It is that time of year once again. With Labor Day behind us, the fourth quarter of the calendar stares us in the face. This week,
Fantasy Football the National Football League kicks off its 2012 season, which means that it is time gaze into the tea leaves and produce seven digital signage industry predictions for the coming year. I choose to trot out my predictions early because no one wants to read another prediction post in December. There is also the theory that I have a pathological need to be first, the blogging equivalent of driving a Corvette through a tunnel. Choose whichever argument fits your perception, and let’s get started by reviewing last year’s predictions.
- Dramatic changes in the playing field: Partial hit. While there has been some consolidation, mostly on the network side, 2012 did not bring dramatic change. I did score on the display vendor software piece, though.
- Ad dollars flow, but retail networks focus on branding and experience: Not so much on the ad dollars unfortunately, but the retail piece was dead on.
- Mobile strategies coalesce around the practical: Score!
- Camera-based measurement will meet resistance: Score! I don’t even hear anyone talking about it.
- Endpoints take on a varied look: I’ll rate this one as a partial hit. Certainly more interest in non-traditional displays, but the small screen avalanche has not yet started. It will.
- The cloud becomes understood for what it is… and what it isn’t: Partial hit. I think people now understand that cloud means infrastructure, not function. New, cloud-fueled business models have yet to emerge.
- Institutional capital remains on the sidelines, waiting for the smoke to clear: Half right. Little to no institutional action beyond portfolio shuffling and recaps. But corporate capital did not appear, either.
Overall, a fairly solid scorecard, even if there was nothing truly bold on the list. Armed and forewarned with metrics produced without a camera, we will climb into a borrowed Vette and provide a touchdown and an extra point’s worth of predictions for the next twelve months.
1. A Fall event is cobbled together to become a permanent fixture in North America
The digital signage universe descends upon Las Vegas each year in the February/March time frame for the Digital Signage Expo, now entering its second decade of growth. The opportunities for education, networking and lead generation are abundant and valuable, and a great way to kick off the year. It has always felt like there is room for something in the early Fall to cap off the calendar year, but it has not yet happened in a sustainable way. DSE’s Exponation wisely ditched a Fall expo in favor of two smaller, sponsored Forums and local huddles. The Fall version of CETW, the flagship show for the DSA, has found its identity and market in its own roots as more of an interactive and kiosk-focused conference than a digital signage event. But now something organic and digital signage-centric has happened in mid-October. A confluence of no less than twelve events are scheduled to occur in a single week in New York. There is something for everyone associated with digital signage, from investors to network operators to vendors and advertisers. Without doubt there are going to be hundreds of industry players in Manhattan that week. With all the activity, there is an Olympic feel to the whole thing: distinct events with varied appeal and several venues. I believe that people are starting to put this week on their calendar every year. What is needed to make this something special and sustainable is an Organizing Committee that helps with logistics, conflict resolution and marketing. Pulling an event together without having a central venue is not easy, but I think it will happen. Since the last Olympic games were held in London, perhaps it will take a Brit to pull it off. Is Sebastian Coe busy?
2. No Pi in the Sky
While the worthy and wholly non-commercial development of the Raspberry Pi has been an interesting story to follow for a year or so, its initial release is not going to change the digital signage playing field. Players will indeed continue to evolve with smaller form, lower prices and more power, driven more by Moore’s Law than by the wishful thinking of tinkerers. The higher end of the market is calling for more function, more integration and more processor-intensive features that will require robust players. ARM-based players running some version of Linux will have an impact for specific use cases, and it will take all of the next year to develop both commercially acceptable players and the attendant use cases. Just don’t expect them to be Raspberry Pis priced at $25 when they appear. That raspberry flavor is not always what you think it is.
