The future of the Euro is uncertain, the US economy continues to suffer from the effects of the sub-prime banking crisis and governments around the world, especially in Europe, are implementing austerity measures to counter serious budget deficits that threaten to bring down countries. But, as Kevin Hilton reports, the broadcast equipment sector is showing distinct signs of the green shoots of recovery that everyone else so desperately wants to see.
As politicians argue over whether the best way to bring about economic recovery is to cut back and reduce spending or increase investment to stimulate growth, the broadcast market is quietly riding the choppy waters.
As major broadcasting centres are built in Europe the broadcast sector is regaining some buoyancy and confidence, according to the latest Industry Trends Survey published by the IABM (International Association of Broadcasting Manufacturers). This "end of year report" shows a global industry "in steady recovery", with the exception of North America, which is "at least six months behind".
The survey reflects business during the third commercial quarter of 2010 and was taken six weeks after this year's IBC. The organisers claimed it to be the second biggest in the IBC's history and if foot traffic was anything to go by, the areas pulling in the visitors were TV and film hardware and audio.
Sound doesn't make a strong showing in the breakdown of technology areas in the IABM Broadcaster Survey, however. Audio editing and processing comes in at joint Number 3 with its video counterparts, while, inevitably, HD and storage take the Number 1 and Number 2 spots respectively.
Peter White, director general of the IABM (pictured), says worldwide sales are improving. The period from NAB 2009 to NAB 2010 shows vast improvement, he comments, compared to the same period for 2008-2009, when sales were "in steep decline".
Since the spring revenues have been increasing and show no sign of stopping, White observes. "Profits have also followed a similar pattern, dipping a little earlier and recovering a little later than sales revenues," he explains, "but this summer saw global profits achieve positive year on year growth again. Order books globally have also increased steadily over the same period."
The US, along with Japan, is still seen as the economic benchmark for the international market. The old phrase coined in 1929 after the Wall Street Crash, "when America sneezes the rest of the world catches a cold", still holds true but in 2010 it seems the North American economy is still suffering from man flu, although the Republic of Ireland, Spain and Portugal have the real thing.
White observes that the Asia Pacific region had a "shallower recession and recovered quickly", with Europe, the Middle East and Africa soon after showing a "strong recovery". Because North America felt the effects of the recession later compared to Europe, it is only now starting to recover. "Other markets perhaps have less reliance on advertising revenues than North America and this has been put forward as a reason as to why North America suffered so badly and has been slower to recover," White says, "but recovery looks set for 2011 in that region."
Individual broadcast building projects are not identified in the Survey but the release of previously deferred contracts in all but North America has caused what White describes as a "surge" of activity. "We also expect a surge in North America and then, like the rest of the world, a settling down into a more gradual and stable growth," he comments.
Major manufacturers in the broadcast sector confirm the upswing. Keith Watson, marketing director at Soundcraft Studer, says this market was the first to react to the recession because of its reliance on large capital projects funded by loans and the support of the banks, which are generally seen as the cause of the current problems. "This year, witnessed by the vastly improved NAB and excellent IBC, we've seen very good growth and returning optimism across this sector," he comments.
Watson says audio is picking up in general but because broadcast equipment sales were hit hard two years ago, its recovery across all market areas has been notable. "We did see a doubling of sales of mid to lower sized analogue consoles during the recession," he comments, "and although these sales numbers are sustaining well this year, we're now seeing very good additional growth in the mid to top end digital consoles across all our audio segments."
Henry Goodman, head of sales and marketing at Calrec Audio, also points to a slowdown in sales during 2009 caused by broadcasters reacting to the financial crisis and credit crunch by deferring large capital expenditure. "Our major clients began placing orders again in late 2009 and this 'recovery', if that's an appropriate description, has gathered speed since then. Some geographic regions, such as Japan, have been consistent throughout the recession and business in these regions has remained constant."
Neither Calrec nor Studer recognises the American situation as described in the IABM Survey. "We’re fortunate many of our sales in North America are to OB vehicles for sports and light entertainment," says Goodman. "Broadcasters in that field have remained very active and competitive. North American sales have been very strong after a short-lived dip. Certainly sales have been less brisk for fixed-installation studio projects but that affects us less in the US market."
Watson says NAB was the first big show to indicate that a crisis was imminent but says the situation is rectifying itself. "Broadcast demand is strong generally now," he comments. "We have been engaged on several very large European tenders recently and also see high demand in the Middle East, Asia and South America. Also, recently we've had our best period for sales of the Vista range in the US."
This optimism seems out of step with national headlines detailing government austerity measures and Eurozone countries such as Greece and Ireland being shored up by other EU members. The phrase "double-dip recession", describing an apparent recovery followed by an even bigger decline, continues to appear in arguments about how to cope with the crisis.
Keith Watson says Studer continues to monitor the market closely: "We took the view that as we clearly couldn't have any impact on the external factors at the time of the recession, we would focus on those that we could make a difference to and decided we must develop even more new products so that as soon as the economy picked up we'd be first out of the gates and take market share. It takes nerve to invest at such a time, but it worked."
Peter White at the IABM acknowledges "an air of uncertainty" remains and that the Eurozone crisis is tempering enthusiasm but says there is the strong view that "we are coming out of the doldrums and will not return in the foreseeable future."
The IABM's "confidence ratio", produced every six months, showed a negative score during the recession but hit a positive 10 in November 2009. "This rose to a record breaking 14 in June 2010 and settled back to 11 this November," White adds. "The level of confidence for North American respondents is so high for 2011 it is way off the scale."
The hope is that this heartening attitude is reflected in the wider economy but it should be remembered what blind confidence and optimism in the 1990s led to.