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Media technology revenues decline 4.3% in 2015 --
Mon, 29 Feb 2016 16:22
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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 number of factors contributed to the year-on-year decline in media technology spending. These include significant currency fluctuations, ongoing consolidation among media organisations, 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 analogue switch-off programmes 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 the Global Market Valuation and Strategy report.
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 online 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, 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.
For more information visit the IABM DC website.
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