Posts Tagged ‘2012 Big Broadcast Survey’

Commercial Drivers and Obstacles for the Deployment of Cloud-Based Technology in the Broadcast Industry

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, technology trends | Posted by Joe Zaller
Sep 24 2012

This is the eighth in a series of articles about some of the findings from the 2012 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands. Nearly 10,000 broadcast professionals in 100+ countries took part in the 2012 BBS, making it the largest and most comprehensive market study ever conducted in the broadcast industry.

 

Cloud computing is one of the hot topics in the broadcast industry in 2012, but our research shows that it’s still early days for deployments of this technology in the broadcast industry.  This article looks at the commercial drivers for implementing cloud technology, what potential buyers view as obstacles to deploying cloud technology, and to whom cloud technology is most important commercially in 2012.

 

About this time last year, we met with a large number of industry executives to discuss what broadcast industry trends to add, if any, to Devoncroft’s annual global study of the broadcast industry, the Big Broadcast Survey (BBS).

During our meetings with more than 50 industry executives, one trend was mentioned virtually every time – “cloud computing / cloud-based services.”  However, when we asked what specific information about cloud technology these people wanted to know, there was a wide divergence of opinion.  Some were interested in how broadcasters plan to use cloud technology, and what parts of the workflow broadcasters might migrate to the cloud first.  Others wanted to know if broadcasters would simply transfer existing workflows to the cloud, or whether cloud technology will enable entirely new workflows.  And finally there were some who confessed that they didn’t actually know what they wanted to know; they just wanted to understand more about cloud technology and its implications for the broadcast industry.  Ultimately, we added questions about cloud technology to the 2012 BBS in an attempt to answer some of these questions.

As seen in Figure 1 the nearly 10,000 respondents to the 2012 BBS who we asked to prioritize the commercial importance to their businesses of a variety of broadcast industry trends, ranked “cloud computing / cloud-based services” #7 out of 16 in our 2012 BBS Broadcast Industry Global Trends Index.

Although cloud technology ranks in the top half of our 2012 Trends Index, it is significantly below other topics such as multi-platform content delivery and other traditional drivers of spending such as the transition to HDTV, and the move to file-based workflows.

Figure 1: The 2012 BBS Broadcast Industry Global Trends Index

 

Commercial Drivers and Obstacles for Cloud Technology in Broadcast

To better understand the commercial drivers behind the answers of these respondents, we asked, we asked those respondents who said that “cloud computing / cloud-based services” was the most important trend to their commercial success in the future why they feel this is the case.  The results are shown in the table below.

 

Figure 2: Commercial Drivers for Deployment of Cloud Technology in Broadcast Industry

 

The top commercial drivers cited by broadcast customers for deploying cloud technology in the broadcast industry highlight the fact “cloud technology / cloud services” are principally viewed today as way to enable new workflows and increase efficiencies.  While potential cost savings — achieved through increased efficiencies, shifting costs to OpEx, and SaaS services —  are arguably the most straightforward rationale for deploying cloud technology, these results imply that customers also see the cloud as a potential driver of revenue, particularly if it enables new workflows, drives collaboration, and increases the overall utilization of content.

While the benefits of deploying cloud technology are relatively clear, it is also useful to understand the obstacles that customers feel may prevent them from deploying this technology today.  These are shown below in Figure 3, which since we are discussing cloud, is displayed in the form of a word cloud. Keep in mind that the people describing these obstacles to deploying cloud technology / service, are in fact a representative sample of the biggest proponents of cloud technology in the broadcast industry.

Figure 3: Obstacles to Deploying Cloud Technology in Broadcast Industry

 

Even those who regard cloud technology as the most important commercial driver for their business over the next several years note a wide range of obstacles preventing them from deploying it today.  The most commonly cited factors are budget/cost, availability of bandwidth, content security, and the perception that cloud technology is too immature for broadcast applications.  Other factors cited as obstacles include lack of skilled personnel, rights issues, internal bureaucracy, and disruption to existing workflows.

Despite these obstacles, customers are seriously investigating this technology, and technology vendors are investing in the development of a wide variety of cloud technologies and services.

 

Relative Importance of Cloud Technology

Given the hype surrounding cloud technology, and the level of investment from vendors, it is perhaps not surprising to find that technology suppliers — represented in the chart below by systems integrators and vendors — see cloud technology as more important to their commercial success than do their customers.

 

Figure 4: Technology buyers versus sellers: Relative importance of cloud technology

 

 

Indeed, it turns out that those respondents who are most interested in, and have the most to gain commercially in 2012 from “cloud technology / cloud services” are the parties whose business is developing and selling cloud technology.

 

Figure 5: Commercial Importance of Cloud Technology by Respondent Type

 

This does not mean that the concept of cloud in broadcast is not important.  Our research confirms that there is considerable interest in deploying cloud technology and cloud services in the broadcast industry.

However, it appears that significant issues, including immature technology, cost, security, bandwidth, and viable business models, must be overcome before cloud technology can deliver commercial success that lives up to the hype it has generated over the past year.

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A previous version of this article appeared in the 2012 IBC Daily News.

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The information in this article is based on select  findings from the 2012 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands. Nearly 10,000 broadcast professionals in 100+ countries took part in the 2012 BBS, making it the largest and most comprehensive market study ever conducted in the broadcast industry. The BBS is published annually by Devoncroft Partners.

Granular analysis of these results is available as part of various paid-for reports based on the 2012 BBS data set. For more information about this report, please contact Devoncroft Partners.

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Related Content:

The 2012 Big Broadcast Survey – Information and available reports

The 2012 BBS Broadcast Industry Global Trend Index

Tracking the Evolution of Broadcast Industry Trends 2009 – 2012

Analyzing Where is Money Being Spent in the Broadcast Industry – The 2012 BBS Broadcast Industry Global Project Index

Ranking Broadcast Technology Vendors Part 1 – The 2012 BBS Overall Brand Opinion League Table

Ranking Broadcast Technology Vendors Part 2 – The 2012 BBS Net Change of Overall Brand Opinion League Table

Ranking Broadcast Technology Vendors Part 3 — 2012 BBS Global Brand Opinion Leaders League Table. 

Ranking Broadcast Technology Vendors Part 4 — the 2012 BBS Broadcast Technology Vendor Innovation League Table

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© Devoncroft Partners 2009 – 2012. All Rights Reserved.  No part of this article, including but not limited to charts, images, data presentation, and numerical findings may be reproduced without written permission from Devoncroft Partners.

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Ranking Broadcast Technology Vendors Part 4 — the 2012 BBS Broadcast Technology Vendor Innovation League Table

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast Vendor Brand Research, market research, technology trends, Top Broadcast Vendor Brands | Posted by Joe Zaller
Sep 17 2012

This is the seventh in a series of articles about some of the findings from the 2012 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands. Nearly 10,000 broadcast professionals in 100+ countries took part in the 2012 BBS, making it the largest and most comprehensive market study ever conducted in the broadcast industry.

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This is the fourth post in an occasional series of articles about how broadcast technology vendors were ranked and benchmarked on a variety of metrics by the respondents to the 2012 BBS.

The previous three articles in this series described the 2012 BBS Overall Brand Opinion League Table, the 2012 BBS Net Change in Overall Brand Opinion League Table, and the 2012 BBS Global Brand Opinion Leaders League Table.  These rankings show how the global sample of 2012 BBS respondents rated a variety of broadcast technology vendor brands in terms of their overall opinion of these vendors, and also how their opinions have changed over time.

This post looks at one of the most important metrics for any technology company – innovation.

The product side of the film & broadcast industry is driven by technology and innovation.  All vendors spend heavily on research and development in order to create advanced technologies that make their products stand out from the competition.  Thus innovation is a very important component of the brand image and reputation of vendors in this space.

To find out which broadcast technology vendors are considered to be most highly regarded in terms of innovation, respondents were asked to rank broadcast technology vendor brands for “Innovation” on a scale of 1-10 – with 10 being best in the market, and 1 being worst in the market.  The top 30 ranked brands for innovation are shown below for the global sample of all respondents.


Please note that these results are shown in alphabetical order, NOT in the order in which they were ranked in the study. 

