Examination of the Digital

Transcription

1 FESPA & InfoTrends Examination of the Digital and Screen Printing Graphics Market

2 Table of Contents Executive Summary 5 Introduction 7 Project Objectives 7 Methodology 7 Market Size 7 Respondent Profile 8 Best Practices 10 Sales and Marketing 10 Training 11 Most Important Quality 12 Key Client Contact 12 Wide Format Digital Printing 12 Ownership of Wide Format Equipment 13 Revenues Attributable to Digital Wide Format Printing 13 Percentage of Business by Method 13 Cost-Effectiveness of Screen/Analogue Printing versus Digital 14 Future Purchasing Plans 15 Applications 16 Selecting a Hardware Supplier 17 Print Volumes 17 Media Mix 18 Ink and Media Spending 19 Expectations for Supplies Spending 19 Technological Challenges 20 Optimism about the Future 20 Expectations for Changes in Market Dynamics 20 Impact of Digital Signage 21 Agree/Disagree Statements 22 Conclusions 22 About the Authors 24 2

3 List of Figures Figure 1: Which regions are the respondents from? 7 Figure 2: The Value of Screen Printed vs. Digitally Printed Wide Format Graphics in Europe 8 Figure 3: Which of the following categories best represents your company s primary business? 8 Figure 4: Approximately how many people work at this location? 8 Figure 5: Location Size by Primary Business 9 Figure 6: Approximately what is your company s annual revenue for printing and related services? 9 Figure 7: Annual Revenues by Primary Business (Print Providers) 9 Figure 8: Do you have wide format digital printing equipment? 9 Figure 9: What other equipment do you have at your establishment? 10 Figure 10: Employment of Dedicated Sales/Marketing Personnel by Company Size 10 Figure 11: What is your annual expenditure on marketing as a percentage of turnover? 11 Figure 12: Which of the following tools do you use to market your business? 11 Figure 13: Presence of in-house Training Programme by Annual Revenues 11 Figure 14: Approximately how much do you spend each year on training as a percentage of turnover? 11 Figure 15: Technical vs. Business-Oriented Training by Primary Business 11 Figure 16: What is the most important thing that customers demand from you? 12 Figure 17: Which of the following best represents your key client contact? 12 Figure 18: Ownership of Wide Format Equipment by Primary Industry 12 Figure 19: How many of each of the following wide format devices do you own? 13 Figure 20: How many of each of the following wide format devices do you own? (per company) 13 Figure 21: Roughly what percentage of your business/revenue is currently attributable to digital wide format printing? 13 Figure 22: Roughly what percentage of your business/revenue will be attributable to digital wide format printing in two years? 13 Figure 23: Percentage of Revenue from Digital Wide Format Printing by Vertical Segment 14 Figure 24: Roughly what percentage of your current wide format graphics printing business can be attributed to the following methods now, and in 2 years? 14 Figure 25: Roughly how many wide format graphics would you need to produce on your digital printer before it became more cost-effective to produce them using screen/analogue processes? 14 Figure 26: Do you plan to purchase or lease a new wide format printer in the next 12 months? 15 Figure 27: Which type of digital wide format printer will you most likely purchase? 15 Figure 28: What is your primary reason for acquiring a new wide format printer? 15 Figure 29: Which new capabilities are you most interested in acquiring? 15 Figure 30: What are the top features you are looking for when buying a new wide format printer? 16 Figure 31: How much do you expect to pay for the new printer you plan to acquire? 16 Figure 32: Which applications do you regularly produce? 16 Figure 33: Which applications do you see growing and which do you see declining? 17 Figure 34: Which applications do you see growing and which do you see declining? 17 Figure 35: Please rate the importance of the following factors when selecting a hardware supplier 17 Figure 36: Roughly how much per month do you print on your digital wide format devices? 17 Figure 37: Percentage of Digital Wide Format Output by Media - Mean 18 Figure 38: Rigid Media Mix 18 Figure 39: Flexible Media Mix 18 Figure 40: Paper-based Media Mix 18 Figure 41: Film-based Media Mix 19 Figure 42: Vinyl-based Media Mix 19 Figure 43: Roughly how much do you spend on ink and media for your wide format printers annually? 19 Figure 44: Roughly how much do you spend on ink and media for your wide format printers annually? (Segmented by Establishment) 19 Figure 45: Do you expect your annual spending on ink and media for your wide format digital printing equipment to increase, decrease or stay the same? 20 Figure 46: How much do you expect spending on wide format digital printing media and ink to increase? 20 Figure 47: Please indicate the rate of importance of the following technological challenges your company faces 20 3

4 Figure 48: On a scale of 1 to 10, how optimistic are you about the future of your business and the wide format industry overall? 21 Figure 49: Please indicate if you are seeing the following key trends as far as your client demands 21 Figure 50: Where do you see the future success of wide format? 21 Figure 51: When, if ever, do you think digital signage systems will have an impact on the wide format printing business? 21 Figure 52: Rate of agreement with statements 22 4

