Posts Tagged ‘broadcast industry trends’

NAB 2011 And The Investment Banker’s View of the Broadcast Technology Industry

broadcast industry technology trends, broadcast industry trends, Broadcast technology channel strategy, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor M&A, market research | Posted by Joe Zaller
Mar 29 2011

The 2011 NAB show is less than two weeks away and there appears to be a feeling of optimism in the industry, something that has been lacking for the past year or two.  The economy is seemingly healthier, the financial performance of both broadcasters and technology vendors has improved, and digital media is a hot topic across many industries as companies roll out plans to bring video and audio content to a growing number of platforms and devices. 

The pre-NAB period is typically when expectations are set for the year, as both customers and vendors reveal their respective buying and selling plans. So far there have been year there have been some interesting articles written about what customers are shopping for at the show, what new technologies are on display and of course the most important trends in the broadcast industry in 2011.  

But there’s another group of industry observers who also have an interesting view on the outlook for the broadcast industry – investment bankers and private equity firms – and this year there appears to be more interest than usual from these players.

So what do investment bankers think about the broadcast industry, and what are their objectives for the NAB show?  In a word: deals. 

At this year’s NAB show, bankers and PE players should have plenty to keep them busy.

Video and audio technologies have become strategic to many companies outside of the traditional broadcast business, so bankers will use the NAB show as a way to find companies that might add value to a larger enterprise or a portfolio of companies.

Within the traditional broadcast industry, the improving economy has increased speculation about broadcast vendor M&A and consolidation.

Indeed, as shown below, our most recent research of senior executives at broadcast technology vendors reveals that while about a third of companies intend to retain their private status, many others expect to be involved in some sort of strategic transaction within the next 2-3 years. 

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Recently Covington Associates and Silverwood Partners, two investment banks that focus on the broadcast and digital media industries, published pre-NAB “teaser” documents for their clients and prospects.

Covington’s pre-NAB market analysis provides a concise overview of macro drivers in the industry and highlights recent digital media M&A activity.  This is (as far as I know) the first time that Covington has published a pre-NAB industry analysis, presumably driven their recently enlarged digital media team, which marries former industry executives and investment banking expertise.

Silverwood has been consistency active in the broadcast industry for the past decade, and typically publishes a report before and after major industry trade shows. You can read their pre-NAB 2010 document here, their pre-IBC2010 document here, and their IBC 2010 Post-Show Perspectives here. 

Silverwood’s 39-page pre-NAB 2011 document takes an in-depth approach.  It covers trends in the digital media industry, recent financial performance by vendors, macro industry drivers, the accelerated pace of change in the broadcast technology space, the “3D hype cycle,” and the way customers are changing their commercial focus and broadcast technology procurement plans as their revenue models shift towards “new media.”

Silverwood ends their deck with an interesting section on broadcast industry IPO, PE and M&A transactions, and why company valuations may differ, based on a number of factors. In doing they are seeking to balance creating excitement about M&A, and setting realistic expectations about valuations.

Overall both are worth reading, regardless of whether you are a vendor, broadcaster, or independent industry observer.  They provide a perspective that is sometimes missing when people discuss the broadcast business. 

At the end of the day the broadcast industry is a business; so when you head off to the NAB show, make sure you understand what both technology and financial people are thinking.

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Related Content:

Covington Associates: 2011 NAB Show Overview

Silverwood Partners: 2011 NAB Show Strategic Industry Analysis

Broadcasting & Cable Article: Gearing up for NAB 2011

Broadcast Industry’s Most Comprehensive Market Study Reveals Top Trends of 2011

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Tracking Changes in Broadcast Industry Trends — 2011 Versus 2010

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, market research, technology trends | Posted by Joe Zaller
Mar 21 2011

This is the second in a series of articles about some of the findings from the 2011 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands.  More than 8,000 people in 100+ countries took part in the 2011 BBS, making it the largest and most comprehensive market study ever done in the broadcast industry.

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In a recent post I discussed the 2011 BBS Broadcast Industry Global Trend Index, which shows the most important trends in the broadcast industry for 2011.

The article referenced both the 2009 and 2010 BBS Broadcast Industry Global Trend Index from, and looked at how the rankings of trends have changed over time.  For example, in 2009 the transition to HDTV operations was, by far, the top ranked trend.  However by 2011, the transition to HDTV operations had been overtaken by multi-platform content delivery as the top trend (although the move to HD is clearly still very important).

