broadcast industry trends

Posts Tagged ‘broadcast industry trends’

Devoncroft Digest July 24, 2010 – Earnings Season Begins, More Broadcast M+A (and an IPO), Echolab Rumors

Broadcast Vendor Brand Research, Broadcast technology vendor financials, Devoncroft Digest, Top Broadcast Vendor Brands, broadcast industry technology trends, broadcast industry trends, broadcast technology market research | Posted by Joe Zaller

Jul 24 2010

The Devoncroft Digest is a semi-regular amalgamation of news items I’ve seen recently. Here are a few of the things that have caught my eye recently.

Earnings Season Kicks Off for Broadcasters and Broadcast Tech Vendors:

Quarterly earnings are starting to roll in from both broadcasters and broadcast technology vendors. For those who are on an annual fiscal year, it’s a chance to see how the first half of the year went, and to hear management thoughts on the second half of 2010.

Broadcast Technology Vendor Earnings:

Avid reported their numbers for the second quarter. Sales for the quarter were $162.2m, an 8% y/y increase – and the company pointed out that this was the first quarter of y/y growth for both audio and video since 1997. The company’s shares jumped on the news.

While discussing uses of cash on the company’s earnings call, Avid executives talked about the amount of cash used for the Euphonix acquisition. I was not aware of the purchase price for Euphonix, but it turns out that according to an SEC filing, Avid paid 17.6m for Euphonix, including cash of $12.6m and cash of $5m.

For more on Avid’s results, here’s a link to a transcript of Avid’s Q2 earnings call, and an article from Barrons about the results.

Speaking of Avid, Post Magazine’s Jonathan Moser recently published an interesting Q&A with Avid COO Kirk Arnold about present & future status of the company. In my opinion, both Arnold and CEO Gary Greenfield have done a good job recently with this type of interview. One of Avid’s strengths is their user community and the company is clearly working to communicate with their base. Here’s another example.

Barco reported strong results for the company’s Q2 and first half of 2010. In the earnings press release, company President & CEO Eric Van Zele said that Q210 “Must have been our best quarter ever.” Van Zele also said that Barco is “experiencing explosive growth in demand for our digital cinema projectors and are working very hard to deal with the supply chain issues this creates.”

Storage vendor Isilon also reported their Q2 numbers this week, and they were pretty good. The company’s Q2 revenues of $45.1m represented increases of 15% q/q and 56% y/y respectively. The company also had positive net income in the quarter. Shares jumped 18% on the news. With Isilon apparently firing on all cylinders and Omneon now part of Harmonic, the storage space is going to be interesting to watch over the next year or so.

IPTV provider KIT Digital published strong preliminary results for their Q2. In an upbeat press release, the company said that its Q2 revenues of “at least $22.7m” were up by more than 110%. The company also said that its EBITDA for the quarter would be at least $4 Million

Broadcaster and Platform Operator Earnings:

Broadcaster LIN TV reported 2Q revenues of 99.5m, which represents a 21% y/y increase. The company’s earnings release highlighted the fact that digital revenues were up by 44% y/y, and that political revenues more than doubled versus last year. Lin President and CEO Vincent Sadusky said: “Our results demonstrate continued, sustained improvement over 2009. Television advertising has experienced a strong recovery and our digital business, which now constitutes 15% of our total revenues, continues to grow and differentiate us as a local multimedia company.”

According to industry website TVNewswCheck, The McGraw-Hill Companies reported that its Broadcasting Group’s revenue grew by 24% to $25.3 million in the second quarter compared to the same period last year. Increases in national, local and political advertising all contributed to the improved performance. The company as a whole reported net income for the second quarter of 2010 increased by 16.4%, or $27.0 million, to $191.1 million. Revenue in the second quarter was up 0.6% to $1.5 billion.

Media General reported that the company’s broadcast revenue rose 13% in the second quarter, driven by increases in automotive and political advertising (publishing revenues fell by 7%). The company’s digital revenues rose by 8% during the quarter. The company issued upbeat guidance for its broadcast properties saying, that “Broadcast revenues in the third quarter are expected to increase more than 20 percent, mostly reflecting significant Political revenues.”

Finally, DVD rental and streaming video provider Netflix reported its Q2 results this week. Although the company’s subscriber, revenue and net income numbers all numbers increased, it was not enough for investors who were looking for higher sales revenues. The stock tanked.