 

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There are a wide variety of companies on this list, including large and small firms; single product and multi-product firms; global and regional players; and audio and video technology providers.

Let’s look specifically at the how these companies and their products were ranked in the 2012 BBS, beginning with products and technology.

As shown in the chart below, these companies make products in 22 of the 30 product categories that we covered in the 2012 BBS.

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2012 BBS Broadcast Technology Vendor Innovation League Table — Frequency of Product Categories:

 

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The top product categories provided by brands in the 2012 BBS Broadcast Technology Vendor Innovation League Table are audio vendors – audio consoles and microphones each appear four times in this ranking. This is a change from last year, when the top product categories were microphones, video transport, and signal processing / interfacing / modular.

Does company size play a role in innovation?  Larger companies offer more products and are consequently used in more places than their smaller counterparts.  But this does not necessarily translate into innovation.

The chart below breaks down the 2012 BBS Broadcast Technology Vendor Innovation League Table by the number of product categories (as defined by the 2012 BBS segmentation) offered by each brand listed in this ranking.

 

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2012 BBS Broadcast Technology Vendor Innovation League Table – # of Product Categories Offered by Vendor

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Although the top two product categories in 2012 BBS Broadcast Technology Vendor Innovation League Table, just over one-third of the vendors in this ranking are pure-play audio vendors.

There are also many more hardware companies in the ranking versus software companies.

Interestingly, this ranking is dominated by companies that provide products in a single product category – 18 out of 30 brands in this list. This suggests that focused companies who apply their efforts to specialist product areas are often able to generate more innovation in the eyes of the market.

At the same time, larger companies are also represented on this list of the broadcast industry’s top innovators. Snell provides products in the most categories in the 2012 BBS Broadcast Technology Vendor Innovation League Table, followed by Omneon and Sony – please note that 2012 is likely the last time that we will cover Omneon as a stand-alone brand as it has now been fully absorbed into Harmonic.

Of course, companies are listed here based on how many 2012 BBS product categories they produce, which is not an absolute measure of the products offered be each vendor on this list. There are some very large companies on the list above who appear in just one 2012 BBS category.

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Please keep the following in mind when reviewing this information: All data these charts are presented in alphabetical order, not in the order brands were ranked by respondents to the 2012 BBS. All data in this article measures the responses of all non-vendor participants in the 2012 BBS, regardless of organization type, organization size, job title, geographic location, or purchasing authority — responses based on individual organization types or geographic locations may be very different from the results shown in this article.  There is a minimum sample size requirement for any brand to be included in any cut of the data presented in this article. There were a total of 152 brands covered in the 2012 BBS, for a complete list please click here. Granular analysis of these results is available as part of various paid-for reports based on the 2012 BBS data set. For more information about this report, please contact Devoncroft Partners.

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Devoncroft Partners has published a variety of reports from 2012 BBS data.  For more information, please get in touch.

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Related Content:

The 2012 Big Broadcast Survey – Information and available reports

The 2012 BBS Broadcast Industry Global Trend Index

Tracking the Evolution of Broadcast Industry Trends 2009 – 2012

Analyzing Where is Money Being Spent in the Broadcast Industry – The 2012 BBS Broadcast Industry Global Project Index

Ranking Broadcast Technology Vendors Part 1 – The 2012 BBS Overall Brand Opinion League Table

Ranking Broadcast Technology Vendors Part 2 – The 2012 BBS Net Change of Overall Brand Opinion League Table

Ranking Broadcast Technology Vendors Part 3 — 2012 BBS Global Brand Opinion Leaders League Table. 

Last Year:  The 2011 BBS Broadcast Technology Vendor Innovation League Table

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© Devoncroft Partners. All Rights Reserved. Findings May Not Be Reproduced or Quoted Without Written Permission from Devoncroft Partners.

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Ranking Broadcast Technology Vendors Part 3 – the 2012 BBS Global Brand Opinion Leaders League Table

broadcast technology market research | Posted by Joe Zaller
Aug 28 2012

This is the sixth in a series of articles about some of the findings from the 2012 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands. Nearly 10,000 broadcast professionals in 100+ countries took part in the 2012 BBS, making it the largest and most comprehensive market study ever conducted in the broadcast industry.

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This is the third post in a series of articles about how broadcast technology vendors were ranked and benchmarked on a variety of metrics by the respondents to the 2012 BBS.

The first two posts in this series described the 2012 BBS Overall Brand Opinion League Table, and the 2012 BBS Net Change in Overall Brand Opinion League Table.  These rankings show how the global sample of 2012 BBS respondents rated a variety of broadcast technology vendor brands in terms of their overall opinion of these vendors, and also how their opinions have changed over time.

There were 48 vendors in the in the 2012 BBS Overall Brand Opinion League Table, and 58 vendors in the 2012 BBS Net Change in Overall Brand Opinion League Table.

However, the brands in the Overall Opinion and Net Change of Opinion rankings were not always the same. In fact, between these two sets of league tables, a total of 76 broadcast technology vendor brands were listed.

This post looks at looks at the companies that were listed in both the Overall Opinion and Net Change in Overall Opinion Rankings. In other words, these are the companies whose brands are held in high regard today, and who are perceived to be getting better over time.

We’ve called this list the 2012 BBS Brand Opinion Leaders League Table. Out of the 76 broadcast technology vendor brands that were listed in the previous two rankings, just 30 brands (out of 152) were listed in both sets of rankings, either globally or regionally. These are shown below.

Please note that these results are shown in alphabetical order, NOT in the order in which they were ranked in the study. 

 


The 2012 BBS Brand Opinion Leaders League Table:

 

Not only do 2012 BBS respondents hold these companies in high regard, their opinion of them has improved over the past several years.

There are a wide variety of companies on this list, including large and small firms; single product and multi-product firms; global and regional players; and audio and video technology providers.

What they have in common is strong brand recognition, and a dynamism that 2012 BBS respondents feel is making them even stronger.

 

Brand Opinion Leaders by Product Categories

As shown in the chart below, the companies in the 2012 BBS Brand Opinion Leaders League Table make products in 25 of the 30 categories that we covered in the 2012 BBS.

The top products for brand leaders are Audio Processing and Monitoring, Graphics & Branding, Microphones, Signal Processing / Interfacing / Modular, Video Editing, and Video Transport.

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2012 BBS Brand Opinion Leaders League Table — Frequency of Product Categories:

 

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The chart above has a good mix of audio and video products, as well as a mix of hardware and software products.

It is also useful to look at the number of product categories provided by each vendor in the Global Brand Opinon Leader League Table.  After all, larger companies often make more products and are consequently used in more places than their smaller counterparts.

The table below shows the number of product categories that each brand in this ranking produces (as defined by the segmentation used in the 2012 BBS).

 

 

2012 BBS Brand Opinion Leaders League Table — Number of 2012 BBS Product Categories per Brand:

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While there are several brands on this list that appear in many product categories, the vast majority produce only one or two types of products.  Indeed out of the thirty brands in this table, about hale 2/3 appear only once (down from 2/3 in 2011).

Keep in mind that companies who produce only one type of product are not necessarily small.  There are some very large companies on the list above who appear in just one 201 BBS category.

It turns out that to fully understand what drives brand opinion and brand leadership, one needs to look at the factors that drive and influence these perceptions.  This includes the company’s reputation for things like innovation, reliability, quality, value and great customer service.

These metrics will be covered in future posts.

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Please keep the following in mind when reviewing this information: All data these charts are presented in alphabetical order, not in the order brands were ranked by respondents to the 2012 BBS. All data in this article measures the responses of all non-vendor participants in the 2012 BBS, regardless of organization type, organization size, job title, geographic location, or purchasing authority — responses based on individual organization types or geographic locations may be very different from the results shown in this article.  There is a minimum sample size requirement for any brand to be included in any cut of the data presented in this article. There were a total of 152 brands covered in the 2012 BBS, for a complete list please click here. Granular analysis of these results is available as part of various paid-for reports based on the 2012 BBS data set. For more information about this report, please contact Devoncroft Partners.

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Devoncroft Partners has published a variety of reports from 2012 BBS data.  For more information, please get in touch.

