By Mark Hanley
The wide format market as a whole is not quite mature yet, but it feels as if it is getting there before long, in the sense of flat sales year over year. But, aside from the aqueous markets, it is not quite there.
In the way of invention and creativity, more of a super high end is breaking out at close to and above $1M. This is not just into high-volume graphics, but with a clear emphasis at drupa in May/June 2016 on packaging—corrugated in particular. There has also been steady growth in printing on three-dimensional (3D) substrates on flatbed systems.
Beyond that, point of purchase (POP)—the heart of the market—never stops finding new ways of embellishing the product to higher value, as the new phrase has it. Every year that goes by sees more productivity and functionality for less money. Users benefit from a truly competitive market.
Market Dimensions 2015 Status
Looking back, the wide format graphics digital print market worldwide had the following fundamental dimensions in growth rates in 2015. Vendor revenues in hardware and ink for wide format graphics in 2015 were $4,629,534,316. 38 percent of that number—or $1,761,000,509—made up vendor hardware revenues. The other 62 percent, or $2,868,533,808, comes from vendor ink revenues. With that being said, the vendor revenue compound annual growth rate (CAGR) to 2020 is -0.11 percent.
Also in 2015, the square meters printed worldwide in digital wide format graphics was 1,228,649,534. The square meters printed CAGR to 2020 is 7.68 percent.
Note, no Chinese demand or vendor numbers are included in these statistics. The result is the possible exclusion of up to 12 percent of revenues worldwide by not having access to the data. Otherwise, the global data is the composite product of information shared by vendors in the other minimally 88 percent of the market.
Projections to 2020
Chart A is a simplified statistical review for actual 2015 and projected 2020 of system units sold and the revenues they generated for hardware and ink by major sector. Once again, Chinese numbers are not included.
Chart B is a further simplified statistical review by major sector for actual 2015 and projected 2020 square meters printed. The growth of the print rate is a lot better than vendor revenue growth and units of sale in Chart A. This is a healthy function of an efficient market supplying under conditions of strong competition and more productive systems at even lower prices per unit of productivity. The square meters number is the best measure of market maturity and suggests that only the oldest aqueous market is mature. Again, numbers from China are not included.
The rest of the market is growing, with UV accelerating in its growth as it becomes more established as a technology of choice for larger users and super-important faster response times. This in turn takes place within a market, which is a direct and critical support of the retail market for sales of goods and services in major consumer economies. In other words, inkjet graphics at a more or less local level perform a critical and central role in the functioning of the consumer economy. In fact, conservatively estimated, print providers take all this inkjet technology and globally generate revenues of approximately $40B per year for printed and converted output very largely sold to retailers, suppliers, distributors, and manufacturers.
The printed area and revenue data presented in Charts A and B is also represented in Charts C and D for 2015 only, and includes the declining sector of aggressive solvent for comparison.
In summary, latex jumped ahead, eco-solvent sustained its dominance, and UV accelerated in production markets. Meanwhile, aqueous markets sustained a mild decline.
Chart E illustrates the projected growth for the three major sectors of aqueous, eco-solvent/latex, and UV for units of sales, hardware, and ink revenue, and square meters printed from 2015 through 2020.
Chart E says that the aqueous sector is now definitively mature, while the eco-solvent/latex sector is not mature in demand—printed output—terms, but is under heavy competitive pressure resulting in lower prices for more productive systems and depressed revenue growth. The UV sector is seeing better revenue growth partly driven by larger systems being sold into this production-oriented sector, but also by significantly increased rates of print.
In the aqueous sector there is a general mild decline in system sales and print rates, which indicates true maturity as in fewer users wanting the output. But the market remains fairly large and aqueous retains its preferred status among those demanding the very highest display print quality.
There is also a growing overlap between the separate and still large technical drawing market and graphics now that 3D rendering and digital graphic display is an integral part of engineering-driven illustration. Some users use aqueous where it isn’t expected. For example, users of large-scale continuous-feed aqueous inkjet document presses are printing posters in large quantities in reels at much lower costs than possible with a serial aqueous wide format graphics system. This does not mean aqueous is being revived, but that its decline continues to be slow.
As always, latex and eco-solvent statistics remain together as latex stays an almost single vendor market. But latex and eco-solvent address fundamentally similar applications and users at least in the low end—systems less than $50,000. In the low end, this twin-technology market is the largest by some distance among all digital wide format graphics sectors as expected from technologies that are universal in the sense of being able to address indoor and outdoor graphics with a single chemistry at very low acquisition costs to the buyer.
On the eco-solvent side this is a competitive market. In the U.S. alone there are around 56 separate products available from a handful of vendors at price/performance levels. These have consistently climbed, allowing users to obtain 1,000 square feet per hour (sf/h) for less than $20,000. This is partly the result of competition among eco-solvent vendors, but also a conscious or unconscious unitary reaction by eco-solvent vendors to the threat of latex. The breadth of the eco-solvent offering makes its market coverage very tight and that is a good defense against latex.
As for latex, despite the massive eco-solvent competition and the wall-to-wall product coverage, it made significant progress in 2015 in its share of the graphic arts market.
