RMG Decides To Sell What Sells

April 11, 2012 by Dave Haynes

You can sum up the muted announcement by RMG Networks that it is unloading some of its vertical networks and focusing on executive travel in a handful of words – they’re going to sell what sells.

The company sent around a quasi press release Tuesday that “announced its intentions to expand and focus on its primary business channels: Executive Place-Based Video Advertising and developing robust distribution software for Digital Signage Networks. To better focus on these fast growth segments, RMG will exit the Fitness and Retail segments of DOOH media and focus exclusively on its leadership position in the Executive Travel Media space. RMG controls the largest, national network of digital video advertising across US airlines representing 100% seat-back in-flight entertainment screens.”

So they are shopping around the health club network stock they have, as well as the old Danoo network inventory that’s in places like coffee shops, which was branded as the New York Times Today network. I’m told deals to move both should happen within weeks, and we can assume the discussions didn’t just start yesterday.

The obvious buyer for the health club screens is Zoom Media, but that doesn’t mean it will happen that way. There is no immediately obvious buyer for the coffee shop network, but I understand there are suitors and that I’d be familiar with them.

RMG invested a lot of time and money into packaging up the whole notion of Digital OOH as a medium that follows lifestyles and is with consumers throughout their days –  as they stop for coffee, get in a workout, shop, dine and so on. But if it was resonating with media buyers RMG would not be focusing on just one vertical.

The executive travel thing sells and RMG has been seeing the levels of advanced buys and sold inventory that VP Ad Sales dream about. Demand has actually outpaced inventory. The company’sAirport/Airline network is in the frequent flyer lounges of many commercial airlines, almost 50 private airports and on the seat-back “in-flight-entertainment screens” for Delta, United, Jet Blue, Virgin America, Frontier, and Alaska Airlines.

RMG is also compelled to narrow its focus because it has what could prove a very nice strategic partnership with DIRECTV, which announced last month it is using an evolved version of RMG’s old Danoo software to run digital signage for DIRECTV’s commercial customers using their standard set-top boxes. RMG is a paid supplier for this service. That fitness centers and small retail like coffee shops could opt in on this program is the official reason (“product conflict”) why RMG is exiting those verticals.

It boils down to sales, however. The decision is another hard reminder, if one was needed, that running a successful Digital OOH media business is a big challenge. Those companies that are doing well are all, I believe, ones with absolute focus. Even monsters like Accent Health, with 12,000-plus venues, are now getting even more focused – going from being a network in medical offices to a collection of networks in “condition-specific” environments. There is a big shopping mall network. A big elevator screen network. An office tower network. A couple of big gas station networks.

The efforts to sell across multiple networks have all, at best, struggled – though NEC’s Vukunet is re-upping its efforts to make that work, and one of precious few companies that have the resources to wait out the lengthy time needed for adoption. SeeSaw ran out of that time, and while there’s no official word, Adcentricity has evidently changed its focus.

Whoever may be looking hard at the NYTimes Today network should think really carefully if there is indeed a workable media model there. That screen over the cash in small retail, like coffee places, is probably way better served moving caramel mocha lattes than running sold media.

Ken Goldberg’s take: http://www.realdigitalmedia.com/digital-signage-blog/focus-is-the-new-footprint/