5 Executive Summary This document outlines the findings from a FESPA survey that was conducted during the summer of The information in this report is the result of detailed primary research with respondents around the world. In conducting this study, we hoped to measure the digital penetration into the screen printing market segments (particularly the European digital and screen printing markets), identify the leading technologies in these markets, obtain information on purchasing plans and printing volumes, and obtain European end-user perspectives on the opportunities and challenges facing the screen and digital wide format market. InfoTrends originally issued this survey on the show floor during the FESPA event in June 2007, then reissued it immediately following the show to FESPA membership associations. 400 respondents in 66 countries across 6 continents completed this Webbased survey. Many types of print-for-pay and manufacturing companies attend the FESPA event and are included in the organisations that FESPA represents. The most common business types were screen printers (35%) and digital printing specialists (24%). InfoTrends believes that of the European market value of 25.6 billion, digital makes up over o13.17 billion. As technologies improve which lower running costs for digital production methods, and add to the substrate variability of digital printing, we believe that digital is poised to grow 7.5% annually while screen printing is expected to decline 4.1% annually. By 2012, InfoTrends expects wide format digital printing to reach over billion in value compared to screen printing, which is expected to decline to less than o10.5 billion. Typical of many InfoTrends research projects in the wide format graphics market, this survey shows a very strong tendency toward small companies. Nearly 47% of survey participants worked for company locations with no more than 10 employees, and over 80% worked for locations with fewer than 50 employees. On average, our survey participants worked for locations with about 45 employees. The print providers that responded to this survey indicated a mean annual revenue value of 2.63 million. Companies that own digital equipment reported that they are on average twice as large as those that do not in terms of annual turnover ( 520K to 230K). Yet companies that own digital equipment employ only 29% more people than companies that do not have digital devices. This certainly suggests a higher level of profitability (twice as much revenue driven by only 30% more employees). Less than 50% of respondents have digital wide format printing in their shops. This suggests a still large opportunity for wide format digital equipment growth among the various segments of respondents. Almost 60% indicated they have a low-end colour inkjet printer while almost 50% reported owning a colour copier/printer. Many printing establishments use these as proofing devices. 47% reported owning a screen printing press, which is a very interesting finding given that only 35% defined themselves as a screen printer. Respondents had high standards for the services they would expect to receive from a trade association. 86% expected information about technologies that could impact their business, 64% expected information about legislation, 60% expected training, and nearly 60% expected industry data. Overall, nearly 69% of survey participants reported employing dedicated sales/marketing personnel, but that number was strongly tied to company size. Although less than half of the businesses with fewer than 10 employees had specific sales/marketing personnel, nearly all of the largest companies did. The mean annual expenditure on marketing as a percentage of annual turnover for all respondents was 4.5%. The most common marketing tools were direct marketing and word of mouth recommendations. InfoTrends has seen a growing trend towards Open Houses in the North American market. Just under half of our survey respondents (49.2%) had an in-house training programme or apprenticeship scheme. On average, respondents spent 2.8% of their annual turnover on training. Moving forward, the vast majority of survey participants (94%) expect their expenditures on training to increase. Most training was a combination of technically-focused tutorials as well as training related to business skills. Survey participants reported that the most important things that customers demanded from them were product quality (49%), product cost (24%) and speed of turnaround (12%). InfoTrends believes these are indicators that customers often do not have the time to develop new ideas for themselves or manage advertising related projects. This presents an opportunity for printers. On average, our survey respondents indicated that nearly 39% of their business was attributable to digital wide format printing. Many survey participants expected digital wide format printing to account for 49% of their business/revenue in two years time. Users expect to continue the move away from robust solvent and into alternative production technologies, particularly UV-curable inkjet. Respondents reported that today UV-curable inkjet represents 12% of production but in 2 years it will represent 22% of production. Over half (57%) of the survey respondents indicated that they plan to invest in a new wide format printer in the next 12 months. Another 26% were unsure and only 17% said no. This suggests a strong potential for near-term purchases in this market and it is important 5

6 to remember that only half of these respondents have wide format digital equipment today. Respondents with future purchasing plans were also asked which type of wide format printer they expected to purchase. UV-curable inkjet printers were the most commonly cited (43%), followed by solvent inkjet (25%) and eco-solvent inkjet (15%) printers. Print quality, reliability, and running cost per square metre are the top three features end-users consider when they look for a new wide format printer. More than 66% of users that plan to invest in new wide format printing hardware intend to spend more than 33, % of respondents reported they regularly produce banners, 58% reported they regularly produce posters while 55% reported they regularly produce signs. Essentially none of the respondents indicated that they see these applications declining versus growing. Users see the greatest potential in textiles, POP materials, packaging samples, vehicle graphics and banners. The most important considerations for end-users are manufacturers service & support capabilities and the level of digital printing expertise that manufacturers possess. These are the critical elements that manufacturers should stress in their marketing messages to end-users because very sensibly, users want to feel like their chosen manufacturer will stand behind the product with appropriate support, and will have the expertise to develop products that will help them be successful. The average user prints more than 2,400 square metres per month on all of their wide format digital printers. There is a wide variance between the different types of users. It is clear from this data that billboard printers, while relatively small in number of establishments, are the most productive users of wide format digital printing equipment. Overall, more than 1/3 of print media used is rigid. This represents a relatively new area for the wide format digital print market and a growing opportunity that has emerged due to the growth of wide format UVcurable inkjet printers installed base. The data on paper consumption by finish reflects one very important trend in the wide format market; the growth of high-quality but lower priced cast-coated papers is limiting the use of higher-end photographic or photo-base papers. Lighter weight coated papers (either glossy or matt) finish offer many of the same characteristics of photo-base paper often for less than half of the purchase price. The data on film-based print media is interesting in that it shows that 18% of the film-based print media used is clear film, which must be used for applications such as window graphics. Also, 56% of the film-based print media is high-gloss white poly which offers some of the same properties as paper-based print media (gloss and colour pop) as well as greater tear resistance. The data on vinyl consumption validates some of the suggested market trends that show the overall trend away from cutting vinyl towards the digital printing of vinyl. 75% of the users surveyed reported that they expect to spend more on supplies for their wide format digital printer in the next 12 months than they did in the last 12 months, while 21.6% of respondents reported that they do not anticipate a change. Those that expect their spending on wide format digital printing supplies to increase, also expect is that spending on supplies will increase by 18.4%. Users reported that the greatest technological challenge they face is in the area of standardisation of colours. This is an interesting finding because there have been many efforts made to develop colour standards and widely deployed ICC profiles to meet colour standardisation requirements. Users are highly concerned about the technological challenge of finishing and see a need for increased automation. More users reported that they anticipate a significant increase in expectations from customers for a more sophisticated service. Printers are seeing an increase in the demand from clients for on-line ordering, personalisation, just-in-time fulfillment, shorter runs, closer integration with other marketing collateral and shorter turnaround times. 55% of respondents indicated that they see a more successful future in purely digital printing and another 20% think the key will be operating both screen and digital platforms. Another 20% see their success in being a full service print service provider, meaning that they would offer narrow format print services in addition to what they do in wide format. Perhaps the key statistic though is that just 4.5% indicated that they foresee a successful future in purely screen printing. Remarkably, more than 50% of the respondents reported that they believe digital signage systems are already having an impact on the wide format business. The research data indicates a slowing growth of wide format solvent inkjet, which InfoTrends believes is based on the advancement of health & safety regulations as well as the relative maturity of the market which is pressuring profit margins for outdoor graphics. The advances in UV-curable inkjet printing technology, aswell as the combination of new print head technology and new ink formulations, are providing both running cost improvements and enabling new capabilities. These improved capabilities are exciting to the market, and many users indicated their intentions to invest in new wide format UVcurable equipment. In addition, the anticipated strong 6

