Rumblings of Recovery

Last month in this space, we found out what top analysts from the worlds of digital content creation and 3D computer graphics had to say about current business conditions and what, if any, promising opportunities they could point us to in their respective fields. This month, we get the latest assessment from another leading researcher, Jim Whittington, founding partner of TrendWatch, which specializes in the visual effects and dynamic media markets. Here’s a summary of the results of a major study his firm has just completed:

In a new survey of more than 600 studio and facility owners in the visual effects/dynamic media markets, approximately 84 percent expect business to be as good or better in 2003 than in 2002, 15 percent expect it to be poorer, and just 1 percent expect it to be much worse. This represents a dramatic attitude adjustment since last year. In fact, when asked about conditions in 2002, only 54 percent said business was as good or better than the year before, while 30 percent said it was poorer, and 15 percent said it was much worse.

The most sanguine segment are owners of companies that create and produce Web, interactive, and streaming media, including studios that specialize in designing and producing entertainment Web sites. These businesses do the initial creative, visual effects, animation, post production and most all other aspects of the projects they work on. Whereas only 8 percent of this group thought that business conditions were better last year than the year before, 42 percent say that the climate will improve in fiscal 2003. These optimists attribute their positive outlook to an increasing use of streaming media, a rise in the use of digital content, an expectation on the part of Web users for rich, interactive content, and the perception that B2B and B2C Web marketing is no longer a novelty but a requirement.

Also upbeat were animation and effects studios. Although 15 percent of owners surveyed said that business conditions were better in 2001 than 2002, more than two and a half times that many, 39 percent, expect conditions to be better in 2003. Driving growth, respondents say, will be a strong demand for digital effects in TV commercials, feature films, and cable content, as well as an increasing demand for digital effects in corporate film and video projects.

Perhaps the most promising trend is that the industry is investing in new tools. A year ago, the survey showed that investments were largely in software. Now, software sales will continue to be strong, but demand for hardware will be even higher. The survey forecasts growing sales of PowerMac and PowerBook G4s, with Windows NT/2000 and XP Professional workstations second. The use of Linux-based systems is also on the rise. What's most surprising is the extent of this movement. Some 60 percent of companies plan to buy one or more workstations in 2003. This means that more than 11,000 companies will buy workstations in 2003, and that if each company buys only 1 workstation apiece, together they will spend more than $40 million in 2003. Moreover, these numbers only include Mac and PC workstations; they do not include mid-range or high-end digital video non-linear editing platforms.

After so many false starts, it may be hard to believe that recovery could be right around the corner. But every voice that adds to the rumblings of a recovery is a welcome sound, especially one that speaks for so many of those on the front lines.