Broadcast, media supply tech revs inch up annually but profit growth stalls
Joseph O'Halloran
| 28 February 2018

The first of IABM's new format supply trends reports has shown modest growth in year-on-year sales in the broadcast and media technology market, but with fundamental reasons for optimism looking ahead.

Covering the six months to December 2017, the Supply Trends Report fom the international trade association for suppliers of broadcast and media technology, combined financial data on the sector drawn from public and private sources with survey evidence from members on current trends, issues and sentiment.

The report found that sales grew by 1.2% in December 2017, with SME performance improving at a faster rate than large companies for the first time in several years.

Yet while sales improved slightly, profit growth continued to slow, running at 75.9% of the December 2016 level, IABM also revealed that a 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, was also shown to be well underway, though hardware remains the primary source of both revenues and profits for most suppliers, with the caveat of the aforementioned decline in profits. However, some respondents who said their primary source of revenues is hardware also said that their primary source of profits was now software, which generally carried higher margins than hardware.

The IABM confidence ratio, which reflects business sentiment looking forward for the coming 12 months declined from a 7.4 mid-2017 to a less optimistic 5.6 in December 2017. This, said IABM, was relatively low by historical standards. It also noted that companies which 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.

"Although some suppliers are going through difficult times at present, there are reasons to remain positive about the future of media technology," insisted IABM CEO Peter White. "2018 is a 'spike' year with plenty of events-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."

Yet the report also showed the continuing difficulty for companies in recruiting staff with both the broadcast and IT skillsets needed today.