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To: BillyG who wrote (27792)	1/8/1998 5:15:00 PM
From: John Rieman	Respond to of 50808

Post production revenues grow for next few years......................... ijumpstart.com Post-Production Seen Topping $1.4B By 2003 <Picture><Picture><Picture> Sales from the growing post-production equipment business will reach $1.4 billion by 2003, thanks to the ongoing switch from standard-definition broadcasting to ATSC Digital Television and the resulting need of post-houses to put productions into the highest-quality formats, according to a new report from research firm Frost & Sullivan. HDTV is also expected to be a major factor in equipment purchasing over the next five to 10 years. Frost & Sullivan researcher Inna Radzinsky, author of the report, titled U.S. Video and Audio Post-Production Hardware and Software Markets, said the high figure for 2003 is confirmed by industry revenues of $836.3 million in 1997 combined with an annual compound growth rate in post-production equipment sales of 8.5 percent from 1993 to 2003 (projected). "DTV will be one of the most important factors of growth," Radzinsky said. "DTV and HDTV will affect post houses because they do advertising work and they want the highest quality... they'll have to buy new equipment to match the standard set by DTV and HDTV." But some industry watchers are skeptical about the glowing optimism. Post production research specialist Matthew Peterson of Scenic Wonders Inc. in Madison, Wis., doesn't dispute Frost & Sullivan's prediction that the business will grow, but is doubtful of the projected revenue. "We estimate that 10 to 15 percent of revenues get sunk into equipment every year. [Frost & Sullivan's figures] mean we're going to be positing a $14 billion post-production industry," Peterson said. While it is possible, he added, that total equipment revenues could reach that which is supposed by the research firm's new data, it is a daunting goal to achieve by 2003. "$1.4 billion for equipment seems high to me," Peterson continued. "I'm bullish on the post-production industry because of DTV, HDTV and the Internet, I'm just not quite convinced that it will translate into a substantial recapitalization of the industry." Peterson said the cost of converting to component digital caused an industry shake-out in the early '90s. Many post-production executives are concerned that another recapitalization so soon for DTV could slow industry growth in the short-term. Radzinsky remains confident in her crystal ball. "We performed the bottom-up approach," Radzinsky said. "We estimated the annual growth rate for each sub-segment [of the industry], starting from the base year when the research was performed, 1993, and combined that with the result of revenues for each segment." Radzinsky's team did not factor in inflation rates when it arrived at its projections for the years of revenue ahead, and excluded the cost of such peripheral (and essential) devices as monitors. The equipment covered in the report included telecines, still stores, storage systems, linear and nonlinear editing systems, CGs, standard converters, DTV effects systems and software apps. "We allow for error in our estimates, they're based on trends. Manufacturers are more concerned with which segment is going to expand and which is going to shrink," Radzinsky said. "I rate the future of the business as good-I'm optimistic not because of the $1.4 billion figure, but because of the market growth rate." (Frost & Sullivan, 212/964-7000; Scenic Wonders, 608/273-4803) Post-Production Revenue Forecast Revenues for video and audio post-production hardware and software are projected to top $1 billion by 2003 according to a recent market forecast by Frost & Sullivan, nearly doubling the $836 million in revenues projected during 1997. Year Total (millions) Video (millions) Audio (millions) 1993 $631.2 $436.6 $194.6 1994 668.8 464.0 204.8 1995 713.1 496.4 216.7 1996 771.6 540.8 230.8 1997 836.3 590.7 245.7 1998 905.0 643.3 261.7 1999 981.0 701.6 279.5 2000 1,064.8 766.0 298.7 2001 1,155.9 836.1 319.8 2002 1,255.6 914.4 341.3 2003 1,367.4 1,002.7 364.7 Compound Annual Growth Rate (1996-2003) 8.5 9.2 6.8 (Note: Figures represent revenue forecasts. All figures are rounded. The base year is 1996) Source: Frost & Sullivan