7 growth for their overall digital business, and indicated strong supplies purchasing expectations. At the same time, however, InfoTrends is wary that there are too many print service providers entering the wide format UV-curable market, which could lead to overgrowth of capacity and damage the existing pricing structure. In the highly competitive wide format digital hardware market it will be increasingly important to develop a strategy that keeps manufacturers as close as possible to their customers. InfoTrends believes we will see a growing number of user groups that will be sponsored by equipment manufacturers. The objectives of these users groups will be primarily to promote the effective use of the equipment, but from a manufacturer s standpoint, a side benefit would be the maintenance of close ties to their end-users. In summary, InfoTrends believes that based on the end-user survey data there is still a strong growth opportunity for wide format printing. The relevant indicators include interest in new hardware, high spending expectations for equipment and supplies, reported growth among wide array of applications, the wide format business growth expectations, and the increasing set of demands from print buyers. Nevertheless, the wide format printing business is also showing some signs of maturity that include awareness of digital signage and the threat it poses, more hardware vendors competing by reducing printing costs, and increasing international competition. Introduction This document outlines the results from a FESPA survey that was issued during the summer of The information in this report is the result of detailed primary research with respondents around the world. In conducting this study, we hoped to measure the digital penetration into the screen printing market segments (particularly the European digital and screen printing markets), identify the leading technologies, obtain information on purchasing plans and printing volumes, and obtain European end-user perspectives on the opportunities and challenges facing the digital wide format market. Individuals who would like additional information related to this study are encouraged to contact FESPA and/or InfoTrends. Project Objectives This report has been prepared by InfoTrends in cooperation with FESPA. The key objective of this research project was to determine the state of the wide format graphics market in Europe and try to measure the outlook for the business on a number of levels. The research provides insights on how wide format graphics producing business operators plan to grow their business, meaning what technologies and types of equipment they plan to invest in. The research also provides some insights on the best practices of some of those that have invested in digital wide format printing equipment already. Another goal of this research was to gather information on what users look for and how they use industry associations. Finally, we wanted to research end-user perspectives on their concerns about the wide format market. The results of this research project should help the FESPA organisation, hardware and supplies manufacturers, and end-users as they develop business plans through 2008 and beyond. Methodology InfoTrends originally issued this survey on the show floor during the FESPA event in June 2007, then reissued it immediately following the show to FESPA membership associations. 400 respondents in 66 countries across 6 continents completed this Webbased survey. Membership or affiliation with FESPA generally means that respondents are involved in screen or digital printing in a print-for-pay environment, or that they use screen printing as part of a manufacturing process. Figure 1: Which regions are the respondents from? Market Size One aspect of InfoTrends annual market sizing and forecasting exercises is to collect and analyze the shipment of digital wide format printing equipment and supplies in the worldwide market and 2007 have seen dramatic changes in the wide format digital printing market, and we think that it is at the expense of screen printing. InfoTrends believes that of the European market value of 25.7 billion, digital makes up over billion, or more than half of the total value of wide format graphics production. Furthermore, as technologies improve lower running costs for digital production methods and add to the substrate variability of digital printing, we believe digital is poised to grow 7.5% annually while screen is expected to decline 4.1% annually. 7

