IABM DC releases 06 Global Market Valuation and Strategy Report

IABM DC releases 2016 Global Market Valuation and Strategy Report 07 March 2016

Media Technology Revenues Decline 4.3% in 2015 as Industry-Wide Structural Shift Continues The total market for media technology products and services declined 4.3% to $49.3bn in 2015, according to the newly released 2016 Global Market Valuation and Strategy Report (GMVR), published by IABM DC, a joint venture between IABM and Devoncroft Partners.

A number of factors contributed to the year-on-year decline in media technology spending. These include significant currency fluctuations, ongoing consolidation among media organizations, the strategic move from CAPEX to OPEX as end-users evolve their business models, and for the first time in six years, negative growth in services as well as products.

Revenues in 2015 from Products declined 4.4% to $22.01bn 44.6% of total industry revenue. 2015 Services revenues declined 4.2% to $27.31bn 55.4% of total industry revenue. 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.

For the four year period from 2012-2015, the compounded annual growth rate (CAGR) for the total industry was -1.0%. During the same period, the CAGR for media technology products and services was -2.4% and +0.1%, respectively.

Foreign exchange rate fluctuations had a significant impact in 2015. In Brazil and Russia, steep currency declines effectively doubled the prices for some media technology products thus deterring investment. Other currencies including the Canadian Dollar, Euro and Japanese Yen also declined versus the US Dollar, changing the competitive dynamic for many players. While many media technology suppliers have both revenues and costs in multiple currencies and are able to mitigate swings in foreign exchange to some extent, the same is not true for managed service providers that operate in a single territory. 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 notable drivers for the decline in overall 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 GMVR. Now in its seventh edition, the Global Market Valuation and Strategy report is an essential tool for all broadcast industry strategists. 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 extensive 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.

Joe Zaller, founder and president of Devoncroft Partners, said, The commercial models of many broadcasters and media companies have changed dramatically over the past few years. The combination of new digital and on-line delivery platforms, the shift to file-based workflows, the increasing drive for digital monetization, 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, said, 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 maximize business opportunities.

The changing media landscape of the demand side of the industry is clearly affecting the supply side, and many organizations 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.

Products include hardware, software and associated maintenance and support revenues.

Services include systems integration, consultancy, post-production, services to live production, managed services, playout, CDN, Infrastructure as a Service, OTT/OVP platforms, and terrestrial and satellite transmission infrastructure.

About the Global Market Valuation and Strategy Report (GMVR)

Considered by many to be the definitive source for broadcast and media technology market sizing and trend analysis, the GMVR draws on actual and future projected revenue and product shipment data

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