Ask the Board – October 30, 2017 | STEVE GLANCEY

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How can the digital signage industry support so many CMS solutions, and what is the future for our industry relative to CMS solutions?”


Why are there so many CMS solutions out there? 

I think that there are many reasons, but here are a few:

  1. Low Barrier to Entry 
  2. Market Growth & Specialization 
  3. Economic Conditions
  4. Localization

1. Low Barrier to Entry:

Software as a Service (SaaS) is easy as pie to create these days, at a basic level, and anyone can hire a developer to build to spec for basic digital signage needs. These needs and costs are mostly paid for by the original customer, and then additional features are added here and there as new customers are acquired. Once it’s built, maintenance is relatively inexpensive and easily covered by a small base of customers allowing for just about any software to ride along, bring in recurring revenue and “stay alive” even if they aren’t actively growing.

This is significantly different than any other time in history. Unlike 25 years ago, an entrepreneur can rely on servers, a part-time remote dev team in Indonesia and automated systems to keep things working while employees and owners are off to build two or three other SaaS cash cows. Many people compare the future market consolidation to the search engine market at the turn of the century with Google rising on top. However, in my opinion, even 15 years later, with all the new services, new technology and international workforce, all at a competitive prices, things have changed. 

In summary, the costs to build and maintain a basic level software solution are lower than ever before. 

  1. Market Growth and Specialization:

The market itself is still growing, at a rapid pace and in many new niche markets. Rapid growth means plenty of fertile soil for any software looking to specialize in one niche or another. Some of the big software platforms have certainly been able to cover the mass needs desired by the biggest industries, but a single software, built to serve a single purpose and market to a single audience, can be far more attractive to that audience (such as appliance retail) than a massive behemoth software trying to serve hundreds of other customers with needs from DOOH to government agencies. 

  1. Economic Conditions: 

The global economy hasn’t suffered a massive setback since 2007/08. Many of the well-established software platforms were built before then, but I would guess that more than 50 percent have been built in the wake of 2008 … until now. There is plenty of wiggle room in markets during the good times. Even poorly run companies can run in the black during a bull market for approximately the last 10 years. When the tides turn in the next economic cycle, the writing will be on the wall for many software companies selling their services in the industry today. 

  1. Localization:

“Home court advantage” can be another factor to consider. The Digital signage industry is a global industry, and there are software companies all over the world. Even the best U.S. or European software providers don’t have local offices in half of the countries around the world, leaving many open pockets of countries with different languages, currencies and cultures only supported by local software providers. There may be a lot of competition globally but only a few competitors in particular local markets.  

What will happen in the future? Saturation will take place (some might argue it already has). When that happens, even the small niche audience needs will be well served. Growth will become stagnant and only those software companies that manage their costs well will continue to grow/stay alive during the next economic downturn by adding additional services beyond digital signage (this is already taking place). Market consolidation will continue to take place with strategic acquisitions of competitors with great client bases. Others will eventually dwindle due to a failure of running the business well. Costs will continue to be driven down (increased supply drives down demand, which drives down costs) until those who were able to operate at a higher revenue can no longer survive the famine of price wars.  

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