8 Figure 2: The Value of Screen Printed vs. Digitally Printed Wide Format Graphics in Europe By 2012, InfoTrends expects European wide format digital printing to reach over billion in value compared to screen printing, which is expected to decline to less than 10.5 billion. The combination of greater demand for short runs, the declining costs for digital production, and the additional value of personalised/regionalised information are the leading factors causing the erosion of screen print volumes. Alternatively, the growth of significant wide format digital applications, such as vehicle graphics and textile banners is expected to spur the digital market. It should be noted that the calculation figure in digital wide format production from all sectors, not just screen printing establishments. Respondent Profile Among those respondents that participated in this year s survey, the most common business types were screen printers (35%) and digital printing specialists (24%). Apart from these two responses, the responses were very fragmented, with the overall focus among the on print-for-pay establishments. InfoTrends has been saying for years now that the wide format graphics market is a collection of vertical segments, this Figure illustrates that fact because within the base of respondents we found twelve (12) vertical segments represented. A different look at the data shows the split between print-for-pay establishments and other types of establishments. 90% of the companies that responded to the survey are print-for-pay establishments with the rest made up of dealers and equipment and supplies manufacturers. Among the other category are companies that could not define themselves within those labeled segments as well as manufacturing companies that use screen or digital printing as part of their manufacturing process. For example, one of the respondents that we interviewed personally uses screen printing to print the packages he uses in his factory. He took the survey while he was attending FESPA to look at the latest advancements in screen printing automation equipment. It is also noteworthy that the respondents to this survey, who come from the separate associations within the FESPA organisation, are clearly not all screen print oriented. Only about one-third of the respondents identified themselves as screen printers. Typical of many InfoTrends research projects in the wide format graphics market, this survey showed a very strong tendency toward small companies. Nearly 47% of survey participants worked for company locations with no more than 10 employees, and over 80% worked for locations with fewer than 50 employees. On average, our survey participants worked for locations with about 45 employees, but this mean was most certainly driven upward by the small percentage of respondents that came from locations with 250+ employees. Figure 4: Approximately how many people work at this location? Figure 3: Which of the following categories best represents your company s primary business? It is important to note that the number of employees by location varied widely in terms of primary business. Sign shops (10) and graphic design firms (20) had the smallest locations, while manufacturers (151) and inplants (117) had the largest. These findings are fairly consistent with InfoTrends other market research studies where we find that many sign shops and graphic design firms are among the smallest 8

9 production establishments in terms of annual revenue and employee head count. Figure 7: Annual Revenues by Primary Business (Print Providers) Figure 5: Location Size by Primary Business The print providers that responded to this survey (manufacturers and distributors were removed from the Figure below because they drove up the overall mean by a substantial margin) indicated a mean annual revenue value of 2.63 million. At the same time, however, over half of the respondents reported annual revenues below 700,000, and it must be remembered that many of our survey participants came from very small companies. Figure 6: Approximately what is your company s annual revenue for printing and related services? According to the survey data, companies that own digital equipment are, on average, twice as large as those that do not in terms of annual turnover ( 520,270K to 340K). Yet companies that own digital equipment employ only 29% more people than companies that do not have digital, this certainly suggests a higher level of profitability (twice as much revenue driven by only 30% more employees). This survey was primarily driven by the interest in the convergence of the wide format digital and screen printing markets, so one of the key questions is the penetration rate of digital wide format equipment. The data shows that today less than 50% of respondents have digital wide format printing in their shops. This suggests a still large opportunity for wide format digital equipment growth among the various segments of respondents. Figure 8: Do you have wide format digital printing equipment? Once again, there were significant differences by company type. In-plant printers reported the lowest annual revenues ( 405,405), while commercial/quick printers reported the highest ( 5.2 million). For several reasons, it is also helpful to look at what other types of printing equipment that end-users have. First, it helps understand what types of establishments are being surveyed. Second, it helps manufacturers of different types of equipment recognise any opportunities to leverage an installed base. Among the survey respondents, almost 60% indicated they have a low-end colour inkjet printer while almost 50% reported owning a colour copier/printer. Many printing establishments use these devices as proofing devices. 9

10 47% reported owning a screen printing press, which is a very interesting finding given that only 35% defined themselves as a screen printer. Figure 9: What other equipment do you have at your establishment? Sales and Marketing Overall, nearly 69% of survey participants reported employing dedicated sales/marketing personnel. As illustrated in the Figure below, however, the employment of sales and marketing personnel was strongly tied to company size. Although less than half of the businesses with fewer than 10 employees had specific sales/marketing personnel, nearly all of the largest companies did. Figure 10: Employment of Dedicated Sales/Marketing Personnel by Company Size Best Practices There were some differences by primary business. Specifically, respondents from other (9%) and in-plant (14%) businesses were the least likely to be members of trade associations, while screen printers (40%) and billboard printers (38%) were the most likely. Respondents had high standards for the services they would expect to receive from a trade association. 86% expected information about technologies that could impact their businesses, 64% expected information about legislation, 60% expected training, and nearly 60% expected industry data. Hopefully, this report and others like it, will be the type of information that FESPA members can make use of. Respondents were also asked about their annual expenditures on marketing as a percentage of turnover. The mean percentage for all respondents was 4.5% but that number is certainly lifted by the 12% that spend more than 10% of their annual turnover, because over 67% spend less than 4% of their annual turnover on marketing. 10

11 Figure 11: What is your annual expenditure on marketing as a percentage of turnover? Figure 13: Presence of in-house Training Programme by Annual Revenues With the overall limited marketing expenditure, it begs the question, how do printing establishments market their services? Most respondents reported using some type of tool to market their businesses. The most common marketing tools were direct marketing and word of mouth recommendations. InfoTrends has seen a growing trend towards Open House events as marketing tools printing establishments use to let their customers know about their capabilities. They also a offer a great chance to show print buyers some of the capabilities of wide format printing equipment by highlighting some of the more creative applications. On average, respondents spent 2.8% of their annual turnover on training. We saw no significant differences across various demographics. Figure 14: Approximately how much do you spend each year on training as a percentage of turnover? Figure 12: Which of the following tools do you use to market your business? Moving forward, the vast majority of survey participants (94%) expect their expenditures on training to increase. Training Just under half of our survey respondents (49.2%) had an in-house training programme or apprenticeship scheme. Not surprisingly, however, respondents from companies with higher annual revenues were generally more likely to have in-house programmes. Most training was a combination of technically-focused tutorials and training related to business skills. As outlined in the Figure below, this was particularly the case among in-plant companies and manufacturers, but less so among billboard and commercial/quick printers. Figure 15: Technical vs. Business-Oriented Training by Primary Business 11

