Microspace Communications Corp. announced June 8 it formed a partnership with Scala Inc. to create a satellite-based digital signage offering aimed at small companies that may find the cost of current networks too expensive.

The Microspace-Scala partnership will offer a shared network solution that charges customers based on the amount of service they use, rather than forcing customers to pay for an entire network, company officials said.

“With Scala having the experience providing the digital signage platform, we saw an opportunity to go after this market that really isn’t serviced by some of the larger companies,” said Greg Weaver, account manager for digital signage at satellite service provider Microspace. “It is an opportunity for smaller or growing retailers to have digital signage and media rich content delivery without expending their whole budget for the next 10 years on getting a network up and running.”

Weaver cited a few factors contributing to the growth of the digital signage market, including overall economic upturns and an unlikely assist from consumer electronics technology in the home.

“Within the last couple of years, the prices of displays have come down, the economy has turned around quite a bit in retail, and advertisers are realizing they need other sources to get in front of eyeballs,” Weaver said. “Thanks to Tivo, advertisers are reaching fewer and fewer people at homes. So out-of-home networks and captive audience networks are gaining in popularity.”

Tivo was the first mainstream digital video recorder that allowed viewers to record programming delivered to the home via cable or satellite for viewing at a later date. The fast-forward functions allow viewers to easily bypass commercials when watching recorded programming.

Realizing the market opportunity for digital signage, which Frost & Sullivan forecasts will exceed $800 million by 2011, Microspace formed its partnership with Scala to help bring digital signage to small- and medium-sized enterprises that may not have been able to afford the first generation of the technology.

“If you are a large corporation and you have a big budget, you can build your uplink, buy your own bandwidth and hire your own network operations center staff of engineers” to support a satellite network for digital signage, Weaver said. “But some of these smaller retailers need access to get their multimedia content out into their 20 or 30 or 50 locations to digital signage.”

As part of the partnership, Microspace installed Scala’s Infochannel software platform in its network control center, which enables seamless integration with Microspace’s Velocity high-speed video, data and audio broadcasting service. The Scala software provides the ability to create, schedule, manage, distribute and play back content to one or thousands of displays from a single desktop.

Customers that require distinct daily content to be displayed at different sites have the option to manage the content themselves or subscribe to a managed service, and the solution allows customers to pay for the content delivery based on their amount of usage for rates as little as 50 cents per megabyte.

Microspace and Scala are looking to eventually extend their offering beyond retail outlets.

“There are a number of different vertical markets for this,” Jeffrey Porter, executive vice president of Scala, told Satellite News. “We’ve got folks that are focused on doing banks, retail, quick service restaurants, cinema and theater. There must be at least two dozen vertical markets.”

One non-retail market that Porter noted was health care. He cited an example of putting screens in doctors’ waiting rooms to provide information to patients. “While you are waiting for your doctor, purple pills are flying around the screen and the message says ‘Nexium, ask your doctor,'” he said.

In time, the two companies see even the large enterprises as potential targets for this service.

“I think it is quite possible we will get the larger guys, too, because they are not used to the pay-by-the-megabyte-plan,” Porter said. “They are used to paying for dedicated bandwidth, which is pretty expensive if you are the sole owner of that bandwidth.”

“We are not just going after the small enterprises,” Weaver said. “That is just where we saw immediate opportunities. We are going to continue to pursue and meet with larger retailers and banks and things like that. The beauty of the whole platform is it is not going to be outdated if you want to go to your own network at some point. We just put up a dedicated channel. Nothing changes at the remote site. So the transition from a part-time user to a full-time users that uses the pipe not only for digital displays, but for training to the desktop, background music, the corporate CEO addressing the branch manager, things like that, is an easy one.”

Market Challenges

While the technology side of the digital signage equation offers a variety of solutions, the key will be to get the content in line to make the medium an effective means of advertising, said Vineeta Kommineni, industry analyst with Frost & Sullivan.

“Digital signage is a ‘marketing-by-glance’ medium and dictates that the messages be brief with as minimal audio as to be non-disruptive to both customer and employee,” Kommineni.

To achieve success in the digital signage industry, the various segments need to work together, Kommineni said.

“There are two types of vendors attempting to provide digital signage solutions,” Kommineni said. “On the technology side are display manufacturers, signage software players and audio-visual integrators. On the marketing side are content, merchandising, advertising and promotional marketing agencies. A successful implementation of digital signage networks hinges on the understanding of each other’s domain. There is a grand void for managed service providers who encompass both marketing and technology aspects such as foot traffic analysis, ergonomic studies, network design, hardware and software selection, installation content creation, liaison with advertising agencies and media planners, and network maintenance into their solution.”

Frost & Sullivan noted that as the medium continues to grow, the future of digital signage hinges on the emergence of a new discipline related to creating content tailored for the medium. Studies analyzing store traffic flow need to be correlated to determine the placement of display, lenght and nature of the message.

–Gregory Twachtman