Seven acquisitions in seven days – market consolidation in the digital signage industry is visibly gaining momentum. Due to high interest rates and poor sales and profit development caused by the pandemic, market consolidation had almost come to a standstill in the past two years. Now, M&A deals are back in full swing.
The German and international digital signage market is still far too fragmented for a global industry. With a few exceptions, medium-sized software providers and integrators dominate the market. Trison is an exception as a pure play digital signage integrator with over 100 million euros in sales in Europe. Pure players are increasingly competing against large IT/ProAV groups like Econocom, Computacenter, and Cancom in Europe. Globally, AVI Systems, AVI-SPL, and Diversified are dominating the ProAV market, but the role of the big US groups in the digital signage market is still limited.
Software providers rarely achieve annual sales of more than 10 million euros. Vertiseit (Grassfish/Dise) and Navori are among the only major software specialists in Europe to achieve significantly higher sales.
Consolidation in full swing
Seven takeovers in the past five working days. At the turn of the half-year, M&A announcements are piling up:
- Wallboard (HU/US) takes over software provider Keywest Technologies (US)
- Wallboard (HU/US) takes over software provider Unified Brand (US)
- Playipp (SE) takes over software provider Databeat (NO)
- i3-Technologies (BE) takes over touch manufacturer Ctouch (NL)
- LG Electronics (KR) takes over IoT platform Homes (NL)
- Macom / Drees & Sommer (DE) takes over AV planning office Sync (LU)
- Digitopia (BE) takes over software provider Thisplays2 (BE)
Buyers are usually companies with financial investors in the background or large companies such as LG and Drees & Sommer.
Size Matters
Scalable business models with high recurring software and service sales are necessary to remain competitive in the digital signage market. A large installed base is necessary to refinance development costs and, in particular, to integrate new AI functions. With fewer than 100,000 active licenses in stock, it will be difficult to remain a relevant provider in the market.
Integrators must serve their customers internationally and no longer just in their home market. In other words, without a relevant company size and international footprint, it will be difficult to assert themselves on the market in the future.
Leading international integrators should generate at least 100 million euros in sales in the long term in order to not lose touch with the large IT groups with billions in sales. Managed services such as signage as a service require not only know-how but also great financial strength and international coverage.
Competitive pressure is increasing, particularly among hardware providers – who are traditionally larger than integrators and software providers. Chinese display and LED manufacturers are increasingly establishing themselves in Europe and North America. They are flooding the market with cheap hardware offers. This is putting pressure on margins in particular. Established providers are concentrating on services and solutions as a supplement to pure hardware offerings and are focusing on sustainability. But competition in the digital signage market will increase: only financially healthy, internationally positioned (vertical) specialists with modern solutions and service offerings will be able to successfully position themselves on the market. This requires competitive businesses that can best adapt to the changing conditions through takeovers and organic growth.