Consolidation! That’s a topic that’s been bantered around the Digital Signage Industry for years. It seems that nearly everyone has been eagerly anticipating the day when the small players cash out and the big players are left to enjoy the benefits of scale. This thinking can be seen in a recent Digital Signage Today article: “Is The Digital Signage Industry Finally Starting to Consolidate?”
But is consolidation really the answer to every network operator’s and software developer’s prayer? In my opinion: NO! Why? Let’s take a walk down memory lane and see what history has to teach us.
Most people don’t realize it, but there are very strong parallels between the Digital Signage Industry of today and the U.S Paging Industry of the 1990’s. In 1993, the Paging Industry was populated by numerous small paging carriers — most of which were looking to be acquired in an industry roll-up. By the mid-90’s the consolidation binge had started in earnest. By 1998 pagers were everywhere and four major players owned the vast majority of the U.S market (remember PageNet, Skytel, Metrocall, PageMart/Weblink). Times were definitely good.
But while the champagne was still flowing and the acquisition parties were still raging, along came digital cellular with its ability to support text messaging, mobile email and mobile messaging (remember BlackBerry). Then POOF, by 2005 the Paging Industry and its market leaders were largely gone… along with them the vast wealth of many shareholders. The mobile network operators, who ultimately became AT&T, Verizon, Sprint, T-Mobile, took the Paging Industrys’ customers and left them for dead.
It was a sad thing to witness. By the early 2000’s, paging had gone from being a high growth, profitable business to being a dying industry valiantly struggling to justify its existence. In the period between 1998 and 2002, paging carriers had spent hundreds of millions of dollars on new services, such as two-way paging, trying to maintain their relevance. It was too late though as they were already behind the eight ball and there was nothing they could do except watch their earlier profits turn into red ink and their companies fall apart at a seismic pace.
The really sad part was that they saw the threat from cellular’s text messaging and mobile data services coming before the consolidation craze started to gain momentum. They, however, just chose to ignore it or rationalize why it wouldn’t affect them. I witnessed this rationalization many times at many industry events and at many meetings with Paging Industry executives.
When it was all over, thousands had lost their jobs, major suppliers had been forced to shut down, the industry conferences had ceased, the trade associations had restructured to serve new markets, the magazines had disbanded and the industry analyst and pundits had been left with no place to go because they weren’t established in the newer markets. It was exceedingly sad to watch.
So… will there be consolidation in the Digital Signage Industry? Maybe… but things are moving much, much faster today than in the late 1990’s and disruptive technologies could potentially decimate the industry before it even has a chance to consolidate.
Think about this: In the not too distant future, the same systems that power content to smartphones, tablets and wearables will ultimately manage the creation, distribution, consumption and engagement analytics of digital content for nearly any object on the planet, e.g. place-based screens, static posters, shelf tags, promotional products, store products, tables, lamps, salt shakers…. you name it.
Who’s working on these integrated content management platforms? If you don’t know, you should make it a point to find out.
My advice to the Digital Signage Industry: Stop worrying about consolidation! Learn the lessons from the Paging Industry and start addressing the disruptive technologies that will dis-intermediate you if you don’t do something to stop it! Your future investors will thank you.
One last point, if you’ve ever wondered what’s at the heart of these emerging disruptive technologies, its mobile commerce. Mobile commerce is composed of mobile marketing (e.g. mobile advertising, promotions and coupons), mobile wallets, mobile payments, mobile loyalty/rewards and a touch of social media. Take a look at the following graphic for a perspective on the content management model that the thought leaders within the mobile industry are evolving towards: