Television Technology: Trends & Insights
Until February 2020, the television industry was on a familiar path of technology evolution. IP-based infrastructures were continuing their ascendency; 4K Ultra-HD production was growing; the TV spectrum repack was approaching completion; and a successful initial rollout of the ATSC 3.0 standard appeared to be certain.
However, with the outbreak of the COVID-19 pandemic and its impact on broadcasters, production and post-production houses and all of the businesses serving them, a new set of tech priorities emerged, as the industry scrambled to maintain operations with skeleton crews on site and many working from home.
The outbreak also threatened ad spending–the lifeblood of the TV industry, as businesses struggled to remain afloat. With ad spending falling, the economic underpinnings of the television business were unexpectedly threatened, putting many planned project and tech upgrades on hold.
Even as TV broadcasters grappled with the economic fallout of the pandemic, they rose to the challenge –especially in local markets—of delivering timely, useful news and information about the outbreak. For their part, viewers responded by tuning in to local news in droves. Even the elusive millennial generation demographic began watching.
However, what many viewers see during local newscasts has changed. Reporters and anchors working from home are now a mainstay. Laptop and smart phone cameras and mics along with Skype and Zoom have replaced professional equipment and the crews typically sent to support remotes.
Viewers seem to appreciate the authentic feel of watching anchors present newscasts from their homes, leading some news executives to question the future of slick, professionally lit sets and highly produced graphics.
More broadly, closing or severely limiting access to newsrooms and other station departments has managers questioning whether a major shakeup in long-established workflows is overdue. Many have a newfound appreciation for cloud-enabled, virtualized workflows.
Beyond the station, the pandemic has taken a toll as well. Cancellation or postponement of sporting and entertainment events has sidelined mobile production. Construction and outfitting of new OB trucks have been put on hold, creating economic hardship for the vendors that supply production equipment, vehicle builders, system integrators and installers.
The business consequences of the recession spawned by the pandemic are manifold for television broadcasters and the vendors, system integrators, consultants and investors that have supported them.
Capital spending is slowing dramatically. Even before the pandemic, fewer dollars were needed to acquire the same level of technology and performance as was available only a year or two prior. For example, the image quality produced by today’s relatively inexpensive cameras is better than that of more costly models from a few years ago. Further, the increasing acceptance of virtualized workflows in the cloud is accelerating a decline in CAPEX spending as more broadcasters embrace an OPEX model.
For many technology vendors, the next several years are likely to be difficult. Initially, all but the most essential capital spending will be deferred by broadcasters as they wait for what will probably be a slow recovery of the general economy and ultimately growth in ad spending. Vendors offering solutions to improve productivity and lower costs as well as those that can help broadcasters generate revenue from new sources will likely fare best.
Pressed by lower capital spending and growing competition from the general computing market as IP-based products supplant baseband, many vendors will need to seek new investors, company sales or mergers with competitors.
Developing a Strategy
There are actions broadcasters and technology vendors can take to achieve a speedy recovery. Most importantly, they need the financial strength to continue developing new products that respond to customer needs.
Fortunately, there are many sophisticated investors that view the current situation as an opportunity to invest in companies at attractive prices. Private equity funds are sitting on billions of dollars of uninvested funds looking for those opportunities. New investors will give companies the financial flexibility to grow organically or through acquisition.
Even buttressed by new investment, vendors will do well to remember that offering the most advanced technology is no guarantee of success in today’s world. Customers increasingly value service and support along with a guarantee that their chosen vendor has the financial stability to maintain its hardware and software. A strong balance sheet has become as important as strong technology.
Partner with Experts
The television business has once again entered a period of accelerated change. Pressure will continue to mount on technology vendors, system integrators and service providers as their clients grapple with the economic downturn.
Consolidation among vendors will continue as size will matter in navigating the times ahead. Partnering with trusted, experienced professionals to assist in this process of selling, acquiring or merging businesses is more important than ever.
At Lakewood Advisors, we have decades of experience in the broadcast industry and know the companies and the people who make decisions. We regularly attend industry conferences and visit with key companies to gain a comprehensive understanding of technology and financial trends affecting the industry. This sets us apart from large investment banks, which do not take the time to develop expertise in the broadcast industry because they view it as too small.
Lakewood Advisors specializes in working with privately held companies in need of succession planning, industry leaders looking for opportunities to acquire new entities and companies seeking capital for acquisition and expansion. Our partners have a wealth of technical expertise and have advised individual companies and company owners on the growth of their sales and marketing organizations and the development of long-term strategic plans. We have a successful track record of working with major investment banks, company owners, financial advisors, accountants and lawyers.
Lakewood Advisors is available for confidential, no obligation consultations. We would like to help your company navigate industry change and achieve its goals.