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Related Content:

The 2012 Big Broadcast Survey – Information and available reports

The 2012 BBS Broadcast Industry Global Trend Index

Tracking the Evolution of Broadcast Industry Trends 2009 – 2012

Analyzing Where is Money Being Spent in the Broadcast Industry – The 2012 BBS Broadcast Industry Global Project Index

Ranking Broadcast Technology Vendors Part 1 – The 2012 BBS Overall Brand Opinion League Table

Ranking Broadcast Technology Vendors Part 2 – The 2012 BBS Net Change of Overall Brand Opinion League Table

Last Year:  The 2011 BBS Global Brand Opinion Leaders League Table

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© Devoncroft Partners. All Rights Reserved.

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Ranking Broadcast Technology Vendors Part 2 – The 2012 BBS Net Change of Overall Brand Opinion League Table

broadcast industry technology trends, broadcast technology market research, Broadcast Vendor Brand Research, market research, Top Broadcast Vendor Brands | Posted by Joe Zaller
Aug 24 2012

This is the fifth in a series of articles about some of the findings from the 2012 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands. Nearly 10,000 broadcast professionals in 100+ countries took part in the 2012 BBS, making it the largest and most comprehensive market study ever conducted in the broadcast industry.

 

In previous posts, I have discussed the most important broadcast industry trends of 2012, where money is being spent in the broadcast industry in 2012, and the overall opinion rankings of broadcast technology vendors in 2012.

Each year, as part of the Big Broadcast Survey (BBS), we ask a global sample of broadcast professionals to rank a variety of technology vendor brands on a wide range of metrics. We use these responses to create a series of reports, which through benchmarking and industry “league tables,” provides a view as to how each vendor is positioned in the market relative to the industry as a whole, as well as against their direct competitors.

This is the second in a series of posts about how broadcast technology vendors were ranked and benchmarked on a variety of metrics by the respondents to the 2012 BBS.

The first post in this series described the 2012 BBS Overall Brand Opinion League Table, which shows how 2012 BBS respondents ranked broadcast vendor brands.

While it’s positive for any vendor to achieve a good “overall opinion” ranking, this metric is somewhat one-sided because it relies solely on the positive opinions of respondents. In order to get a better understanding of how broadcast technology vendor brands are perceived, it is necessary to look at both the positive and negative opinions of brands, and to take into account how these opinions have changed over time.

This post looks at how the global sample of broadcast professionals who participated in the 2012 BBS ranked their net change of overall opinion of the 152 broadcast technology vendors we covered in the study. You can find a chart with the complete list of vendor brands covered in the 2012 BBS here.

 

How These Results Were Calculated

We first asked 2012 BBS respondents to rank their overall opinion of relevant brands (see brand opinion rankings here) on a scale of 1 -10 with 10 being the best in the market and 1 being the worst in the market.  We then asked respondents whether their opinion of these brands has changed over the last few years – specifically whether they feel their opinion of each brand has “improved,” “declined” or “stayed the same.”

This “change of opinion data” provides a more comprehensive view of how each brand is perceived by the market because it takes into account positive and negative perceptions.

No company is perfect, and the brands we measured in the 2012 BBS are no different.  All brands in the 2012 BBS study had both positive (got better) and negative (got worse) connotations associated with it, and there were also are significant percentage of respondents who said their opinion of a brand had “stayed the same.”

In order to derive a more meaningful metric, we use the “change of opinion” data to calculate the  Net Change in Overall Opinion for each brand by subtracting the percentage of respondents who said a brand “got worse” from the percentage of respondents who said their opinion of a brand had “got better,” while ignoring the “stayed the same” responses.

This metric shows the brands that are perceived as getting better, and which are in decline, on an overall basis.

The Net Change in Overall Opinion presents a more balanced view each brand because it takes into account both the positive and negative perceptions of brands, along with how these opinions have changed over time.

 

The Net Change in Overall Opinion findings from the 2012 BBS are shown below in two ways:

  • An overall industry “league table” that shows the 30 highest ranked vendors for the metric “Net Change of Overall Opinion.”  The data in this chart is broken out globally and regionally.

 

  •  An analysis of the “frequency” of appearance of each vendor in the Net Change of Overall Opinion league table

 

The top 30 ranked brands for Net Change of 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 inclusion of any brand in any cut of the data shown the tables in this article is dependent on available sample size.  The minimum sample size for inclusion in these charts is 30 respondents per cut of the data. Therefore it is possible that a highly regarded brand was excluded from these findings based on sample size.

 

In all cases, these results are shown in alphabetical order, NOT in the order in which they were ranked by respondents to the study.


The 2012 BBS Net Change in Overall Opinion League Table:

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A total of 58 broadcast technology vendor brands are included in this table (up from 51 in 2011), illustrating the geographic variation of opinion. Analysis of these results shows that are some clear market leaders on a global basis, while others are strong on a regional basis.

It’s useful to understand how often each brand appears in the 2012 BBS Net Change in Overall Opinion League Table.

This is shown below, along with the equivalent data from the 2011 BBS for comparison.

 

Frequency of appearance of brands in the 2012 BBS Net Change in Overall Opinion League Table:

  • 9 brands appear four times (compared to 13 brands in 2011), meaning they were ranked in the top 30 globally and in each geographic region

 

  • 12 brands appear three times (compared to 10 brands in 2011)

 

  • 11 brands appear two times (compared to 9 brands in 2011)

 

  • 26 brands appeared one time (compared to 19 brands in 2011).  This illustrates a fragmentation of opinion  about many brands based on geography

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Brands appearing four times in the 2012 BBS Net Change of Overall Opinion League Table:

 

  • 2012 BBS: Adobe, Avid, Blackmagic Design, Canon, Harmonic, Panasonic, Riedel, Sennheiser, Sony

 

  • 2011 BBS: Adobe, Aja Video, Apple, Blackmagic Design, Canon, Cisco, Genelec, Omneon, Panasonic, Riedel, Sennheiser, Sony, Tektronix

 

 

Brands appearing three times in the 2012 BBS Net Change of Overall Opinion League Table:

  • 2012 BBS: Aja Video, Apple, Autodesk, Digital Rapids, EVS, Front Porch Digital, NewTek, Omneon, Phabrix, Rhozet, Ross Video, Vizrt

 

  • 2011 BBS: Ateme,  Evertz, EVS, Harmonic, Net Insight, Rhozet, Rohde & Schwarz, Ross Video, Shure, Vizrt

 

 

Brands appearing two times in the 2012 BBS Net Change of Overall Opinion League Table:

 

  • 2012 BBS: AmberFin, ateme, brightcove, Cisco, Gigawave, Net Insight, Rohde & Schwarz, Screen Service, Tektronix, Telecast, Wohler

 

  • 2011 BBS: AKG, Digital Rapids, Dolby, Ensemble,  Front Porch Digital, Lawo, Telestream, TVIPS, Wohler

 

 

Brands appearing once in the 2012 BBS Net Change of Overall Opinion League Table:

  • 2012 BBS: Aspera, Axon, Calrec, Clear-Com, Dolby, Elemental Technologies, Ensemble, Envivio, Evertz, Genelec, Harris, Isilon Systems / EMC, Kaltura, Kit Digital, Lawo, Neumann, PubliTronic / Grass Valley, RTW, Schoeps, Shure, Snell, Telestream, Wheatstone, Wide Orbit, Wowza, Yamaha

 

  • 2011 BBS: AmberFin, Audio-Technica, Avid, Fujinon, Grass Valley, Harris, Inlet Technologies, Linear, Linear Acoustic, Miranda, MSA Focus, Nevion, Playbox, PubliTronic, Schoeps, Screen Service, Solid State Logic, Telecast, Yamaha

 

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Frequency Analysis of the Brands in the in the 2012 BBS Net Change of Overall Opinion League Table:  

In order to provide a better understanding of which brands were most highly ranked in each geographic region, 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.

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Frequency Analysis of Brands in the 2012 BBS Net Change of Overall Opinion League Table: 

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This frequency analysis chart shows that there are some interesting geographic variations in the data. Here’s a closer look at how brands appeared by geography:

 

Appearing only in the global ranking of the 2012 BBS Net Change of Overall Opinion League Table

Seven brands achieved a top 30 ranking in the 2012 BBS Net Change of Overall Opinion league table, despite not being listed in the top 30 of any of the three geographic regions.  This may be a function of sample size.  As discussed above, there is a minimum sample size requirement for inclusion in each cut of the data presented in these chart, and the global ranking, by definition, has the largest overall sample.

