A new study by Outsell, a research and advisory firm focusing on the information- content industry, has found growth in the company, credit and financial-information segment relatively flat for the past year. The total size of the segment, which covers the spectrum of financial-market-related data, reached about $19.4 billion last year, declining about 0.4 percent from the previous year.
Leslie Jacobs, vice president and lead analyst for the company's credit and financial information group, says that of the 75 major players identified in the study, the top ten vendors account for 75 percent of the marketplace and grew by only about 0.1 percent. The remaining smaller companies declined by about 0.4 percent.
"Sept. 11 is a real driver for the decline and hit this industry more than any other," says Jacobs. She says that while the downward budget trend began surfacing before Sept. 11, spending habits were scrutinized even more post-Sept. 11 as market-data buyers were looking to cut costs and streamline products.
"The buyers in the industry have been taking a look at where their spending was going and making difficult choices," she says. "Where we used to see companies that had redundant services, maybe both Bloomberg and Reuters in house, they now have one, not both." She adds that firms are looking for more cost-effective solutions moving forward, and some have even been learning to do without.
Jacobs also points to a trend in lighter technology solutions in an attempt to lower costs in the market-data area. "In the market-data area the offerings have had fairly proprietary networks and structures," says Jacobs. "Now the vendors are taking a look at what pieces of their applications can be made into Web-based offerings so that the technology investment is much lighter than it has been."
The study found that Bloomberg, Thomson Financial and Reuters remain in the top revenue producing spots for information providers, with Bloomberg growing by about 24 percent and Thomson growing by about 26 percent, largely attributed to its acquisition of Primark. Reuters' financial-information units though reported only about 2 percent growth, says Jacobs. The Outsell study calculates vendor revenues directly from publicly and privately held companies that supply it and models revenue for those private companies that do not supply it.
Although the Outsell study does not predict future performance of the marketplace, Jacobs says that the company, credit and financial segment of the information- content segment continues to decline so far through the third quarter of this year.