UV is a hard market to tie down with any accuracy. Its most basic and successful format is flatbed, which had a general familiarity to foregoing display graphics screenprinters. Once just a convenience printer to have when occasional rigid substrate demand arose, flatbed systems at the high and low end—breakpoint is $200K acquisition price—now print flexible as well as rigid substrates.
UV’s most obvious identity today is as the production sector of digital wide format graphics, meaning the ability to handle larger quantities for larger customers, large areas allowing lower conversion costs post print, and print a large quantity in a very short space of time. This fast response capability for larger customers usually on a seasonal basis is probably the most important single parameter of competition among print service providers (PSPs).
There are UV systems now that can print around 10,000 sf/h. There is also a specific sub-sector of production systems referred to as super high end, which often, but not always, cost over $1M. Super high-end UV flatbed is a subset of the high-end UV flatbed sector. The historical sales of these systems worldwide is depicted in Chart F.
UV roll-to-roll systems are also successful, though they’ve never definitively replaced the large volumes of output printed on old aggressive solvent systems. This is probably due to their relatively high ink prices compared to the open and commoditized aggressive solvent ink market. Even today, aggressive solvent printers in the install base in the U.S. and Europe are still part of the market, while in China and other non-developed markets they are still the norm.
A characteristic of the UV market is a growing preference by users for vendors with full product ranges at low and high ends. This reflects the difference between UV PSPs and their more numerous colleagues in the sub to $25,000 roll-to-roll low end of the wide format graphics market. The UV PSPs are production oriented and fairly consistently grow their businesses and need access to an evolving set of print systems as they get bigger, and they often want this from a single trusted supplier.
Most interestingly, an emerging trend is the UV sector’s marked evolution upwards of its print rates. This is reflected in Chart G.
In wide format graphics, beyond simple print as a function, PSPs have consistently developed the capabilities in application of display graphics far beyond just print. The use of super-conversion techniques, special substrates, additional print with screen, imaginative installation techniques, and integrations all combine to raise the value of what starts as a printed product. This renders the market overall stable and margin rich, supporting in turn its sustained growth for suppliers and appliers. Last year in 2015 at a conservative estimate the wide format graphics market value for final printed, converted, and installed product reached worldwide a number of at least $42B.
Digital vs. Analog
Digital wide format graphics—which is one third the size in printed area, but three times bigger in revenues of the analog display graphics market—does not significantly overlap the analog display graphics market. However, it is more than likely that in the future the kind of standard brand-defense graphics provided with offset today will cede to some significant extent to a future model of customized branding by country and even by region for brand defense graphics. If that happens, it is probably the role of the super high-end UV flatbed to leverage the opportunity. In fact, that could be part of what drives that sub-sector today.
The printing of textiles within the specific signage segment is undertaken to a small extent on latex, eco-solvent, aqueous, and UV, but it is mostly printed with dedicated dye-sublimation (dye-sub) systems. There is a high end and a low end in the growing application of soft signage. At the high end at a preliminary estimate up to perhaps 100 systems per year are sold at prices between $100K and $750K, yielding a market of about $100M for hardware and ink. While at the high end, in the majority other applications are served by dye-sub, the soft signage part is largely served by a separate dedicated set of vendors and products.
At the low end—less than $100K acquisition cost—there are thousands of dedicated systems sold each year with an install base of around 15,000, but they are only used now in the minority for soft signage. How many are just soft signage is debatable where apparel printing has become the majority application at the low end. The value of soft signage at the low end in hardware and ink sales to vendors is around $150M, though it is very hard to separate out where systems are sold for multiple applications and the divergence in application only takes place at the PSP.
Chart H separates out high- and low-end soft signage in terms of square meters printed in 2015. Soft signage as a display graphics application in total represents about ten percent of the total non-Chinese wide format graphics digital output worldwide. Soft signage’s annual growth rate is believed to be about five to six percent per year, possibly higher, with an increasing share going to the high end. That makes it one of the fastest growing wide format graphics sectors.
The team at I.T. Strategies depicts an interesting type of growth for wide format graphics. While traditional market sectors like aqueous, eco-solvent/latex, and UV are pillars of the market, it is the interesting use of these technologies that define the industry as a whole.
For example, the use of aqueous printers for creating posters versus the traditional practice of seeing them primarily in the architectural space. Or UV flatbed printers used for printing membrane switches and in production-level environments. The key to this industry’s growth, it seems, is reinvention of the usage of certain hardware.
Mark Hanley, president, I.T. Strategies, has over 20 years of experience in the electronic printing industry. He specializes in identifying new markets for digital color printing technologies. In addition to conducting research and consulting, he travels extensively around the world, facilitating partnerships and strategic alliances between manufacturers in Europe, Japan, and the U.S.
Prior to co-founding I.T. Strategies, Hanley organized the European operations of CAP International, subsequently known as BIS Strategic Decisions. From 1990 to 1992, he was services director at BIS, responsible for the management and growth of electronic hard copy information services in Asia-Pacific, Europe, and North America.
Aug2016, Digital Output