This post generated a lot of lot of feedback from clients and readers.  Many people said they wanted to more easily see changes to the importance of trends over time, and asked for a single chart that shows year-over-year comparisons.  I’ve done this in the chart below, which shows a comparison of the BBS Broadcast Industry Global Trend Index from 2011 and 2010. 

Please note that I have not included the 2009 Index in this chart because multiple changes were made to the trends in the Index between 2009 and 2010, reducing the ability to make an “apples-to-apples” comparison.  It’s also worth noting that all 14 trends from the 2010 Index were included in the 2011 Index.  However, based industry feedback, we added a 15th trend to the 2011 list – i.e. analog switch-off, which was ranked 11th out 15 in 2011.  The addition of analog switch-off likely “cannibalized” a small percentage of responses from other trends in this year’s ranking. 

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So what changed between 2010 and 2011? 

There are two ways to look at this:

  • changes in overall numerical ranking relative to the previous year
  • changes in overall commercial importance relative to the previous year

 

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Changes in Numerical Ranking of Broadcast Industry Trends

Let’s start with the overall numerical ranking of trends.  The first column in the table below shows how trends were ranked in 2011. The number in parentheses to the right of each trend shows how it ranked in the 2010 BBS Index. Although there were no changes at the top and bottom of the 2011 Index versus the 2010 Index, almost everything in between changed position relative to the previous year.

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As I wrote previously, the top four trends in the 2011 Global Broadcast Industry Trend Index are the same as last year and the year before:

  • Multi-platform content delivery
  • Transition to HDTV operations
  • File-based / tapeless workflows
  • IP networking and content delivery

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However, there has been considerable movement in the relative ranking of these four trends over the past several years.  Most significantly, “multi-platform content delivery” has become increasingly important, and is the dominant trend in 2011.   

Several trends were ranked more highly in 2011 than in 2010.  For example video-on-demand moved up from #8 in 2011 from #6 in 2011; while 3DTV moved up from #10 in 2010 to #8 in 2011.

Other trends remained relatively static in terms of their ranking in 2011.  For example: “transition to 3Gbps operations”, “transition to 5.1 channel audio”, “outsourced operations” and “green initiatives” remained the bottom four trends in 2011, as they were in 2010.

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Changes in Commercial Importance of Broadcast Industry Trends

As well as changes to numerical ranking, there were also year-over-year changes to the perception of commercial importance to each trend.  This is shown in the table below:

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For the most part, the trends moved up in the rankings in 2011 also were seen as more important commercially versus the previous year. 

However, it is possible for a trend to move up in the numerical ranking, while moving down in terms commercial importance to respondents, as happened this year with the transition to HDTV operations.  In this case, these changes are likely more of a function of the strong showing for multi-platform content delivery, than a poor showing for the transition to HDTV.

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Why Tracking Movement of Trends is Important

In the broadcast industry much of the spending on technology is project-based, and those projects all come from somewhere.  Our view is that industry trends drive capital projects, which in turn drive budgets, which in turn drive product purchase.  In other words, what’s commercially important to technology buyers today (i.e. trends) will likely turn into what they are budgeting for tomorrow (i.e. projects).

Looking at the trend data from the 2011 BBS, monetizing content on multiple platforms is clearly a key objective for broadcast professionals this year.  Yet, as I wrote a few months ago after returning from CES: “On the monetization point, I lost count of the number of times I heard the word “experimentation” during [conference] sessions – particularly from content owners.  In other words, although everyone agrees that multi-platform content delivery is a very important trend, many players have still not figured out the business model.”

There’s a difference between recognizing that a trend is commercially important and having a business plan in place that capitalizes on it.  So while there’s no doubt that generating incremental revenue by delivering a multi-screen experience to consumers is hot topic, business models have to move beyond the experimental in order to drive serious market growth.  Once that happens, multi-platform content delivery will likely become the most important planned project rather than just the most important trend.

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Keep in mind when reading this information that all data in this article measures the responses of all non-vendor participants in the 2011 BBS, regardless of organization type, organization size, job title or geographic location.  Responses of individual organization types or geographic locations may be very different than those shown in this high level overview.  Granular analysis of these results is available as part of the full 2011 BBS Global Market Report. For more information about this report, please contact Devoncroft Partners.