  • brightcove, Elemental Technologies, Kaltura, KIT Digital, Lawo, Wide Orbit, Wowza

 

Appearing only in one region of the 2012 BBS Net Change of Overall Opinion League Table

The following 21 brands appear in one regional category of the 2012 BBS Net Change of Overall Opinion League Table, but do not appear in the global ranking:

  • Aspera, Axon, Calrec, Clear-Com, Dolby, Ensemble, Envivio, Evertz, Genelec, Harris, Isilon Systems / EMC, Neumann, PubliTronic / Grass Valley, RTW, Schoeps, Shure, Snell, Telestream, Wheatstone, Yamaha

 

Appearing only in the EMEA region in the 2012 BBS Net Change of Overall Opinion League Table

  • Calrec, Isilon Systems / EMC, Neumann, PubliTronic / Grass Valley, RTW, Schoeps, Snell,

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Appearing only in the Asia-Pacific region in the 2012 BBS Net Change of Overall Opinion League Table

  • Axon, Clear-Com, Dolby, Envivio, Evertz, Genelec, Harris, Shure, Yamaha

 

Appearing only in the Americas region in the 2012 BBS Net Change of Overall Opinion League Table

  • Aspera, Ensemble, Evertz, Telestream, Wheatstone,

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Please keep the following in mind when reviewing this information: All data these charts are presented in alphabetical order, not in the order brands were ranked by respondents to the 2012 BBS. All data in this article measures the responses of all non-vendor participants in the 2012 BBS, regardless of organization type, organization size, job title, geographic location, or purchasing authority — responses based on individual organization types or geographic locations may be very different from the results shown in this article.  There is a minimum sample size requirement for any brand to be included in any cut of the data presented in this article. There were a total of 152 brands covered in the 2012 BBS, for a complete list please click here. Granular analysis of these results is available as part of various paid-for reports based on the 2012 BBS data set. For more information about this report, please contact Devoncroft Partners.

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Devoncroft Partners has published a variety of reports from 2012 BBS data.  For more information, please get in touch.

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Related Content:

The 2012 Big Broadcast Survey – Information and available reports

The 2012 BBS Broadcast Industry Global Trend Index

Tracking the Evolution of Broadcast Industry Trends 2009 – 2012

Analyzing Where is Money Being Spent in the Broadcast Industry – The 2012 BBS Broadcast Industry Global Project Index

Ranking Broadcast Technology Vendors Part 1 – The 2012 BBS Overall Brand Opinion League Table

Last Year’s Net Change of Overall Opinion Rankings: Ranking Broadcast Technology Vendors Part 2 – the 2011 BBS Net Change in Overall Brand Opinion League Table

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© Devoncroft Partners. All Rights Reserved.

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2012 BROADCAST INDUSTRY & DIGITAL MEDIA MARKET RESEARCH FINDINGS

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast Vendor Brand Research, market research, Top Broadcast Vendor Brands | Posted by Joe Zaller
Aug 21 2012

Since we are often asked for broadcast industry market research information, we have compiled a list of the articles that have been published based on the 2012 Big Broadcast Survey (BBS).  This list will be updated when new articles are published, so please check back regularly.

If you are not familiar with the BBS, it is an annual global of the broadcast technology and digital media market.  Nearly 10,000 broadcast professionals in 100+ countries participated in the 2012 BBS, making it BBS the largest and most comprehensive study ever done in the broadcast industry.

The BBS is the definitive demand-side study of the broadcast industry and is used by a wide variety of vendors, investment banks, broadcasters, and strategy consultants.

BBS Reports deliver insight into the opinions and attitudes of key technology buyers including broadcasters, playout centers, cable/satellite/IPTV operators, radio stations, recording studios and more. This includes industry trends; purchase intent and buying behavior; major project plans; products being evaluated for purchase; and detailed opinions of vendor brands.

To find out more about the 2012 BBS, please contact Devoncroft Partners.

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Selected Market Research Findings from the 2012 Big Broadcast Survey

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The 2012 Big Broadcast Survey (BBS) – Information and available reports

 

Commercial Drivers and Obstacles for the Deployment of Cloud-Based Technology in the Broadcast Industry

 

Ranking Broadcast Technology Vendors Part 4 — the 2012 BBS Broadcast Technology Vendor Innovation League Table

 

Ranking Broadcast Technology Vendors Part 3 – the 2012 BBS Global Brand Opinion Leaders League Table

 

Ranking Broadcast Technology Vendors Part 2 – the 2012 BBS Net Change in Overall Brand Opinion League Table

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Ranking Broadcast Technology Vendors Part 1 – The 2012 BBS Overall Brand Opinion League Table

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Analyzing Where is Money Being Spent in the Broadcast Industry – The 2012 BBS Broadcast Industry Global Project Index

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Tracking the Evolution of Broadcast Industry Trends 2009 – 2012

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Largest-Ever Study of Broadcast Market Reveals Top Industry Trends of 2012

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© Devoncroft Partners. All Rights Reserved.

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Ranking Broadcast Technology Vendors Part 1 – The 2012 BBS Overall Brand Opinion League Table

broadcast technology market research | Posted by Joe Zaller
Aug 14 2012

This is the fourth in a series of articles about some of the findings from the 2012 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands. Nearly 10,000 broadcast professionals in 100+ countries took part in the 2012 BBS, making it the largest and most comprehensive market study ever conducted in the broadcast industry.

 

In previous posts, I have discussed the most important broadcast industry trends of 2012 and where money is being spent in the broadcast industry in 2012.

This is the first in a series of posts about how broadcast technology vendors were ranked and benchmarked on a variety of metrics by the respondents to the 2012 BBS.

Each year, as part of the Big Broadcast Survey (BBS), we ask a global sample of broadcast professionals to rank a variety of technology vendor brands on a wide range of metrics including “overall opinion,” “change of opinion,” and brand drivers including “innovation,” “quality,” “reliability,” “value for money,” and “great customer service.”

We use this information to create a series of reports, which through benchmarking and industry “league tables” provides a view as to how each vendor is positioned in the market relative to the industry as a whole, as well as against their direct competitors.

This post looks at how the global sample of broadcast professionals who participated in the 2012 BBS ranked their overall opinion of the 152 broadcast technology vendors we covered in the study. You can find a chart with the complete list of vendor brands covered in the 2012 BBS here

Please note that inclusion of any brand in the tables in this article is dependent on available sample size.  The minimum sample size for inclusion in these charts is 30 respondents per cut of the data. Therefore it is possible that a highly regarded brand was excluded from these findings based on sample size.

 

How These Results Were Calculated

Respondents were asked to rank their 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.

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.

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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.

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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.      

 

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2012 BBS Overall Brand Opinion League Table

 

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A total of 48 broadcast technology vendor brands are included in this table, (up from 43 last year), illustrating the geographic variation of opinion, which will be discussed later.

In terms of frequency of appearance in this table:

 

  • 15 brands appear four times, meaning they were ranked in the top 30 globally and in each of the three geographic regions.  For comparison, in the 2011 BBS (when we covered 118 brands) there were 19 brands that appeared in the top 30 globally and in each of the 3 regions.

 

  • 10 brands appear three times. For comparison, in the 2011 BBS (when we covered 118 brands) there were 9 brands that appeared three times.

 

  • 7 brands appear two times. For comparison, in the 2011 BBS (when we covered 118 brands) there were 2 brands that appeared twice.

 

  • 16 brands appear one time, which demonstrates that some brands are strongest in one geographic area. For comparison, in the 2011 BBS (when we covered 118 brands) there were 13 brands that appeared one time.

 

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.

