Posts Tagged ‘IBC 2010 Trends’

Investment Bankers, Others Offer Post-IBC Assessment of Broadcast Technology Industry

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Oct 01 2010

Quite a few people have written about their impressions of the IBC show, and given the huge scope of an event like IBC, each takes a slightly different approach depending on their perspective.  For example, here’s one from Murali Nemani at Cisco, another from David Grubb at Motorola, one from UK consultants MediaSmiths, and an announcement from industry guru Mark Schubin that he’ll be presenting a review of IBC on the 12th of October.  There’s even one from me.  

I always read all these articles, but it’s often the thoughts of non-technical industry observers that are the most interesting, because they focus on the business of the business and where it’s heading from a financial perspective.

For example, Silverwood Partners, a boutique investment bank that focuses on the media technology sector recently published their thoughts on the broadcast technology industry in a 19-page document called “IBC 2010 Post-Show Perspectives.”  Silverwood often publishes documents like this before and after major industry shows as a way to connect with broadcast technology vendors who may be looking for investment banking services.  You can read their pre-NAB 2010 document here, and their pre-IBC2010 document here.

From their point-of-view, Silverwood identifies the following as the key themes that emerged from the IBC show.

  • Industry environment improving
  • Intensifying focus on software
  • Large acquirers have substantial cash reserves
  • Focus on broader video use cases
  • Noticeable de‐emphasis of 3D
  • Concerns on sustainability of recovery
  • OTT – alternatives proliferating

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In the document, Silverwood discusses each of the above in the context of what is driving increased industry optimism; wider application of video technology (beyond broadcast and post production); what’s required to sell to other verticals; and an increased focus on software and MAM to solve complex workflow problems.

As one might expect from an investment bank who make their money through advising on transactions, Silverwood’s document has a few slides on industry M&A.  They contend that large companies have high cash balances, and that “alternative investments for cash are relatively unappealing.”  In other words the industry is changing radically and companies with cash should be using it for M&A in order to better position themselves for the future and buy growth.

They go on to illustrate the need for M&A by discussing how formerly profitable media businesses have been disrupted by market shifts and new technologies, and then graphically show the industry M&A activity from the past 12 months.

Whether you’re a broadcaster, technology vendor, content owner or distribution platform this is interesting stuff.

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You can read the full Silverwood IBC 2010 Post-Show Perspectives document here.

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A Look at How the Recession Affected Broadcast Technology Vendors

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
Sep 29 2010

Last week I wrote an article about how the recession impacted the technology budgets of broadcasters and other purchasers of broadcast technology products.

This showed that broadcast technology spending in EMEA held up better than in the Americas, which was hit particularly hard by the recession.  For example, 40% of respondents from the Americas reported that their budgets for 2010 were lower than in the previous year.  

So how did this reduction in spending affect the sales of vendors who supply hardware and software products to these customers?

To find out, we asked just under 800 broadcast technology vendors who participated in the 2010 Big Broadcast Survey how their company’s revenues had changed over the past year in terms of percentage growth or decline.

On an overall basis, 45% of vendors reported that their sales had either declined or stayed the same versus the previous year, and about half of respondents reported that their sales had increased – in some cases by quite a bit.

When I saw these results I wanted to know the detail behind them so that I could figure out if one type of vendor had fared better than others, and if so what were the determining factors.

For example: was company size a factor? How about location, type of products sold, or whether the vendor is a “pure-play” broadcast company or a one that operates in multiple markets including broadcast?

Based on these questions, I decided to break out the results by a variety of demographic factors, as shown in the chart below:

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When the results are viewed this way it appears that the largest companies were the most impacted by the recession. 53% of respondents from vendors with 1,000+ employees reported that their sales had either declined or stayed the same. 

Large companies were closely followed by respondents based in the Americas, and those from firms that primarily supply hardware products.  More than half of these respondents reported that their sales had either declined or stayed the same versus the previous year.

In terms of pure-play versus non-pure-play broadcast vendors, respondents from firms that sell more than 80%+ of their products into the broadcast industry fared slightly worse than those who sell 20% or less of their products into the industry.

So which vendors reported the most growth?  The short answer is small companies, software vendors and VC funded private firms (many of whom are undoubtedly small providers of software products).  

In terms of overall growth 50% of vendors reported that their revenues had increased versus the previous year. However when you consider companies who provide primarily software products, this number jumps to 62% of respondents.

What about the respondents who said their company’s revenues increased the most? Again, software companies lead the way.  21% of respondents from vendors that sell primarily software products, and 18% of privately held VC-backed companies, reported that their revenue grew by more than 30% versus the previous year. And 18% of small companies (those with 50 employees or less) also reported that their revenues had increased by 30% or more.

