Sinking Ships: How Failing (and Nearly Failing) Providers Have Helped to Spur Our Recent Growth

Posted by on Aug 19, 2014 in DOOH, Industry, Insight

The niche of digital signage has seen a number of casualties in the last few months, none of which bodes well for the industry at large, but which is expected for an industry bred out of technology. Low barriers to entry, ease of scalability and free software solutions make it difficult to compete in an environment of constant change. Such constant change has recently brought several competing digital signage firms to the bargaining table–negotiating reorganizations, recapitalizations and new loans to help sustain the business. Luckily for us, this has created some very interesting growth by what I might call “attrition from the competition.” Trouble In Paradise

Loans & Recapitalizations 

In a market that is full of SaaS-driven companies recaps, loans and reorgs don’t look so good. Rocking the boat in an organization tends to toss people out, including customers. Like a good housewife, customers want a vendor that has real staying power–especially if they’re invested in a solution for the long-haul. Recent public announcements from some of the larger players in digital signage have not boded well for some of the more well-known brands in the industry. Reorgs like this signal at least one of several things:

  • Less-than-desirable growth
  • Poor fiscal corporate management
  • Bad integration
  • Already poor customer service
  • Wrong business model for growth
  • Inability to make quick pivots
  • A general/macro malaise in the industry

In each case of our competitors, I suspect there is some combination of the above. The latter of the five is what concerns me personally the most, but since it’s the one area I can’t control I try not to worry too much. Fortunately, when we’re negatively impacted by something external, the knife doesn’t cut both ways. We’re not beholden to public shareholders, venture capitalists or private equity groups. We have the added benefit of keeping our own dirty laundry to ourselves. If we did have a major issue or shift in the company, we wouldn’t be required by law to send out a press release and make it known. We’re fortunate in that way. Others–not so much. They not only have bad news internally, but eventually the knife cuts the other direction. The stock is typically negatively impacted. Worse still is the negative impact on the customers, which is what we’re currently witnessing right now.

Down, But Not Out 

Sure, our competitors are “down, but not out,” but the news stories have been negative enough that we’ve seen a lot of stirring within the market, enough so that we’ve a number of new clients who’re seeing the proverbial forest through the trees. Their numbers are not minuscule and they’re not coming from just one single competitor. They’re from several. Certainly the competition is down, but not out, but losing customers is terrible if you wish to appease shareholders with stories of growth. Moreover, a truly positive outlook for customers is also helpful in maintaining market share.

And while the companies themselves are down, but not out, the impact of the changing tides could prove even more fatal down the road. How long do you keep a growing, but unprofitable company afloat, especially as the growth slows?

Sinking Ships Create Opportunity 

When it comes to looking for passengers for our vessel, we’re not too concerned with where they come from, but as long as they come. If we can pick up a few floating customers from the sinking Titantics in the industry, then we’ll take them. But, it doesn’t mean we’re completely happy with where things are going. If the pie were bigger and the growth were stronger than more companies wouldn’t be seeing the issues we’re seeing. That’s the downside of picking up customers when they leave the competition: the industry itself becomes a bit more tainted. Customers ask, “who really can I trust here?”

We’re currently working hard to make accommodations for new users in the process of transitioning them to our system. We ourselves are also constantly and feverishly working to ensure we remain relevant in a increasingly competitive and shifting environment. Opportunity still exists for organic growth, but churn may have arrived–for some more than others.

We don’t revel in others’ failure, but what we’re realizing is that cost, quality, support and speed certainly all play a key role, but company staying power is still part of the decision to go get married to a particular vendor. We’re seeing that very clearly in some of our newest clients. What will the future hold for digital signage companies who have a hole in their revenue bucket and creditors sucking liquidity out the top? We sure hope we’ll never have any reason to throw the customer droves overboard. The verdict is likely still out on us all.

  • Jonas Christoffersen

    Exelent post, very well writen.
    I actually had a similar discussion with an acquaintant last week.
    Europe is still a new marked and the wild west when it comes to digital signage and new providers are shooting up all over the place. Companies like Scala are taking huge thunks out of the marked. The discussion we had was about how I was willing to take the chance and put all my eggs in the Media Signage basket and not jump into bed with others.
    Now I’m not saying that Media Signage has it hard, I have know way of knowing, As you wrote your self, you dont have to hang your dirty laundry out to dry.

