As Expected, Reuters Led Data Distribution Biz in '96, Market Saturation, New Strategies Seen As Causes For $7 Million Drop In Revenues Charted by MDI

Revenues for the global trading systems integration industry declined by a hair in 1996, according to Waters Information Services' MDI: The Market Data Industry report. This is primarily because the market has become saturated and vendors have set their sights on non-financial companies. Many are also considering new marketing strategies or have major overhauls under way.

For the year ended December 31, 1996, total revenues were $411.3 million, down 1.7 per cent from $418.6 in 1995. (All of the MDI financial information is in US currency.)

The report also indicates that for each of the 108,850 positions served, systems integrators earn approximately $38,000 a year per seat.

The 1.7 per cent decline becomes a little more severe when put in context of the increasing number of screens served; the total universe of trading seats served by trading systems integration vendors rose 15.3 per cent in 1996, to 108,850 positions. In 1995, that figure was 94,400, according to the MDI report.

Then again, however, this revenue decline may not come as any great surprise because--except for Reuters--the major data distribution vendors have undergone tremendous change in the past year.

Reuters' Triarch continues to drive the market, having earned $183.5 million (44.6 per cent of the market) in 1996. The next biggest contestant, Reuters' subsidiary Tibco, is hardly a close second. It earned $78 million, or 19 per cent, of the market in 1996.

Triarch will, in all likelihood, continue to have a lock on the market because all of the other players are going through periods of transition.

For instance, Tibco initially excited financial technologists with its publish-and-subscribe and messaging technologies in 1994 and 1995. But its strategy since then has become somewhat confusing to industry insiders because it has split into the generic Tibco Software Inc. and the specialized Tibco Finance Technology (TST, November 25, 1996). According to several sources close to Tibco, the vendor has yet to resolve the division of labor between the two companies.

In addition, Tibco's revenues in 1996 plummeted 30 per cent, after soaring 71 per cent the year before (TST, February 17). If that weren't enough, a dozen of the firm's top executives have left Tibco within the last year. (See related story, this issue.)

CSK Software, the third largest company in the trading systems integration game, earned $55.4 million, or 13.4 per cent of the total, in 1996. This is no small feat, given the fact the company lost a large number of key marketing, sales and service personnel in the US and Europe in 1996.

Like Tibco, CSK Software--a.k.a. CSK Micrognosis (TST, January 20)--is attempting an upheaval. CSK is in the process of reinventing its business based on video switches to one that emphasizes digital and Internet solutions (TST, June 24, 1996).

Vendor number four, according to the MDI report, is Dow Jones Markets, which earned $53.3 million, or 13.0 per cent market share, in 1996. Dow Jones, too, is entering a new phase. The company recently dropped the name Telerate, announced a $650 million plan to rebuild its network, and has begun amassing time series data in order to compete with the Reuters 3000 series of services (TST, March 3, April 14).

Formerly known as Global Financial Information (TST, September 2, 1996), Bridge Information Systems earned $23 million in 1996 and gained a market share of 5.6 per cent.

Bridge, owned by venture capitalist Welsh Carson & Associates, has just gone through a blaze of acquisitions, ending most recently with its purchase of Knight-Ridder Financial news (Dealing & Investment Systems, May 20, 1996). As reported in last week's Inside Market Data (May 19), several sources say Bridge is on the verge of acquiring Telesphere.

For last year, Midas-Kapiti International is ranked as the sixth largest vendor in this market, having earned $20 million, or 4.9 per cent, of the total. The performance lag may be the result of a year of consulting and no growth.

MTI Trading, vendor number seven, earned $13.2 million in 1996. However, MTI is now out of business (Dealing With Technology, April 7).

Finally, British Telecom/Syntegra, which earned $8 million in 1996, just under 2 per cent of the market, continues to toil at making a dent in this highly competitive market.