Mergers and acquisitions can be powerful for growth in a young market, but must address market demand first and foremost (© Fotolia / alphaspirit)
Companies have two ways to grow: organically, where they expand into new markets, launch new products and take on more people; or inorganically, through mergers and acquisitions (M&A). The latter can bring expertise and market share without having to re-invent the wheel.
Whether the software or hardware involved is intended for transit, retail, internal communications or out-of-home, the key to M&A in this young industry is to create easier ways to implement a digital signage solution. With so many options on the market, interoperability and ease of use are driving both innovation and acquisition in order to appeal to new markets and applications.
This is a driver behind many recent investments and moves. In mid-December last year, USA-based SCG Financial Acquisition Corporation (SCG), which is in the process of merging with RMG Networks, unveiled a letter of intent to acquire digital signage and communications company Symon Communications.
HH Global is a world-wide marketing company working in a variety of markets to deliver cross-channel communications strategies. Digital media development director Chris Heap considers this acquisition: “SCG/RMG/Symon could make real sense. Companies that embed others to improve their overall offering may make good business sense if it makes it easier for the client to buy – on the basis that the relationship makes sense in the first place.”
But Heap sees some other alliances are more confusing – including that announced by Samsung, signagelive and Scala at ISE. “For instance, when you are working on a project, who recommends which platform makes sense for an end user – Samsung? And do allies compete with each other within Samsung’s ecosystem?”
Every merger, acquisition or alliance needs three questions answered, according to Heap. Is the combination helpful? Will it add value? Will it drive down the cost for end users? ”The issue is that most companies don’t really have a clear vision regarding where they’re going and what the customer wants,” he argues. “Partnerships and acquisitions are somewhat confused and predicated on existing tech, not on the new services they can create once brought together. My personal view is that the market needs to become much more service-orientated than product driven and I didn’t see a great deal of services being offered at ISE – just more product, albeit, arguably, slightly advanced over last year’s offering.”
An example of this focus on services was in last year’s acquisition of LCD display manufacturer Hantarex by Global Display Solutions (GDS) from Sambers. GDS stated that this deal would give its customers the benefits of international competitiveness, but with the responsiveness and flexibility of a local contact point.
In spring 2012 we also saw these principles exemplified in the joining of Israeli companies YCD Multimedia and C-nario. YCD’s Retail Advertising and Merchandising Platform (RAMP) was paired with C-nario Messenger digital signage software to provide a multi-display playback engine with a user-friendly graphical interface – a web-based solution that has been developed for marketing professionals. Digital signage specialist and ThinkAndMake founder Giuseppe Andrianò comments: “Incorporating the market knowledge of C-nario with the power of YCD (especially using the RAMP solution) offers a very new and innovative approach and solution to the market.”
YCD built on this approach at ISE 2013, announcing with BrightSign an integrated digital merchandising solution, combining the latter’s media players with RAMP. The move furthers the merged YCD vision: to provide easy and cost-effective digital signage solutions based on application-specific demand.
Microsoft’s interaction in this sector has seen it adopt both approaches. During his Reddit AmA (Ask Me Anything) session, Bill Gates used an 80″ (203cm) Perceptive Pixel (PP) touchscreen to show off the native touch capabilities of Windows 8. Microsoft bought large-scale, multi-touch hardware and software developer PP last summer, hoping to unlock new collaboration and productivity opportunities. However, it is Samsung that currently manufactures the behemoth’s multi-touch table Surface, now known as PixelSense.
It’s not just manufacturers that acquire: diverse media and store experience company Mood Media has been at it, too. Recently it brought acquisitions BIS Group, Technomedia Solutions, GoConvergence, multi-sensory outfit DMX and the eponymous Muzak under a singular brand, Mood. This demonstrates that economy of scale is up to each company to identify and assess, and mergers and acquisitions are a process, not just an event. However, they must always bear the end user in mind if they are to create a successful rationalisation of the portfolio – and we are likely to see more of the same in this sector.
