The wide format segment is a 20 year old market with remarkably, relatively stable pricing and persisting growth overall. Some vendors regard wide format graphics as in sight of overall maturity. This is more valid for non-global vendors—shifting the full market initiative to the global vendors. Wide format is becoming a gateway to industrial, decorative, and marking markets and also acts as a technology platform for new technologies like UV and latex with potential beyond wide format.

Analyst firm I.T. Strategies, Inc.’s wide format graphics forecast has been issued annually since 1994. The forecast is based on systems sales units input of 90 percent or over of vendors representing at least 90 percent of sales for the prior calendar year—this year, 2011. Further data regarding pricing, consumption, utilization rates, and substrate usage is gathered through secondary research and is regularly refreshed through research among users of wide format technology each year. Various methods of cross analysis are employed as sanity checks on individual data points, for example ink and media consumption calculations are compared against real vendor revenues after hardware.

The forecast is divided into four major technology sectors—aqueous, eco-solvent, aggressive solvent, and UV-curable. The aqueous sectors are then broken down to under 36-inch wide systems—not including 17 inch, over 36-inch wide systems, and systems used in house or corporate. The UV sector is also further broken down into low-end UV flatbed for flatbed systems with an acquisition price below $200K and high-end UV flatbed systems with an acquisition price above $200K. The same $200K threshold is applied to splitting UV roll-to-roll systems into low-end and high-end systems. Hybrid systems are usually classified into either flatbed or roll-to-roll according to their perceived base configuration. Latex technology is included in eco-solvent as it was a one vendor market up to the end of 2011.

Dollar amounts in the forecast are partially normalized from foreign currencies and mostly do not incorporate discounting assumptions. List prices are normally used even though discounting of hardware and consumables is widespread. While the aggregate revenue numbers are accurate and in general conform to vendor revenues by conscious adjustment, individual positions may overstate values somewhat. In general, prices are used at a dealer level where dealers are involved or the price that the dealer would pay for product, including its margin.

All projections forward from the year of actual data inclusion are based on a simple linear projection of the prior-to-actual year historical growth line but including an algorithm to calculate install base driving ink/media sales and area printed, which is not a simple linear function. The projections 2011 thru 2012 are broadly similar with the exception of roll-to-roll UV high-end and aggressive solvent sectors, which declined more in 2011 or further out than foreseen.

Total Market

The firm made an adjustment of installed bases upward and ink consumption downward in aqueous greater than 36 inches and aqueous corporate as result of vendors and users auditing. This resulted in an adjustment downwards of revenues for the total wide format market in 2011 of 4.6 percent and of installed bases upwards of 4.57 percent.

The total market is growing to 2016 at three percent in units of sales and seven percent in vendor ink and hardware revenue. This is similar to what was projected in 2011. Growth is net of around 28 percent of the market, which is the aqueous sector, which is flat to declining, though it yields high margins at low research and development costs. Aqueous is mature and eco-solvent/latex is the largest growing market, with UV still strong. UV tends to be deployed at higher utilization rates than eco-solvent/latex, which has some characteristics of universal market coverage.

Aqueous Market Becomes More Mature

Aqueous Under 36 Inches

This segment of the market underperformed the 2011 projection by five percent in units and nine percent in revenues. It sustains a good install base and generates strong consumables revenues. It is close to maturity but continues to grow throughout the forecast period partly as a result of consumer demand. This market is the smallest of all wide format separate sectors in revenue terms at just around $170M in vendor revenues for hardware and ink and plays a correspondingly modest strategic role for the vendors active in the sector.

Aqueous Over 36 Inches

I.T. Strategies made a onetime adjustment of install base in this sector up by 8.69 percent from 2011 on and ink revenue/consumption down by 18.73 percent from 2011 as a result of auditing with vendors and users.

This sector at $1.1B in ink and hardware revenues is second in the wide format market only to eco-solvent/latex in size, but unlike eco-solvent/latex it is a mature and now declining market, which is not surprising after 20 years of being the leading wide format sector.

The role of this sector is to generate high margin ink revenues at its very high ink prices for the principal vendors in the market. Aqueous greater than 36 inches remains a very important core product for the mass of small-scale print service providers worldwide who provide graphics to a mix of consumers and small businesses on a local basis.

Not surprisingly ink revenues dominate in this sector over hardware revenues based on high ink pricing levels appropriate to and manageable by this very splintered localized market.

Aqueous Corporate

A onetime adjustment of install base in this sector was made up by 10.36 percent from 2011 on and ink revenue/consumption down by 27.94 percent from 2011 as a result of auditing with vendors and users. This sector at $600M in vendor ink and hardware revenues is also a solid profit earner for those in it.

