in December 2004
to Digital AV
By Neal Weinstock
Winners and Losers.
AV business regularly goes through rounds of new technology
infusions. Every time, we all have to re-strategize just
where our bread will be buttered. We all know we’re
in the middle of another of those rounds. This time, we’re
seeing not only the usual infiltration of new products from
consumer electronics and AV production, but also all of
those products, and our traditional ones, merging with enterprise
IT, getting networked and being created with software embedded
This may not be news to any
readers. In the new Weinstock Media Analysis report, “Transitions
to Digital Media/Winners and Losers,” we found that
71% of our representative sample of system integrators agree:
We’re in a period of complex change that sorely taxes
their ability to stay in business. This is serious stuff.
|VALUE OF NEW
DEVICE-BASED SERVICES BUSINESSES, US ONLY: 2003-2009
|Digital Signage (Advertising Only)
|Education & Religion
|Source: Weinstock Media
Analysis © 2004; all rights reserved.
|IS THIS TRANSITION DIFFERENT?
|FROM A REPRESENTATIVE
SURVEY OF 150 AV SYSTEMS INTEGRATORS, NOVEMBER 2004
|New Technology Makes Profitability Tougher
|Expect to Grow Profit on New Technology
|Expect to Provide Networked Services by 2009
|Most important New Technology for Profitability Is:
Weinstock Media Analysis © 2004; all rights reserved.
A More Critical Era?
But is our period of change
now a more critical era, one tougher to navigate across,
than, for example, the transition from open reel tape recorders
and overhead projectors to wherever we’ve been the
last decade or so? At first glance, surely yes. There is
a far more complicated set of possibilities now than ever.
At second glance, maybe not. Earlier transitions in our
business clearly created opportunities. You go from not
being able to provide good sound reinforcement in a large
hall to being able to provide it, and you can make some
good money designing and building a sound system!
But at second glance, once
it gets really, really easy to build that sound system,
making a buck at it gets tough. Avoiding commoditization
is always the big challenge for our industry. At least now
we seem to be developing many complex new products and services
at once, and that implies many differently successful new
That’s a conclusion
we reached in the report. It’s a wide-ranging study
that evolved from the commonalities we were seeing in the
different media technology fields we’d been bench-marking
over the last few years: digital signage, markets for AV
in education, government, medical and other industries,
and production/post-production for entertainment.
In fact, add together all
the new services-built-around-new-devices business that
are at the heart of the transitions we’re going through,
and WMA estimates that we should generate about $24.7 billion
in annual revenues by 2009.
Insights gleaned from our
private consulting with leading manufacturers have entered
in here, too. Comparing and contrasting these similar and
yet different fields has allowed us to get some fresh perspective
on common and differing issues.
The questions we tried to
• Where are
the new product opportunities? Oddly enough, there
are a number of commonalities across all the industries
we looked at. Boil down the definitions of where people
expect to find opportunities and they synthesize into “networked
devices that enable new services.” In AV systems design,
that means networked digital signage, touchscreens and sound
systems delivering advertising, interactive purchasing,
interactive education and collaborative work.
Almost all such services involve
material distributed by a central server and called up by
users with some kind of automated aids (vision systems,
audio recognition, radio-frequency ID, etc.). Key to most
of these products is media database software that can figure
out what material to play where and when, or who has used
what material where and when, or who has permission to use
what material, and how to charge for it all. In an installed
AV context, call this TiVO for public places or collaborative
• What are the
most overrated new products? Advertising that clutters
up spaces people want to be ad-free. (Audio is, in fact,
seen as far more obtrusive than video ads.) Automated systems
that chip away at privacy. But we found regional differences
here more pronounced than inter-industry differences.
For example, New Yorkers,
perhaps the most already-bombarded with digital signage,
often reject in-taxi ads and dedicated TV channels in bars
and waiting rooms that are welcome in the rest of the country.
Conversely, Northeasterners in general welcome louder audio
in public places than the rest of the country (but not in
church). West Coast respondents are more upset about loss
• Who will realize
the most benefit from the new generation of products?
By far, that’s the user. But device-makers that are
able to wrap a comprehensive service into a simple-to-install
and simple-to-use product will also reap the rewards of
loyal users over a long period of time—and probably
become known more as service providers paid by subscriptions
and software licenses than as device-suppliers. Giant new
media companies will evolve from device-makers. Device-makers
also bear huge risks, though: A device that fails is probably
a company that fails.
Database creators, automated
sensing software creators and workflow improvement software
creators are all likely to be low-risk winners, and one
or two of these may even turn into a new Microsoft. AV program
producers benefit, too; there will be lots more new, specialized
markets for advertising and information.
Meanwhile, systems integrators
and installers are also low-risk winners: Somebody has to
customize all these systems for particular environments
and install them. Some of these companies are also likely
to turn into device-makers and software service providers,
because their strong knowledge of particular markets can
be leveraged into specialized services.
• Who are the
losers? Old media companies that rely too much
on established distribution media: plain old TV and radio
and paper signage.
Here’s our basic understanding,
after all. Now comes the end game for media fragmentation.
Multiple data paths to audiences and users in all sorts
of workplaces and public places will challenge each sort
of transmission provider, technology and service provider
and advertiser, to maintain control of its audience or customers.
It is already widely accepted that the new file distribution
means challenge content owners. They actually offer far
more challenge to pipeline owners. We are entering an era
in which the medium is defined by the end device and its
positioning in people’s lives.
For people whose job it is
to position those devices, this is really a time of great
opportunity. So stop worrying and embrace media complexity!
It’s making for more solid new opportunities now than