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Brands appearing four times in the 2012 BBS Overall Brand Opinion League Table: 

  • Adobe, AKG, Apple, Avid, Canon, Cisco, Dolby, Genelec, Neumann, Panasonic, Schoeps, Sennheiser, Shure, Sony, Tektronix 

 

Brands appearing three times in the 2012 BBS Overall Brand Opinion League Table: 

  • Angenieux, Autodesk, beyerdynamic, Clear-Com, Fujinon, Ikegami, JBL, Rohde & Schwarz, Wohler, Yamaha 

 

Brands appearing two times in the 2012 BBS Overall Brand Opinion League Table:

  • Aja Video, Electro Voice, Grass Valley, RTW, Snell, Solid State Logic, Studer 

 

Brands appearing once in the 2012 BBS Overall Brand Opinion League Table:

  • Adam, Blackmagic Design, DK Technologies, Evertz, EVS, Harmonic, Harris, HP, Lawo, NEC, Omneon, Riedel, RTS Intercom Systems, Salzbrenner Stagetec, Telex, Thomson 

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Frequency Analysis of the Brands in the in the 2012 BBS Overall Brand Opinion League Table:  

The table below, which shows the global and regional performance for each brand in the top 30 ranking of overall opinion, provides a better understanding of where each brand was highly ranked for overall opinion.

 

Frequency Analysis of Brands in the 2012 BBS Overall Brand Opinion League Table

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

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

Two brands managed to achieve a top 30 ranking globally, despite being in the top 30 of only one of the three geographic regions.

  • Aja Video, Grass Valley, Solid State Logic, RTW, Studer

  

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

The following 13 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

  • Adam, DK Technologies, EVS, Harmonic, Lawo, Riedel, Salzbrenner Stagetec

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

  • Electro-Voice, Harris, HP, NEC, Omneon, Thomson

 

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

  • Blackmagic Design, Evertz, RTS Intercom Systems, Telex 

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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 2012 BBS.  Also, the charts in this posting measure the responses of all non-vendor participants in the 2012 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.

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All data in this article measures the responses of all non-vendor participants in the 2012 BBS, regardless of organization type, organization size, job title or geographic location. Responses of individual organization types or geographic locations may be very different. Granular analysis of these results is available as part of the full 2012 BBS Global Market Report. For more information about this report, please contact Devoncroft Partners.

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Devoncroft Partners has published a variety of reports from 2012 BBS data.  For more information, please get in touch.

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Related Content:

The 2012 Big Broadcast Survey – Information and available reports

The 2012 BBS Broadcast Industry Global Trend Index

Tracking the Evolution of Broadcast Industry Trends 2009 – 2012

Analyzing Where is Money Being Spent in the Broadcast Industry – The 2012 BBS Broadcast Industry Global Project Index

Last Year’s Overall Opinion Rankings: Ranking Broadcast Technology Vendors Part 1 – the 2011 BBS Overall Brand Opinion League Table

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© Devoncroft Partners. All Rights Reserved.

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Analyzing Where is Money Being Spent in the Broadcast Industry – The 2012 BBS Broadcast Industry Global Project Index

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, technology trends | Posted by Joe Zaller
Aug 08 2012

This is the third in a series of articles about some of the findings from the 2012 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands. Nearly 10,000 broadcast professionals in 100+ countries took part in the 2012 BBS, making it the largest and most comprehensive market study ever conducted in the broadcast industry.

 

In a previous post, I discussed The 2012 BBS Broadcast Industry Global Trend Index, which shows which industry trends are most commercially important to the global sample of 2012 BBS respondents. 

Like any list of trends, this list includes a mix of current and future commercial priorities, some of which are being done today on a wide scale, some of which are in a trial phase, and others which have not yet been widely implemented.

By a wide margin, the top trend in the 2012 Trend Index is “multi-platform content delivery.”  Other important trends include the transition to file-based workflows, the transition to HDTV operations, and IP networking and content delivery.

Tracking broadcast industry trends and their evolution is useful because this shows what customers are discussing and thinking about implementing in the future.  However, a high ranking in an industry trend Index does not necessarily mean that this is where customers are spending their technology budgets in 2012 and 2013. 

Thus, it’s important to make a clear distinction between what broadcast customers are thinking and talking about in the future (industry trends), and where they are spending their technology budgets today.

Technology spending in the broadcast industry tends to be project-based. Projects might include international elections and sporting championships, to the long-term, planned capital upgrades of broadcast infrastructure and facilities.  Thus, an understanding of the major projects being implemented by broadcaster professionals around the world provides useful insight into the capital expenditure plans of the industry.

Projects represent where broadcast technology budgets are being spent today, not just what people are talking about doing in the future. 

In order to better understand this dynamic, were presented broadcast professionals with a list of major projects and asked them to indicate which ones they are currently implementing or are planning / budgeting to implement within the next year.  Their responses were then used to create the 2012 BBS Broadcast Industry Global Project Index, which is shown below. 

 

 

When compared to The 2012 BBS Broadcast Industry Global Trend Index, which can be found here, The 2012 BBS Broadcast Industry Global Project Index illustrates where broadcast technology budgets are being spent today.

Our research shows that the difference between what people are thinking and talking about (trends), and where they are planning to spend their budgets (projects) can be quite dramatic.

For example although “multi-platform content delivery” dominated the 2012 BBS Broadcast Industry Global Trend Index, the corresponding project “distribute and monetize content on multiple distribution platforms,” ranked #9 out of 17 in the 2012 BBS Broadcast Industry Global Project Index.

In terms of where money is being spent in the broadcast industry today, more broadcast technology buyers cited “upgrading infrastructure for HD/ 3Gbps operations” than any other project.  This project correlates directly with “transition to HDTV operations,” which was ranked #3 in the 2012 BBS Broadcast Industry Global Trend Index.

Although the transition to HDTV operations is certainly not new, it remains one of the key drivers of broadcast technology spending in 2012 and 2013.  Even as a small number of broadcasters announce that they are close to completing their decade-long transition to HDTV, many broadcasters are still in the early stages of the move to HD.  This is especially true in emerging economies where there is still a great deal of both standard definition and analog infrastructure. 

On a global basis, the transition to HDTV has consistently been the top driver of broadcast technology spending for the past several years — it was also the top project last year in the 2011 BBS Broadcast Industry Global Project Index – and it appears that this will be the case for the foreseeable future.

Significantly, the move to HDTV is represented in multiple places in the Project Index.  The projects ranked #3, #5, #7, and #10 – upgrading transmission & distribution capabilities; building new studios / OB vans; launching new channels; and upgrading newsroom operations – are also related to the transition to HDTV operations, as these transmission upgrades, new studios, new channels, and upgraded news environments will almost certainly be at least HD capable, if not fully HD.

Coming in as the #2 ranked project on this Index is “Install or enhance workflow / asset management system.”  It also achieved the #2 rank in 2011, but was much further behind the transition to HDTV in terms of overall importance to broadcast customers.

Although asset management is a relatively small and specialized market, it has become increasingly important over the past several years as broadcast customers move to file-based workflows and plan for multi-platform content delivery.  The take-away here appears to be that once a broadcaster has made the transition to file-based workflows, the strategic emphasis shifts to finding, deploying, and monetizing content in the most efficient way possible.  Thus asset and workflow management are likely to become increasingly important as customers move to business models focused on multi-platform content delivery, and driven by sophisticated IT-based systems.

The rest of the list offers a mixed picture of project activity across the world, and includes everything from upgrading audio and newsrooms to multi-platform distribution being chosen in large numbers. 

As mentioned earlier, multi-platform content delivery ranked #9 in the 2012 BBS Broadcast Industry Global Project Index.  It also was ranked #9 in 2011. Despite the importance to organizations of monetizing content on multiple distribution platforms, it appears many broadcast professionals have not solidified their business plans in this area.  This likely means that there will be significant opportunities in the future for broadcast technology vendors who offer a suite of products for multi-platform content delivery.  The current excitement surrounding OTT video and connected TV is evidence of this, but this is still a small proportion of the money being spent on broadcasting technology in 2012.

Interestingly, despite the fact that they may have the potential to deliver increased efficiencies and new revenue streams, there are several major projects that appear towards the bottom of this list. The two most obvious instances are the low ranking of “consolidate operations in regional hubs (centralcasting), and “outsourced operations (playout),” which are the bottom two projects on this list. This is because although these are high value projects, they will be undertaken by a relatively small number of organizations — i.e. large broadcasters.  This highlights that the 2012 BBS Broadcast Industry Global Project Index is a graphic representation of the number of all planned projects across all respondents, regardless of organization type, size, or location.  It does not measure size, value, or relative commercial importance of planned projects.  Please keep this in mind when reading this information and interpreting these findings.

