IABM members hold positive expectations on 2016 despite sales and profits decline 11 January 2016
IABM Market Intelligence Blog
Lorenzo Zanni, IABM Research Analyst
lorenzo.zanni@theiabm.org
The latest editions of the IABM Industry Index, Benchmark Report and Industry Trends Survey are now available exclusively to IABM Members in the Research section of our website.
The IABM Industry Index is released quarterly and covers the performance of over 100 companies in the North American and European broadcast and media technology sectors, providing like-for-like comparisons to track emerging trends.
The IABM Benchmark Report, released half yearly, delves deeper into company accounts and creates a series of benchmark parameters, which enable IABM member companies to evaluate their own performance within the B&MT sector and related sectors.
The IABM Industry Trends Survey is a half-yearly, qualitative report based on responses from senior decision makers in IABM member companies. The sample represents a broad cross-section of companies in the broadcast manufacturing and media technology sector globally.
Financial results of broadcast and media technology (B&MT) companies have significantly deteriorated in autumn following a worse than expected performance in Q3. The Industry Index shows that sales are still growing but have slowed down compared to recent months. More worryingly, profits have plunged to a year low and are now close to a zero growth rate. The chart below illustrates the sharp decline in profits started in August 2015.
The Benchmark Report indicates that the B&MT sector remains healthy from a financial standpoint although its overall performance has weakened compared to other comparative industries. Despite the revenue decline, B&MT companies are still heavily investing on R&D and Selling & Administration costs to catch up with new market developments.
Interestingly, the Industry Trends Survey outcome is positive as confidence in the industry is higher than six months ago. The divergence between quantitative and qualitative results may be explained by a rising optimism for 2016 as a number of key events is expected to drive new demand for broadcast and media technology products and services. In fact, 2016 will be a quadrennial year with the Olympic Games, UEFA European Championship and the US elections.
Putting aside the excitement for these events, the B&MT industry is experiencing a difficult moment as the shift in technology spending by end-users has curbed demand for traditional broadcast products and services (see recent Market Intelligence blog on the pre-IBC End-User Survey). In fact, end-users are focusing their spending on technologies facilitating the monetisation of multi-platform delivery. These technologies are increasingly software-based and are marketed at lower price points than bespoke broadcast products. This has led to intense competition in the market forcing traditional vendors to introduce new offerings.
This technology-driven transition has been made more difficult by other recent macro trends. Exchange rate headwinds continue to pose US and UK multinationals at a competitive disadvantage compared to European exporters. Consolidation on the demand side is representing another hurdle to growth as larger technology buyers are able to extract substantial discounts from vendors. The B&MT marketplace is therefore increasingly turbulent and competitive. 2016 may represent a sigh of relief for some vendors as cyclical investment is expected to refill their coffers. However, in the long-run, a re-thinking of the traditional business model is needed to keep up with the changing end-users' technology preferences.
For more information or to discuss any of this please email our Research Analyst Lorenzo Zanni (lorenzo.zanni@theiabm.org)
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IABM members hold positive expectations on 2016 despite sales and profits decline 11 January 2016
