Growth returned to the broadcast and media technology market in 2016, according to the 2017 Global Market Valuation and Strategy Report (GMVR).
The report, published by IABM DC – a joint venture between the IABM and Devoncroft Partners, found that the aggregate revenues for all media technology products and services in 2016 was $50.97 billion, up 2.3 per cent on the previous year.
The new figures follow a dramatic decline of 6.3 per cent in 2015. Despite last year's increase, however, overall market revenues in 2016 were at levels last seen in the 2010-2011 timeframe.
The findings revealed that the gap between products and services continued to widen in 2016, continuing a trend that began in 2011. Revenues from hardware and software products (and associated support revenues) represented 43.3 per cent of the total industry in 2016, or $22.07 billion, up 0.9 per cent versus 2015. The compounded annual growth rate (CAGR) of product revenues from 2012-2016 was -2.08 per cent. Revenues from services accounted for 56.7 per cent of the total industry in 2016, or $28.91 billion, up 3.3 per cent versus 2015. The compounded annual growth (CAGR) of services revenue from 2012-2016 was 0.20 per cent.
Although normal industry churn and exchange rate fluctuations play a role in the newly published figures (all GVMR numbers are reported in US Dollars), the report states that a variety of other factors continue to impact the market, including:
- Certain end-users are implementing, or planning for, a generational change in technology infrastructure (e.g. transition to IP-based systems, and the adoption of 4K for content creation and delivery)
- Standards for IP-based production and delivery systems are still yet to be finalised, potentially delaying projects, while raising concerns over interoperability in multi-vendor deployments
- Government regulation continues to impact the industry in certain regions. These include mandates for localised content, issuance or delay of new broadcasting licences, auctions of broadcast spectrum, and next generation broadcast standards
- As consumer media consumption patterns evolve, and the number of OTT, streaming and SVoD services increases, broadcasters are demanding technology solutions that are more agile and flexible. Some of these solutions require the establishment of new pricing and revenue models for both buyers and sellers of technology products and services
- Cloud-based solutions continue to improve for applications ranging from on-demand computing power, to playout, to archive, even as they decline in price
- Media companies are developing in-house solutions ranging from content management, to advertising technologies, to OTT services that allow them to bypass traditional distribution outlets, and directly target consumers
There are also significant market opportunities revealed by the GMVR, according to IABM DC. For example, workflow orchestration grew in 2016, OTT managed services increased by 17 per cent, and the market for IP routers also continued to grow at a CAGR of 16.06 per cent between 2012 and 2016.
“As we go through this structural shift and transition gradually from hardware to software and from Capex to recurring revenue streams, the GMVR reveals potential areas of high growth within the industry for vendors to consider,” said Peter White, IABM CEO.
“The static overall market reflects the change to new business models and the change in product mix that the market is going through at present. While the overall revenue potential of projects is reducing as software becomes the norm, their profit potential increases because of much lower material costs for vendors. We cannot compare the present-day industry with the one we were in even five years ago; this is a new market with plenty of opportunity for innovators.”
“The GMVR provides invaluable insights into the shifting structure of the broadcast and media technology market that will be of benefit every company operating in the sector,” said Joe Zaller, CEO of Devoncroft Partners.
“Whether you are benchmarking your performance against other vendors or wider industry trends, preparing for M&A activity or are looking to enter the market, the GMVR is the only authoritative source of hard information that covers every area of the industry.”