12 Most Important Quality When asked about the most important thing that customers demanded from them, our survey participants most commonly cited product quality (49%). Product cost (24%) and speed of turnaround (12%) followed. This finding speaks to the nature of the printing business in general; however, it is interesting that nearly 15% of respondents indicated that issues not necessarily related to pure print were the most important issues to their clients. 8.4% of respondents indicated that the most important thing customers expect from them is new ideas, and another 6.3% reported that overall project management is the most important thing customers expect from them. InfoTrends believes these are indicators that often customers do not have the time to develop new ideas for themselves or the time to manage advertising related projects. This certainly presents an opportunity for printers to extend their design and creative services as well as taking on a greater role in the management of advertising projects. Figure 16: What is the most important thing that customers demand from you? Figure 17: Which of the following best represents your key client contact? Wide Format Digital Printing Equipment Ownership of Wide Format Equipment On average, about 49% of respondents indicated that they owned wide format digital printing equipment. As illustrated in the Figure below, however, ownership varied widely based on primary industry. 75% of the sign shops responding to the survey have invested in wide format digital printing while just 33% of the companies that have identified themselves as screen printers have invested in wide format digital. Billboard printers are the most likely to have invested in wide format digital printing among the different types of respondents. Figure 18: Ownership of Wide Format Equipment by Primary Industry Key Client Contact When respondents were asked about their key client contact, the most common response was other (30%), which suggests a somewhat fragmented industry where vendors are contacting a wide range of client types. Professional Print Buyers were cited by 22%, followed by Brand Managers at 18%. There is obviously a very important component of the market indicated in these results, and that is the print broker and professional print buyers. Making up almost 40% of the key contacts that printing establishments deal with, they clearly represent a key sector of the market and one that savvy printing establishments will form a specific marketing strategy to engage most effectively. This data suggests that there is still a very good business opportunity for hardware manufacturers to grow their wide format digital equipments sales. This is especially true in those segments such as in-plants, quick and commercial printers, and screen printers who reported low rates of digital wide format printer ownership. The next two figures delve deeper into equipment ownership rates. Figure 19. provides the total number of various wide format printing devices owned by all 12

13 respondents. This Figure shows that wide format solvent inkjet is the most common type of wide format print technology among the respondent base. InfoTrends does not believe this is an accurate reflection of the overall wide format market, but it does represent an accurate representation of those users in the production wide format market that would be responding to a FESPA survey. Aqueous inkjet is the second most common type of wide format equipment in the installed base among these survey respondents, but based on our work in the market InfoTrends believes the actual installed base of aqueous inkjet printers is three times larger than that of solvent inkjet printers. Figure 19: How many of each of the following wide format devices do you own? Revenues Attributable to Digital Wide Format Printing When we asked survey participants about the percentage of their business (revenue) that was currently attributable to digital wide format printing, the responses were all across the board. On average, our survey respondents indicated that nearly 39% of their business was attributable to digital wide format printing. Among the important findings here is that there are few companies (16%) that solely do wide format digital printing and a large number of the respondents (40%) derive less than 20% of their revenue from wide format digital printing. Figure 21: Roughly what percentage of your business/revenue is currently attributable to digital wide format printing? The Figure below indicates the mean number of various devices owned per company (among companies that reported having devices of this type). So, the proper way to read this Figure is to say that of the companies which reported having aqueous inkjet printers, the average is 2.6 printers, and among those that have solvent inkjet printers, the average is 4.4 printers. Perhaps the most interesting finding here is that most establishments have more than one printer, no matter which technologies they have invested in, and most have invested in multiple technologies at this stage. One of the growth indicators of the wide format market is that users expect wide format digital printing to become a more important part of their business. Respondents were asked how they expected this percentage to change over the next two years. On average, survey participants expected digital wide format printing to account for 49% of their business/revenue in two years time. Figure 22: Roughly what percentage of your business/revenue will be attributable to digital wide format printing in two years? Figure 20: How many of each of the following wide format devices do you own? (per company) It is also interesting to consider the responses to these questions in relation to primary business. Billboard printers attributed the highest percentage of their revenues to digital wide format printing, but these 13

14 respondents were also the only ones expecting to see a decline (albeit slight) over the next two years. This may be a reflection of the state of the billboard market in terms of pricing since that market has become extremely price competitive. Meanwhile, sign shops, screen printers, and graphic designers were particularly bullish about their future growth potential in the digital wide format business. Figure 24: Roughly what percentage of your current wide format graphics printing business can be attributed to the following methods now, and in 2 years? Figure 23: Percentage of Revenue from Digital Wide Format Printing by Vertical Segment Percentage of Business by Method We ve already seen the penetration of the different wide format graphics production technologies, but the following two Figures illustrate the business breakdown between these disparate technologies. As we saw, solvent inkjet is the leading technology among these respondents in terms of the equipment they own, so it is not surprising that it represents the greatest portion of their business at 34% today. What this chart illustrates is that users expect to continue the move away from robust solvent and into alternative production technologies, particularly UV-curable inkjet. Respondents reported that UV-curable inkjet currently represents 12% of production, but this figure will rise to 22% over the next 2 years. We also see a movement into eco-solvent inkjet and away from analog and aqueous inkjet, which are congruent with the trends that we are seeing in the overall wide format digital printing market. Cost-Effectiveness of Screen/Analogue Printing versus Digital Digital printing has advantages for short run lengths, but analogue processes are generally more costeffective for handling longer run lengths. We asked our respondents to estimate how many wide format graphics they would need to produce on their digital printers before it became more cost-effective to produce them using screen printing or analogue processes. On average, our survey participants reported a crossover point of about 132 wide format prints. Figure 25: Roughly how many wide format graphics would you need to produce on your digital printer before it became more costeffective to produce them using screen/analogue processes? Once again, crossover points varied widely based on primary business. Commercial/quick printers reported a crossover point of only 32 prints, while digital/reprographics printers indicated a crossover point of 169 prints. 14

