Daytime temperatures in Las Vegas dipped into the mid 60s during last week's NAB convention, but even that couldn't cool off a hot show floor. That was literally true, thanks to the throng of more than 104,000 attendees—and to local union employees who, in a job-action protest, shut off the air conditioning one day at 5 p.m. Figuratively, it was true, too: Vendor after vendor says the broadcast-equipment market is stronger than it has been in years.
“I've never seen NAB be this good,” says Tim Thorsteinson, president/CEO of Leitch. And he isn't alone in his sentiment. Two senior vice presidents for sales and marketing, Pesa's Bob McAlpine and OmniBus' Dave Polyard, say their sales forces left Las Vegas with far more leads than expected.
“We're definitely more bullish this year,” says Joe Zaller, VP, marketing and product management, Snell & Wilcox. “Last year, our growth was up 20% in the U.S., and we expect that to continue.” Some tech firms talk of record sales at the show.
Not since 1999 has the NAB show brimmed with such confidence about future business. The dotcom crash in 2000 hit the industry hard: Vendors reeled from a double whammy of failed initiatives designed to capitalize on Internet ventures, and then the failure of most of those companies to even stay in business. Then the 9/11 terrorist attacks cut sharply into broadcaster revenues and, in turn, capital budgets.
“The hangover from what happened in 2000 and 2001 created stagnation in the market, and that, coupled with a regulatory environment that emphasized the DTV transition, had a negative impact on spending for everything except DTV transmission,” says Polyard, whose company builds traffic and automation systems. “Discretionary spending was gone.”
Filling the HD Blanks
Today, however, almost 1,500 TV stations have completed the move to DTV transmission (fewer than 100 have yet to do so) and are now ready for the next step in the DTV transition: converting the station facility itself to digital.
That means broadcasters are now satisfying their digital needs by acquiring digital newsroom equipment and gear needed for field operations. And that makes vendors confident the market is entering a boom cycle because the conversion to digital and HD production and distribution infrastructures has become a global phenomenon.
Moreover, high-definition is extending to all market segments. Cable networks (particularly sports networks) have made large commitments to HDTV content, which, in turn, has led to truck vendors' investment in HD-capable vehicles. As a result, top camera manufacturers have sold literally hundreds of top-of-the-line HD cameras, and production-switcher suppliers like Sony and Thomson have populated those trucks with switchers costing about $300,000 a pop.
The digital action revved tech sales even before the NAB convention. Avid's first-quarter revenues were a record $165 million, and Sony says it sold $10 million more in tech equipment in March than in any other single month (see story, page 34).
Likewise, Leitch is profitable again and up about 20% from 2003, and Polyard says OmniBus saw revenue jump 73% from 2003 to 2004 and expects an additional 25%-30% growth this year.
Low-End Optimism, Too
The attention might be on the high-end opportunities, but there is plenty of optimism at the low end of HDTV production. Cheaper HDV videotape-format camcorders are available now (or soon) from Sony, JVC and Panasonic (see story, page 32). At the show, JVC demonstrated a ProHDV camcorder that will cost only $6,295 with a lens, and a $25,000 encoder that can help send live reports from the field back to a TV station. Those relatively low price points are expected to pull news departments into HD—if not this year, then definitely by 2006, when HDV nonlinear editing will be improved.
Dave Walton, JVC national marketing communications manager, thinks the move to news will have a domino effect in local markets. “If one station in a market takes the leap to HD news, every other station will have to do it,” he says. “The stakes are simply too great.”
Howard Kirsch, of ENG Systems, whose truck was involved in JVC's demonstration, says it costs about $250,000 to outfit an electronic-newsgathering van for HD news (about $100,000 more than one equipped for standard-definition). But the real reason for the bullishness is that it is time for broadcast stations to move from analog facilities to digital ones, or from digital SD to digital HD.
“Broadcasters have had some of their equipment for years,” says Panasonic spokesman Jim Wickizer. “Some DVCPRO gear has been in use for seven years.”
Industry estimates indicate more than 90% of stations have yet to make the move from analog to digital infrastructure. “And the equipment they need to do that is finally mature,” says Pesa's McAlpine. “Stations are now beginning to fill in the HD blanks.”
The one area of the tech business that was hurt least by the lean years was DTV transmission: Stations were under the gun to prepare for the transition to digital. Still, even though the first round of purchases is over, transmission-related gear—transmitters, encoders—is still selling as buyers upgrade.
Tandberg TV President/CEO Eric Cooney says Tandberg's revenues are up 30% over last year, with cable, satellite and telco providers shopping for compression products. And Dave Glidden, director of transmission products for Harris, notes that the vast majority of broadcasters need to boost their DTV and HDTV transmission gear in order to broadcast full-power digital signals.
“The market still has to make the second half of its investment in transmission to get to full power,” Glidden says. That means approximately $500 million in new orders industry-wide. At the same time, telcos' renewed interest in video delivery adds a “new opportunity,” says Grass Valley President Marc Valentin. “We also see ongoing growth in the pro-audio/video market.”
But perhaps most important, the reason for such optimism is that the NAB show, besides being about improving video and audio quality or workflows, is also about investing in equipment to build new revenue streams. Thorsteinson points to Leitch's $40,000 equipment package, which is designed to help NBC stations deliver new digital service WeatherPlus.
“A few years ago, a similar product was Agilevision, and that cost about $300,000,” Thorsteinson points out. “That change in price is a huge change.”
Pipe Dream No More
Now, with mobile video services and TV based on Internet Protocol ready for delivery to consumers, new revenues related to subscription and VOD services await. Says Laura Barber Miller, Grass Valley VP, worldwide communications, “Enabling multi-distribution strategies isn't a pipe dream anymore.”
All of which made for a happy NAB crowd: buyers getting what they wanted at prices that seemed approachable, vendors finding lots of customers.
Some even saw the return of what was once a standard feature of NAB shows. In the lean years, organizations cut their foot-soldier presence to only a few because they weren't really intending to buy, but this year, station-group and cable-network engineering staffs were traveling in packs. “Earlier today, we saw about 10 people from Discovery pass through our booth,” says Polyard. “That's a good sign.”