IABM, the international trade association for suppliers of broadcast and media technology, has just released the first of its new format Supply Trends Reports. Covering the six months to December 2017, the Supply Trends Report combines actual financial data on the broadcast and media supply sector drawn from public and private sources with survey evidence from members on current trends, issues and sentiment.
Analysis of the data is carried out by IABM’s in-house analysts, led by lead analyst, Lorenzo Zanni, and gives an authoritative overview of the performance of, and outlook for, the broadcast and media technology supply sector. Following is a headline summary of the Report’s findings. The full report may be reviewed by IABM members here, and a short blog that discusses the wider industry picture, including end-users, can be found here.
Year-on-year sales in the broadcast and media technology market grew by 1.2 percent in December 2017, with SMEs’ performance improving at a faster rate than large companies for the first time in several years. But while sales improved slightly, profit growth continued to slow, running at 75.9 percent of the December 2016 level. The continuing shift in buyers’ preferences for software running in generic IT technology, their increased concern for efficiency and a highly competitive market are all continuing to exert pressure on selling prices, with margins reducing despite vendors decreasing expenditure on R&D, recruitment, sales, marketing and shows.
The transition to software (including the cloud) is well underway, though hardware remains the primary source of both revenues and profits for most suppliers – with profits in sharp decline as noted above. However, some respondents who said their primary source of revenues is hardware also said that their primary source of profits is now software, which generally carries higher margins than hardware.
Unsurprisingly given the Supply Trends Report’s findings on profitability, the IABM confidence ratio, which reflects business sentiment looking forward to the next year, declined from a fairly robust 7.4 mid-2017 to a less optimistic 5.6 in December 2017; this is relatively low by historical standards. Companies that primarily rely on software revenues were however significantly more confident than those primarily relying on hardware revenues – reflecting the now long-standing transition of technology buyers from hardware to software.
The Report also reflects the continuing difficulty for companies in recruiting staff with both the broadcast and IT skillsets needed today.
“Although some suppliers are going through difficult times at present, there are reasons to remain positive about the future of media technology,” said Peter White, CEO, IABM. “2018 is a ‘spike’ year with plenty of event-related spending guaranteeing growth and opportunities for many – particularly with SMPTE ST2110 now published and giving end-users the confidence to move forward with their IP plans.
“Adoption of emerging technologies will continue to rise, driving more growth for those suppliers that have invested in them. In the longer term, technology spending will continue to grow as traditional technology users try to keep up with the volatile nature of online video, leaving a plethora of opportunities for suppliers,” White concluded.