Looking forward, IHS forecasts the world market for digital signage revenue to surpass $15.1 billion for 2014, up 6.0% over the previous year. For 2014, the largest revenue growth is expected among media players and set-top boxes, expected to increase by 15.7% over 2013 values.
Media players and set-top box revenue experienced significant gains for 2013, increasing 22.4% over the previous year, accounting for $188.0 million of overall digital signage revenue. As media players become more widely utilized due to their smaller form factor and improvements in processing power, IHS expects revenue growth for media players to show strong potential in coming years.
There is a varied assortment of different media player options currently available on the market, namely, there are two general categories made up of PC-based and appliance-based media players.
PC-based media players are computers frequently utilizing an x86 processor, and are typically Windows-embedded with customizations specifically for digital signage installations, including specialized mounting brackets, passive cooling, and more durable components.
Appliance-based media players and set-top boxes use non-x86 processors, such as RISC or ARM-based architecture, and have the ability to support different operating systems such as Linux, Android, or Windows. Many appliance-based media players often include specific software applications for end users to easily create, publish, and manage content that gets distributed to the digital display.
More recently, there has been an influx of Android-based media players from BroadSign, Capital Networks, Haivision, IAdea, Stratacache, and Technovare Systems, to name a few, offering a lower cost advantage and solid state platform. Current Android deployments seem to be better suited for SMBs with a limited number of screens and for those end users who are very cost conscious. Software companies that have experimented and modified the Android operating system to meet their specific needs are finding it as a viable option and have had success with the Android platform.
Total cost of ownership has become a substantial factor driving many digital signage deployments, especially with larger installations. Many end users are becoming increasingly cost sensitive, making appliance-based media players an attractive alternative to PC-based players due to their lower initial purchase price and lifetime TCO.
As appliance-based media players are becoming increasingly popular and more widespread throughout the digital signage industry, many manufacturers and other industry experts believe the distinction between the two types of media players is becoming ambiguous. While the processing power of PC-based media players is still greater than that of appliance-based players, the latter has become increasingly robust, offering similar functionality, lower cost, and higher reliability.
IHS expects double digit increases for media players, set-top boxes, and PCs from 2014 through 2016, with shipments averaging 12.6% gains each year. However, IHS believes there will be a shift in the prevalence of appliance-based media players in coming years as more companies develop these players with comparable functionality as mini-PCs, no longer requiring the full capabilities that PC-based players offer.
Revenue for digital signage software also demonstrated double-digit increases of 16.5% for 2013 over the previous year, generating $365.1 million last year. For 2013, total premise-based software revenue was $244.5 million, and IHS expects premise-based revenue to rise 5.7% for 2014. Licenses for premise-based software are expected to show steady growth of 14.9% for 2014, however, by 2018, IHS expects the growth rate to narrow as the shift toward software-as-a-service (SaaS) licenses becomes more widespread. Faster deployment speeds, lower upfront costs on capital overhead costs and IT infrastructure, and scalability of the SaaS model make this software solution appealing to companies entering the digital signage landscape.
IHS segments SaaS into two separate categories, specifically, standard and premium tiers. Standard tier SaaS revenue reached a total of $82.8 million for 2013, with anticipated growth of 29.3% and 20.5% for 2014 and 2015, respectively. For premium tier SaaS revenue, IHS anticipates an even greater increase of 40.5% for 2014 over current levels. Many software providers currently offer both premise-based and SaaS solutions, and IHS believes the SaaS model will continue to gain popularity as many companies become aware of the benefits, in addition to the progression of cloud technology.