For more on Netflix, check out the take from website VideoNuze, who penned an interesting post called 5 Key Takeaways from Netflix’s Q2 ’10 Results.

Broadcast M&A

Echolab Rumors Continue

Since Echolab was suddenly put into liquidation, there has been great speculation about what would happen to the company’s IPR – particularly the Atem production switcher line up. Well if rumors are to be believed, Blackmagic Designs is set to announce that they have purchased the assets of Echolab. This is information is not confirmed, but I have spoken to several people about it.

As many know, Blackmagic made headlines earlier this year when they purchased color correction specialist Da Vinci. Coincidentally, TVB Europe just published an article about how Blackmagic took Da Vinci’s $200,000+ products into a sub-$1,000 product for the Mac and kept all the functionality. If this rumor is true, it will certainly be interesting to see what Blackmagic has in store for Echolab’s Atem product line. Watch this space.

Vitec Multimedia (not to be confused with the Vitec Group) announced the purchase of the Focus Enhancements’ Systems Group. In the press release announcing the deal, Philippe Wetzel, CEO of VITEC Multimedia said “In combination with our recent acquisition of Optibase, this acquisition furthers our objective to provide a complete line of advanced digital video solutions to our customers around the globe. With innovation at its core, the VITEC R&D division — now with more than 100 esteemed engineers — is uniquely positioned to deliver innovative solutions for a wide range of advanced digital video applications — managing the entire video process from source to display.

Vizrt announced that it has completed the acquisition of Adactus by buying the additional 71% of the company that it did not already own

Other Broadcast Technology Vendor News

Vizrt’s Chief Commercial Officer appears to have left the company. According to a press release from online gaming firm 888, David Zerah has become the managing director of Dragonfish. While at Vizrt Zerah spent seven years as EVP of worldwide sales before becoming CCO. Vizrt has not yet announced a replacement.

3D News

The official IBC blog had an interesting entry on 3DTV the other day, which says that 3D will probably only impact the industry in “small dimensions”.

OTT Video News

As mentioned above, Netflix reported their Q2 revenues.

NewTeeVee Reports that Redbox readying a streaming offering. Streaming media expert Dan Rayburn says Redbox Won’t Challenge Netflix’s Streaming Service, Here’s Why

Digital Cinema

According to the Wall Street Journal, Imax has signed an exclusive 2-year deal with privately held Laser Light Engines. The company says that the resulting laser-power projectors will deliver brighter images for digital cinema, which will be especially beneficial for 3D.

3D News – RealD Goes Public

3D provider RealD went public this week in a $200m IPO, which raised 33% more than expected, a testament to the strong interest in all things 3D. The company’s shares were up 22% on its first day as a public company.

The company’s 100+ page IPO documents are worth reading for an overview of the company’s financials as well as the state of the 3D and Digital Cinema Markets. Files 100+ Page IPO Doc. Worth Reading for Financials and #3D Industry Overview. #3DTV #Broadcast http://bit.ly/bCanRM

Market Research Note of the Week – Quality Rankings of Broadcast Technology Vendors

This article looks at how a global sample of several thousand broadcast professionals ranked broadcast technology vendors for one of the most important metrics for any technology company: quality.

The broadcast industry prides itself on the fidelity of its sound and images, so the perception of quality is a very important metric for broadcast technology vendors. Many vendors use quality as one of the key components of their market positioning.

To determine the market’s perception of the quality of broadcast technology vendors, respondents to the 2010 Big Broadcast Survey were asked to rank broadcast technology vendor brands for “quality” on a scale of one to 10, with 10 being best in the market and one being the worst.

As with the top 30 innovation rankings published earlier, this list contains a broad mix of vendors including both audio and video companies. There are also interesting similarities and differences in terms of the types of products produced, geographic location and company.

