While most of the vendors in the online video industry have fared OK in these economic times, vendors selling broadcast video based hardware are taking a beating. While many of these vendors said they saw a big decline in sales in Q4, the real impact has been taking place nearly all of last year. Combined with the aggressive-competition driven pricing pressures, companies like Sony (NYSE:SNE), Panasonic (PC), Avid and Thomson (NYSE:TMS) are really feeling the pinch.
Today, many broadcasters are looking for low-cost software based solutions that cost a fraction of their existing equipment. As a result, the broadcast equipment makers have all been required to look at alternate potential markets where they can divert their energies to make up for the losses, especially the prosumer and non-broadcast enterprise segments.
In an environment where the next 12 months will have several large broadcasters optimizing their assets instead of new investments, these large companies will have to diversify their efforts further to reach out to newer markets or re-innovate their business models around services and upgrades.
Companies like Thomson are currently looking at selling off their Grass Valley business and many of the other vendors can't be too far behind. In Thomson's year end report, they stated that the decline of the Grass Vally business was due to conditions that were worse than expected and that they have already started the divestment process for the Grass Valley unit.
While the retail price on many video based hardware units has come down, it's still a big CAPEX expense that many companies simply can't afford with the smaller budgets. This is not only the case for broadcast video hardware, but also for webcasting based hardware, video conferencing gear and many other pieces of hardware in the video ecosystem. This is going to be a tough year for the hardware manufactures and we can expect to see more companies like Thomson get out of the broadcast hardware business.
Disclosure: No position