Quarantine Measures Suspends Digital Signage Industry with Longer-Term Investments Uncertain

The outbreak of COVID-19 has plunged the world into an unprecedented period of restriction. The mantra: ‘Stay at home’ is being broadcast across all major markets, as governments struggle to dampen the virus’ mortality curve. Whilst this shift to life in isolation has caused opportunities for some industries (namely computing hardware, accessories and collaboration solutions), it has virtually suspended the digital signage trade.

Existing projects are struggling to be fulfilled, as integrators are (mostly) forced to stay at home. This trend is being witnessed across all verticals, from retail to transport. Whilst this immediate impact on revenues is troubling, it will only be a short-term issue – as proven by China, which is reporting an albeit slow return to project realisation as restrictions are lifted.

The real concern is the level of opportunity for DS moving forward. Most corporations have enforced a freeze on all unnecessary spend as they battle to remain viable. It is highly likely that the effective suspension of the world’s leading economies will cause a global recession, the effects of which could last far into 2021. This will undoubtedly trigger many businesses to downgrade the priority of DS expenditure, causing substantial revenue reductions across the industry for the next 12 to 18 months.

This trend is expected to be particularly evident in the education and hospitality verticals. Demand from retail and transport is expected to not be so adversely impacted: It is hoped that after weeks trapped in their homes, consumers will flock to the high-street for some long overdue retail therapy, or embark on delayed trips (for both business and leisure). Businesses working in these industries may well employ new DS installations as a vehicle to promote and therefore drive consumer confidence – creating a self-fulfilling prophecy: business is back to normal!

However, it is important to note that such spending will be retained to flag ship stores and the busiest transport hubs, as many companies will struggle to regain their financial footing over the next 18 months.

COVID-19 has highlighted the value of centralised DS systems that provide real-time, co-ordinated messaging across multiple sites/channels – particularly for supply chain environments (including factories and warehouses, etc) where employees typically do not look at screens or regularly check emails but do have a need for real time communication from both production/productivity and internal company messaging standpoints. It is expected that the adoption of such systems will report long-term growth and somewhat defy the industry’s overall decline in to 2021. Furthermore, with budgets tightening across all verticals in the mid-term, upgrading software solutions may prove to be an effective, low-cost alternative to investing in signage hardware.

The adoption of customer analytics (CA) was finally gaining momentum in 2019, following the improvement of data capture and realisation tools. Considering the additional CAPEX incurred by such solutions, there is a question of whether adoption will decline in to 2021. However, with the cost of CA declining and businesses needing to have greater visibility on ROI, it is thought that this burgeoning segment will remain largely unaffected by the impending economic downturn.

In fact, COVID-19 has led to a new usage case for in-store analytics. Retailers are now not only obliged to improve the customer experience but also to reduce risk. Analytics tools, such as heat-mapping, can provide real-time data on the effectiveness of social distancing throughout the store. Businesses can then make appropriate adjustments to the store’s layout/occupancy rates in order to better protect consumers. Tech company which works in the Customer Analytics field, Beabloo, recently announced its new ‘Interaction Care’ solution. Working together with Microsoft, the solution (which will be donated free of charge to existing Beabloo customers) gained Intel’s IoT Market Ready Solution certification to combat COVID-19.

In-store analytics has been marred by concern and controversy since its inception. However, the industry is now confident that perceptions will shift given that the public has now been presented with a tangible benefit and compelling message: customer analytics can save lives. This development will not doubt accelerate discussions around Digital Experience Platforms (DXP), leading to deeper and more integrated consumer insights and thus more effective DS integration.

Another trend expected to emerge from fallout of the virus is a rise in the number of businesses seeking to maximise their existing installed base of screens by selling more content in the ad-based model.

Greenfield projects will certainly report the greatest rate of decline moving forward – a trend that will significantly impact the display industry as well as specialist DS integrators. Considering that the AV channel is going to be very sluggish in the mid-term, display hardware vendors may feel pressured to reduce prices. This temporary price cut could result in a spike in DS sales once the world’s workforce returns to action.

The DS industry, particularly in established markets, is highly competitive. The unprecedented economic climate caused by COVID-19 will challenge the resilience of every DS player, particularly new entrants. It is highly likely that the impact of COVID-19 will not be limited to declines in the industry’s revenue over the next 12-18 months but also see the withdrawal of multiple players, from integrators to site owners.

Despite the impact of COVID-19 being a largely negative story for the digital signage industry, as it is for many others, the epidemic has highlighted how DS can evolve to meet the changing needs of estate owners and the public.

About the author

Claire Kerrison

Claire Kerrison leads the Education team, overseeing Futuresource’s quarterly K-12 PC tracker and end-user research programs. Claire is closely involved in the formation and delivery of custom projects covering the EdTech sphere.

Claire joined Futuresource in 2011 from the University of Birmingham where she collaborated on a broad range of market tracking and strategic projects covering the Displays industry. Claire went on to lead the Displays team, with a focus on developments in the Front Projector market.