Revenues are declining at six percent per year in what is now a mature replacement sector. The evident more rapid decline in revenues over the forecast period is driven by an adjustment made in consumption rates based on user research.

Throughput and coverage are much lower in this utilitarian sector than in professional graphics sectors and as such this sector is more dependent on quantity of locations than on quality or quantity of output for its revenues.

Solvent Driven by Eco-Solvent and Latex

Eco-Solvent/Latex

At $1.7B in revenues in 2012 this eco-solvent/latex sector is the wide format market’s largest and best growing sector at a rate of growth in revenues of 11 percent per year.

The eco-solvent/latex sector is the closest we have to a sector with universal coverage and capabilities. It is at least capable of covering the widest range of customers and indoor/outdoor applications.

While latex has taken a significant share of total sales in this market and will continue to grow its share, eco-solvent in its own right continues to grow even when allowance is made for the latex share. It is hard therefore at this point to say whether latex is a direct competitor or peer of eco-solvent.

Aggressive Solvent

The aggressive solvent market is in even faster decline than projections of 2011. Basically hardly anyone wants to buy any more new aggressive solvent systems. This is partly because actual users don’t like working with aggressive solvent inks with their volatile organic compounds, but partly also because the market eco-systems from the end users on down want to go for alternatives.

Additionally, the alternatives are interesting in their own right for different reasons. Thus with limited resources they tend to get split between new lower priced, low-end systems with high quality and productivity and very high-end, extremely productive systems. However, a large install base of aggressive solvent systems remains in place to print at very low prices of aggressive solvent inks in what is left of the outdoor vinyl market.

UV Graphics Market Relatively Small

UV Low-End Flatbed

Prices are beginning to slip well below $100K as competition heats up. Everyone probably needs/wants a flatbed and the low end market is not saturated.

The actual 2011 market was above I.T. Strategies’ projection for 2011 by 6.4 percent in revenue terms based on sales units above projections by 9.5 percent. Shifting install base composition evens out the projected difference by 2016.

UV has not been and could not be challenged in flatbed by eco-solvent or latex and this allows UV an undisputed anchor position in the lower part of the market, which in turn allows it a base from which to develop roll-to-roll.

UV High-End Flatbed

The UV high-end flatbed sector has been the standard bearer for vendor campaigns on behalf of analog to digital transformation. This has begun to happen in placement terms as analog-display-graphics-dominant offset printers start to adopt, though high volumes of print are not yet assured. This drives a lot of future growth. High-end flatbed systems are also coming to be used to a significant extent for decorative markets.

The actual 2011 market was slightly below I.T. Strategies’ projection for 2011 by 4.4 percent in revenue terms based on sales unit shortfall against projections of 6.3 percent.

High-end flatbed systems are not seen by analog printers as directly competitive to analog, rather as new market creators of growth and high margins. This is sometimes a market with relatively little resistance to high acquisition costs.

UV Low-End Roll-to-Roll

UV as an alternative to eco-solvent/latex at mid-production levels is part of a UV range of offerings from vendors in an attempt to re-cast market sectorization. LED curing and no need to pre/post eat/cure substrates is part of the argument against latex and supposedly in favor of more eco-friendly UV. This sector has given rise to a fast-growing industrial market for packaging proofer cutter/printers as an early way into the back door of the packaging markets.

UV High-End Roll-to-Roll

The UV high-end roll-to-roll market underperformed I.T. Strategies’ 2011 projection by more than 25 percent. This was not conditioned equally by the positioning of all vendors and is not necessarily indicative of an external demand trend.

This segment was seen by some as a replacement for aggressive solvent billboard printers. UV systems with very low ink pricing and ability to print well on vinyl competitors like PE and PP were developed. It appears now that this has been a less effective driver of demand than anticipated with a large number of aggressive solvent systems staying in the market and doing high volumes of legacy printing at customary low aggressive solvent ink prices.

Large scale UV roll-to-roll systems could become less competitive in throughput, and arguably not as good quality against certain large high-end flatbed systems even for flexible substrates.

Mark Hanley is president of analyst firm I.T. Strategies. With over 22 years of experience, he specializes in researching digital color printing technologies. Hanley travels around the world, facilitating relationships and strategic alliances between manufacturers in Europe, Japan, and the U.S.

Editor’s Note

As wide format finds its place, it continues to expand outside of the norm. Inkjet is slowly making its presence known in the industrial, decorative, and marking fields. While many of these transitions are found in narrow format devices, wide format is quick to follow. Ink manufacturers and hardware developers alike are fine tuning technology to cater to this demand.