Start of a new era

The year 2019 was a remarkable digital signage year. Not only in hindsight what is called the old normal or Pre-COVID19 today. The market transitioned in many ways – a development industry experts have predicted for many years.

The visualization market started into a new era with more and more fine pixel pitch LED replacing LCD Screens in larger installations, niche digital signage solutions (High Brightness Displays) entering the mainstream and the partly resurgence of projection (laser projection in retail). The LCD-Display industry recorded another record year – 1.4m professional screens (32” and larger) were sold worldwide according to Futuresource. An increase of 20% in volume and 15% in value (reflecting the continuing trend of falling panels prices). While global sales were driven by high demand in China, Europe, Middle East, and Africa (EMEA) grew by 16% (Volume) and 15% (Value) respectively. The DACH market grew slightly less than the region (+13% volume), while surpassing the neighboring markets in growth of value (+21%). Obviously larger and more premium displays were sold in Germany, Austria, and Switzerland – Europe’s most important digital signage market.  Largest professional display supplier in Europe remained Samsung, followed again by LG Electronics. Surprisingly, Philips (TPV) replaced NEC Display Solutions as the third largest vendor in the digital signage space. Most likely this will change again in 2020 as Sharp and NEC announced to merge their display activities into a single entity – a new joint venture majority-owned by Sharp (Foxconn). 

Demand for LED-solutions in EMEA grew above-average between 30-50%, depending on which sources to trust most. While four out of ten LED-cabinets are still sold in China, the west is quickly adopting to the new technology. All major display vendors expanded their offering by a wide range of LED solutions, usually SMD-based modules made in China. But the visuals market – lacking real innovations for years – experienced a considerable shift from displays towards LED. While Surface-mounted LED (SMD) is still the dominating technology, new Chip-on-Board (CoB) solutions are not only available in showrooms or on showfloors anymore, but increasingly installed with customers. Sony was first to the market, followed by Samsung with the The Wall product line. Others have followed like Sharp (The Canvas), Absen and LG. The industry has recognized that ,8mm pixel pitch while offering breathtaking picture quality, is not affordable for most retailers (with the notable exception of Apple). A wide range of CoB-products were announced at ISE 2020 by various vendors, most important was the launch of Samsung The Wall for Business in 1.2mm and 1.6mm pixel pitch. For the first time CoB is now available at SMD-comparable price points. Samsung is determined to establish The Wall for Business / CoB as the new standard in the industry. Quite an aggressive move taken most competitors by surprise. It remains to be seen – considering the COVID19 crisis – how fast Samsung will be able to gain market share. But eventually they have a high chance to dominate the LED market as they have dominated the professional display markets for more than ten years. Leading LED-suppliers are still the Chinese-companies Unilumin, Absen, Infiled and Leyard. Samsung is the largest global brand chasing the LED pure players.   

While the projection market in general is losing considerable market share especially in meeting environments, smaller laser projectors and large installations projectors gain popularity. Laser-based projection enables architects and designers to break out of the 16:9 ratio, exciting consumers with dynamic digital content merging with surfaces. Large ultra-high brightness projectors can now also used during daytime, enabling new experiences not possible before. But the volume of the market is still small. 

No changes at the Top

The DACH market remains dominated by IT-Integrator Cancom. Cancom generates 1.5bn EUR revenue mainly in Germany with IT and AV related solutions. Digital Signage is just one of many solutions offered to hundreds of Cancom-customers. While the focus remains on IT, AV-based collaboration and digital signage solutions are currently just 3% of total revenue, Cancom expands activities in the field of digital signage, aiming to be the leading digital transformation partner. Xplace is the second largest integrator and largest pure-player in the DACH-region. Xplace is majority owned by Europe’s largest consumer electronics retailer Media Market / Saturn. The fortune of Xplace is tightly connected to the development of Media Market and Saturn which reduced their European footprint in recent years. But besides serving multiple external customers like Miele or Porsche, xplace is one of the few players in the market with extensive ESL-label experience and deep insights into integrating product information onto TVs. The North-Germany based integrator recently announced a strategic partnership with Swiss retail-tech giant Bison, introduced a vendor-agnostic retail tech platform (xplace biscuit) and offers its own CMS (replacing Scala in many projects).  

In 2019 Umdasch Digital claimed the Bronze Medal as the third largest digital signage integrator. In spring 2019 Umdasch Shopfitting acquired Gundlach Seen Media and merged the operations with its own Linz/AT based digital retail unit. As digital becomes increasingly important in retail projects, shopfitters are looking at expanding their skillset either by partnering or downright acquiring digital signage experts. The advantage of digital units for shopfitters and shop designers are great because customer experiences can be conceptualized and designed around the retail design, not retrofitted like in the past. In addition, joint deployed of shopfitting and digital is cheaper than separate teams. In July 2020 Umdasch Digital and Design/Consulting Unit of Umdasch moved under one roof in Duisburg, enabling teams of both divisions to work even more closely together.    

Formerly instore-radio only specialist Radio POS has clinched the fourth rank in the DACH region in 2019, offering successfully digital signage services to existing radio customers as well as new clients. Largest pure-player integrator in Switzerland, and fifth largest in the DACH region, is Lucerne-based JLS Digital. The Swiss market remains a local game with attractive banking and corporate customers.  