    So Why do I put all my eggs in one basket?
    I have a strong belief in what Media Signage stands for, the affordable platform. Sure there are some areas that really annoys me and that seams to go unnoticed by Media signage. But then again. The price tag on the media cloud have made it posible for me to target small to mid size companies that would never have the kind of money to even think about buying another system, that way I am actually not finding customers that already have a big demand, but I’m creating a future demand, maybe that demand will in time outgrow the possibilities with media signage and force me to look elsewhere, but let’s cross that bridge when we get there.
    I do have one advantage on many of my peers in this industry, my company was not build on the foundation of an advertising agency or even the AV industry, my background is in the IT industry and I have noticed that it gives me an edge. My clients dont have the biggest of demands, most of the screens we put up are for internal company information at our clients business to replace the ton of circulating emails and notice boards. Or it is small shop owners wanting to display there products in a new way and take advantage of the available technology. But it is also very clear that even though our company motto is “Keep it simple”, people always start out small and soon wants more, more features, more special coding to make the media player more suited to there specific needs. It’s funny that when I got into this business I thought the hard part to sell people on would be the Signage software, as many of the systems I have looked at are fantastic with some very good features but also with a very large price tag. Today I actually have more trouble selling the hardware even with only 1% margins or less, the hardware is still way more expensive. So if there are to big a huge battle of war in the Signage Industry I am sure that Media Signage will be one of the companies still standing when the dust settles.

    Jonas Christoffersen
    ShowIT Media

    • Nate Nead

      Thank you Jonas for your comments. There are certainly areas where improvement are needed–in both our product and the industry at large. The SMB is probably the toughest to target because of the lack of budget, hence the issue with selling HW. Getting the hardware cheaper will certainly be key, but will require innovations in hardware acceleration. The real players will remain, but the complete, right business model in digital signage still hasn’t yet won the day.

  • Lars Mathiasen

    Hi – Excelent post!

    I have worked with av-solutions for about 10 yrs now in Denmark. As Jonas mentioned Scala has the lead. I helped them along myself. I have worked with the solution for a little less than a year. The strong side is easy access and a quick start and great help videos, but after a while when you have learned the system you begin to look for ways to make your solution more advanced. Here DS fails utterly and “out of the box” vendors like Scala wins again. Now they don’t even have to wait for infrastructure… Its already there! DS can copeed and for my part I support the platform, but DS myst begin to think in “HOWTO’s” – Provide insider knowledge to enterprise customers on how to. This is why others win. They provide solutions to problems without providing knowledge, instead they empower their soultionprovidors. This is what in my humble opinion lacks in DS businessmodel. I grant som is there, but a lot more is needed. Examples could be: How to show a ressource calendar from Exchange in DS? How to manage the RESTfull feed from Sharepoint. How to use Sharepoint as a DS backoffice. How to get SOA or REST feeds from MS Dynamics software into DS, or SAP? How to interface to Google Apps for Business like calendar, or Office 365?

    Those are subjects I have delivered in another DS system solely from insider knowledge delivered by the developing company. I use other IDE’s to manage those item in Mediasignage DS and in a recent DS solution we managed to show SOA feeds from the ERP on all screens in the factory. It worked nicely and the customer is happy. Mediagignage – DELIVER COMPLETE SOLUTIONS. Don’t let customers hang! This a winning consept.

    Another item is the API of DS. Here the really strong side of it lies. No other solution out there has as strong an API as Mediasignage DS, but DS unfortunately fails to document it so we can use it effeciently. DS might be an open source project, and it might be cheap, but the cost of manhours to discover how to do somthing undocumented is the same for a customer in any solution, it is expensive. They ofcause buy the product with the better solution at the lowest cost. THAT is the real economy of it. The ROI – NOT the initial cost. Then there’s the matter of hardware. One can buy nice players at Mediasignage but when it comes to utilizing them in an advanced A/V solution the support dries out. For instance how can one get DS player to manage an IR interface to a screen to manage TV on/off switch, or how to get a i5 player that power on automaticly when it gets voltage? A little but vital thing when the TV hangs 5-10 meter in the air, or is behind glass in a museum. We found a solution, but it was more expensive because my team had to find the solution elsewhere.

    So for DS to stay competitive they – in my opinion – will have to get started on delivering insider howtos to every aspect of digital signage and kiosk building. Thats how to win with Mediasignage solutions! The secret to this trade is, that nobody actually knows enough to manage without a strong support from partners and solution manufactures. Those developers who empowers their costumers win! It is that simple!


    Lars P. Mathiasen

    • Nate Nead

      Hi Lars,

      Fantastic feedback which we will surely take to heart and work to implement. That’s the biggest reason we love dialogue with our enterprise users: they help us improve.

