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.
The Software Holocron (Digital Signage, Gesture, Kiosk and Touch) kept up to date here (free of charge I might add) by my technical team and I lists well north of six or seven hunded vendors making more like a thousand products on the market, see http://www.dailydooh.com/digital-signage-software-vendor-list
As I believe Ken has mentioned before however, realistically there are maybe a dozen vendors and products that can be taken seriously. In each vertical (corporate comms, ad serving, QSR, casino, hospitality, retail etc) it’s simple enough to name three or four that can scale, work properly, have a good number of existing customers for each ‘vertical’.
Thanks for a good write-up Ken. As a veteran of the industry I have seen so many changes as to boggle the mind. My little place-based network has managed to hold on through all of it and we are finally back in an expansion mode albeit not in our original vertical. 2010 through 2012 were rough I will not lie but I believe better things are on the horizon. I know that is the rally cry of every entrepreneur but having been to the edge and back I know it can’t really get any worse than it was.
Thanks for the comment. I am a big believer that dealing with adversity is the hallmark of an entrepreneur. It is sort of a merit badge we all have to earn along the way. Glad to hear that things are improving, and hopefully the trends in the industry will work to your advantage one way or the other!
As the aforementioned consultant accused of “spamming”, I can assure you that while I agree for the most part with what you say, that there are still legion of buyers out there who are not savvy and simply overwhelmed. I certainly do not purport that only our group can sift through the vendors, but many newcomers to our industry have a lot of difficulty identifying who are the leaders and serious players. Our aim is to help people make well informed choices, plain and simple. That should accelerate consolidation if you believe in “efficient markets”. –Lou
Thanks for the comment as well as the call we had. As we discussed on the phone, my central beef with your premise is that there are really not 300 or 600 candidates for any given opportunity. We do agree that there is a serious issue in the marketplace where legitimate buyers can become confused by the number of selling messages in the solution space, many emanating from empty suits and snake oil salesmen. I would suggest that if an independent party invested the time and money to do a deep dive on a dozen solutions, they would be in a position to provide real value to high value clients. As far as I know, none have bothered. Until then, call me a cynic.
Excellent commentary Ken.. the supply sector has always been a long, low pyramid, widening on the bottom as new providers seek some share of a growing revenue pie. Digital signage is a g
sorry… Digital signage is a goldmine of frustrations and disappointments.. the goldmine being open to those firms that solve problems.. well. Quality suppliers know what it takes to assure project success and I have noted increasingly that quality suppliers are walking away from initiatives that are not “recipe-ed” for success.. all others (the also-rans) travel the path of diminishing returns… a path that will increasingly be littered with “might have beens”. Many still believe digital signage to be a technology industry – it is not, it is a knowledge industry.
Thanks for the comment. I agree with your thoughts on the also-rans, and view the intermediate term prospects of their efforts to be quite gloomy. This is a knowledge-based business. Solutions trump gizmos. Gizmos that provide solutions have merit. But constant pressing of the price button is not a great strategy if you are in fact selling knowledge.