After many years of false hopes, bad predictions and the occasional tease, it appears that the era of consolidation is finally upon us. It must be true since random industry people mention it in the course of conversation, which had never been the case before. It had to happen sooner or later. Let’s think about why.
- The sustainable venues for ad-supported networks have been identified, exploited and/or bungled, but are now mature enough to be considered a zero sum game. Continued growth will eventually require business combinations or modified business models.
- Corporate networks not dependent upon ads are either ready for their 2.0 iteration or hot to get started. As a group they are both savvy and picky buyers. This means that the universe of potential solution providers will narrow, even as new companies spring up and proclaim themselves leaders.
- On top of that, consultants have entered the fray with varying degrees of expertise, independence and useful process. Whatever their methods, their own purposes are best served by keeping an initial list of candidates relatively short, and an internal list of trusted providers even shorter.
In short, the market dynamics will simply not support more than a dozen healthy, growing providers, if that. All of this points to consolidation. (Note: While this post was in process, one consultant spammed industry inboxes with a piece positioning software selection as “You versus the 300”. One presumes it is his strategy to market to prospects foolish enough to think that there really are 300 candidates that only he could sift through for them. Laughable, folks.)
Without rehashing the deal yet again, RMG Networks made industry headlines with their SPAC-powered acquisition of Symon Communications and the less understandable re-animation of the corpse that was Akoo. Additional deals are rumored to be in the offing. Whether the newly re-formed company succeeds or not is almost irrelevant. Their actions have defined a new liquidity strategy for investors in digital signage: put companies together and create a more attractive exit vehicle.
We are likely to see more examples of strange bedfellows as companies seek a way to find a competitive edge, execute a survival strategy or to achieve liquidity. The recent Wireless Ronin-Delphi Display deal was at least one of the above. Look for rumors or news of other tactics such as:
- Joint Ventures
- Rollups of network or technology assets
- Traditional buyouts or mergers
Scale, depth and breadth will be the buzzwords that accompany such deals, along with the occasional hat tip to synergy. Regardless of the structure that some of these deals may take, or the rationale provided for them, the new reality reflects a recognition that the industry is in transformation.