To read the full article, including analysis of the findings, click here http://bit.ly/cY2nZO

Tags: 2010 Big Broadcast Survey, 3D, 3DTV, Adactus, Avid, Barco, Blackmagic Design, broadcast industry trends, Da Vinci, Dan Rayburn, David Zerah, Digital Cinema, Dragonfish, Echolab, Eric Van Zele, Eurphnix, Focus Enhancements, Gary Greenfield, Harmonic, Imax, Isilon, Kirk Arnold, Kit Digital, Laser Light Engines, Lin TV, McGraw Hill, Media General, Netflix, Omneon, Optibase, OTT Video, Philippe Wetzel, Post Magazine, Quality Rankings, RealD, RealD IPO, Redbox, TVB Europe, VideoNuze, Vitec Multimedia, Vizrt
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Quality Rankings for Broadcast Technology Vendors — The Top 30 Globally

Broadcast Vendor Brand Research, Top Broadcast Vendor Brands, broadcast technology market research | Posted by Joe Zaller

Jul 08 2010

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

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

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

Recently, posts which rank broadcast technology vendors include:

In keeping with the theme of top 30 rankings, let’s now turn to one of the most important metrics for any technology company – quality.

In an industry that prides itself on the fidelity of its sound and images, the perception of quality is a very important metric for broadcast technology vendors. Many vendors use quality as one of the key components of their market positioning.

To determine the market’s perception of the quality of broadcast technology vendors, respondents were asked to rank broadcast technology vendor brands for “Quality” 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 the global sample of all respondents.

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

As with the top 30 innovation rankings published earlier, this list contains a broad mix of vendors table including both audio and video and audio companies.

There are also interesting similarities and differences in terms of the types of products produced, geographic location and company size (something that is not measured in the BBS and won’t be discussed further here). So let’s look a little deeper into these results.

Number of products per vendor – Single Product Companies Dominate Quality Rankings

One obvious question that should be asked when reviewing these results is how many products are produced by each vendor on this list. This will help us to understand if whether quality comes from small focused companies, or large multi-product vendors.

A breakdown of how many product categories are produced by each vendor on the top 30 quality list is shown below:

With 22 out of 30 vendors on this list producing a product in only one BBS category (out of 27 measured) it’s clear that focused, specialized companies are regarded as quality leaders in the eyes of the market.

This finding reinforces a previous post called Purchasing Preferences of Broadcast Technology Buyers – “Best-of-Breed” or “One-Stop-Shop?, which shows that broadcast technology buyers overwhelmingly prefer to evaluate products from individual suppliers and create best-of-breed solutions.

Nevertheless it’s also worth pointing out that large companies can also be considered industry innovators. For example Grass Valley is covered in 10 product categories in the 2010 BBS and Avid is covered in 7 product categories.

Please keep in mind that this is not an absolute measure of the products produced be each vendor. In total, the 2010 BBS looked at 148 vendors in 27 separate product categories (based on the IABM’s industry model), but even so it did not necessarily cover the entire product range of all vendors.

Geographic Location

Another factor to consider is the geographic location of each company on the list. By this measure, companies headquartered in EMEA are the clear quality leaders, while companies based in the Americas and Asia trail the pack.

In terms of individual countries, the Germany and the USA are tied with 11 companies each on the Top 30 Quality Rankings. Japan, the UK, Finland and Belgium round out the rest of the countries where the quality leaders are headquartered. Keep in mind that when looking at geography, it’s important to remember that many of these firms are truly global, with offices all over the world, regardless of where they are headquartered.

Product Categories

Finally, let’s look at the product categories produced by the vendors who made the top 30 quality list for the 2010 BBS.

Out of the 27 product categories covered in the 2010 BBS, 23 appear on this list; showing that quality is widespread across the broadcast industry.

Audio products lead the list of products produced by the top 30 quality leaders, with microphones, audio consoles and audio monitors topping the rankings.

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

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

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

Tags: 2010 Big Broadcast Survey, 2010 broadcast market research, Adobe, Aja Video, AKG, Apple, Avid, Barco, Beyerdynamic, broadcast industry market research, broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast Vendor Brand Research, Calrec Audio, Cisco, Dolby, Genelec, Grass Valley, Ikegami, JBL, Klein + Hummel, Lawo, Neumann, RED, Riedel, Rohde & Schwarz, Salzbrenner Stagetec, Sennheiser, Shure, Snell, Solid State Logic, Sony, Studer, Tektronix, Telex, Yamaha
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Devoncroft Digest — June 27, 2010

Broadcast Vendor Brand Research, Broadcast technology vendor financials, Devoncroft Digest, broadcast industry technology trends, broadcast industry trends, broadcast technology market research | Posted by Joe Zaller

Jun 27 2010

Here’s a recap of some of the items that caught my eye over the past week or so.