15 Future Purchasing Plans Over half (57%) of the survey respondents indicated that they plan to invest in a new wide format printer in the next 12 months. Another 26% were unsure and only 17% said no. This suggests a strong potential for near-term purchases in this market and it is important to remember that only half of these respondents have wide format digital equipment today. Figure 26: Do you plan to purchase or lease a new wide format printer in the next 12 months? flatbed inkjet because this is the newest technology which represents the primary interest of end-users. It also indicates that these users are not necessarily considering UV-curable as a technology that offers reduced costs, even though it does enable direct to rigid substrate printing which can reduce steps in the production process and therefore reduce costs. Figure 28: What is your primary reason for acquiring a new wide format printer? Respondents with future purchasing plans were also asked which type of wide format printer they expected to purchase. UV-curable inkjet printers were the most commonly cited (43%), followed by solvent inkjet (25%) and eco-solvent inkjet (15%) printers. What is just as important, and reflective of the state of the market, is that only 6.4% of the respondents indicated that they plan to invest in an aqueous inkjet printer (despite all of the models that have recently been introduced) and only 2.8% indicated that they are in the market for a screen printer. Figure 27: Which type of digital wide format printer will you most likely purchase? When further probed about what specific new or better capabilities these users are interested in acquiring, 35% of users reported that they are looking for faster print speeds, which are really achievable with any print technology. The newest generation of aqueous inkjet printers is considerably faster than past generations, but print speed is an important factor because it allows users to turn jobs around faster, providing better customer service. The second and third most sought after capabilities are the ability to print specialist colours and flatbed printing or the ability to print onto rigid substrates, which point directly to UV-curable inkjet and its ability to do some of the same types of graphics that screen printers can produce. Figure 29: Which new capabilities are you most interested in acquiring? When asked to specify their primary reason for acquiring a new wide format printer, 64% of users indicated that they are planning to invest in a new printer to gain access to some new capability. 21% indicated they were simply adding capacity, 10% indicated they are replacing an older device and just 4.6% reported their primary reason was to reduce costs. This data reaffirms the prior data charts that indicate an interest in wide format UV-curable and When asked about the top features that they look for in a new wide format printer, predictably, print quality, reliability, and running cost per square metre are the 15

16 top three features end-users consider. Print quality is a feature that should really be considered as a strata, or a relative feature, because users that are looking for a new billboard printer likely have a different set of expectations than a user that is buying a new printer intended to produce POP materials. The important issue would seem to be acceptable or sellable print quality. Considering the importance users place on reliability (63% indicated it is one of the top three features they consider), it seems that vendors could do more, or establish better standards, such as the sometimes used Mean Time Between Failures (MTBF) standard to describe the reliability of their printing systems. Other factors such as training, warranty, and versatility are certainly very important but not cited as one of the top 3 factors compared to those other factors. Applications The Figure below illustrates the range of applications users report they regularly produce. 72% of respondents reported they regularly produce banners, 58% reported they regularly produce posters while 55% reported they regularly produce signs. One of the ways to interpret this figure is to suggest that those that have invested in digital wide format production equipment are able to produce a wide range of applications because of the flexibility of the equipment in terms of the achievable print quality on a wide variety of substrates. Figure 32: Which applications do you regularly produce? Figure 30: What are the top features you are looking for when buying a new wide format printer? There appears to be a large market for mid-range and high-end systems among the survey respondents. In accordance with the data that suggests these users are primarily interested in UV-curable and solvent inkjet printing equipment, users expect to pay the premium prices these technologies require. More than 66% of users that plan to invest in new wide format printing hardware plan top spend more than 33,500K, which is really the entry point for UV-curable inkjet technology. Figure 31: How much do you expect to pay for the new printer you plan to acquire? Perhaps a more compelling set of questions relates to the end-users view on the applications they produce and which they see growing and declining. There are several important findings among these two figures, but one of the most important is that essentially none of the respondents indicate that they see these applications declining versus growing. Based on Figure 33., users see the greatest potential in textiles, POP materials, packaging samples, vehicle graphics, and banners. 16

17 Figure 33: Which applications do you see growing and which do you see declining? messages to end-users because very sensibly, users want to feel like their chosen manufacturer will stand behind the product with proper support, and will have the expertise to develop products that will help them be successful. The way InfoTrends interprets this data is to suggest that users are looking for a comfort in dealing with their wide format hardware manufacturer; they want to know that the manufacturer will support the equipment, and they want to know that they are being sold the right piece of equipment in the first place. Figure 35: Please rate the importance of the following factors when selecting a hardware supplier The second tier of applications includes some of the more established applications such as signs and posters which are commonly produced by users at all levels of the market. Other applications, such as engineering drawings and proofs are seeing some declines based on users who simply view information such as layouts or technical information on their screen instead of printing them out. Another explanation for the declines in these applications is that print-for-pay establishments would see declines in these because the price of equipment has come down so low that many end-user establishments can now buy the equipment to print proofs or technical documents themselves. Figure 34: Which applications do you see growing and which do you see declining? Print Volumes The average user prints more than 2,400 square metres per month on all of their wide format digital printers. The Figure below illustrates that there is a wide variance between the different types of users. It is clear from this data that billboard printers, while relatively small in number of establishments, are the most productive users of wide format digital printing equipment. Figure 36: Roughly how many square metres per month do you print on your digital wide format devices? Selecting a Hardware Supplier Perhaps one of the most important pieces of information for the manufacturer is to understand the decision criteria that end-users factor into their hardware purchasing decisions. Based on the data in Figure 35., the most important considerations for end-users are the manufacturer s service & support, capabilities and the level of digital printing expertise that manufacturers possess. These are the critical elements that manufacturers should stress in their marketing We find it interesting that with relatively low wide format digital print volumes, there is so much interest in the acquisition of faster printing equipment. This can be explained by the growing requirement for shorter turnaround times, so in essence, printing establishments are required to have an excess of capacity on a day-to-day basis to meet the requirements of their busiest times. 17

