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IABM DC 2019 Global Market Valuation and Strategy Report reveals continuing structural shift

Wed 02, 10 2019

Broadcast and media technology revenues up 2.5% in 2018

The broadcast and media technology sector achieved 2.5% growth in 2018, according to the recently released 2019 Global Market Valuation and Strategy Report (GMVR), published by IABM DC LLC, a joint venture between IABM and Devoncroft Partners. This headline number builds on the modest 1.2% growth reported in last year’s Report.

Aggregate revenues for all media technology products and services in 2018 was $52.9 billion, up 2.5% over the previous year. Despite the year-on-year increase, overall market revenues in 2018 were 1.7 percentage points below their 2014 peak of $53.8 billion.

'Broadcast and media technology revenues up 2.5% in 2018' – IABM DC 2019 Global Market Valuation and Strategy Report Click To Tweet

Examination of these figures reveals that the gap between revenues derived from the sale of hardware and software products and those from 3rd party service providers was 11.7 percentage points, the widest margin observed since the inception of the Report in 2009. This is despite a restructuring of the GMVR segmentation model, where $928.6 million of revenues from certain OTT components were recategorized as products because they are sold as modules.

Revenues from hardware and software products (and associated support and maintenance revenues) accounted for 44.2% of the total industry in 2018, or $23.4 billion, up 1.5% on 2017. However, the compounded annual growth rate (CAGR) of product revenues from 2012-2018 was negative 1%.

Revenues from services accounted for 55.8% of the total industry in 2018, or $29.5 billion, up 3.2% on 2017. The compounded annual growth (CAGR) of services revenue from 2012-2018 was 0.4%.

There are also significant market opportunities revealed by the GMVR. For example, product categories such as Live Contribution over Unmanaged Networks, Workflow Orchestration, IP Networks & Switches, and Cloud-based Compute and Storage continued to enjoy double-digit growth rates in 2018.

Although normal industry cyclicality and exchange rate fluctuations play a role in the newly published figures (all GVMR numbers are reported in US Dollars), a variety of other factors continue to impact the market, including:

  • End-users are increasingly implementing a generational change in technology infrastructure by moving to a cloud, multi-cloud or hybrid cloud/on-prem model. This move has implications across every aspect of their businesses – people, skills, technology and business models
  • As consumer media consumption patterns evolve, and the number of OTT, streaming and S-VOD services continued to grow rapidly in 2018, broadcasters are demanding technology solutions that are more agile and flexible. These are increasingly software and cloud-based with a focus on workflow automation and intelligence through emerging AI/ML deployments at some broadcast and media organizations
  • The continuing search for scale among broadcasters, telcos and media companies to enable them to compete with the digital giants has driven increased M&A activity and joint initiatives in 2018 (and onwards into 2019), putting more pressure on tech suppliers’ pricing and reducing the number of sales opportunities
  • The relentless growth in content investment continued during 2018, with traditional and new media companies pouring billions into new programming to attract digital subscribers to their OTT offerings. This has had the trickle-down effect of raising technology spending in some product categories, particularly production and post- production products and services
  • The move to digital and HD is still lagging in some regions, particularly Africa, the Middle East and Latin America mainly due to a combination of lack of government will or budget. Government regulation also continues to impact the industry in certain regions with mandates for localized content, issuance or delay of new broadcasting licences, auctions of broadcast spectrum, and next generation broadcast standards
  • The trend of media companies developing in-house solutions continues to grow, putting more pressure on tech vendors. These in-house solutions range from content management, to advertising technologies, to OTT services that allow them to bypass traditional distribution outlets, and directly target consumers

“Against the backdrop of continuing industry-wide change, media companies and broadcasters are transforming their business models,” said Peter White, IABM CEO. “Integral to this transformation is a complete overhaul of their traditional technology procurement and deployment strategies to focus on operational flexibility, which is built on OPEX-based software and services, as reflected in the 2019 GMVR. The impact of these fundamental changes continues to ripple through the supplier community, with those who have lagged in shifting their focus to industry-specific software looking exposed, while those that have embraced this change are moving forward.

“Business model changes require enterprise-wide business transformation that involves everything from operational practices to company culture. This year’s GMVR starkly illustrates that tech suppliers cannot expect media companies simply to replace older technologies with new versions of the same. Instead, they need to collaborate and become an integral component of broadcasters’ strategic focus as the power is now fully in the hands of the viewers with an ever-increasing number of media choices,” White concluded.

“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, founder 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.”

Find out more about the IABM DC GMVR at www.iabmdc.com

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