This week, the Wall Street Journal reported that the National Bureau of Economic Research, the arbiter of the start and end dates of a recession, determined that the US recession that began in December 2007 ended in June 2009.
I am not sure these dates match up with the reality in the broadcast industry, since 2008 was a banner year for most of the industry with the US elections and the Beijing Olympics. Still, there’s no doubt that the industry has been in recession for some time, and we are now being told that it’s over — officially at least.
Whether you believe that the recession is over or not, there’s no denying that times have been tough in the broadcast industry over the past couple of years.
Broadcast technology budgets were hard hit by the global downturn, which in turn impacted the supplier community. For the past 18 months, vendor after vendor has reported that their sales are down due to the reigning-in of spending by customers. During this time technology providers have been impacted severely. Many have reported losses and have gone through painful rounds of layoffs. Some businesses have liquidated, and there has been a marked uptick in industry consolidation.
To find out how broadcast technology budgets were impacted by the recession, we asked a series of in-depth questions to a global sample of broadcast technology professionals as part of the 2010 Big Broadcast Survey (BBS). (The BBS, which is conducted annually by Devoncroft Partners, is the largest and most comprehensive study of the broadcast industry. More than 5,600 people participated in the 2010 study).
As seen in the chart below, broadcast technology spending in EMEA held up better than in the Americas, which was hit particularly hard by the recession. 40% of respondents from the Americas reported that their budgets for 2010 were lower than in the previous year.
Significantly, Asian markets showed the most budget growth in 2010 with nearly 60% of respondents reporting that they planned to increase their spending on broadcast technology products in 2010. This data is consistent with a recent survey conducted by the IABM and presented last week during a “state of the industry” session at IBC.
Overall the past year or so has been tough for the broadcast industry. In 2010, just 34% of respondents reported that their broadcast technology budgets had increased versus the previous year. 32% reported that their budgets had stayed about the same, and 28% reported that their budgets had decreased, including 8% of respondents who said that their spending had declined by more than 30%.
However, the indications are that the outlook for 2011 is better. The question everyone wants to know is: when spending returns, where will money be spent?
Traditionally, in the broadcast industry, major projects drive technology budgets, which in turn drive product purchase. To help readers better understand how major projects are impacting technology spending, I recently wrote an article called Where is Money Being Spent in the Broadcast Industry? — A Review of Major Projects Being Planned, which provides some insight into broadcast CapEx on a global basis.
In it, I showed the major projects that are being planned and budgeted for by more than 3,000 broadcast processionals – including radio and TV broadcasters, cable/satellite/IPTV operators, playout centers, post production facilities, and cable programmers.
Here’s the chart from that article:
By a wide margin, more respondents selected “upgrading infrastructure for HD/ 3Gbps operations” than any other type of project. In addition to upgrading infrastructure for HD/3Gbps operations, respondents also indicated that they plan to upgrade their transmission and distribution capabilities – presumably to support their transition to HDTV and to prepare for analog switch-off. You can read the full post here.
What Will Drive Post Recession Broadcast Technology Spending?
One of the key issues that broadcast professionals must ask themselves in a post-recession world is whether broadcast technology spending will be the same as the pre-recession days, or has there been a more fundamental shift.
My suspicion is that things have changed – for both buyers and suppliers of broadcast technology.
Broadcast technology buyers today remain for the most part risk averse, and many have shifted their focus. They are focused on increasing efficiencies, and finding new ways to monetize content through initiatives like multi-platform content distribution. At the same time I keep hearing the mantra that products have to “fit for purpose” and “good enough for the job” rather than the best.
On the supplier side, vendors have also shifted their focus. For one thing, many vendors seem to want to shift to a more software-centric model as IT technology continues its seemingly unstoppable progress. At the same time, there is an increased emphasis on technologies that enable increased efficiencies through file-based workflows (in order to meet the needs of buyers mentioned above). However, some of the firms with leading expertise in software and file-based technologies are not necessarily the companies that were considered industry leaders pre-recession. This leads one to imagine two scenarios – new leaders will emerge, or M&A among technology vendors will increase as larger technology suppliers look to bring much needed expertise in-house. In reality both will probably happen, which means that the next few years will be interesting to watch.