18 Media Mix One of the additional questions asked of the survey respondents was about the mix of materials they print on, between rigid and roll-fed media. Overall, more than 1/3rd of the print media used is rigid. This represents a relatively new area for the wide format digital print market and a growing opportunity that has emerged because of the growth of the wide format UV-curable inkjet printer installed base. Figure 39: Flexible Media Mix Figure 37: Percentage of Digital Wide Format Output by Media - Mean The mix of products used that are rigid includes rigid PVC, acrylic, polycarbonate and a variety of other rigid print media such as wood and metals. The survey data illustrating the mix of rigid media products used is an indicator of the types of products that ink manufacturers should be aware of when looking at the types of substrates inks must adhere to. The data is a good indicator of the types of rigid media products that distributors should think about adding to their portfolio as well. The figure below illustrates the mix of paper-based substrates used by those that consume paper-based substrates for their wide format digital printing. The data on paper consumption by finish reflects one very important trend in the wide format market; the growth of high-quality but lower priced cast-coated papers is limiting the use of higher-end photographic or photobase papers. Lighter weight coated papers (either glossy or matt) finish offer many of the same characteristics of photo-base paper, often for less than half of the purchase price. Figure 40: Paper-based Media Mix Figure 38: Rigid Media Mix Similarly, the data on mix of flexible print media products should be illustrative for distributors who want to serve the wide format digital printing market. The mix of media products consumed should be recognised as the state of the market today though because as the application data illustrated, there appears to be significant growth in the digital textile production market which now reflects just 14% of production. Figure 41. illustrates the mix of film-based print media used by those that consume film-based print media for their wide format digital printing, which is only 16% of those users. The data on film-based print media is interesting in that is shows that 18% of the film-based print media used is clear film, which must be used for applications such as window graphics. Also, 56% of the film-based print media is high-gloss white poly (which could mean polyester, polyolefin, or polypropylene) which offers some of the same properties as paper-based print media (gloss and colour pop) as well as greater tear resistance. InfoTrends believes the consumption of film-based print media is trending downward because of the higher prices, which are required because of the higher prices demanded by raw materials suppliers. 18

19 Figure 41: Film-based Media Mix Figure 43: Roughly how much do you spend on ink and media for your wide format printers annually? The Figure below illustrates the mix of vinyl-based print media used by those that consume vinyl-based print media, which is 38% of the overall media mix. The data on vinyl consumption validates some of the suggested market trends that include the overall trend away from cutting vinyl towards the digital printing of vinyl. Users are simply using glossy white vinyl and digital printing equipments instead of using cutting plotters and multiple rolls of vinyl in a variety of colours. Because print volumes per establishments are very different (as we have seen earlier in this report), supplies expenditures per establishment should be different as well. The Figure below shows that, among the segments of users, the commercial and quick printers and digital printing establishments represent the greatest opportunity for supplies vendors. Figure 42: Vinyl-based Media Mix Figure 44: Roughly how much do you spend on ink and media for your wide format printers annually? (Segmented by Establishment) Ink and Media Spending One of the goals of the research was to determine the value of the wide format digital printing business on an annual basis. One of the key components of the digital wide format printing business is the ongoing revenue streams derived by manufacturers and distributors from ink and media sales. Figures 43. and 44. illustrate what amounts to the industry averages in terms of ink and media spending per establishment. What the first chart tells us is that the average establishment represents nearly 60,257 per year in wide format digital printing supplies. Expectations for Supplies Spending Yet another indicator that the digital market is growing is that 75% of the users surveyed reported that they expect to spend more on supplies for their wide format digital printer in the next 12 months than they did in the last 12 months. 21.6% of respondents reported that they do not anticipate a change, leaving just 3.7% who indicated they will spend less. 19

20 Figure 45: Do you expect your annual spending on ink and media for your wide format digital printing equipment to increase, decrease or stay the same? Figure 47: Please indicate the rate of importance of the following technological challenges your company faces The Figure below shows that among those that expect their spending on wide format digital printing supplies to increase, their expectation is that supplies spending will increase by 18.4%. A modest 25% of users expect their annual supplies spending to grow less than 10%, but more than 60% of users reported that they expect their spending on supplies for wide format digital printing to grow more than 10% in the next year. Figure 46: How much do you expect spending on wide format digital printing media and ink to increase? There are two other issues in this figure that deserve commentary. The second horizontal bar shows that users are highly concerned about the technological challenge of finishing. What InfoTrends has found in the past is that at many shops, finishing, particularly lamination and mounting, often requires significant additional floor space and additional trained personnel. InfoTrends believes that part of the reason the market has transitioned so readily to solvent and UV-curable wide format digital printing is the ability to skip the finishing step in the production process for some wide format graphics because finishing is a bottleneck in many production processes. The last really noteworthy piece of data from this chart, and one that is arguably connected to the other two, is that users see a need for increased automation. This, combined with the requirements on the finishing side, would seem to indicate a market requirement for some type of in-line finishing. Technological Challenges When asked about which technological challenges their companies face, users reported the greatest area of need is in standardisation of colours. This is an interesting finding because there have been many efforts made to develop colour standards and widely deployed ICC profiles to meet colour standardisation requirements. InfoTrends believes the key to understanding the requirement for colour standardisation is found in supplies and RIPs. The top bar in Figure 47. shows that users are highly concerned about the variability of inks and media, which is critical to meeting those colour standards. Optimism about the Future Our survey participants were also asked to indicate their optimism about the future of their own businesses and the wide format industry as a whole. Responses were graded on a 10-point scale, where 1 meant not optimistic at all and 10 meant extremely optimistic. Respondents were generally optimistic about the industry, but were more likely to express a strong optimism for their own businesses. 20

