue was driven primarily by a reduction in revenue from the Content Services segment.

Q2 losses from continuing operations before income taxes were $17.5m, compared to a loss of $12.4 million in the prior year period. Year-to-date, the loss from continuing operations before income taxes was $28.6 million compared to a loss of $23.2 million for the six months ended June 30, 2009.

 “Ascent’s year-to-date operating results have not met our expectations as uncertainty about the timing and pace of the economic recovery has led to ongoing volatility in the media marketplace,” said William Fitzgerald, Ascent’s CEO. “A consequence of the current environment is that our customers have continued to take a cautious approach to capital spending.”

Fitzgerald was more upbeat about the rest of 2010, saying “We are beginning to see positive indications of an upturn, including first half revenue improvement in our creative services business, a strengthening pipeline of feature film and other projects, and rising industry advertising estimates for the second half of 2010.”

The full earnings press release can be found here.

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Chyron Q2 Losses Narrow as Revenue Jumps 20%

broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
Aug 05 2010

Broadcast graphics provider Chyron today announced its financial results for Q2 and 1H 2010.

Q2 revenue was $6.94m, up 20% versus Q2 2009.  Gross margins for the quarter were 70%, up slightly from the previous year.

Q2 product revenue was $5.4m, up 18% y/y.  Service revenue increased 29% y/y to $1.19m.  Service revenue accounted for 22% of the quarter’s total revenue.

The company posted an operating loss for the quarter of $680,000, a 52% y/y improvement; and a net loss of $710,000, 35% better than a year ago.

For the first six months of the year Chyron posted revenues of $13.8m, an increase of 15% over 2009 levels.  Net losses for the first half of the year were $1.37m, a 30% improvement over 2009.

Company president & CEO Michael Wellesley-Wesley, said that the company continues to recover from recessionary levels of 2009, and that revenue momentum built steadily during the first half of 2010.  In the company’s earnings release, Wellesley-Wesley said “If the economy continues to improve, we anticipate that our revenues will continue to improve in the second half of the year over the prior year periods; however, our focus will remain on cost containment and cash generation.  “When looking at Chyron’s medium-term prospects into 2011, we are more optimistic. We believe that the technology enhancements that we put into place in 2009 and 2010 has made Chyron a stronger company with a clear means to drive future growth.”

You can find Chyron’s earnings release here.

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Miranda’s Q2 Earnings Increase as Expenses Fall, Sees Increased Order Activity

broadcast industry technology trends, broadcast industry trends, Broadcast technology vendor financials | Posted by Joe Zaller
Aug 05 2010

Broadcast infrastructure provider Miranda Technologies announced their Q2 2010 results this morning.  Revenue for the quarter was C$32.1m, up 3% from the same period a year ago and up 11% versus the previous quarter.  International sales were up 11% y/y.  Sales in the US were up 10% y/y

The company’s net income jumped 173% to C$3.5m as expenses were reduced during the quarter, and EBITDA rose by 125% to C$6m versus the same period in 2009.  Gross margins were 60%, slightly down from Q2 2009, but up from 57.7% in the previous quarter.  This is a good showing in a competitive market, which the company attributes to a higher margin mix, and increased sales of routing switchers.

Miranda CEO Strath Goodship issued an upbeat statement saying “Quarterly sales momentum continues to build, with order intake levels strengthening significantly over the first quarter of 2010. This includes a noticeable uptick in the USA, where broadcast markets have been particularly hard hit by the economic downturn. At the same time we are seeing heightened sales of higher-margin products, including routers, which positively impacts customer and product mix, along with gross margins.”

Goodship also said that he expects “overall business conditions in each of our markets to strengthen, in conjunction with a gradually improving global economy.”

You can read the company’s earnings press release here.

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DG FastChannel Reports Record Q2

broadcast industry trends, Broadcast technology vendor financials, content delivery | Posted by Joe Zaller
Aug 04 2010

Advertising and broadcast content delivery specialist DG FastChannel reported record results for its FY2010 second quarter today, blowing past the expectations of equity analysts. 

