In hopes of better understanding our readers’ outdoor graphics businesses, Digital Output and InfoTrends conducted a market survey in October 2006. InfoTrends is a market research company specializing in the wide format digital printing business. Together with the participation of 230 Digital Output subscribers, we gathered research on the wide format printing market that indicates strong buying and supplies consumption expectations. The market research includes a number of key findings that have major implications for wide format digital graphics providers in the U.S.
Our research shows that aqueous inkjet is the dominant technology in the installed base, with nearly 3/4 of respondents reporting they have an aqueous inkjet printer. However, more than 44 percent of those surveyed report they would be investing in a new wide format printer within the next 12 months and of those, the primary interest was in non-aqueous inkjet print technology.
The following data was derived from our reader survey.
What type of wide format inkjet printer do you expect to purchase?
The primary interest is in eco-solvent and solvent inkjet and UV-curable inkjet. While these new technologies offer lower digital graphics production costs, they also offer vastly improved image quality over the first- and second-generation of solvent and UV-curable inkjet equipment. It is not just improved image quality that is driving new investment though, because these new printers are faster, offer better and more automated media handling, and other capabilities such as flatbed and white ink printing. These features allow printers to produce a wider variety of applications for their customers and achieve a faster return on investment (ROI). Users reported that they see a number of key application areas growing, ranging from POP signage and displays to vehicle wraps, floor graphics, and fine art work.
The results of this research point to some things that will have a large impact on the total market. One of the key developments is the proliferation of these faster, low production-cost printers because they allow PSPs to produce more work themselves. This eliminates the need to send wide format print jobs to screen printing companies that can more cost effectively complete the job. InfoTrends has measured this dynamic—the digital crossover point—in past studies on the outdoor graphics market and found that, because it is now less costly to produce these graphics in-house using solvent, eco-solvent, or UV-curable inkjet, the digital crossover point has moved significantly in just the past three years. In 2003, users reported that they would produce an average of 112 wide format prints themselves before they would send the job to an analog or screen printer. In 2006, they would produce more than 160 jobs themselves. Clearly then, the ability to cost competitively produce longer runs in-house, because of lower production costs, adds volume and profits to the companies that have invested in new equipment.
There is another indication in the research about the growth expectations among wide format printer end users—supplies spending expectations. Nearly 70 percent of wide format printer users report that they expect to spend more on outdoor graphics printing supplies in the next 12 months than they did in the last 12 months, while just 3 percent expect to spend less.
How do you expect your annual spending on digital wide format printing media and consumables for outdoor graphics will change over the next 12 months?
Those that indicate they will spend more on supplies expect to spend an average of 20 percent more in the next 12 months. Supplies spending includes ink and media.
These strong growth indicators held true across the users of wide format printing equipment, who represent a variety of vertical segments ranging from sign shops and screen printers to photo labs and ad agencies. It is interesting to note, though, that big companies—those with $10 million or more in annual sales—were 50 percent more likely to indicate they would be investing in a new printer in the near term and more likely to buy high-end solvent and UV-curable equipment.
So what are the applications that are driving the demand for increased wide format digital graphics printing capacity? The vast majority of users report that POP graphics, vehicle graphics, banners, long term and short term signs, posters, fine art work, and back-lit displays are all growing. Some of these, particularly POP, posters, and banners, are the leading wide format applications from an overall volume standpoint. Others, such as vehicle graphics and fine art work, have historically been specialist applications but are now much more common because of new hardware and software tools.
There are always a number of factors to consider when analyzing markets that add either upside or downside risk. In the case of wide format digital printing for outdoor graphics, the one that gets the most attention is solvent. This research certainly indicates that users are very aware of the environmental issues related to solvent inkjet ink. Statistically, anything that gets more than a 3.5 on a 1-5 scale shows strong agreement. The following chart illustrates the conflict between market issues. On one hand, the two statements that users most strongly agree with are that they need to have an outdoor performance warranty and that they would be willing to switch from water-based inks to solvent or UV-curable inks. These two statements are essentially a market requirement for greater outdoor durability and lower production costs than is available with aqueous inkjet. On the other hand, the survey respondents also strongly agree with the statement indicating that they are concerned about the health or environmental concerns with using solvent or eco-solvent inks. Although this concern is slightly lower than the other market issues, this is likely because at this point these companies have probably found a way to deal with these environmental issues through proper ventilation techniques.
Some of the recent print market indicators point to a slower overall print industry as we head into 2007. We think some of these indicators point to a strong future for wide format digital printing for several reasons.
First, this survey data indicates stronger new hardware and supplies buying expectations than it has in similar studies in past years. We think these buying expectations are fueled by new and better wide format printing capabilities enabled by improvements in hardware, ink, and media.
Second, several of the wide format digital graphics print market indicators, such as outdoor and point-of-purchase expenditures look strong and provide better advertising impact than other media such as newspapers, television, or radio. At the same time, these other mediums are being effected by disruptive technologies, such as TiVo, satellite radio, and the Internet, which allow people to eliminate advertising messages.
Finally, while these research findings have a lot of implications, it is also important to remember that this survey includes companies that already own a wide format printer, so there is another group of companies and individuals that may be considering investing in new wide format printing equipment that are new market entries.
Digital Output and InfoTrends would like to thank the participants of this survey.