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Related Content:

You can find out about the 2011 Big Broadcast Survey here.

The 2011 BBS Broadcast Industry Global Trend Index is here.

The 2010 BBS Broadcast Industry Global Trend Index is here.

The 2009 BBS Broadcast Industry Global Trend Index is here.

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This article is based on the findings from the 2011 Big Broadcast Survey (BBS), a global study of industry trends, technology purchasing behavior and the opinion of vendor brands.  With more than 8,000 people in 100+ countries participating, the 2011 BBS is the largest and most comprehensive market study ever done in the broadcast industry.

Devoncroft Partners has published a variety of reports from 2011 BBS data.  For more information, please get in touch.

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©Devoncroft Partners 2009-2011

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Broadcast Industry’s Most Comprehensive Market Study Reveals Top Trends of 2011

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, market research, technology trends | Posted by Joe Zaller
Mar 16 2011

This is the first in a series of articles about some of the findings from the 2011 Big Broadcast Survey (BBS), a global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands.  More than 8,000 people in 100+ countries took part in the 2011 BBS, making it the largest and most comprehensive market study ever done in the broadcast industry.

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The 2011 BBS Broadcast Industry Global Trend Index

Each year, Devoncroft Partners conducts a large scale global study of the broadcast industry called the Big Broadcast Survey (BBS).  More than 8,000 broadcast professionals in 100+ countries participated in the 2011 BBS, making it the most comprehensive study ever done in the broadcast industry.

One of the key outputs from the BBS is the annual BBS Broadcast Industry Global Trend Index. This is a ranking of the broadcast industry trends that are considered by BBS respondents to be the most commercially important to their businesses in any given year.

To create the 2011 BBS Broadcast Industry Global Trend Index, we presented BBS respondents with a list of 15 industry trends and asked them to tell us which one trend they consider to be “most important” to their business, which one trend they consider to be “second most important” to their business, and which other trends (plural) they consider to be “also very important.” 

We then used the responses to this question to create the BBS Broadcast Industry Global Trend Index by applying a weighting based on the commercial importance of each trend. 

Please note that our goal from this question is to help clients gain insight into the business drivers behind the respondent’s answer.  Therefore, we asked this question in the context of commercial importance, rather than “industry buzz” or technology hype.

The table below shows the 2011 BBS Broadcast Industry Global Trend Index.  Please note that this chart measures the responses all non-vendors who participated in the 2011 BBS, regardless of company type, company size, geographic location, job title etc. 

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Similar to results in both the 2009 and 2010, the top four trends in the 2011 Global Broadcast Industry Trend Index are:

  • Multi-platform content delivery
  • Transition to HDTV operations
  • File-based / tapeless workflows
  • IP networking and content delivery

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However, there has been considerable movement in the relative ranking of these four trends over the past several years.  Most significantly, “multi-platform content delivery” has become increasingly important, and is the dominant trend in 2011.   For comparison:

  • In 2009, the BBS Broadcast Industry Global Trend Index was dominated by the transition to HDTV operations, while multi-platform content delivery was fourth on the list

 

  • In 2010, multi-platform content delivery had become the most important industry trend, narrowly eclipsing file-based / tapeless workflows (which were combined in the 2010 BBS Trend Index) and the transition to HDTV operations

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These results show that broadcast professionals continue to focus their efforts on taking advantage of the potential for incremental revenue streams presented by multi-platform content delivery.  Indeed, as the chart above shows multi-platform content delivery was ranked significantly higher than any other trend in our 2011 study.  As video content become ubiquitous, broadcasters and content owners are looking for ways to monetize their assets, and grow their revenue.  Technology vendors are continuing to develop solutions to convert content for optimal performance on any platform, and to run targeted ads alongside that content.

But there is more to the story than just multi-platform content delivery. For the third year in a row, the transition to HDTV operations ranks as one of the top trends in the broadcast industry.  It’s likely that HDTV upgrades will continue to be one of the major drivers of project-based spending as broadcasters around the world continue with plans to transition their operations to HDTV.  We provide significant coverage of the global move to HDTV in the 2011 BBS Global Market Report.  This includes a breakdown of where broadcasters are in their transition to HD, and a look at the upgrade plans for more than a dozen product categories. We’ll also be publishing more information here about project-based spending and the HD transition in future articles.