Broadcast Technology Vendor News

Another M&A Deal — RGB Buys Ripcode

In a multi-platform, multi-format world, video transcoding is one of the technologies that everyone needs. But transcoding is a tough business with fierce competition, and it’s considered by many to be a commodity product. This makes it tough for pure-play transcoding vendors (which is why most of them will tell you that they focus on workflow optimization). All of the above makes it an interesting market to watch, so I took note when I read that Ripcode has been purchased by RGB networks. I always thought Ripcode was a pretty interesting company. They raised a lot of money for their platform and they had a different approach to others in the market. It will be interesting to see how they perform as part of RGB.

To read more about this, check out Dan Rayburn’a Business of Video Blog, which has complete coverage of the deal here.

Evertz Delivers Good Results for Q4 and Full Year

Evertz Technologies delivered pretty good results for their Q4 and full year, topping the expectations of equity analysts.

Here are some highlights from the company’s earnings press release here.

Revenue for Q4 was C$75.3m, down 3% versus the same period a year ago, but up 14% over the previous quarter.

In terms of geographic split, sales in Q4 from the US and Canada decreased by 28% versus the same period last year, but this was partially offset by a 41% y/y increase in international revenue (which Evertz defines as markets outside of the US and Canada). International revenue rose by 23% versus the previous quarter, while sales in the US and Canada decreased by 28%.

Revenue for the full year was C$286.5, a 9% y/y decline.

Annual revenue from the US and Canada declined 26% versus last year, while international revenue was up by 24% over last year.

The company’s gross margins slipped a bit to 58% (versus 61% last year). On the earnings conference call, the company attributed this to pricing pressures and the cost of international expansion.

Overall, this was a strong performance from Evertz. The company’s international growth is particularly notable.

Wegener Issues Preliminary Results

Wegener, which was delisted from the NASDAQ earlier this year, issued preliminary operating results for the third quarter ended May 28, 2010. Final results for the third quarter of fiscal 2010 will be released on July 12, 2010.

According to the company’s press release preliminary operating results for the third quarter of fiscal 2010 were revenues of $2.1 million and a net loss of approximately $(487,000) or $(0.04) per share compared to revenues of $2.9 million and a net loss of $(883,000) or $(0.07) per share for the same period in fiscal 2009.

Company President & CEO Troy Woodbury said that “bookings performance in the third quarter was an improvement over the first and second quarters of fiscal 2010, but there is significant room for improvement.”

French Employees Protest Grass Valley Sale

TVB reports that nearly 200 Grass Valley employees at the company’s facility in Rennes France went on strike to protest the shutdown of production. Grass Valley, which has been for sale for what seems like forever, is one the broadcast industry’s most storied names.

Dolby Opens R&D Center in China

Dolby Labs announced that it’s first “from the ground up” R&D facility outside of the US will be based in China. In the company’s press release, Dolby VP Mahesh Sundaram said “China is strategically important to Dolby. The establishment of Dolby China’s R&E Center is an important milestone as part of our continued commitment to China and innovation.” The facility will focus on sound technology.

Technicolor Opens New Lab in Palo Alto

Meanwhile, French technology provider Technicolor (formerly known as Thomson) has announced that it is planning a new lab in Palto Alto, CA. The company says the new lab will focus on the personalization of digitally delivered content, and enhance the company’s research skills in content discovery. The company also says it chose Palo Alto for its proximity to excellent universities and for the potential for interaction within the Silicon Valley technology ecosystem.

Broadcast Technology Vendor Confidence Beginning to Return

According to an article in TVB Europe, the IABM (the association which represents broadcast and media technology suppliers worldwide) has published the results of a new study about industry confidence. The result — the worst of the recession appears to be over in the broadcast and media technology sector and vendors are feeling increasingly optimistic about the future.

The IABM says that 74% of vendors who participated in their poll are response anticipating better business next year than last, and that 47% of those surveyed are already reporting better order volumes than expected. However the study also found that the industry is facing strong pricing pressure.

Disclosure: Devoncroft and the IABM partner on market intelligence.