21 Figure 48: On a scale of 1 to 10, how optimistic are you about the future of your business and the wide format industry overall? The answers to the questions seen above are hints at the way that users see the business heading. When users are asked where they see the future success of wide format, 55% indicate that they see it in purely digital printing and another 20% think the key will be operating both screen and digital platforms. Another 20% see their success in being a full service print service provider, meaning that they would offer narrow format print services in addition to what they do in wide format. Perhaps the key statistic though is that just 4.5% indicated that they foresee a successful future in purely screen printing. Figure 50: Where do you see the future success of wide format? Expectations for Changes in Market Dynamics In another set of questions, users were asked about their expectations for a variety of trends in the wide format and in the overall printing market. Seemingly across the board more users than not reported that they anticipate a significant increase in greater expectations for a more sophisticated market. Printers are seeing an increase in the demand from clients for on-line ordering, personalisation, just-in-time fulfillment, shorter runs, closer integration with other marketing collateral and shorter turnaround times. The reason these options were presented is that many of these dynamics are the key drivers that cause companies to invest in digital production equipment, which has significant turnaround time advantages over screen printing, especially for short-run jobs or jobs that require personalisation. Figure 49: Please indicate if you are seeing the following key trends as far as your client demands Impact of Digital Signage One of the more interesting findings from this survey research was about users opinion on when digital signage systems would impact the wide format market. Remarkably, more than 50% of the respondents reported that they believe digital signage systems are already having an impact. This is a particularly interesting finding because it seems to run contrary to the aggressive equipment and supplies expenditures as well as the relatively high level of overall optimism in the wide format market. Figure 51: When, if ever, do you think digital signage systems will have an impact on the wide format printing business? 21

22 Agree/Disagree Statements On a question that asks users to rate their level of agreement on a scale of 1 to 5 where 5 equals strong agreement and 1 equals strong disagreement, any mean that is above a 3.5 is considered strong agreement. In the Figure below, we asked users to rate their agreement with several of the major issues facing endusers in the wide format digital printing market today. Users overall strongly agreed with 3 of the 7 issues raised. Interestingly, the issue that people agreed with the most had to do with the challenge of recruiting good employees, but users only indicated mild agreement that there is a skills shortage in the business. This may mean that business operators believe there is a relatively limited talent pool to draw from, but for one reason or another, actually recruiting those employees is challenging. These companies also indicated a strong agreement that they are concerned about the health or environmental concerns related to the use of solvent-based inks. This is another indicator, and another factor contributing to InfoTrend s strong projections for the wide format UV-curable inkjet printer market. Users also reported a strong agreement with the requirement for an outdoor performance warranty for the durability and longevity of outdoor printed materials from the manufacturers. This finding suggests that this is still a requirement by printing establishments even though it is widely believed that the length of time that many wide format digital prints are actually displayed is getting shorter. Figure 52: Rate of agreement with statements There is a lot of talk in the wide format digital print market about increasing the use of recyclable media. Overall, the end users did not strongly agree that their print buying customers are the ones asking for it. However, users also did not strongly or even mildly agree that the inks they use in the wide format printer must be the same brand as their hardware. While this is a good sign for third-party ink suppliers, it is not a good sign for hardware manufacturers who often count on funding the development of next-generation hardware with profits from ink and media sales. Conclusions End-user survey data is certainly highly illustrative of the latest thinking of end-users but should be applied in the context of the market situation. This section of the report summarises the findings from the end-user research and uses additional market information to make final conclusions. InfoTrends believes that of the European market value of billion, digital makes up over billion, or more than half of the total value of wide format graphics production. Furthermore, as technologies improve lower running costs for digital production methods and add to the substrate variability of digital printing, we believe that digital is poised to grow 7.5% annually while screen is expected to decline 4.1% annually. By 2012, InfoTrends expects wide format digital printing to reach over billion in value compared to screen printing, which is expected to decline to less than 10.5 billion. The combination of greater demand for short runs, the declining costs for digital production, and the additional value of personalised/regionalised information are the leading factors causing the erosion of screen print volumes. Alternatively, the growth of significant wide format digital applications, such as vehicle graphics and textile banners is expected to spur the digital market. It is true that the markets that produce wide format prints are generally comprised of small companies. This is a very important consideration because small companies are more likely to run lean organisations, without dedicated sales and marketing personnel, without in-house training programmes, and with limited capacity to keep a large inventory of equipment and supplies. The day-to-day operation of their business is what they are most concerned about in small printing establishments. Bigger establishments typically have the luxury of investing more in these types of personnel and market developments. However it is just as important for the growth and survival of small companies to continue adding new skills and capabilities that strengthen their business value proposition. Companies of all sizes can further leverage their affiliation with industry associations to aid in the development of their personnel and marketing plans. Digital wide format hardware and supplies manufacturers should also recognise that printers often have limited ability to spend time and money on market and personnel development, and could become better business partners by providing or co-funding resources or training seminars that would improve the top and bottom line for printing establishments. The overall market trends from the buyer side, as well as improvements in technologies from the equipment and supplies side indicate an increasingly digital future. While this should not be news to people involved in the screen and digital printing markets, the high rate of agreement on specific trends, such as shorter cycle 22