Operational efficiencies (through file-based / tapeless workflows) remain a significant macro driver in 2011, as broadcasters continue to deploy new workflows.  The increasing importance of file-based technologies has implications for the broadcast industry in terms of both workflows and product procurement.  Our previous research shows that broadcasters are moving to file-based workflows not only to achieve greater speed and efficiencies, but also to reduce cost.  During the recession, technology budgets were typically prioritized towards solutions that add revenue and/or reduce cost.  Now that the industry is recovering from the downturn, it’s likely that the way technology is purchased will remain focused on these commercial priorities.

Several trends were ranked more highly in 2011 than in 2010.  For example video-on-demand moved up from #8 in 2011 to#6 in 2011; while 3DTV moved up from #10 in 2010 to #8 in 2011.

Other trends remained relatively static in terms of their ranking in 2011.  For example: “transition to 3Gbps operations”, “transition to 5.1 channel audio”, “outsourced operations” and “green initiatives” remained the bottom four trends in 2011, as they were in 2010.

It’s worth mentioning that in order to show year-over-year movement, all trends from the 2010 BBS were included in the 2011 BBS.  However, based on industry feedback, we added a 15th trend to the 2011 list – i.e. analog switch-off, which was ranked 11th out of 15 in 2011.  The addition of analog switch-off likely “cannibalized” a small percentage of responses from other trends in this year’s ranking. 

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Keep in mind when reading this information that all data in this article measures the responses of all non-vendor participants in the 2011 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 2011 BBS Global Market Report. For more information about this report, please contact Devoncroft Partners.

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Related Content:

You can find information about the 2011 Big Broadcast Survey here.

The 2010 BBS Broadcast Industry Global Trend Index is here.

The 2009 BBS Broadcast Industry Global Trend Index is here.

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This article is based on the findings from the 2011 Big Broadcast Survey (BBS), a global study of industry trends, technology purchasing behavior and the opinion of vendor brands.  With more than 8,000 people in 100+ countries participating, the 2011 BBS is the largest and most comprehensive market study ever done in the broadcast industry.

Devoncroft Partners has published a variety of reports from 2011 BBS data.  For more information, please get in touch.

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

Broadcast technology vendor financials | Posted by Joe Zaller
Mar 08 2011

Harris Corporation announced that it has strategically realigned its operating businesses to “provide increased market focus and address the fast-growing global market for integrated communications and information technology and services.”

Under the company’s previous structure, Harris had three operating divisions: RF Communications, Government Communications Systems, and Broadcast Communications.  Under the new structure Harris retains three business units, but has added a new division called Integrated Network Solutions (ISN), which includes the broadcast business.

In addition to broadcast communications, the new ISN segment includes the Harris IT Services, Harris CapRock Communications, Healthcare Solutions, and Cyber Integrated Solutions businesses (all of which were previously part of the Government Communications Systems segment).  

The company says that its new ISN segment will provide IT services, managed services, cyber integration, interoperability, imaging, and digital media management solutions to support government, energy, healthcare, broadcast, and enterprise networks.  It will build on the company’s strengths in established markets, while extending its reach into new markets, including healthcare, energy, cloud computing, sports, entertainment, and retail venues.  

Harris Corp. EVP and COO Dan Pearson has been named acting group president of the new segment. He had this to say about the new ISN business unit: “Commercial businesses and government customers around the globe are increasingly seeking total solutions – combining innovative technology with managed services.  With a flexible technology and managed services approach, Integrated Network Solutions is uniquely positioned to create tailored end-to-end solutions for customers seeking a trusted communications and IT partner.”

Harris says it will begin reporting financial results under the new segment structure effective with its third quarter of fiscal 2011.

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The full Harris strategic reorganization announcement is here.

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Related Content:

Harris Broadcast Business Making a Comeback Thanks to Improved Market Condition and New Opportunities in Digital-Out-of-Home

Harris Says Broadcast Communications Business Improved Significantly in Q2

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The Commercial Drivers for Multi-Platform Content Distribution in the Broadcast Industry

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, content delivery | Posted by Joe Zaller
Jan 13 2011

This is the third in a series of occasional articles about the commercial drivers behind some of the most important trends in the broadcast industry.

