22 TVBEurope
News & Analysis Guest Opinion
The increasing commoditisation of the broadcast equipment industry
By Adam Cox, Head of Broadcast Equipment, Futuresource Consulting
BROADCAST PRODUCTS are becoming increasingly commoditised and technology that was once the preserve of only the most cutting-edge broadcasters is now readily affordable to even the most cash-strapped videographer. There are many reasons why this is happening and there are even more ways in which this is affecting the market. The democratisation of technology is commonplace in today’s world and is everywhere we look — computers once filled rooms and now they sit in the palm of your hand. Even within the world of broadcast equipment this trend is nothing new; the emergence of the video camera in the 1980s acted as the trigger and it hasn’t stopped since. What has changed over the
past five years or so is the pace of this change. Over the last five years Futuresource has been focusing its end user research on the exploration of purchasing trends and behaviour, and it has become clear that since the economic crisis began in 2008 there has been a significant attitudinal shift within the broadcast industry. When the markets crashed in mid-2008, everyone — from the largest broadcasters to the individual camera operators — was forced to look closely at their capital expenditure. For larger companies this has meant that the finance and operation teams have become more involved in purchase decisions. Up until this point, purchase decisions had been dominated by engineering teams, and although the price of equipment was always a factor, there was a bias towards the product and the technology. Engineers tend towards purchasing the best equipment available. Unfortunately, operations
teams, and those more focused on the financial aspects of the business, approach from a different direction. Their priority is to secure the best value for money — trading off performance and functionality for price.
Essentially what this means is that ‘best-in-class’ has been
replaced by ‘good enough’. This doesn’t mean that end users are opting for sub-standard equipment — far from it — quality is still at the forefront of end users’ minds. What it means is that broadcasters and video professionals are opting for lower cost solutions that do the same job. For example, in the pro
camcorder market there is a seismic shift taking place. Gone are the days when a broadcast quality camcorder must be shoulder mounted and must have 2/3-inch sensors. Gone are the days when camcorders must
started to gather pace once again — albeit to a limited extent in some cases — the mentalities of companies did not change; why go back to the old days of buying the best if good enough works? The reluctance to pay
premium prices, the significant improvement in technology at the lower end of the market and the emergence of disruptive brands such as Red Digital Cinema and Blackmagic Design has resulted in the average selling price of pro camcorders plummeting in EMEA. Between 2006 and the first half of 2013, prices have fallen by a third.
A market needs to grow at the
same rate or faster than prices are decreasing in order to maintain equilibrium, however. Unfortunately this is not the case for pro camcorder manufacturers, despite the increased addressable market. Even though volumes increased by 20% between 2006 and 2012, the market value has decreased by 18% (€61million).
EMEA Pro Camcorder market value and average selling price EMEA Pro Camcorder volume by number of sensors
have three sensors to be considered professional. In the first half of this year, single sensor professional camcorders accounted for 50% of EMEA market volumes; six years ago this figure was 9%. Elsewhere in the world the trend is similar, if not more pronounced. An element of this has been caused by the large sensor revolution, but if large sensor camcorders are excluded from the sample, single sensor products still account for 41% of camcorders shipped in H1 2013. The key point here is the shift in mind-set. Even when economies around the world
Falling prices, though, mean a wider addressable market, particularly when internet-based video production is really taking off. The corporate vertical, so long in decline, is one of the applications currently fuelling growth in the pro camcorder market due to the insatiable demand for online video. This is particularly true for the world of publishing where the migration from print to digital is necessitating the need for video to enrich websites. Videographers, education, government and in fact most other user segments are all seeing the benefit of lower price points.
A significant factor in this has been innovation and the disruptive influence of another product area: DSLRs in the case of professional camcorders. Although this may be an oversimplification of the issues surrounding the threat of DSLRs, the fact that they’re available at a fraction of the price of most pro camcorders and are capable of producing stunning footage make them a prime example of what’s happening throughout the industry. They are products that can do the same job as another product, but at a significantly lower price. Elsewhere in the industry, in the compression, router and video server markets for example, this is being seen as the contraction of workflows, with one product doing the job of many. In these cases the cost of the product is not necessarily decreasing significantly as the additional functionality is maintaining price points, but the effect for the end user is the same — the same job for less money. Innovation has therefore been pushed to the fore. There’s a reason IBC and NAB have been dominated by 4K and — before that — 3D; vendors need reasons for end users to buy new products and they need to maintain price points. Competition is increasingly fierce as IT and broadcast become more intertwined and new players enter the market with fresh ideas. We’re in a broadcast industry zeitgeist at the moment;
Adam Cox:
Essentially what this means is that ‘best-in-class’ has been replaced by ‘good enough’
www.tvbeurope.com September 2013
pressures on budgets are forcing end users to re- examine their
priorities, which in turn is forcing
price points lower and resulting in increased innovation from the equipment manufacturers. The economic situation is better than it was for many, but these times of austerity will be here for a while longer. Most importantly, the mind-set that has been fostered during recent years will be evident long after economic recovery takes hold.
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