Buying Digital Real Estate Options

Posted by on Jul 19, 2013 in Hardware

I’m an owner of digital real estate, both online and out-of-home. In the online space, I’ve brokered hundreds of domain name deals. I’ve treated them much like a real estate transaction. You can buy and hold, buy and build, buy and flip or some combination of the three. A winning strategy would probably involve some hybrid of the three. The same strategy goes for your electronic sign installations as well.

Buying Digital Real Estate “Options”

I’ve heard of from another industry colleague  (but never seen implemented) the idea of actually purchasing digital signage screen “options.” Much like an option on the open stock market or options in real estate investing, a digital signage screen network option allows the user to have some sort of first right of refusal on the digital real estate for some contractual length of time.

Again, the same strategies ultimately apply here. You can buy the option and hold it (if you’ve the money to burn), buy the option and build out a screen network sometime in the near future, or buy the option and flip it to existing larger screen operators.

Buying options is extremely speculative and involves a large degree of risk. Adding that risk on top of the general exposure involved in most typical bleeding edge digital signage installations is, in my opinion, foolhardy, unless of course two facts hold true:

  1. The option is highly-affordable. As long as the option is purchased at the right price–in most cases this is going to mean super cheap–then
  2. The option represents a strategic play. When demand for real estate in the digital arena becomes excessive and shortages begin to crop for the most lucrative installation positions, buying options in front of a competitor may be a great tactical tool. Buying digital real estate options is not the strategy itself, but a tactic used to secure an expanded network. Like Sun Tzu states: “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”  

Unfortunately, I don’t think we’re to the point where options in digital signage are worth the excess cost. Moreover, as hardware/software costs continue to shrink, the option to buy may be more excessive than just simply performing the install itself in which case the point becomes moot. The low-hanging fruit is still available and the west has yet to be won as the land-grab continues.

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