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As part of the 2010 Big Broadcast Survey, we asked a global sample of more than 5,600 broadcast professionals about the most important trends in the broadcast industry.  Respondents were presented with a series of industry trends, and asked to indicate which one is the “most important” commercially to their business over the next few years, which one is “second most important” commercially important to their business over the next few years, and which others are “also very important.” 

These results were then weighted to create the 2010 BBS Trends Index, which is shown in the table below.

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By a wide margin, the top three places in the 2010 BBS Global Trend Index were multi-platform content delivery; file-based / tapeless workflows; and the transition to HDTV operations.

This article looks at the commercial drivers behind the top trend in the 2010 BBS Trend Index, multi-platform content delivery, and sheds light on why multi-platform content delivery is important to broadcast professionals world-wide. 

If interested, you can also read previous articles about commercial drivers for the global move to HDTV operations, and the commercial drivers for the global move to file-based operations.

In order to understand why, we asked respondents who said multi-platform content delivery the trend that’s most commercially important to their business a series of questions, including the reasons why, which vendors they feel are best positioned to provide solutions to their needs, and what obstacles they think might prevent them from achieving their goals.

As shown in the chart below, the top two reasons cited by most 2010 BBS respondents for the commercial importance of multi-platform content delivery is to provide potential new revenue streams and to ensure that branded content is available on all distribution platforms.

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These results were fairly consistent across the respondent base, with 77% of respondents falling into one of these two categories.  However there were a few notable exceptions. 

There was a marked contrast in the responses from pay TV broadcasters versus license fee funded broadcasters.  Pay TV providers were overwhelmingly concerned with new revenue streams, while public broadcasters were interested primarily in making sure their branded content is available on all distribution platforms.

Second only to pay TV providers, respondents from the government / education / corporate sectors were also very interested in having their content available on all platforms

Other differences were more subtle.   Respondents from EMEA were slightly more interested having their branded content on all platforms, than were respondents from the Americas who were more interested in generating new revenue streams.

Participants in the China and the Middle East and Africa were more interested in gaining a competitive advantage than respondents from other regions.

When considering the responses of broadcasters (shown on the far right of the above chart), most seem to agree that the generating new revenue streams is the most important reason for moving to a multi-platform distribution model.  Interestingly the smallest broadcasters see the need to have their content widely available on all platforms is more important than new revenue stream.

If you are interested in a more comprehensive breakdown of these results, please contact Devoncroft Partners for more information.  

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

The 2011 Big Broadcast Survey will be published in the first quarter of 2011, and will provide an updated view of these findings as well as a year-over-year comparison.

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Looking Back at 2010 — The Most Read Posts

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor Brand Research, Top Broadcast Vendor Brands | Posted by Joe Zaller
Jan 02 2011

Here’s a list of our top 10 most read posts from 2010. Thanks for reading.  Looking forward to 2011.

 

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

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

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2010 Broadcast Industry Market Research Findings

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

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Avid to Cut Jobs, Close Some Facilities During First Half of 2011

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Innovation rankings for Broadcast Technology Vendors – The Top 30 Globally

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Value for Money Rankings of Broadcast Technology Vendors — The Top 30 Globally

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Harris Broadcast Posts Q4 and Full Year Results

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Echolab Goes into Liquidation

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What are the Commercial Drivers for the Global Move to File-Based Operations in the Broadcast Industry?

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, market research | Posted by Joe Zaller
Dec 13 2010

This is the second in a series of occasional articles about the commercial drivers behind some of the most important trends in the broadcast industry.  The first article in this series discussed the commercial drivers for the global move to HDTV operations.

As part of the 2010 Big Broadcast Survey (BBS), we asked a global sample of more than 5,600 broadcast professionals about the most important trends in the broadcast industry.  Respondents were presented with a series of industry trends, and asked to indicate which one was the most commercially important to their business over the next few years.

The move to file-based workflows ranked number two on this list. 

In order to understand why, we asked a series of questions to those respondents who said the transition to file-based workflows is the one trend that is most commercially important to their business. These included why the move to file-based operations is important to them, which vendors they feel are best positioned to provide solutions to their needs, and what obstacles they think might prevent them from achieving their goals.

