Update on market intelligence – Sector’s confidence bounces back on the back of improving financial outlook

Update on market intelligence – Sector’s confidence bounces back on the back of improving financial outlook

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Lorenzo Zanni, Research Analyst, IABM, discusses new IABM research showing a recovery in industry confidence, arguably driven by an improvement in financial performance for broadcast & media technology.  Overall market sales growth jumped from August 2016 to November 2016. This improvement was driven by large companies’ sales growth, which had increased again between August and November 2016.

Data from the IABM Industry Index – December 2016 showed an improvement in broadcast and media technology companies’ financials.
Overall market sales growth jumped from the -0.6% reported in August 2016 to 1.6% in November 2016. This significant improvement was driven by large companies’ sales growth, which increased from 0.2% in August 2016 to 3.4% in November 2016. As opposed to large companies’ improving situation, SMEs’ sales growth continued to deteriorate – decreasing from -6.1% in August 2016 to -9.3% in November 2016. As a result of this, the financial divide between large companies and SMEs’ sales growth has more than doubled reaching 12.8%. This is a record level for the industry. The chart below shows market sales growth for the whole industry.

The IABM Industry Index is released quarterly, and covers the financial performance of 100+ companies in the North American and European B&MT sectors. It is based on the latest filed financial updates, accounts and submissions to IABM under NDA from member companies. The IABM Industry Index is therefore a statement of fact looking back at recent results to track overall performance trends in the industry.

As far as profits are concerned, the situation has significantly improved compared to previous months. Profits declined by 12.4% in November 2016 as opposed to the -16.3% reported in August 2016. This is undoubtedly a good sign: profits are still declining but results for the last quarter of 2016 show a reversal of the overall downward trend . Broadcast and media technology suppliers have strived to achieve increased cost efficiencies to alleviate declining demand from end-users. These efforts are starting to produce results. While companies have also struggled to deal with the increasing volatility in exchange rates, the number of loss making companies has decreased from 37% to 35% of our sample.

The cyclical demand of end-users covering the Rio Summer Games improved suppliers’ performance in Q3 2016. The effect on large companies’ financials is clear as illustrated by the rise in their growth rate between August 2016 and November 2016. Some private SMEs included in our sample have benefited from this cyclical demand as well but this will translate into positive revenue figures only when they file their accounts for fiscal 2016 in 2017. Overall, we expect industry performance to improve in 2017 as broadcast and media technology suppliers continue to adapt to the shift in technology spending by end-users. Technology upgrades in various regions will also help boost sales of legacy products.

The highlight of the January 2017 Industry Trends Survey is the recovery in confidence compared to the previous two surveys. The IABM Confidence Ratio, which is based on year-on-year industry confidence, bounced back from 4.2 in H1 2016 to 9.7 in H2 2016.

The IABM Industry Trends Survey is a biannual qualitative report on the state of the broadcast and media technology industry. It is based on responses from senior decision makers in IABM member organizations representing a broad cross-section of companies in the broadcast and media technology sector globally. Only member companies that complete the survey have access to the full survey results.

The recovery in confidence can be attributed both to an increase in cyclical demand deriving from the 2016 Summer Games and to expectations of rising customer demand in 2017. In fact, in 2017, ATSC 3.0 and the Spectrum Auction’s re-pack process will arguably drive spending in transmission-related products and services. Also, broadcasters that transitioned to HD in 2007 will also start replacing their equipment in 2017 – assuming a 10-year useful life for HD equipment.

Suppliers will benefit from the demand for traditional products and services and will continue to invest in next-generation offerings to accommodate the gradual customer transition to new media infrastructures.

About IABM

IABM is the international trade association for suppliers of broadcast and media technology. IABM members represent over 80% of the market’s revenues; IABM facilitates the important networking and interaction between suppliers that shape and define the unique ecosystem of the broadcast and media technology industry.

IABM supports member companies with a comprehensive range of services across market intelligence, training, events, technology, exhibitions, business standards and best practices. We hold the interests of member companies as paramount, and strive to provide strong guidance and support at every level in all geographies.

We understand that in today’s rapidly changing media landscape, our members have never had a greater need for timely, relevant and effective advice and support. IABM’s mission is to be an ever more powerful beacon illuminating the way forward, highly responsive to all our members’ needs and helping them to successfully navigate change and prosper.

Further information about IABM and its activities can be found at www.theiabm.org.



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