Revenue for the quarter was $60.3m, well ahead of the $55.6m consensus estimate of equity analysts.  This represents a 38% revenue increase versus the same period a year ago, and an increase of 11% from the previous quarter.  Net income for the quarter was $9m, up 150% increase versus Q2 2009 and up 12.5% versus the previous quarter.

Significantly, the company’s revenue from the delivery of HD advertising content increased 99% to $23.9 million versus the same period of 2009.

The company also that it retired all of its outstanding debt, thanks to a recent public equity offering that raised net proceeds of approximately $108m. As a result of this offering, the company reported that as of June 30, 2010, it has $79.6 million in cash and no debt.

Company Chairman & CEO Scott Ginsburg said “The Company continues to execute on its strategic business plan… revenue, margins, earnings and net debt show marked improvements during the second quarter.”

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Harris Broadcast Posts Q4 and Full Year Results

broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
Aug 03 2010

Harris Corporation reported its Q4 and full year 2010 results today.  While the company as a whole did well, the broadcast communications division continued to struggle.

For the full year, revenues from the broadcast communications division were down 17% versus the previous year.  For Q4, the company’s broadcast revenues were down just 1.9% y/y, although orders were down 12.5% versus the same period last year.

In the 4th quarter of FY 2010, Harris posted an operating loss of $21m.  According to the company, this “includes $7 million in charges related to cost-reduction actions and $6 million in inventory write-downs associated with weaker demand.”

Harris executives discussed the performance of the broadcast division in both the company’s earnings press release and on the conference call with equity analysts.

During the prepared remarks on the conference call, Harris CEO Howard Lance disclosed that:

  • Significant cost reductions were implemented in 2010 in response to the lower revenue trends, and further actions will be completed in early fiscal 2011
  • A new leadership team was put in place in this business in the fourth quarter.  This includes Doug Means,  the recently appointed GM and VP of the newly created WINS division; and Brad Turner the new Vice President of Strategy and Marketing for the broadcast communications division

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Lance also highlighted three growth areas for the company’s broadcast communications division:

  • international markets – particularly the BRIC countries;
  • synergy with the company’s existing government business, where video is becoming increasingly important;
  • out of home advertising (digital signage)

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Finally, Lance said the following about the revenue of the broadcast division: “we continue to expect revenue in a range of $490 million to $510 million with break-even operating results. We expect to see continued operating losses in the first half of the year with profitability improving in the second half of the fiscal year.”

The parts of the press release and the conference call that relate to the broadcast communications division have been pasted in below.

 

From the Earnings Press Release

Broadcast Communications
Orders in the Broadcast Communications segment were $111 million in the fourth quarter and were weaker compared with the prior-year quarter of $127 million.  Revenue in the fourth quarter was $128 million compared with the prior-year quarter of $130 million.  

Operating loss in the fourth quarter was $21 million and included $7 million in charges related to cost-reduction actions and $6 million in inventory write-downs associated with weaker demand.  Operating results reflected continuing market weakness in the traditional U.S. broadcast market as well as increased investment to address new media and international growth opportunities.  Additional cost-reduction actions are planned for fiscal 2011 and are expected to result in additional charges of about $7 million.

Orders in the fourth quarter included $9 million for turnkey, high-power AM radio transmitter systems for the Pakistan Broadcasting Corporation funded through USAID; $4 million for the Korean Broadcasting System for high-powered AM radio transmitters; $3 million for Viditec S.A. in Argentina to begin to deploy the country’s first digital terrestrial transmission system; and $3 million for TCN Channel Nine PTY LTD. in Australia to continue to build out the company’s playout and news centers.

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From the Conference Call:

The Broadcast Communications segment continued to underperform in the fourth quarter. Revenue of $128 million was in line with recent quarters, but fourth quarter orders were sequentially lower at $111 million. Segment operating income was a loss of $21 million in the quarter. This did include $7 million coming from restructuring costs and $6 million coming from inventory write-downs. Fourth quarter results reflected the continued weak U.S. market capital spending trend.

For the full fiscal 2010, Broadcast Communications revenue declined almost $100 million or 17% from fiscal 2009. The decline was led by $60 million in lower revenue in our transmission systems product line.