Other Items of Interest:

TVB reports that the new PricewaterhouseCoopers 2010-14 Global Entertainment and Media Outlook predicts that advertising revenues remain fragile in nature and spending is unlikely to return to former levels, and that by 2014, the U.S. advertising spend is expected to still be 9 percent below its level in 2007.

NetApp Files 10K with SEC

Following April Announcement, John Malone Formally Steps Down as DirecTV Chairman

According to Dan Rayburn, here’s the “best article by far” about Google TV: “Google TV: everything you ever wanted to know” – Best article by far on the subject by Engadget.

The Wall Street Journal reported that News Corp Want to Buy Rest of BSkyB, but that Sky is holding out for more money.

Harmonic was upgraded by Merrill Lynch, who say that the Omneon acquisition could be significantly accretive in 2011

Cablevision bought Bresnan Communications for $1.4Bn

Market Research Note of the Week:

Innovation Rankings of Broadcast Technology Vendors – The Top 30 Globally

In keeping with the theme of top 30 rankings, let’s now turn to 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 strive to create techniques that will 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, more than 4,000 broadcast industry professionals 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.

There’s a broad mix of vendors included in these ranking, including both audio and video and audio companies. There are also interesting similarities and differences in terms of the types of products produced, geographic location and company size. So let’s look a little deeper into these results….

To see the full results, included three ranking tables and analysis, please follow this link.

You can find other 2010 Big Broadcast Survey (BBS) here:

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

The Top 30 Broadcast Vendor Brands by Net Change in Brand Image.

Tags: 2010 Big Broadcast Survey, Bresnan, broadcast industry market research, broadcast industry trends, Broadcast Innovation, Broadcast M&A, BSkyB, Cablevision, Dan Rayburn, DirecTV, Dolby, Evertz Microsystems, Grass Valley, Harmonic, Harmonic buys Omneon, IABM, NetApp, Omneon, RGB Buys Ripcode, RGB Networks, Ripcode, Technicolor, Thomson, Transcoding, Wegener
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Innovation Rankings for Broadcast Technology Vendors — The Top 30 Globally

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

Jun 16 2010

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

Recently, I discussed how respondents to the 2010 BBS ranked The Top 30 Broadcast Technology Vendor Brands by Overall Opinion, Ranked, Globally and Regionally, and followed up with a ranking of the Top 30 Broadcast Vendor Brands by Net Change in Brand Image.

In keeping with the theme of top 30 rankings, let’s now turn to one of the most important metrics for any technology company – innovation.

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

Innovation — The top 30 broadcast technology brands, listed alphabetically (global sample of all respondents)

There’s a broad mix of vendors included in the above table including both audio and video and audio companies. There are also interesting similarities and differences in terms of the types of products produced, geographic location and company size (something that is not measured in the BBS and won’t be discussed further here).. So let’s look a little deeper into these results.

Number of products per vendor

One obvious question that should be asked when reviewing these results is how many products are produced by each vendor on this list. This will help us to understand if whether innovation comes from small focused companies, or large multi-product vendors.

A breakdown of how many product categories are produced by each vendor on the top 30 innovation list is shown below:

It’s interesting to note that vendors producing just one product account for more than half of the vendors in the top 30 innovation 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.

Nevertheless it’s also worth pointing out that large companies can also be considered industry innovators. For example Grass Valley is covered in 10 product categories in the 2010 BBS and Avid is covered in 7 product categories. These are examples of large companies who have managed to remain instill innovation across their product lines.

Geographic Location

Another factor to consider is the geographic location of each company on the list. By this measure, companies headquartered in EMEA just edged out those based in North America on the top 20 innovation list, while companies based in Asia trailed the pack.

This is not surprising since this broadly reflects where the companies on the overall list are based.

In terms of individual countries, the USA leads the way with 10 companies on the list of the 30 top innovators, with Germany close behind with 6 vendors on the list.

When looking at geography, it’s important to remember that many of these firms are truly global, with offices all over the world, regardless of where they are headquartered.

Product Categories

Finally, let’s look at the product categories produced by the vendors who made the top 30 innovation list for the 2010 BBS:

Out of the 27 product categories covered in the 2010 BBS, 23 appear on this list; showing that innovation is widespread across the broadcast industry.

Signal processing, studio cameras and video editing lead the list of products produced by the top 30 innovation leaders.

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.