M&A on the rise

Since the inception of digital signage, the integration market was dominated by pure players. Pure-play integrators are experts in their field of technical design, installation, operation, and service of digital signage concepts. For many years’ integrators focused on their home market and operated internationally for their domestic customers. In the past five years pan-European champions were formed with true international business. While going international with domestic customers’ needs deployment and service skills, winning projects abroad is much harder. Digital signage is much more than scalable technology, individual concepts and content must be adapted to local cultural needs. That is the reason why pan-European integrators just started to emerge through extensive M&A, acquiring market know-how, contacts, and cultural background in each country.  The largest European digital signage integrators in 2019 were Trison (Spain), Zeta (Sweden), M-Cube (Italy) and Stratacache’s European operations managed from the Netherlands. Recently Trison and M-Cube entered the DACH market by opening a subsidiary (Trison Stuttgart) or by acquisition (M-Cube acquired Storever). Stratacache decided to operate across the continent with local sales and installation teams and centralized concept, technology, content, and support infrastructure from the Scala Europe HQ in the Netherlands. 

While the digital signage market grew by 17%, digital signage integrator recorded only 10% growth with new players entering the digital signage space. Global ITC-players (Econocom, CDW) and especially professional service providers (Deloitte, Accenture) are becoming increasingly active in the digital signage market. These players are mainly designing and deploying multi-million Euro digital experience platform projects (DXP) or ERP/CRM (SAP, Salesforce) projects for enterprise customers. Digital Signage solutions are part of a larger digital cross-platform strategy and therefore included. The global players are financially strong, well connected and a trusted name with large enterprises, making it easier for them to successfully pitch vs. smaller digital signage pure play integrators. 

■ invidis expects a growing market share for global players, which will reduce the role of digital signage integrators for Fortune 500 customers.

Digital signage software (CMS) has long been at the end of the digital signage value chain often not providing more than 3-5% to the project. The low entry hurdle to the market enabled hundreds of CMS-developers to offer CMS platforms. The vast majority struggled to gain a substantial market share as their CMS was less unique then they thought and lacking sustainable business models. This changed with cloud-based Signage as a Service offerings enabling CMS provider to collect recurring fees. Most customers underestimate how much digital signage software needs to be customized to connect to existing backend and media asset platforms. Software is much less of a product business, but a finetuned symphony of CMS platform and digital signage integrator. A CMS is only as good as the integrator customizing and implementing it. 

New role allocation for software vendors

The role for software providers in the industry was long established. Software vendor sells through integration partners which customize the software to the needs of the customer. But the balance of power has shifted towards integrators. Either integrators developed their own software replacing third party vendors or the customization changed the standard software so much, that software vendors were left with some basic license fees, while the integrator kept most of value inhouse.  

Only a few software vendors were able to keep customization inhouse and hence kept their market position. Four of the Top 5 software vendors in the DACH region (MDT, Grassfish, Easescreen and Scala) lead the ranking for many years. The only newcomer on the block is Samsung MagicInfo, a software solution bundled with Samsung displays. But Scala and Grassfish have changed their business model radically in the past years. Both analyzed that would survive as a stand-alone software provider. Scala changed its Go-To-Market strategy the most, by doing direct business with customers circumventing existing partner. Today Scala – part of Stratacache – offers a full end-to-end solution including Scala-branded displays and media players, fully replacing the need of an independent integrator. It was the vision of Stratacache CEO Chris Riegel “to gain full control of a project”. The strategy has been implemented very successfully also in Germany, winning global customers, and growing at least 30% every year. Scala has transformed from software specialist to a turnkey supplier. During the transformation Scala lost some of its best partner like M-Cube or Seen Media (today Umdasch Digital), but a few loyal partners remained on board. It seems the direct touch strategy complemented with limited partner business worked out fine for Scala. 
Grassfish, even fully independent and not part of an international group like Scala/Stratacache, also decided to sell directly to customers. But the Vienna-based software vendor decided to keep the partner ecosystem, just switching roles. Today Grassfish aims to take over the role as General Contractor, concept developer and software supplier while selected integrators deploy and service the touchpoints. Grassfish reports that the first full year of the new strategy was very successful, and they plan to continue the chosen strategic avenue. Grassfish CEO Roland Grassberger argues that the key to successful digital signage concepts is the (software) platform. According to him projects are too complicated for integrators and that they need a large amount of customization best delivered by platform providers.  

One of the larger digital signage software providers based in the DACH region – Navori – is a great exception in the market. Usually CMS provider are very strong in their home market, that is not the case for Navori. The Lausanne-based digital signage provider generates 55% of its business outside of Europe, and only a fraction of its European business originates in Switzerland or Germany. But Navori remains extremely successful by growing globally more than 30% in revenue & licenses in 2019.  Jerome Moeri: “Navori Labs origins and headquarter are Swiss. So, no doubt that DACH market is key for us. In 2019, Navori software has been selected to power one of the largest DACH-deployment of the year: Lotto Bayern, 4000 displays on Samsung Tizen.” Not all successful software vendors need to aim for international reach, as the number of active licenses of Online Software and PMS prove. Both are mainly focused on Germany focusing on special vertical markets (Food Retail and Convenience/Sports Arenas respectively).

The media player market experienced a very difficult year in 2019. Intel could not deliver enough CPUs tremendously reducing product availability. While specialist like Concept International were able to deliver a reduced number of players, availability of media players in general was limited. Integrators moved to alternatives like ARM-based Android player or selected display integrated SoC platforms. One of the winners of the CPU-shortage was Brightsign. The appliances are very popular with AV-integrator worldwide, but enterprise customer often prefer certified Windows-platforms. Slot-in media player deployed are predominantly OPS-player, at ISE 2020 the first display vendors launched the much smaller OPS-successor SDM. But it will take a while until SDM can capture a sizeable market share. For the time being CPU availability is back to normal, also due to COVID19 related lower global demand.