Digital Signage Growing As VARs Eye Recurring Revenue, Back-End Opportunities4:00 PM EST Fri. Dec. 09, 2011
Digital signage is evolving and maturing to the point where the display hardware is becoming the least important part of the technology. For solution providers, the most important parts of the technology now lie in the back-end integration opportunities and recurring revenue streams.
A recent study conducted by ABI Research forecasts the global market for digital signage -- which, beyond the displays themselves, accounts for associated installation/maintenance efforts, content management systems and software applications -- will grow from approximately $1.3 billion in 2010 to $4.5 billion in 2016.
As the market expands, implementation costs are declining. WireSpring, a digital signage vendor based in Fort Lauderdale, Fla., estimated that the total cost of deploying a 100-screen network -- approximately $3,700 including installation, player software, hardware and content management costs -- dropped more than 14 percent in 2010 alone. The firm also reported a drop of approximately 56 percent in total digital signage costs since 2004, the first year the vendor tracked the market.
As the costs of the technology have declined, the opportunity for solution providers has grown; solution providers can take an assortment of pieces on both the front and back ends and put together a complete solution that’s affordable and attractive to a growing number of customers.
Todd Swank, vice president of marketing at Nor-Tech, a systems integrator based in Burnsville, Minn., and an Intel authorized integrator and Platinum partner, believes that the many technical components under the digital signage umbrella -- ranging from software management, to AV, to networking -- give solution providers an opportunity to ease end-user headaches by providing all-in-one digital offerings from a single source.
“It’s hard to just offer one element of digital signage,” Swank said. “When customers are looking into it, they don’t want to buy hardware from one place, the installation from one place, and then the software from another. That’s a lot of people for the customer to talk to. They’d rather just have a solution provider provide all those elements in one, single package.”
And as the industry advances, so too has the technology. With the rise of solutions such as Santa Clara, Calif.-based Intel’s Audience Impression Metric (AIM) suite, for example, digital displays can now register a spectator’s gender and age bracket to deploy a targeted message on-the-fly. The suite also can gauge how long a consumer views a display, allowing advertisers to more accurately evaluate its “wow” factor.
In addtion, platforms such as Vukunet, a turnkey system from NEC Display Solutions of America, Itasca, Ill., facilitate collaboration between third-party vendors and digital display advertisers, linking additional advertising dollars to digital signs. What’s more, Vukunet automates the running of ads across a given digital display network, reducing manual efforts and perhaps, more importantly, driving new profit for the advertiser.
The most noteworthy advancement within the market, however, is its recent expansion beyond the retail realm. Once viewed strictly as advertising outlets, digital displays are being leveraged more frequently to meet informational or educational needs.
“Digital signage, as an industry, is continuing to grow,” said Mike Zmuda, director of solutions development for NEC Display Solutions of America. “But I think we have to pay attention to the fact that ‘digital signage,’ as a term, is very ambiguous. You really need to look at it as having different sectors.”
Many quick-serve restaurants, Zmuda said, now communicate nutritional values via digital displays, while airports, hospitals and higher-education institutions are “going digital” with in-house directionals and maps.
The digital signage channel is also evolving to keep up with the advancing technology and pricing changes. The aggregation seen within the digital display market has led to a significant shift within the make-up of the channel. While first viewed as predominantly AV-centric, the digital display channel is opening its doors to IT resellers in a way it never has before, thanks, primarily, to rising customer needs within the content and software management space.
“The channel is quite interesting,” said Gene Orstead, director of product marketing at Walnut, Calif.-based ViewSonic, a digital display vendor. “There is still some level of channel convergence taking place between what used to be the pro-AV installer -- which was a value-added reseller that knew how to handle large displays, handle the construction, and deliver HD video to large signs -- and the IT sector. Now, half the equation of being able to deliver a digital signage solution is how to manage the content, deliver that content, and network that content. And these skills -- networking and pushing content -- lie in the IT group,” said Orstead.
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In addition to blurring the lines between the AV and IT channels, the aggregated nature of the digital signage market bodes well for solution providers that can seize the opportunity to create all-in-one digital signage solutions.
Chris Kemp, director of business development at Allied Technologies, a Little Rock, Ark.-based reseller, does just that. The company already has started to reap the benefits of offering of an all-encompassing digital signage package.
“We see an opportunity to open up some more revenue sources, especially on the recurring revenue side,” Kemp said. “With the equipment, management and software … being able to bundle that and offer it as a hosted solution [is key].”
Bob Rosenberry, manager of visual solutions at Hewlett-Packard, Palto Alto, Calif., reiterated this all-in-one opportunity, as he’s seen IT resellers fare increasingly well within the digital display channel over the past six years.
“I’ve seen this industry evolve to be very channel-driven,” Rosenberry said. “Within digital signage you have the hardware, the software, the networking, the content, the physical installation ... this big, extended team used to be needed to make this happen. And now, through the channel, this is becoming much more efficient and kind of ‘everyday.’ A lot of the software companies in the industry are pursuing channel strategies and seeing that as a key to growth.”
The opportunity for IT solution providers to take advantage of an aggregated market is no doubt there. But here’s the kicker: The many “moving pieces” that come with digital signage mean that solution providers getting into the market will need to step up their game.
Kevin Prewett, vice president of vendor management at distributor Ingram Micro, Santa Ana, Calif., spoke to the learning curve many solution providers encounter when warming up to the digital display channel.
“People see the screen and say ‘that’s digital signage,’ but there’s so much more on the back-end side,” Prewett said. “It’s really just so much more involved than that, and somebody just stepping into it, most of the time they realize that it’s a bit of an undertaking.”
In response to this learning curve, many vendors and distributors -- including NEC and Ingram Micro -- offer training programs to bring prospective solution providers up-to-speed and help them better meet customer needs.
Betsy Larson, channel director at NEC, stressed the importance of reseller training programs within the digital display channel.
“I’ve met so many resellers and solution providers through groups, and boot camps and digital signage summits. They’ve just been great, and that’s an easy first step,” Larson said. “I’ve been in the industry for 15 years and it’s great to see the solution providers really catching on and seeing the value in learning how to put these solutions together.”
Alison Evans, vice president of marketing and development at Better Direct, a solution provider based in Tempe, Ariz., said that the robust nature of digital signage partner programs and training initiatives was one of the driving factors behind the firm’s decision to enter the market.
Whether through a seminar, extended flooring terms or client “Try and Buy” programs, most partners in the digital signage space seem eager to help. “The partner programs are excellent,” Evans said, “and are still high-margin. I think it’s a really attractive market.”
It seems, then, that despite its potentially high learning curve and “jack-of-all-trade” prerequisites, the digital signage channel is brimming with opportunity. The fragmented landscape in which it sits almost demands a solution provider’s involvement to meet customer expectations and deliver that full, soup-to-nuts solution.
“I think there are more benefits than there are challenges,” Larson said. “Many of the vertical markets right now are leveraging signage, and so many of the SMB VARs play into these different spaces, meaning there are a lot of opportunities within their customer base. Look in your current backyard. You might even have an opportunity there.”