 

All data in this article measures the responses of all non-vendor participants in the 2012 BBS, regardless of organization type, organization size, job title or geographic location. Responses of individual organization types or geographic locations may be very different. Granular analysis of these results is available as part of the full 2012 BBS Global Market Report. For more information about this report, please contact Devoncroft Partners.

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Related Content:

The 2012 Big Broadcast Survey – Information and available reports

The 2011 BBS Broadcast Industry Global Trend Index

Tracking the Evolution of Broadcast Industry Trends 2009 – 2012

Where is Money Being Spent in the Broadcast Industry in 2011?  The 2011 BBS Broadcast Industry Global Project Index.   

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 © Devoncroft Partners. All Rights Reserved.

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Guest Post: Investment Banker Perspective on Sale of Harris Broadcast

broadcast technology market research | Posted by Joe Zaller
May 08 2012

In a recent post called Analyzing the Sale of the Harris Broadcast Division I said I would defer to others on the valuation of and the structure of a transaction for Harris Broadcast. 

In response to this, Josh Stinehour from boutique investment bank Silverwood Partners contacted me and said he has an opinion to offer on the subject. 

So in the first-ever guest post on this site, Stinehour weighs in with his thoughts on the Harris Broadcast deal, including valuation, transaction type, and potential buyers.

Like many observers of the broadcast technology sector, and loyal readers of the Devoncroft blog, I have followed the recent announcements at Harris Corporation with great interest.  The merits of Harris Corporation’s decision to divest its Broadcast Division are well established.  This post is a perspective on the anticipated transaction – timing, type, and price.

Harris in its public messaging has established a few key data points:

  • There is no interest in pursuing a sale of the individual product lines or pieces of the Broadcast Division (Harris Morris’s interview with TVNewsCheck). It is difficult to understate how many vendors were disappointed with this announcement.
  • The expectations is for a price “substantially higher” than $200 million and Harris expects to “divest the business in a sale with cash returning to the company” (Q3 Earnings Conference Call).
  • There has been consistent inbound interest in the division (Harris Morris’s interview with TVNewsCheck, Chris Parson’s interview with Quincy Herald-Whig) – no surprise here.
  • The Company is assuming the transaction closes at the end of 2012 (Q3 Earnings Conference Call).
  • Based on historical SEC filings, the recently provided pro forma analysis (Harris Corp 8K filing), and selected assumptions, the income statement has a revenue and operating income (before corporation overhead) profile approximately as follows:

 

 

 

As the chart above suggests, the sale process will not have the benefit of meaningful revenue growth or a meaningful level of profitability in the Broadcast Division.  That is not to suggest the Broadcast Division is not a valuable asset.  The sale process will have the benefit of an end-to-end suite of products (several are category-leading), a great brand (as confirmed by Devoncroft’s Big Broadcast Survey), a well-regarded management team, and substantial size, presence, and revenue level in the media technology industry.  The caveat to those qualitative points is a portfolio that is much more hardware than software, and Harris Corporation’s self-admission that there is still operational work to do in streamlining the division’s operations (Q2 Earnings Call).

 

 

 

Harris will also have the benefit of a highly accommodating M&A environment, as illustrated in the below slide from our 2012 NAB Industry Analysis.

 

 

Possible Transaction Types:

 

Public Spinout to Harris Shareholders

One possible alternative for Harris is to spin out the Broadcast Division to its shareholders in the form of a stock dividend.  There is precedent for Harris taking this action with a subsidiary.  In January 2007, Harris Microwave Communications Division and Stratex Networks Inc. combined to create a new company having annual revenues of approximately $650 million.  On December 8, 2008 Harris announced it was evaluating strategic alternatives related to this majority-owned subsidiary, Harris Stratex Networks (now Aviat Networks). On March 31, 2009, the Board of Directors of Harris Corporation approved the spin-off to its shareholders of all the shares of Harris Stratex Networks owned by Harris Corporation.   Harris Corporation shareholders received approximately .24 of a share of Harris Stratex Networks for every share of Harris Corporation common stock owned.

This approach allowed the Harris Microwave Communication Division to gain scale, and find a public market with shareholders that were focused on small cap commercial communications growth investments rather than large cap, military communications investments.  A similar logical underpinning would apply in the case of the Broadcast Division. However, the business would need more scale and much more growth for such a strategy to be successful and attract public investors.  This approach would also be time consuming and there may be substantial uncertainty over the upside potential if the business continues to post modest or negative levels of growth and effectively break-even operating results. In sharp contrast, a straightforward sale of the Broadcast Division business for cash allows Harris Corporation to eliminate the distraction and redeploy capital into its core business.

 

Trade Sale to an Industry Participant

You can count on a single hand the number of industry participants capable of financing a greater than $200M cash purchase price.  In each case, it would represent a transformative deal and would require immediate rationalization of the combined organization and cost structure – product overlap would be almost unavoidable.  If such a transaction were successfully executed, the resulting business would have a dominant market position.

 

Trade Sale to a Broader Technology Vendor

Harris is certainly large enough to attract the attention of the comparably much larger IT vendors adjacent to the media technology sector.  For some time, IT vendors have lauded the growth opportunities in video as talking points to Wall Street, and in many instances these same vendors have occupied large booths at NAB and IBC.  However, head of digital media at these vendors is a difficult job to hold through an entire business cycle. 

In this circumstance, the biggest question is whether a broader technology vendor views the Broadcast Division’s portfolio as too hardware-centric and too specialized to the broadcast industry. Conceivably any IT vendor interested in moving into the broadcast sector had the opportunity to make such a decision in connection with the sale process at Grass Valley in 2010, the ongoing sale process at Miranda, or in connection with the evolving situation at other large vendors in the sector.

 

Purchase by a Private Equity Firm

A CapitalIQ screen of private equity firms with a focus in North America, technology, corporate divestitures, and investment criteria in the suggested range yields approximately 2,000 firms – that is not a typo.

There is a tremendous amount of private equity interest in the media technology sector.  The single biggest obstacle these firms have in finding investment opportunities in the sector is a dearth of businesses large enough to support the amount of money these groups are looking to invest. 

Unambiguously there is a private equity buyer for the Broadcast Division.  The challenge is price.  Without the benefit of existing, meaningful historical cash flow or near-term expected cash flows, there is little ability to borrow money to support the purchase price.  Therefore, private equity firms will value the division based on the expectation of near-term efficiencies that can be brought and the expected value of the ultimate exit (generally in a 3-5 year time horizon).  Recall that on a net cash basis, Technicolor provided cash to Francisco Partners at closing in connection with the purchase of Grass Valley. 

 

 

Price

Since 2004, Harris has spent just under $1 billion dollars on acquisitions for the Broadcast Division.  But the market has no memory.

Triangulating between the recent write-downs and the last publicly available balance sheet for the division, it is estimated there is approximately $600 million of assets associated with the division, and more important, the annual revenue is estimated at approximately $530 million.  In the context of those numbers, the level of profitability is insignificant, but critically it is not negative. 

The public comparable companies suggest a revenue multiple of 0.5x to 1.0x.  Recent M&A transactions might suggest a revenue multiple of 1.0 to 1.5.  In the case of the Broadcast Division, the multiples ignore the specifics of the situation; all but a select few industry participants can finance a transaction of the size expected. Private equity firms may have an interest, but they are inescapably bound to pay a price supported by the immediate prospects of cash flow, which price would imply the low end of the suggested multiples. 

In the context of an IT vendor’s balance sheet, a valuation “substantially higher” than $200 million is not a significant amount of money. For that group of buyers, it is a binary question of interest, more than of price. In the past 16 months, by my count, vendors accounting for almost one third of the industry’s revenue have been sold or have actively sought a sale.  With only a few exceptions, the broader technology vendor universe has not participated in those transactions.  The Harris Broadcast Division will make for a great litmus test of the interest in the broadcast technology sector by broader technology vendors: it is big enough to matter to them, spans just about the entire workflow, and comes with a quality and level of video expertise in both the management and engineering ranks that broader IT vendors can not replicate internally.

It will take several months to work through the sale process.  The end result will be a signature event in the industry and will reframe exit expectations for vendors in the sector.