As shown in the chart below, the top reason cited by 2010 BBS respondents for the commercial importance of moving to file-based operations is to increase speed and efficiency in the production process.

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The only notable exception to this was respondents from pay-TV operators, who see the move to file-based operations as a way to deliver more channels and services without a significant increase in cost.

Other reasons cited include:

  • Enabling multi-platform content distribution and monetization
  • Reduce headcount and therefore cost
  • To take advantage of lower cost / generic IT technology
  • To deliver more channels / services with significantly increasing cost
  • To eliminate errors

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Top Vendors for File-Based Transition

As a follow-up, respondents were asked which vendor is best suited to help them make the transition to file-based operations.  The ten vendors mentioned most often were: Sony, Avid, Apple, Panasonic, No One Vendor, Grass Valley, Harris, EVS, JVC and Omneon.

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

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Broadcast Technology Vendors Predict Strong Increase in Software Revenue

broadcast industry technology trends, broadcast industry trends, Broadcast technology channel strategy, broadcast technology market research | Posted by Joe Zaller
Nov 01 2010

When I recently saw the headline “Solving the TV Station Hardware Dilemma” on the Broadcast Engineering website, I stopped to read.

Although the article turned out to be about integrated playout (a.k.a. channel-in-a-box) automation servers rather than a debate about hardware versus software in a broadcast facility, it got me thinking about the shift in broadcasting towards IT-oriented technologies, and what vendors are doing about this market transition.

Our research has found that the move to IT-based operations is one of the broadcast industry’s most important technology trends. This will obviously have a major impact on the broadcast technology vendor community. 

Some commentators like boutique investment bank Silverwood Partners say that there is a diminishing hardware opportunity and that value is migrating to software-based products.  So what are broadcast technology vendors doing to change their product ranges and business models?

To better understand these issues we asked the nearly 800 broadcast technology vendors who responded to the 2010 Big Broadcast Survey, about the make-up of their current and future product portfolio.  Vendors were asked to break down the sources of their revenue by product hardware, software, maintenance, and service. 

Here’s what we found:

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Current Sources of Vendor Revenue – Product Mix

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Hardware products represent the largest percentage of vendor revenue, with more than 80% of respondents indicating that hardware sales represents greater than 20% of revenue, and 31% reporting that hardware products represent more than 80% of revenue.

While more than half of vendors reported that software represents a significant portion of their revenues, only 6% identified software as representing more than 80% of their sales.

Maintenance and service revenues represent a small part of the overall vendor revenue stream today.

But what are vendors projecting for the make-up of their future revenue?

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Future Sources of Vendor Revenue – Product Mix

Vendors were also asked to predict how their revenue by product mix would change over the next several years.

More than half of vendors report that they expect sales of hardware products to stay the same or increase over the next several years, while 20% expect hardware product sales to decline over the same period.

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Vendors expect to see large growth in software sales, with 76% of vendors predicting sales of software products will increase over the next 2-3 years.  Included in this number are an impressive 51% of vendors who expect software product sales to increase by more than 10%.

Vendors are also clearly looking towards maintenance and service revenues to expend their businesses.  Whereas the previous chart shows that today’s revenue from these sources is not huge, vendors are almost all anticipating that maintenance and service income will stay the same or increase over the next several years. 47% of vendors predict that maintenance revenue will increase, and 48% of vendors predict that customer service revenues will increase during this period.   

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Projected Future Vendor Hardware / Software Revenue – by Company Type

To better understand these responses, it’s helpful to profile the research participants according to the type of company they represent.

In the charts below, I have broken out the responses to the projected product mix question based on whether the respondent works for a company that provides primarily hardware products, primarily software products, or has a mixture of both.  In this case “primarily” is defined as more than 70% of a company’s revenue.  Responses for the average of all vendor responses are also shown for the sake of comparison with charts above.

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Hardware Sales

Firstly, let’s look at what vendors predict will happen to their hardware sales.  The chart below shows that 20% of respondents expect hardware product sales to decline over the next few years, while more than half expect hardware product revenue to stay the same or increase over the same period.

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However, there is a clear difference between those vendors who currently produce primarily hardware products versus those who currently produce primarily software products.