When reading these results it’s of course important to keep in mind that revenue growth is one thing, but profitability is another. 

This analysis does not consider the profitability of vendors, but I recently wrote about the findings of a recent IABM study in this area as part of a post on my impressions of IBC 2010.

In that post I reported that during an IBC session on the state of the industry, IABM Director General Peter White stated that 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.   For more information on these results, I encourage you to contact the IABM.

If you’re interested in more information about how broadcast technology vendors responded to the 2010 Big Broadcast survey, please contact me and I’ll try to give you the information you need.

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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.

Economists Say Recession is Over – What was it Like for the Broadcast Industry?

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials | Posted by Joe Zaller
Sep 21 2010

This week, the Wall Street Journal reported that the National Bureau of Economic Research, the arbiter of the start and end dates of a recession, determined that the US recession that began in December 2007 ended in June 2009.  

I am not sure these dates match up with the reality in the broadcast industry, since 2008 was a  banner year for most of the industry with the US elections and the Beijing Olympics.  Still, there’s no doubt that the industry has been in recession for some time, and we are now being told that it’s over — officially at least.

Whether you believe that the recession is over or not, there’s no denying that times have been tough in the broadcast industry over the past couple of years.  

Broadcast technology budgets were hard hit by the global downturn, which in turn impacted the supplier community.  For the past 18 months, vendor after vendor has reported that their sales are down due to the reigning-in of spending by customers.  During this time technology providers have been impacted severely. Many have reported losses and have gone through painful rounds of layoffs.  Some businesses have liquidated, and there has been a marked uptick in industry consolidation.  

To find out how broadcast technology budgets were impacted by the recession, we asked a series of in-depth questions to a global sample of broadcast technology professionals as part of the 2010 Big Broadcast Survey (BBS).  (The BBS, which is conducted annually by Devoncroft Partners, is the largest and most comprehensive study of the broadcast industry. More than 5,600 people participated in the 2010 study).  

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Regional comparison of broadcast technology budgets in 2010 

 As seen in the chart below, broadcast technology spending in EMEA held up better than in the Americas, which was hit particularly hard by the recession.  40% of respondents from the Americas reported that their budgets for 2010 were lower than in the previous year.   

   

Significantly, Asian markets showed the most budget growth in 2010 with nearly 60% of respondents reporting that they planned to increase their spending on broadcast technology products in 2010. This data is consistent with a recent survey conducted by the IABM and presented last week during a “state of the industry” session at IBC.  

Overall the past year or so has been tough for the broadcast industry. In 2010, just 34% of respondents reported that their broadcast technology budgets had increased versus the previous year.  32% reported that their budgets had stayed about the same, and 28% reported that their budgets had decreased, including 8% of respondents who said that their spending had declined by more than 30%.  

However, the indications are that the outlook for 2011 is better.  The question everyone wants to know is: when spending returns, where will money be spent?  

Traditionally, in the broadcast industry, major projects drive technology budgets, which in turn drive product purchase.  To help readers better understand how major projects are impacting technology spending, I recently wrote an article called Where is Money Being Spent in the Broadcast Industry? — A Review of Major Projects Being Planned, which provides some insight into broadcast CapEx on a global basis.  

In it, I showed the major projects that are being planned and budgeted for by more than 3,000 broadcast processionals – including radio and TV broadcasters, cable/satellite/IPTV operators, playout centers, post production facilities, and cable programmers.   

Here’s the chart from that article:  

  

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By a wide margin, more respondents selected “upgrading infrastructure for HD/ 3Gbps operations” than any other type of project.  In addition to upgrading infrastructure for HD/3Gbps operations, respondents also indicated that they plan to upgrade their transmission and distribution capabilities – presumably to support their transition to HDTV and to prepare for analog switch-off.  You can read the full post here.  

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What Will Drive Post Recession Broadcast Technology Spending?  

One of the key issues that broadcast professionals must ask themselves in a post-recession world is whether broadcast technology spending will be the same as the pre-recession days, or has there been a more fundamental shift.  

My suspicion is that things have changed – for both buyers and suppliers of broadcast technology.   

Broadcast technology buyers today remain for the most part risk averse, and many have shifted their focus.  They are focused on increasing efficiencies, and finding new ways to monetize content through initiatives like multi-platform content distribution.  At the same time I keep hearing the mantra that products have to “fit for purpose” and “good enough for the job” rather than the best.  

On the supplier side, vendors have also shifted their focus.  For one thing, many vendors seem to want to shift to a more software-centric model as IT technology continues its seemingly unstoppable progress.  At the same time, there is an increased emphasis on technologies that enable increased efficiencies through file-based workflows (in order to meet the needs of buyers mentioned above). However, some of the firms with leading expertise in software and file-based technologies are not necessarily the companies that were considered industry leaders pre-recession.  This leads one to imagine two scenarios – new leaders will emerge, or M&A among technology vendors will increase as larger technology suppliers look to bring much needed expertise in-house.  In reality both will probably happen, which means that the next few years will be interesting to watch.  

