The transition of broadcast media from terrestrial to Web-based is well underway, although progress is slowed somewhat by the economic climate.
These are two of the findings of a survey, taken by DIS Consulting Corp., titled “Radio Equipment World 2008.” It predicts the future of the global broadcast equipment market for the next five years and describes trends that have been forming and will continue into the future.
The number of radio stations in the world is projected to increase from 44,000 in 2008 to 44,500 by 2012. The survey was taken for four geographic regions: the United States; Europe/Middle East/Africa; Asia; and the Americas (Central America, South America and Canada). The survey results were gathered from chief engineers and other titles at radio stations.
In each of the 11 product categories, respondents reported what they owned, bought last year and planned to purchase this year, by type, by brand and in terms of average prices or values.
The product categories used in the survey included portable recording systems, studio recording systems, audio recording media, large studio mixers and consoles, on-air mixers and consoles, microphones, speakers/monitors, amplifiers, digital audio workstations, and radio transmitters.
The findings of the survey, conducted in the fall of 2008, indicate both a technology transition in the radio equipment market and the impact of the global recession now underway.
Among the 11 categories studied, there was a 16 percent decline between dollars spent on equipment in 2008 and those projected to be spent in 2009. Portable recording equipment was the only category expected to see a modest increase in 2009 purchases.
DIS Consulting was founded in 1982. The NAB is a strategic partner with DIS for market research, though the association does not fund the surveys. Funding is provided by 20 manufacturers who made front-end commitments to support the survey and shared in the results. The complete survey is for sale at the DIS web site (www.disresearch.com).
DIS research projects global sales for broadcast gear to bottom out at $0.98 billion in 2009, and rise to $1.7 billion in 2012 as the economy recovers.
Douglas I. Sheer, CEO and chief analyst of DIS Consulting, said, “Considering the difficult economy and the major shifts away from terrestrial broadcasting to Web-based and satellite-based alternatives, the slide in dollars seems moderate. This is especially true when we look at parallel results on the television side this year.”
He adds that the softening of markets in 2008 is in spite of the fact that it was an election year and an Olympic year, usually both boosts to equipment purchases.
There is light at the end of the economic tunnel for broadcast suppliers, according to Sheer.
“Our five-year forecast is for market recovery, which can only happen after ad revenues come back. We predict that this recovery will begin early in 2010, and recent action on Wall Street seems to support this.”
Sheer is quick to emphasize that the report does not signify the beginning of the end for terrestrial radio.
“Over-the-air broadcasters should focus on what they do best, which is localism. Traditional listenership and formats aren’t going away anytime soon. The Internet on the other hand, is best at serving a global audience. Those stations which have already embraced Web media through streaming and podcasting are in a strong position for the future.”
Another boost for terrestrial radio, according to Sheer, is the precarious position of satellite broadcasters, who have overspent for talent and capital expenses, and are now pulling back. Proposals for channel expansion in the AM and FM bands may also spur growth of items such as transmitters and antennas.
The global average budget for equipment purchases is expected to drop to $22,125 in 2009, and gradually increase to $38,000 by 2012. The decline in terrestrial radio noted by the survey does raise questions on the future of HD Radio, although Sheer doesn’t see an impact in the short term.
“In the long term, no technological solution is forever. HD is widely supported right now, but as the second Web rises, many of our current technologies will come under fire.”
The DIS report suggests there may be some changes coming in the manufacturing landscape as well.
“The privatization of industry, especially in China, is having a huge impact. Instead of acting as job shops for Sony or Panasonic, some companies are starting to make their own products and compete with the big names. Their prices tend to be lower. This trend is well underway in Asia, and is just starting to be felt in the United States.”
While China is the largest overseas player, American buyers can also expect to see more manufacturers from India and Vietnam showing their wares at NAB Shows in the future. This may mean that American equipment manufacturers, which have had some product categories essentially to themselves, will be facing stiffer competition.
The global market for broadcast equipment varies widely by region, according to Sheer. He adds that two opportunistic markets are the Americas and Asia. The Americas have been a backwater for many years. This began to change when mobile and HD standards were decided upon. Brazil is one bright spot, as that country is hardly experiencing the recession.
Asia has been similar to the Americas, the most recent trend has been privatization of the media, particularly in China. Many projects are on hold until the economy improves.
While Europe/Middle East/Africa is one category in the survey, Sheer notes that Africa is the sleeping giant in the group.
“It has an enormous potential for growth in radio transmission. The trend on the continent is away from receiving aid from foreign banks and encouraging the entrepreneurial spirit to flourish.” He adds that Africa will be a great post-recession growth market, starting in about two years.
Once economic leader the leader in Eastern Europe, Russia has been hit hard by the recession and falling oil prices. Sheer said that in the short term, some of the former Soviet block countries such as Poland, Romania and the Czech Republic will show steady growth. He adds that the long-term outlook is for Russia is continued growth as the private sector expands.