73% of respondents from companies who primarily sell hardware products think that their hardware revenue will grow over the next few years.  Conversely, just 39% of respondents from software-oriented companies think their hardware revenue will increase.

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Software Sales:

What about revenue from software products? The chart below shows how vendors project their software sales will change over the next 2-3 years.

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Virtually all vendor respondents predict that their revenue from software will increase over the next few years.  Just 5% of respondents believe that software revenue will decline during this timeframe.

67% of vendors respondents whose company sells primarily hardware products predict that their sales from software products will increase over the next few years, while 86% of respondents from software-oriented vendors believe their software revenue will grow.

These results show that while hardware product sales are not going away any time soon, technology suppliers are responding to market demand for software-oriented products.  Although this analysis does not attempt to put a value on or quantify the percentage of future software sales, it appears that vendors are gearing up to provide more software solutions in the belief that this will help drive revenue growth.

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

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What are the Commercial Drivers for the Global Move to HDTV Operations?

broadcast technology market research | Posted by Joe Zaller
Oct 13 2010

For the most part, large scale broadcast industry CapEx tends to be project-based.  Our most recent research into where money is being spent in the broadcast industry shows that the top two projects globally are “upgrading infrastructure for HD / 3Gbps operations” and “upgrading transmission and distribution capabilities,”  both of which are undoubtedly influenced by the move to HDTV.

As broadcasters migrate to HDTV operations much of the industry’s infrastructure is being replaced, making the move to HDTV a strong driver of broadcast industry CapEx. 

At a time when we are now several years into the HD transition, what continues to drive broadcasters to move to HDTV operations?  Are broadcasters moving to HD to for engineering reasons (e.g. delivering better image quality to viewers), or for commercial reasons (e.g. to remain competitive in the marketplace)?

As part of the 2010 Big Broadcast Survey, we asked a global sample of more than 5,600 broadcast professionals about the most important trends in the broadcast industry.  Respondents were presented with a series of industry trends, and asked to indicate which one was the most commercially important to their business over the next few years.

In order to better understand the drivers behind each trend, respondents were then asked a series of questions about the one industry trend that they indicated was most commercially important to their business – e.g. respondents who indicated that the transition to HDTV operations was the trend most important to their business were asked  why this is the case. 

The results are shown in the chart below:

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Q. Why the transition to HDTV operations the most important to your business?

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On a global basis the most important overall driver for the move to HD is simply completing the job.  In many parts of the world, broadcast professionals are now in the middle of multi-year complex HD migration projects, so this should not be too surprising.  

The second and third ranking factors cited by respondents as drivers for their transition to HDTV were delivering improved picture quality to viewers and the competitive demands of the market.  More engineering-oriented drivers such as taking a technology lead and future-proofing operations were seen by most respondents as much less important.

Like all data of this type, there are of course variations based on respondent demographics.  For example:

  • the competitive demands of the market were ranked as the most important HD driver for US broadcasters, while state funded broadcasters as well as those in Asia ranked completing the job as the their top driver
  • respondents from Australia, MEA and the UK cited more technology-oriented drivers (taking a technological lead in the market and future-proofing operations) than those from other areas where HD is perhaps more mature
  • broadcasters who derive most of their income from subscription revenues cited competitive demands of the market as their top driver for migrating to HD, while both commercial and state funded broadcasters said that completing the job was most important to them

 

Despite these differences, it’s clear that the key drivers for the move to HDTV are commercially oriented.   In today’s environment, the broadcast procurement process is usually based on carefully considered commercial factors, and often as part of a major planned project. 

As written previously, our research shows that the top priorities for the broadcast industry in 2010 include completing the transition to HD, achieving cost savings through operational efficiencies, and generating new revenue streams.  These projects all have a strong commercial justification, and will continue to drive a large share of the industry’s CapEx.

Interestingly, these results highlight why the buzz about some new technologies such as 3D has faded over time as potential buyers begin to appreciate the commercial issues associated with their deployment.  Indeed, many of those who commented on industry trends at the IBC 2010 exhibition commented that the market has become more realistic about 3D.

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

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Brief Impressions of IBC 2010

broadcast industry technology trends, broadcast industry trends, broadcast technology market research | Posted by Joe Zaller
Sep 22 2010

Last week I attended the 2010 IBC show in Amsterdam.  The product introductions and events at the show have been well covered elsewhere, so this is just a short note on my impressions of the show.