 

Investment Bankers Publish Strategic Analysis of the Media Technology Industry, Just in time for IBC 2010

broadcast industry technology trends, broadcast industry trends | Posted by Joe Zaller
Sep 08 2010

Boutique investment bank Silverwood partners, who is very active in the broadcast market, often publishes a commentary on the digital media industry in the run up to major trade shows, and IBC 2010 is no exception

The company recently published a 39-page slide deck  that offers a strategic analysis of the media technology industry. In it Silverwood bankers outline their perspective on the broadcast industry.  The document, which is in the form of a slide deck, is split into three parts.

Part one covers general industry trends such as activity, audience fragmentation, live vs. non-live broadcast, and 3DTV (long terms and short term impact),  before moving on to more detailed commentary on the state of the industry.

The analysis starts with a slide titled “The Crisis in Broadcast and Post‐Production” that uses IABM data to show the number of broadcast technology vendors operating at a loss while experiencing declining sales.

Paret three finishes up with an overview of online video (a slight departure from their NAB 2010 note) and a summary of recent industry M&A transactions.

In a nutshell, Silverwood’s thesis is that the industry is changing, and vendors must change and/or consolidate to survive in this new environment.  Silverwood makes this case by highlighting the changing business models of broadcasters, the unstoppable encroachment of generic IT technology, the shift in selling, and the ways in which broadcast technology procurement is changing.

Naturally, Silverwood who makes their money through fees associated with transactions, is encouraging vendors to explore M&A and consolidation in order to survive in the current environment.

Nevertheless, this is highly relevant and thought provoking document, which should be required reading before IBC 2010.

You can download Silverwood’s 39-page analysis of the media technology industry here.

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

broadcast industry technology trends, broadcast industry trends, broadcast technology market research | Posted by Joe Zaller
Aug 27 2010

This is part of 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.

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Recently, posts which rank broadcast technology vendors include:

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This post looks at how respondents ranked broadcast technology vendors for what is perhaps the most subjective driver we measured in the 2010 BBS — value for money.

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For some respondents value for money might mean low price, for others it might mean superior price/performance, while for others it could mean peace of mind in mission critical environments, regardless of the price.

Whatever the definition of value, the combination of a poor economy over the past few years and customer budget constraints have made many broadcast professionals more value-conscious than ever.  As a result, broadcast technology vendors must respond by continually delivering more value for less money.  This drives innovation in the broadcast supply chain as vendors are forced to compete on multiple levels.

Respondents were asked to rank broadcast technology vendor brands for “Value for Money” 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.

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

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Value for Money – The Top 30 Globally, Alphabetical Order

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There are a wide variety of vendors on this list, including large & small companies and those who produce audio & video products.  In order to better understand what drives the perception of value, we need to look at some of the factors behind these results.  These include the number of products produced by each vendor, the geographic location of the each vendor, and the types of product produced by the top 30 value companies.

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Number of products per vendor

When reviewing these results it’s important to understand how many products are produced by each vendor on this list.  This will help us to understand if whether reliability comes from small focused companies, or large multi-product vendors. 

The 2010 BBS evaluated 27 separate product categories.  In the previously published top 30 quality rankings, and top 30 reliability rankings, single product companies (those who were covered on only one product category in the 2010 BBS) completely dominated the rankings with about 2/3 of all positions.

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

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Just over half of the vendors in the top 30 value rankings produce a product in only one BBS category (out of 27 measured).  This is slightly less concentrated that other findings, such as reliability where there were 21 single product companies in the top 30.

In the case of value, there is a mix of large and small, and single and multi-product companies.  It’s worth pointing out here that much of this list is made up of the industry’s largest multi-product vendors.  For example Grass Valley (10 categories), Evertz and Miranda (5 categories each), Sony (4 categories), Ross Video (3 categories), Apple, Black Magic Design, Cisco, For-A, Harmonic, Ikegami, Panasonic, and JVC (2 categories each).

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Geographic Location

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

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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.

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Product Categories

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

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Out of the 27 product categories covered in the 2010 BBS, 21 appear on this list. This is on par with other metrics. For comparison, there are 20 product categories in the top 30 reliability rankings and 23 product categories in the top 30 quality rankings.

Signal processing products lead the list of products produced by the top 30 value leaders.  This is a fiercely competitive market that is at the heart of the transition to HDTV operations, and customers look for both value and quality.  Cameras and audio consoles were close behind, while microphones, production switchers, routing switchers and video transport also made a strong showing.

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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.

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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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