Significant cost reductions were implemented in 2010 in response to the lower revenue trends, and further actions will be completed in early fiscal 2011. But we cannot rely entirely on cost-reduction actions to deliver improved financial results.

A new leadership team was put in place in this business in the fourth quarter. We believe that continuing to invest in the growth markets of the future is the right strategy. Although we are investing at a time when the legacy market has continued to decline, this is the means to make this business a long-term success and a positive contributor to the company’s future financial results.

Let me highlight today three growth areas. First, international markets, including the BRIC nations of Brazil, China, India and Russia along with other countries in Latin America, Asia Pacific and Africa, offer us significant growth opportunities. Their transition from analog to digital broadcasting is still just getting started. There’s growing demand for both digital transmission systems and the related infrastructure that goes with it. In response, we recently launched transmitter production at new factories in Brazil and China using manufacturing partners. The regional presence will increase our market share and reduce our product cost.

The second area is the U.S. government market for full-motion video systems continues to grow. Harris has a strong market position with unique technology capabilities in this area. Our FAME solution, short for Full Motion Video Asset Management Engine, offers unequalled performance and scalability as our government customers cope with increasing amounts of digital intelligence, surveillance and reconnaissance information. Several FAME systems have been deployed, and we’re receiving positive customer feedback.

Third, the growth of digital out-of-home advertising continues. Our solutions enable advertisers to reach consumers on the move. New systems will be increasingly deployed to deliver rich media content in live sports and entertainment venues, retail establishments and to mobile handheld devices.

At the recent Infocom Trade Show, Harris demonstrated an array of innovative digital audio video solutions which integrate digital signage hardware and software, production play out and scheduling systems, multi-viewers and graphic engines. Harris is uniquely positioned to offer end-to-end solutions and services, which enable customers to implement efficient media workflows and create new revenue streams. These market initiatives, along with the broader end market recovery, will drive improved top line revenue and bottom line results in fiscal 2011 and beyond in this segment.

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Broadcast Tech Vendors Sell Direct Today, Increasingly Indirect Tomorrow

broadcast industry technology trends, broadcast industry trends, Broadcast technology channel strategy, broadcast technology market research | Posted by Joe Zaller
Aug 02 2010

Although the broadcast industry is global, many industry vendors are relatively small.  So for many technology providers, reaching a world-wide customer base can be a significant challenge.  

Vendors have a variety of go-to-market options, including direct sales, a network of dealers & reps, and of course systems integrators.  There is no one-size-fits-all approach to selling successfully, so all vendors use some kind of mix of the available options.  

To better understand how broadcast technology vendors are selling today and what how they are thinking about their future distribution strategies, we asked the nearly 800 broadcast technology vendors who responded to the 2010 Big Broadcast Survey about their current and future sales channels.  Here’s what we found:

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Current Vendor Sales Mix

Vendors were first asked what percent of their sales goes through each of the go-to-market alternatives.

  

Question: How do you currently sell?

In general, broadcast technology vendors show a strong preference to sell direct where possible.  Just under half of vendor respondents indicated that they sell more than 50% of their products on a direct basis.  Yet a large number of vendors responded that they sell their products on an indirect basis through both dealers and systems integrators.

  

 

Future Vendor Sales Mix

As a follow-on question, vendors were asked how they see this sales mix changing in the future.  The results are presented in the chart below.

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Question: How do you expect your sales mix to change in the future?

Although direct sales will undoubtedly continue to be important, vendors predict that direct sales will increasingly decline in favor of indirect channels. 29% of vendors predict that their direct sales will increase by more than 10%, but at the same time 6% expect their direct sales to decrease by 1-10% and 3% expect them to decrease by more than 10%

Systems integrators are seen to be increasingly important, with 32% of vendors anticipating that their sales through SIs will increase by more than 10% over the next several years.

Keep in mind that these results are presented at a high level and that they represent the opinions of all vendor respondents.  Findings may vary based on the type of vendor (e.g. hardware or software), geographic location, product categories produced etc.  If you’d like a granular breakdown of these results, please contact Devoncroft Partners.

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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.

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