      There is also opportunity for each of the solution providers that use our system as other smaller operators fail to meet the needs of their customers or they themselves go out of business. It’s tough in those instances to find someone with “staying power.” Vendors also need that stability. That is one of the reasons Scala wins as well. But in order to build the fortitude and broad networks Scala has you need a couple of decades in the market, just like they have.

      Catch up takes some time, but with feedback like this, we’ll get there faster.

  • Lars Mathiasen

    Your right about Scala Nate – And thanks for the kind Words – I have a huge vested interest in this. I realy see a sound and thriving business emerge from this – If Mediasignage can support it up. I think you might…
    Mediasignage has an oppertunity for making a quantum leap. Do as Apple did with OSX (Kevin) I was one of the volunteere people joining in on developing a really nice OS for the Mac. Free BSD evolved from a obscure nerdy thing to the lovely and trendy women’s prefered choice. If Mediasignage was to provide a 3rd party developer API and some hosting for apps (you have already some thing going there) and if we could develop in .NET, PHP or JAVA calling the server API we could make a killer system. I develop in .NET and PHP not in FLEX, as does most. I would love to make apps I can sell to my customers, or other vendors administered from your cloud:-) Much like you see in the case of apps for WordPress. It is a free system but before you have a killer site you happily have payed more than $100 for need apps and nice features.
    About staying in power. I propose you start developing competence packs in the same way as proposed above. Packs like “How to make a full informationsystem in an airport” or “How to provide an informationsystem in a factory” all based on cases.
    If I could earn something for my company by providing something to the community – I would. This is also why forums do not work. To attain a highly professional standard you have to make it closed source, closed forum and exchangable for some sort of goods. Like Apple and WordPress.
    You have a free and a enterprise license layer. How about offering a vendor or solution providor layer? This could be your ultimate way of getting the power you lack! Something like what Weebly did: Get a free developer account and only pay for published Customer solutions. THEY MADE IT REALLY, REALLY BIG – and FAST! They saw to their developers was empowered with advanced templated and solid and stable features. I did a lot of Customer sites in that IDE. And loved it – until Weebly got greedy and forgot their real customers, the developers… That was an expensive error for Weebly…
    I love – it is nice to work with, but I admit my customers do not like the UX as much as they did in Scala, but that shoul be a small feat to correct for Mediasignage developers. Dont be unique and special. Rip off others successfull interfaces – not to steal but to provide familiar interfaces and maximize the UX.

    • Nate Nead

      Thank you for the feedback, it is appreciated.
      We do have plans to customize the XML component and apply it new solutions such as SAP, Google Calendar and more etc. coming later this year…

      As for the API, as you mentioned, StudioLite is driven by pepper which is a low level SDK thus abstracting the difficulty of API programming through this wrapper, pepper.
      I think between StudioLite which is a real life working application driven by pepper that is well documented as well as the docs posted at: a medium level JS developer should be able to pickup easily and customize the solution as needed.

      hope this help and thanks for feedback,

  • Pedro

    Very insightful piece as usual, in my honest opinion.

    Naturally, the business model, with permission of technology development, is a key success factor in every business and has to be chosen with care. We have recently seen bubbles in some IT areas that by the mere fact of being new and in theory offer unlimited potential have collapsed after too much optimistic puts on scene with gigantic financing networks.

    But the google model among others, as pointed out in previous articles, has to let us reflect in order to make the right bet. Before a market enters its maturity phase, concepts like ownership, financial independence, own production, freedom of operation and organic growth sound to me like the right perspective.

    Recently in our domestic market, the successful news point to homemade software companies that have completely developed the software and targeted on their own humble means major department stores and hotel chains and achieved contracts in competition with the typical big moguls, seemingly omnipresent over here until these news arose. In this sense, right partner choice is key, since they are there not only to make money, but also to assist creating value and support in closing the tech and operational gaps that the new developer lacks of in comparison to the bigger players.

    It is true that the market might be in an impasse and that some may have put together too happy sales budgets, business plans and not too cautious financial structures. This affects for sure in a negative way the image of the market as a whole, but there’s a lot to do in the DS market and one day all the unleashed demand might hopefully translate into robust, sustainable growth.

    Competitors may be back in another form, in a different number, under a different structure or business model, but they will be back. In the meantime, these should be times for opportunities for those who choose the right, cost effective, long term competitive approach.

    • Nate Nead

      Hi Pedro,

      You’re right overly optimistic sales forecasts can often get investment backing, but unfortunately and frequently fail to deliver on their promised results.

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