The total market for media technology products and services declined 4.3% to
$49.3 billion 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 $22.01 billion – 44.6% of total
industry revenue. 2015 services revenues declined 4.2% to $27.31 billion – 55.4% of total industry revenue. While product revenues have been in decline since 2012, this is the first year seeing services revenues decrease since the first IABM GMVR in 2006.
For the four year period from 2012 to 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 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.