3. Streaming is not dreaming
In the world of content, 2013 may be the year in which streaming content makes its way into the mainstream (sorry) of available tools for network operators. No, it is not yet time to predict streaming as the primary delivery mode for content (sorry Cisco), but rather live content, streamed, as a content option within a typical playlist. In the world of corporate communications, think about live sessions from the office of the CEO. In commercial digital signage networks, think about live news feeds keyed to a location or region. In retail, think about live trunk shows, celebrity events and product introductions. The possibilities are endless even if some hurdles to making it happen exist. Many new and engaging ideas can be accommodated by a live stream. Managing the start and end of a live stream within a scheduled playlist will be a challenge to overcome. But the options for streaming are starting to emerge, and used correctly can be valuable and compelling. And guess what? If you have the infrastructure for streaming, you can push the stream to those smartphones in the consumers’ pockets, not just to the big screen. Look for some examples to appear next year.
4. Big deals define the landscape.
The next year will be one of seismic new network deals being closed. Most will be corporate-driven, some will not. Importantly, the outcome of the various processes around these deals will change the landscape in a permanent way, both in how the game itself is played as well as who plays it. The way that digital signage is sold is going to change, because the old way is simply not how customers want to buy it. And once again, market forces and increased educational efforts will narrow the field for each pursuit, whether based on niche specialties, track record, feature/function/architecture, or all of the above. I am conscious of a habit I have of using the word interesting too often. But this is going to be interesting, and it segues nicely into part of the next prediction.
5. Consolidation? It depends.
Here’s how it works: networks consolidate and vendors shrink. That is because it is easier to rationalize assets and resources on the network side than it is to do the same thing with divergent technology stacks and development organizations. With the exception of bottom feeders, no one has really wanted to invest the time, money and brain damage to consolidate software. Perhaps someone will try it, attempting to leverage customer bases, geography and/or distribution channels. But that is costly and risky business if done on a large scale. Customers will tend to get concerned. On that basis, I don’t think you will see vendor consolidation. Instead you may see shrinkage. Not the George Costanza kind, but the natural forces of an over-saturated market in play. Some vertical expansion is also possible, but beware contrived verticalization… we’ve already seen what that has rendered: not much beyond smoke and (quite literally) mirrors. Networks will continue to be the consolidation play.
Spending on ad-supported networks has been spotty this year, certainly impacted by the global economic mess. There have been apparent failures and there have been some nice success stories. In the great middle, there are reports of some networks dropping their proverbial pants on pricing to attract advertisers. The result is analogous to George’s experience in the video above. It is tactic that you can’t take back. Agencies smell fear, and will generally prefer to flee to better properties than to get a bargain. While there may be slight downward pressure on rates, savvy networks will counter with targeted buys, legitimate measurement and local sales efforts which can garner higher rates. One disturbing challenge is the lack of momentum of the DSP and ad buying platform part of the ecosystem. We lost a couple of players in the past year, others are struggling, and one new entrant doesn’t seem to realize that this is not an online business. Something has to give on the technology side of advertising. Who it is and what it will be is unclear, but there is a plum to be pulled from this pie.
7. Big money? It is waiting outside the exit.
Like many others, I have anticipated the arrival of big institutional and corporate money for some time now. I thought the corporate money would arrive last year, and I whiffed on that one. It seems to me that the corporations and institutions are actually connected. Here’s how. The first wave of institutional money came into the space in the first few years of the new century. A second wave followed the insane cash-outs on PRN and SignStorey in a typical “me too” reaction. Both of the takers on the two big exits were corporate buyers (Thomson and CBS, respectively) snapping up network-related properties. Cisco jumped in around the same time by snapping up a technology startup (Tivella). Since then, there have been few exits of note. I think the next wave of institutional money will not come until there are some new exits, especially on the technology side. There are in fact several VC-backed tech companies out there with antsy investors looking for an exit. The likely buyers, if they appear, will again be corporations. Until the institutions see new exits and can calculate expected ROI on new deals with some confidence, they are going to hold on to their chips. Since I don’t see huge exits in the offing on either end of the ecosystem, I am going to modify last year’s prediction a bit. Expect no major institutional action for the tech companies until the smoke clears after a busy 2013, followed by some big bets being placed. Look for a couple of exits (to corporate buyers) on the network side in the coming year.
That’s seven to ponder. Let me know your thoughts in the comment section. We can have fun reviewing it all next year. Until then, I’ll have to return the keys to that Corvette. If I smoked, I’d have a cigarette.