After spending the better part of a week in Amsterdam, and having 40-50 meetings with vendors, bankers, broadcasters and others, I came away from the show with three general impressions – the market is improving, there is more realism about 3D, and the drive toward file-based operations continues. 

It’s also worth noting that I think that these trends will probably act as a catalyst for further market consolidation as vendors seek to position themselves for the post-recession world.

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Improving Market Conditions

In terms of market improvement, many people I spoke with said that buyers were coming back and that once-delayed projects are now table. Many vendors reported that their sales and profitability have increased markedly versus a year ago.  Interestingly, there do seem to be geographic and technological differences in the market recovery.  For example, many people reported that activity in Asia, northern Europe and the middle east was strong; while southern Europe and parts of north America were still sluggish for some.  Also some types of products seem to have recovered more strongly – automation being a good case-in-point.

To get a better handle on the industry’s current status, I attended a very interesting “state of the industry” session hosted by the IABM (the international organization that represents technology suppliers), which was held on the opening day of IBC.  During the session, IABM director general Peter White presented the results of a recent survey of broadcast buyers and suppliers.  This was followed by a panel discussion that included representatives from Sony, Harris, Axon and Softel, with industry veteran Adrian Scott leading the session.

According to White, about 60% of broadcast technology suppliers are now making a profit – up considerably from last year – with European companies performing better in terms of profit performance. 

White also reported that confidence has returned to buyers, with more than half of those surveyed feeling “very or quite optimistic” about the future; and 39% reporting that they feel that the recession is over or that they are coming out of it.

However, White also indicated that things will be different for vendors in a post-recession world.  According to the IABM’s study, broadcast technology buyers are changing the way they purchase, and are also expecting more from vendors in terms of value, interoperability, support etc.

My understanding is that the IABM will be making their findings available in the near future, although I am not sure what for this will take.  It’s good information that everyone should read.

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More Realism About 3D

While 3D was a major theme of the IBC show, my feeling was that, in contrast to the CES and NAB shows earlier in the year, the hype about 3D seems to have dissipated as vendors have become more realistic about 3D’s ability to drive revenue and profitability growth.

In multiple press conferences and vendor meetings, the 3D hype was much toned down.  For example, at the Grass Valley press conference SVP Jeff Rosica referred to 3D as a niche market.  At the Harris press event, Broadcast Communications president Harris Morris referred to 3D projects as experiments.

I am on the record as a 3D skeptic, at least as far as the short term potential for broadcasters, so I was not surprised to hear this type of comments.  I should also point out that these comments are consistent with our market research findings about the most important trends in the broadcast industry, where 3D placed far down on the list versus the transition to HDTV, the move to file-based workflows and multi-platform content delivery. 

There is of course a small part of the market where 3D is and will continue to be a major growth driver.  However, it looks like the bulk of the market is now taking a more realistic approach and focusing on what customers really need.

For more on this subject, have a look at Mike Grotticelli’s article in Broadcast Engineering called 3-D Technology Finds Few Enthusiasts at IBC2010.

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IT and File-Based Technologies

It may seem obvious that IT and file-based technologies are continuing to make inroads into the broadcast market, but at IBC I was struck by the accelerating pace of change in this area.

Vendors, both large and small continue to innovate in this area in an effort to help broadcasters streamline their operations and do more with less.

The shift to IT technology is having an interesting impact on the industry, in the form of product development, M&A and outside investment.

On the product development front, some vendors have jumped into the file-based world with full force – e.g. Evertz who launched a full blown playout server and storage solution at IBC.

Others have sought to accelerate their move into the IT world through acquisition – e.g. Miranda’s purchase of OmniBus, which gives the traditional hardware supplier a highly developed IT-based playout and automation solution.  Another recent industry M&A deal between Telestream and Anystream helped Telestream consolidate its position in the encoding / transcoding / streaming space.  I would not be surprised to see more M&A in this area as traditional vendors seek to beef up their file-based expertise.

The move to IT has also helped bring new money into the industry.  For example two transcoding vendors, Elemental Technologies  and AmberFin both recently announced that they have closed funding rounds, which will help them expand their presence in the broadcast marketplace.

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