On 10 September, Barco and Unilumin announced a strategic partnership to develop their LED business together, with the deal attracting plenty of global interest. Barco plans to buy shares of Unilumin from Unilumin’s majority shareholder and CEO Minfeng Lin, for an amount of approximately €54 million to obtain a minority stake of 5%. If the collaboration goes smoothly, the partnership will accelerate LED sales in control rooms and cinema, as Barco is a major player in both verticals for its projection technology.
Once a leading player in LED display, Barco’s LED business lost momentum in recent years. Like many international display brands, the sheer pace of growth in LED adoption and strength in the Chinese supply chain forced some difficult decisions. Barco pulled away from manufacturing to source products from China, shifting between a number of OEM’s. At the same time, Barco’s key competitors in core vertical markets have been more aggressive with LED development, either by M&A or building a local presence in Shenzhen. A deal like this, with a major LED supplier, brings stability in supply and is something Futuresource has long been anticipating for Barco. It immediately strengthens its position in verticals, which are primed for heavy replacement of legacy display technology and where Barco has built extremely strong positions in recent years. The fact it has struck a deal with one of the industry powerhouses, capable of producing over 500,000 square meters per annum, makes this an even more interesting move. The key question is, will the deal stop at 5%?
From the competition perspective, in the medium term, the deal may put underlying pressure on Leyard/Planar (control room), Christie (cinema and control room), Mitsubishi (control room), Samsung (cinema) and NEC (cinema). That’s before considering other key pillars of Barco’s strength in enterprise and healthcare.
Control Room Opportunity
Futuresource’s latest LED report shows that global sales of LED displays for the control rooms vertical enjoyed strong year-on-year growth of over 90% in 2018, with China accounting for around 70% of the total market. As a late adopter, adoption of LED in international markets is expected to rapidly increase, with many vendors such as Barco and Christie introducing control room specific products in 2018.
The control room space has long been a key target for the LED community, with a large installed base of video walls and the promise of high-value projects. The competition between different visual display solutions is evident in every vertical, but the control room space is the area where it’s especially important to understand those relationships. Rear projection cubes (RPC) have long been the incumbent display technology and with the challenge from LCD and LED, sales have entered into long term decline. However, the large installed base of RPC’s is hugely attractive to the industry. The latest Futuresource global Video Wall report shows that in 2023, the total SQM of RPC’s installed will equate to the entire 2018 sales volume of LED. This opportunity is thought to be one of the contributing factors for the acquisitions of Planar and Eyevis by Leyard in recent years. Barco has long been the leading RPC supplier to this space, with this deal giving it a solid LED range to secure lucrative replacement deals.
The Cinema Story
Samsung’s Onyx cinema has opened new opportunities for the LED industry and new aspirations for NPP vendors. The industry buzz has been unprecedented. Futuresource’s global projection tracking service says that a large proportion of the 180,000 global projection installed base is theoretically due to be replaced. We say theoretically because there is currently no continuation of the studio initiative that saw the cinema industry manage a very expensive transition to digital in 2006.
Barco and Christie collectively occupy the lion’s share (75%) of the digital cinema projector installed base, with both vendors making recent headlines for large-scale projector rollouts. Christie Digital for example announced a 1,000+ unit deal with Cineworld, where the Canadian vendor would also supply more affordable RGB laser 4K projector solutions. While both vendors are almost certainly capable of producing a LED cinema solution if required, it is understood that both will only push such products if market demand warrants the investment. Whilst not quite so immediate as the control room opportunity, The Barco/Unilumin partnership will allow Barco to be more aggressive with LED initiatives going forward.
In brief, Barco/Unilumin’s strategic partnership will likely instigate more acquisitive and partnership moves across major international display vendors, as they consider the future of the display industry. But for now, this deal looks to be an excellent piece of business for both Barco and Unilumin.
Futuresource Consulting has global annual reports on control rooms, controllers, LED display, video wall, projections. For further insights, please contact us.