At the onset of the coronavirus (COVID-19) outbreak, many believed the only issue facing the displays market would be supply chain constraints in China, which would soon normalize and disappear. However, the coronavirus is now categorized as a global pandemic, with the number of reported cases showing no signs of slowing in the immediate future. As the number of cases in China enters a stabilization phase, the severity of the outbreak has multiplied in other parts of the world, causing an increase in global digital signage demand and supply chain issues toward the end of the first quarter.
Due to many factory closures in China and other countries in Asia Pacific, many delays and supply chain issues were anticipated for global digital signage shipments. However, since the end of February, many key digital signage display panel and set makers have ramped up production capacity, with available inventory returning to normal levels. On the other hand, many display brands report a clear decline in sales, with recovery not rebounding as quickly as manufacturing levels. Each vendor is working on contingency sales plans to generate sales revenue from alternative opportunities.
Vertical Market Impacts
Coronavirus impacts are affecting nearly all industries, with several applications within the digital signage sector suffering from these negative disruptions.
- Large education products and classroom display upgrades or replacements in major countries have been canceled or postponed. Many of these education projects are often subsidized by the government, however, many countries are focusing all their efforts on utilizing most of the national treasury to combat the coronavirus situation.
- In the corporate sector, long-term investments to improve internal visual display infrastructures are also being postponed for many conference room and control room upgrades to allocate funding for marketing activities to directly support sales efforts.
- Many public space and retail applications are also suffering from coronavirus impacts due to low sales activity. Many consumers in countries where the number of coronavirus cases is spreading rapidly are facing mandated quarantine periods with ‘shelter-in-place’ orders during the coming weeks. As a result, many companies are exercising caution during this period of uncertainty, limiting investment for digital signage displays for marketing, sporting events, cultural and art performances, tradeshows and conferences, among many other events. Due to the mass number of large-scale public gatherings that have been canceled or postponed this year, declines in digital signage sales are inevitable.
Overall Public Display Forecast Impacts
Based on these impacts, Omdia reflects the current market situation in the latest release of our Public Displays Market Tracker on March 23rd, lowering the overall public display forecast compared to the previous quarter's forecast by 12.6% for 2020. Omdia expects coronavirus effects to negatively influence public display shipments in the first and second quarter by 13.0% and 18.3% compared to our previous quarter’s forecast, respectively, with the latter anticipated to be the most severely impacted. Depending on how the situation unfolds, Omdia forecasts the coronavirus will enter a global stabilization phase in the third quarter, resulting in shipments down by 13.9%, followed by a 5.7% drop in the fourth quarter compared to our previous quarter’s forecast.
As a result, the digital signage market, which records a steady annual growth rate so far, will not be able to escape reverse growth for the first time in 2020. For each usage category, Signage & Information Displays are expected to show negative growth from 6.4% in 2019 to -8.9% in 2020. Similarly, demand for videowalls continued to grow steadily in recent years, however, will demonstrate 14% growth in 2019 to -3.5% in 2020. However, only the interactive flat panel (IFP) display market, which continues to rapidly expand globally, is expected to grow slightly from 45.7% in 2019 to 6.7% in 2020, based on particularly strong demand coming from China.
In the second quarter, China is expected no longer be widely affected by the coronavirus impacts which the region experienced during the start of 2020. Public display shipments during the first quarter are projected to be the lowest, with the second quarter expecting to show signs of rebound. Indeed, Omdia anticipates further rapid recovery for the second half of 2020.
For all other regions, with the exception of China, Omdia expects public display shipments to fall further in the second and third quarters compared to the first quarter, as the effects of the coronavirus vary depending on its proximity to China. Asia Pacific, including Japan, is expected to report the lowest shipments in the second quarter, and improve gradually from the third quarter onward due to its close distance to China. On the other hand, the Middle East and Africa, Eastern Europe, Western Europe, North America, and Latin America are forecasted to experience the most severe impact from the coronavirus in the third quarter compared to the second quarter.
Omdia established these scenarios and assumptions prior to the United States' declaration of the state of emergency, and as the coronavirus spreads more rapidly around the world, Omdia will monitor the situation in detail and provide further updates to our forecast outlook depending on the latest updates for coronavirus impacts to the digital signage industry.