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Related Content:

Analyzing the Sale of the Harris Broadcast Division

Harris Corporation To Divest Broadcast Business

Press Release: Harris Corporation Reports Fiscal 2012 Third Quarter Results

Harris Q3 FY 2012 10-Q Filing

Harris 8-K Filing – Restates Fiscal 2011-12 Revenue on Pro Forma Basis (Without Broadcast and Cyber Integrated Solutions)

Press Release: Harris Corporation Reports Fiscal 2012 Third Quarter Results

Harris Fiscal Q3 2012 Analyst Presentation

Harris Fiscal Q3 2012 Conference Call Transcript

TVNewsCheck Article: Tech’s Big Question: What’s Next For Harris?

Quincy Herald-Whig ArticleProspective buyers seek information on Harris broadcast; business as usual in Quincy

Harris Broadcast Revenue and Income Rise in Q2 2012, Says It’s Laser Focused on Maximizing Shareholder Value.

 

© Devoncroft Partners. All Rights Reserved.

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Analyzing the Sale of the Harris Broadcast Division

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
May 07 2012

After last week’s announcement that Harris Corporation plans to sell its broadcast business, I was contacted by a number of people who wanted more information about Harris Broadcast and the transaction.  Here’s a list of the top questions, along with some thoughts on each one

 

How Big is Harris Broadcast in Terms of Employees and Revenue?

Employees: According to this article in the Quincy Herald-Whig, the Harris Broadcast Communications Division (BCD), has 1,700 employees, including 348 employees at its Quincy Illinois facility.

Revenue: The revenue of Harris Broadcast is somewhat difficult to calculate because Harris BCD is part of Harris Corporation’s Integrated Network Solutions (INS) business unit, which was created last year when Harris Corporation strategically realigned its business segments

Until last week, the last time Harris published data about the broadcast business was more than a year ago (Q2 Fiscal 2011).  However, on the company’s recent Q3 2012 analyst conference call, Harris CFO Gary McArthur disclosed that Harris Broadcast had revenue for the third quarter of fiscal 2012 was $111m, a decline of 14% versus the same period a year ago – thereby also implying that revenue in Fiscal Q3 2011 was $126.5m (interestingly this is a different number than Harris provided last year when it said that Broadcast revenue in Q3 2011 had increased 9% versus Q3 2010, implying Q3 Fiscal 2011 revenue of $134m, but for the purposes of this article, I will stick with the implied $126.5m revenue figure for Q3 2011). Fiscal 2011 Q4 can be calculated from previous earnings announcements.

Also on the Q3 FY 2012 earnings call, Harris revised its guidance for FY 2012.  The company had previously said its revenue for Fiscal 2012 would be approximately $6 Billion. In its Q3 2012 analyst presentation (last page), Harris now says that its FY 2012 revenue excluding Broadcast and Cyber Integrated Solutions (Cyber) operations, (which was also part of the INS Division and was shut down in February 2012) will be $5.45 Billion.  This implies that the company was projecting approximately $555m in revenue from the combination of its broadcast and cyber businesses in 2012.

Harris also recently filed an 8-K with the SEC that enables one to derive more information about the broadcast business.  The 8-K filing restated the performance of Harris’s INS division on a pro-forma basis (excluding Broadcast and Cyber).  By subtracting the pro-forma numbers from previously issued results, it’s possible to approximate the revenue of Harris Broadcast in both 2011 and 2012.

Other regulatory filings show that the revenue from the Harris Cyber business was $11.7m for the first nine months of the current fiscal year.   Thus the revenue of the broadcast business can be calculated as shown below. 

 

 

 

The table above shows that in Fiscal 2011 the Harris broadcast business generated approximately $545m in revenue.  What’s interesting is the company’s huge Q4 2011 performance, which was up 31% over the same period in 2010.

It appears that for the first three quarter of the company’s fiscal 2012, Harris Broadcast revenue is approximately $375m, roughly flat with the first nine months of fiscal 2011.  This begs the question as to whether Harris Broadcast will be able to achieve Q4 FY 2012 results that are strong as their performance a year ago.

According to the article reference earlier, a Harris Broadcast spokesperson said that 56% of the division’s revenue comes from North America.

 

 

What is Harris Broadcast’s Profitability and what is the Impact of Corporate Overhead on Profit?

Given the opaque nature of the broadcast division’s financials, it’s difficult to know its profit levels. The company said that broadcast made a profit in fiscal 2011, but did not offer details.

However, it’s important to keep in mind that Harris Broadcast is part of a $6 Billion defense contractor. As such it undoubtedly has significant corporate overheads allocated to it by the parent company.  While this number is unknown, it likely runs into the millions of dollars.  If these costs are substantial, then they could impact the profitability of the division.  Under a new owner, it’s possible that Harris Broadcast will not be charged these overheads, thereby substantially increasing its underlying profitability. 

 

 

How Much Did Harris Spend The Broadcast Business Together?

For many years, Harris has been a leading provider of radio and television transmitters.  However in 2000 the company went on a buying spree that the company began to transform itself into a multi-product industry giant starting in 2000 with the acquisition of Lout Automation. According to an article in TVNewsCheck, Harris spent $942m on M&A since 2000:

  • Louth Automation in 2000, $85m
  • Encoda Systems in 2004 for $340m
  • Leitch Technologies in 2005 for $450m
  • Aastra Digital Video in 2006 for $35m
  • OSI in 2006 for $32m

 

 

Who Will Buy Harris Broadcast?

This is the number one question people are asking, and I don’t have a clue what the answer will be. 

Harris Broadcast is of a size (see above) that makes it one of the largest pure play broadcast technology vendors.  As such there are not many industry vendors large enough to be able to afford the Harris Broadcast business.  This leave several options including a “strategic” sale to a large IT or media vendor, a private equity deal which leaves the current management in place, or the spinning off of the broadcast business as a separate public company. 

If I had to bet, I would say that the PE option is the most likely, particularly if it is a cash deal.  Harris CEO William Brown implied his preference for a cash deal when he said that Harris will use the first $200m of the proceeds from the sale of the broadcast business to buy back stock, and use the residual balance to fund core activities.

Incidentally, Harris Corporation bought back approximately $800m in stock last year.

 

 

Will Harris Broadcast Be Sold as a Unit or Piecemeal?

It would be pure speculation on my part to hazard a guess at this one, but I’d be remiss if this question was not included on this list.  I am sure Harris is evaluating all the options.

 

 

How Much Will Harris Broadcast Sell For?

This depends on a huge number of factors, and I will defer to others to answer this one.

On the one hand it’s possible that Harris Broadcast sells for a healthy multiple as per the Cisco/NDS and Harmonic/Omneon deals.  On the other hand the valuation may be much lower as per the Francisco Partners / Grass Valley deal. 

One key factor is the expectation of valuation that Harris Corporation has for the broadcast business and how quickly it wants to do a deal.  Although this is not known, the company has provided a few clues in both its statements to analysts, and its regulatory filings.

As stated above on the company’s recent earnings call, Brown said he expects a transaction to occur by the end of calendar 2012.  He went on to say that the first $200m from the sale of the broadcast business would be used to buy back Harris stock.  However, he went on to say that he “fully expects that the proceeds [from the sale of the broadcast business] will be substantially higher than $200m”, although he declined to speculate on a valuation or even a value range.

The company also said it “recorded in the third quarter a non-cash charge of $407m after-tax, or $3.62 per diluted share, to write down a significant portion of the goodwill and other long-lived assets in Broadcast Communications, resulting in the GAAP loss from continuing operations.

In its Q3 FY 2012 10-Q filing with the SEC, Harris Corporation provided useful information about how it calculated the $407m charge, and how it is internally valuing the broadcast business.

The following information is excerpted from the 10-Q:

“Goodwill and other long-lived assets held and used related to Broadcast Communications with a carrying amount of $800.0 million were written down to their preliminary estimate of fair value of $376.0 million, resulting in a preliminary estimate of $424.0 million for a non-cash impairment charge, which was included in income (loss) from continuing operations for the quarter and three quarters ended March 30, 2012. See Note N — Impairment of Goodwill and Other Long-Lived Assets in these Notes for additional information.

