Media tech sales down $2 billion in 2015
IABM's annual report paints a harsh picture of the past year in the broadcast tech sector
IABM has released its Global Market Valuation and Strategy Report for 2016, which describes in black and white, the downturn everybody has already felt. According to the new report, media technology products and services declined 4.3% in 2015 to $49.3 billion.
While Product revenues have been in decline since 2012, this is the first year when Services revenues have also decreased since the first IABM GMVR in 2006. The report said that revenues from products declined 4.4% to $22.01 billion, which was 44.6% of total industry revenue. Services revenues declined 4.2% to $27.31 billion, or 55.4% of total industry revenue.
For the four year period from 2012-2015, the compounded annual growth rate for the total industry was -1.0%. During the same period, the CAGR for media technology products was -2.4% and for services, +0.1%.
Foreign exchange rate fluctuations had a significant impact in 2015, the report noted. In Brazil and Russia, steep currency declines substantially increased the prices for some media technology products, deterring investment. Other currencies including the Canadian Dollar, Euro and Japanese Yen also declined versus the US Dollar, changing the competitive dynamic for some players. Much of the decline in Europe reported for the services segment results directly from the weakening of the Euro against the US Dollar in the period.
Other drivers for the decline in revenues range from the end of government-backed analog switch-off programs in many countries, to the ongoing consolidation of major media companies, to a pronounced shift in technology procurement strategies among end-users, including broadcasters, pay TV operators and media service providers.
These factors, and their impact on the market, are explored in more detail throughout the 2016 Global Market Valuation and Strategy report. The 2016 edition provides market sizing data for approximately 150 product categories across nine market segments. Data tables provide regional splits for product and service revenues, as well as forecasts to 2019 at segment and sub-segment levels. The data tables are accompanied by written commentary (available in Q1 2016), that discusses the drivers affecting the market and an analysis of how changing markets and technologies may shape the future composition of the broadcast and media technology industry.
“The commercial models of many broadcasters and media companies have changed dramatically over the past few years,” said Joe Zaller, founder and president of Devoncroft Partners, IABM’s partner in the report. “The combination of new digital and on-line delivery platforms, the shift to file-based workflows, the increasing drive for digital monetisation, and the promise of COTS IT hardware managed by software defined networks have all been catalysts for an industry-wide rethinking of both what technology is required to support future business goals, and whether it will be purchased or outsourced. We believe these factors will continue to alter the structure of the industry through the end of our forecast period – 2019.”
Peter White, IABM CEO, commented, “Although aggregate industry growth declined overall in 2015, the broadcast and media technology market is still undoubtedly a dynamic and exciting place to be. There was a significant impact on revenues overall from extensive weakening of most currencies against the US Dollar in the year, which particularly impacted services revenues in EMEA where there is a concentration of services suppliers. In addition, although revenues in the majority of product categories experienced a degree of decline, some segments of the market are growing strongly. The Global Market Valuation and Strategy Report illuminates this, and will make compelling reading for those companies that are looking to maximise business opportunities.
“The changing media landscape of the demand side of the industry is clearly affecting the supply side, and many organisations throughout the broadcast and media ecosystem have had to reinvent themselves. Despite a continuing downward trend so far in 2016, confidence still remains in the sector and spend on research and development is continuing at impressively high levels. We are experiencing a wave of innovation and change both from existing suppliers and from new entrants in the market which is fuelling cautious optimism for 2016 and beyond; our industry clearly believes that it can win through and is backing itself to do so.”
The full report is available to IABM members through IABM Digital Media Market Intelligence.
Photo by Dan Moyle.