Tags: Adobe, Aja Video, Apple, Audio Processing and Monitoring, Avid, Blackmagic Design, Broadcast Audio Consoles, Broadcast Automation, Broadcast Graphics & Branding, broadcast industry market research, broadcast industry technology trends, broadcast industry trends, Broadcast Innovation, Broadcast Playout Servers, Broadcast Studio Cameras, Broadcast Transmission Servers, Broadcast Vendor Brand Research, Calrec, Cisco, Dolby, ENG Cameras, Ericsson, EVS, Grass Valley, Harmonic, Ikegami, Ingest / transcoding / streaming, Innovation in broadcast technology, Integrated Playout (Channel in a Box), Intercom / Talkback, Lawo, Microphones, Miranda, Monitors (speakers), Multiviewers, Near-line / Off-line and archival storage, Neumann, Orad, Panasonic, Production Servers, Production Switchers, RED, Riedel, Rohde & Schwarz, Ross Video, Routing Switchers, Salzbrenner Stagetec, Sennheiser, Snell, Solid State Logic, Sony, Tandberg, Tandberg / Ericsson, Tektronix, Test & Measurement, Transmission Encoders, Transmitters, Video Editing, Video Interfacing, Video Signal Processing, Video Transport, Vizrt, Yamaha
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The Top 30 Improving Vendor Brands in Broadcast Technology, Ranked Globally and Regionally

Broadcast Vendor Brand Research, Top Broadcast Vendor Brands, broadcast technology market research | Posted by Joe Zaller

Jun 07 2010

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

Recently, I discussed how respondents to the 2010 BBS ranked The Top 30 Broadcast Technology Vendor Brands by Overall Opinion, Ranked, Globally and Regionally

Appearing in the top 30 of an overall opinion poll is obviously a good place for any vendor to be, but this only scratches the surface of how the market views a brand.

While indicative of the market’s view, these overall opinion rankings are presented as a snapshot in time. They also provide a somewhat one-sided view of how brands are regarded because they take only positive perceptions into account. 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.

One way to do this is to ask people who have an opinion of a brand, how their opinion of that brand has changed over time – i.e. has it improved, declined or stayed the same.

When you do this, you can get some interesting results. It turns out that some brands are more polarizing than others, with different respondents having very different opinions. For example, here’s a chart from the 2009 Big Broadcast Survey.

Notice that in the above table, the company that was ranked #1 for “got better” also ranked #1 for got worse.

Given these results, it is perhaps more useful to calculate the Net Change in Overall Opinion for each brand, which is calculated by using the following formula:

GB-GW/# of total respondents = Net Change in Brand Image

In other words, the percentage of respondents who said a brand “got worse” is subtracted from the percentage of respondents who said their opinion of a brand had “got better” (ignoring the “stayed the same” number).

This takes into account both the positive and negative perceptions of brands, along with how these opinions have changed over time. It also presents a more balanced view of which brands are getting better and which are getting worse in the minds of market participants.

Because some brands are polarizing (as seen in the example above), it’s possible that a strong “got better” response might be cancelled out by a strong “got worse” response. As a result some companies who were rated in the top 30 on just the “got better” score were not included in the global or regional top 30 because their high “got worse” score dragged down their overall result. At the same time, a few of the companies with high “got worse” scores still made the top 30 list because these negative scores were cancelled out by even higher “got better” scores.

In order to arrive at the Net Change in Overall Opinion, research participants were asked whether their opinion of various brands had “got better”, “got worse” or “stayed the same” over the past 2-3 years.

The results of this enquiry 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 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.

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

Question: Has your opinion of the following brands improved or declined over the past 2 years in relation to the broadcast technology products / services they provide?

Interestingly, a total of 65 broadcast technology vendor brands are included in this table, demonstrating the strong variation in opinion change based on geographic segmentation of respondents.