 

“Note N — Impairment of Goodwill and Other Long-Lived Assets

“We test our goodwill and other indefinite-lived intangible assets for impairment annually, or under certain circumstances, more frequently, such as when events or circumstances indicate there may be impairment. Indications of potential impairment of goodwill related to Broadcast Communications (which is part of our Integrated Network Solutions segment) were present at the end of the third quarter of fiscal 2012 resulting from the following circumstances and other factors: (i) an unanticipated revenue decline and operating loss for Broadcast Communications for the third quarter of fiscal 2012 (as a result of weaker demand in North America and longer international sales lead times), which also resulted in a decrease in the fiscal 2012 outlook for Broadcast Communications and (ii) depressed indicators of value resulting from analyses undertaken in the third quarter of fiscal 2012 in connection with the review of our business portfolio, including the evaluation of strategic alternatives for Broadcast Communications that included a potential divestiture of Broadcast Communications and the principal markets currently available. Consequently, in connection with the preparation and review of our financial statements for the third quarter of fiscal 2012, we performed an interim review of Broadcast Communications’ goodwill for impairment as of the end of the third quarter of fiscal 2012. See Note R — Subsequent Event in these Notes for details regarding the approval by our Board of Directors on April 27, 2012 of a plan to divest Broadcast Communications.

“To test for potential impairment of goodwill related to Broadcast Communications, we prepared a preliminary estimate of the fair value of the reporting unit based on a combination of projected discounted cash flows and principal market-based multiples applied to sales and earnings. The current carrying value of the Broadcast Communications reporting unit exceeded its estimated fair value, and accordingly, we preliminarily allocated the estimated fair value to the assets and liabilities of the Broadcast Communications reporting unit to estimate the implied fair value of goodwill.

“In conjunction with the above-described impairment review, we also conducted a review for impairment of other long-lived assets related to Broadcast Communications, including amortizable intangible assets, fixed assets and capitalized software, and impairment of these assets was considered prior to the conclusion of the goodwill impairment review. The estimated fair value of other long-lived assets related to Broadcast Communications was determined based, in part, on an analysis of projected cash flows.

“As a result of these impairment reviews, we concluded that goodwill and other long-lived assets related to Broadcast Communications were impaired as of the end of the third quarter of fiscal 2012 and we recorded an estimated non-cash impairment charge of $424.0 million ($406.5 million after-tax). Due to the length of time necessary to measure the impairment of goodwill and other long-lived assets, our impairment analysis is not complete and is subject to change. We expect to complete our analysis prior to reporting our financial results for the fourth quarter of fiscal 2012 and will record any adjustments to our preliminary estimate at that time. The portion of the estimated impairment charge related to goodwill was $379.0 million and is not deductible for tax purposes. The tax effect of that non-deductibility was treated as a discrete item in the third quarter of fiscal 2012 for purposes of calculating our effective tax rate. We do not expect to make any current or future cash expenditures as a result of the impairment. The estimated impairment does not impact covenant compliance under our credit arrangements, and we do not expect the impairment to impact our ongoing financial performance, although no assurance can be given.”

 

 

Timing – Why Now?

On the company’s conference call with equity analysts, Brown was asked why the broadcast business is being sold now.  Brown said that the divestment of the broadcast business was “Not a new topic with our board, it has been discussed quite frequently over the last several years given where broadcast happens to be… it’s been an active discussion with our board on is it a fit, how do we make it better, what is the timing if we decide to exit… we had a long conversation about it… in our view, given the tough environment that we are facing it’s important for us to focus our resources including our management time and attention on the businesses that we know to be core to our company so we can be successful into FY 2013 and beyond.”

One reason could be Brown himself, who became president & CEO of Harris Corporation in late 2011.   

The current broadcast business was put together under the watch of former CEO Howard Lance who retired last year.  Lance was supportive of the broadcast business so while he was at the helm of Harris Corporation, the structure was unlikely to change.

Brown joined Harris from United Technologies where he was responsible for the company’s global strategic planning and M&A activity.  He’s a deal-maker who has not wasted any time divesting of “non-core” assets, starting with the Cyber Integrated Solutions business, and now broadcast. 

Now that Brown has set up Harris to be more focused on its core defense business, one has to wonder whether he will continue to run the Harris as a defense company, or try to engineer a larger deal that would see Harris Corporation itself sold to a larger defense contractor.

 

 

What Happens to FAME and DooH Initiatives?

Harris Broadcast has for many years sought to leverage its expertise video processing, management, manipulation and storage into market verticals outside of broadcast.  The two most prominent examples of this are the work it does with the military, and its efforts in Digital Signage or “Digital out of Home” (DooH).

For military markets, Harris has long touted its FAME (Full-Motion Video Asset Management Engine) initiative, which seeks to use broadcast technology to capture, manage, analyze and store the vast amounts of video-based content that are now being created in military operations.  Harris has never revealed the extent to which this initiative has gained traction with customers.  However it seems logical that if Harris Broadcast is spun off, the contacts (and contracts) that Harris Corporation have with government customers will live on.  On the other hand it’s also possible that a more focused owner may devote fewer resources to this area in favor of initiatives that are more core to the broadcast industry.

Harris has also very active in the digital signage business, and has had good success with clients including 7-Eleven, Harrods, McDonalds, the Orlando Magic, and Madison Square Garden. Some of these  contracts (especially in the sports market) have undoubtedly resulted in the sale of a lot of Harris Broadcast gear including signal processing and storage products.  The retail-focused projects are more about the digital signage solution than the sell through of broadcast technology.  Thus the issue for DooH markets is similar to the Harris FAME initiative – the contracts will live on, but it’s possible that a new owner may shift resources away from these areas in favor of a more focused approach to the broadcast market.

 

 

Branding — What Happens to the Harris Name?

Harris is one of the biggest names in the broadcast industry, but if its broadcast division is sold off to a PE firm, or is somehow spun out as a separate company, it may have only limited rights to the Harris name.  So depending on the outcome of the sale process, branding could become a major issue for the firm.

So how strong is the Harris brand? As part of our annual Big Broadcast Survey (BBS) study of the broadcast market, we have measured the brand values of Harris Broadcast for the past four years, so we are in a good position to know. 

The 2012 BBS uses a broad variety of metrics to benchmarks how buyers of broadcast technology perceive the strengths and weaknesses of more than 100 broadcast technology brands.  The Harris Broadcast brand is regarded very highly throughout the broadcast industry, and appears to have increased in several key areas over the past twelve months. 

For evidence of the its standing in the market, one only has to look at various broadcast industry message boards to see the outpouring of affection for the Harris broadcast brand. 

 

So what are your thoughts?  There are certain to be many more questions about this deal.  It will be very interesting to watch.

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Related Content:

Harris Corporation To Divest Broadcast Business

Press Release: Harris Corporation Reports Fiscal 2012 Third Quarter Results

Harris Q3 FY 2012 10-Q Filing

Harris 8-K Filing – Restates Fiscal 2011-12 Revenue on Pro Forma Basis (Without Broadcast and Cyber Integrated Solutions)

Press Release: Harris Corporation Reports Fiscal 2012 Third Quarter Results

Harris Fiscal Q3 2012 Analyst Presentation

Harris Fiscal Q3 2012 Conference Call Transcript

TVNewsCheck Article: Tech’s Big Question: What’s Next For Harris?

Quincy Herald-Whig Article: Prospective buyers seek information on Harris broadcast; business as usual in Quincy

Harris Broadcast Revenue and Income Rise in Q2 2012, Says It’s Laser Focused on Maximizing Shareholder Value.

Harris Corporation Shuts Down Cyber Integrated Solutions Business

Harris Corporation Strategically Realigns Business Segments; Broadcast Communications Rolled into New “Integrated Network Solutions” Unit

Harris Corporation Names New President and CEO

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© Devoncroft Partners. All Rights Reserved.

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NAB 2012: Broadcast Engineering Interview

broadcast industry technology trends, broadcast industry trends, broadcast technology market research | Posted by Joe Zaller
Apr 27 2012

During the 2012 NAB show, I sat down with Broadcast Engineering editor Mike Grotticelli to discuss broadcast industry technology trends, where money is being spent in the broadcast industry, and other findings from the 2012 Big Broadcast Survey (BBS).

Click here to watch the video.

 

 

 

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