In terms of frequency of appearance in this table:

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

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

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

Brands appearing four times:

Barco, IBM, Ikegami

Brands appearing three times:

Avid, Chyron, For-A, JBL, JVC, Mackie, Motorola, Siemens, Telex, Yamaha

Brands appearing two times:

AKG, Audio-Technica, Axon, Dayang, Dolby, Echolab, Electro Voice, EMC, EVS, Fujitsu, Grass Valley, Harmonic, Harris, Klein + Hummel, Orad, Pesa, Pharos, Quantel, RTS Intercom Systems, SeaChange, Shure, Snell, Solid State Logic, Sundance, Tandberg / Ericsson, Tektronix

Brands appearing once:

Accenture, AMS-Neve, beyerdynamic, Dalet, Evertz, Focal, HP, KRK Systems, Leader Instrument, Marshall Electronics, Miranda, Net Insight, Neumann, Omneon, Omnibus, Pilat, Pixel Power, Quantum, Rohde & Schwarz, Ross Video, S4M, Screen Service, Sintecmedia, Utah Scientific, Vizrt, Wheatstone

Analysis of overall opinion by region:

The table below shows the global and regional performance for each brand in the top 30 ranking of overall opinion.

The frequency chart shows some interesting geographic variation in the data, which is highlighted below.

Only Global

Interestingly a the following 13 appear in the top 30 Net Change in Overall Opinion for the global sample, but not in any of the regions.

Accenture, AMS-Neve, Focal, KRK Systems, Leader, Net Insight, Omnibus, Pilat Media, Pixel Power, Quantum, Sintecmedia Utah Scientific, Wheatstone

There a number of possible explanations for this. For example these companies may have fared well in each of the regions, but not well enough to make the top 30. However when all responses are aggregated, there positive data propels these brands to the top 30 on a global basis. It is also possible that these brands scored well on a regional basis, but that the regional sample was insufficient to be included in the regional rankings.

All regions, but not global

Interestingly, for four brands the converse of the above also occurred – i.e. these brands made the top 30 list for Net Change of Overall Opinion in each of the three regions, but not in the global sample.

Avid, For-A, JBL, Yamaha

Again this is due to a variety of factors including the aggregate strength of certain brands, coupled with sample sizes.

Global + one region

Nine brands managed to achieve a top 30 ranking in the global Net Change in Overall Opinion league table, despite being in the top 30 of only one of the three geographic regions.

Dayang, Echolab, Electrovoice, Fujitsu, JVC, Motorola, Pesa, Quantel, Sundance

Regional Variation

The following 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:

Only EMEA

Beyerdynamic, Dalet, Neumann, S4M,

Only Asia

Evertz, HP, Miranda, Omneon, Rohde & Schwarz, Ross Video, Screen Service

Only Americas

Marshall Eelctronics, Vizrt

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 2010 BBS. Also, the charts in this posting measure the responses of all 2010 BBS respondents, regardless of their company type, company size, geographic location, job title and budget for broadcast technology products.

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

Tags: 2010 Big Broadcast Survey, Accenture, AKG, AMS-Neve, Audio-Technica, Avid, Axon, Barco, Beyerdynamic, broadcast industry trends, broadcast technology market research, broadcast vendor rankings, Chyron, Dalet, Dayang, Dolby, Echolab, Electro Voice, EMC, Evertz, EVS, Focal, For-A, Fujitsu, Grass Valley, Harmonic, Harris, HP, IBM, Ikegami, JBL, JVC, Klein + Hummel, KRK Systems, Leader Instrument, Mackie, Marshall Electronics, Miranda, Motorola, Net Insight, Neumann, Omneon, Omnibus, Orad, Pesa, Pharos, Pilat, Pixel Power, Quantel, Quantum, Rohde & Schwarz, Ross Video, RTS Intercom Systems, S4M, Screen Service, SeaChange, Shure, Siemens, Sintecmedia, Snell, Solid State Logic, Sundance, Tandberg / Ericsson, Tektronix, Telex, Utah Scientific, Vizrt, Wheatstone, Yamaha
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Recent Findings from the 2010 Big Broadcast Survey

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

May 26 2010

Recent Market Research Findings from the 2010 Big Broadcast Survey

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

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

What factors most influence the purchase of broadcast technology products?

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

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

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

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

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

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

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

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

What Broadcast Buyers Are Evaluating for Purchase in 2010

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

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

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

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

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

Tags: 2010 Big Broadcast Survey, broadcast industry market research, broadcast industry trends, broadcast technology market research, NAB 2010 trends
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The Top 30 Broadcast Technology Vendor Brands, Ranked by “Overall Opinion,” Globally and Regionally

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

May 24 2010

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

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

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

Results are shown in two ways:

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

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

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

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

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

In terms of frequency of appearance in this table:

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

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

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

Brands appearing four times:

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

Brands appearing three times:

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

Brands appearing two times:

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

Brands appearing once:

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

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

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

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

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

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

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

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

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

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

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

Audio-Technica, Calrec, HP, Omneon, Quantel

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

Avid, Mackie

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

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

Tags: 2010 Big Broadcast Survey, Adobe, Aja Video, AKG, AMS-Neve, Apple, Audio-Technica, Avid, Barco, Beyerdynamic, broadcast industry market research, broadcast industry trends, broadcast technology market research, Broadcast Vendor Brand Research, Calrec, Cisco, Clear-Com, Dolby, Electro Voice, Evertz, EVS, Genelec, geographic variations, Grass Valley, Harris, HP, Ikegami, JBL, Klein + Hummel, Lawo, Mackie, Neumann, Omneon, Panasonic, Prism Media, Quantel, RED, Rhozet, Riedel, Rohde & Schwarz, RTS Intercom Systems, Salzbrenner Stagetec, Sennheiser, Shure, Snell, Solid State Logic, Sony, Studer, T-VIPS, Tandberg, Tektronix, Yamaha
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Devoncroft Digest for the w/e May 21, 2010 – Echolab Liquidates, Earnings Season Continues, Bankers on Broadcast, Google Gets into TV

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

May 23 2010

Devoncroft Digest – Recap of the week ending May 21 2010

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

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

Echolab goes into liquidation

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

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

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

Read the full text of Spratling’s email.

Viewcast losses narrow

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

More Broadcast M&A — Tektronix acquires Mixed Signals

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

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

Continued growth for Ross Video

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

Vizrt posts operating profit on big revenue gains

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

Autodesk M&E revenue declines by 4%

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

Trouble at JVC Kenwood

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

DG FastChannel added to S&P SmallCap 600 index

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

Ascent Media CEO dies at age 44

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

Google, coming to a TV near you soon?

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

TiVo and Technicolor Team Up to Offer Integrated PVR Solution

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

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

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

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

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

More info on this here…

3D news

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

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

Market Research Note of the Week:

What factors most influence the purchase of broadcast technology products?

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

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

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

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

Tags: 2010 Big Broadcast Survey, 3D, 3D TV, Ascent Media, Autodesk, Bjarne Berg, Broadband TV News, broadcast industry trends, Broadcast M&A, broadcast technology market research, BSkyB, David Ross, DG Fastchannel, Discreet, Echolab liquidation, future trends in broadcast technology, Google, Intel, JVC, Logitech, Martin Burkhalter, Mixed Signals, Pharus Advisors, PVR, Ross Video, Schubin Cafe, Silverwood Partners, Sony, Technicolor, Tektronix, Tivo, Viewcast, Vizrt
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Vizrt and Ross Video Report Increased Revenues

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

May 20 2010

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

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

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

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

Tags: broadcast industry market research, broadcast industry trends, broadcast revenue, broadcast technology market research, Ross Video, Vizrt
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Two Investment Banks Offer Post-NAB Thoughts, Insight on Broadcast Industry

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

May 18 2010

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

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

Silverwood NAB Perspectives:

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

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

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

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

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

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

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

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

PHARUS ADVISORS

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

NAB OVERVIEW

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

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

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

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

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

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

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

Tags: 3D, 3D TV, broadcast business model, broadcast industry market research, broadcast industry technology trends, broadcast industry trends, broadcast pricing, Broadcast Vendor M&A, broadcast workflow, digital media market research, file-based workflows, multi-platform content distribution, NAB 2010 trends, OTT Video, Pharus Advisors, Silverwood Partners
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Devoncroft

Posts Tagged ‘broadcast industry trends’

Devoncroft Digest July 24, 2010 – Earnings Season Begins, More Broadcast M+A (and an IPO), Echolab Rumors

Quality Rankings for Broadcast Technology Vendors — The Top 30 Globally

Devoncroft Digest — June 27, 2010

Innovation Rankings for Broadcast Technology Vendors — The Top 30 Globally

The Top 30 Improving Vendor Brands in Broadcast Technology, Ranked Globally and Regionally

Recent Findings from the 2010 Big Broadcast Survey

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

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

Vizrt and Ross Video Report Increased Revenues

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

Twitter Updates

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