Dropouts in new media design

New media design groups are dropping like flies. Matthew Valentine investigates the reasons behind the widening gap in the sector and looks at the retreat beaten by 1/2/1.

Players seem to be dropping out of the new media design field at an alarming rate. Just last week AMX Digital was bought out of liquidation by Real Time Studio, while Webmedia was a high profile casualty earlier this year.

It now seems that 1/2/1, the new media arm of retail strategy specialist 20/20, has left the market too, albeit for different reasons.

Last month 1/2/1 was described as being re-integrated into the main 20/20 consultancy (DW 20 March). What wasn’t made clear is that the consultancy is now turning down all new media work that isn’t related to clients wanting across the board retail strategy work.

“It [new media] always comes up as part of business strategy,” says 20/20 chairman Richard Mott. The 1/2/1 team will now look at websites and multimedia kiosks exclusively as part of the bigger picture, he says. The plan fits in with the overall 20/20 focus on strategic planning and brand guardianship, but marks one less independent new media group competing in the sector.

The move has happened at the same time as the scrapping of a 1/2/1 project at NatWest (see News, page 3), which the bank partly blames on 1/2/1 pulling out of the market.

Mott disputes that, saying, “It just coincided with 1/2/1 being closed down.” Although seemingly an off-the-cuff response, that description of 1/2/1 differs considerably from its re-integrated status of last month.

Embattled new media consultancy directors around the country will no doubt be checking their bank balances and business plans carefully. Although there is no suggestion of financial problems at 1/2/1, the disappearance of another consultancy from the open market will do nothing to bolster the confidence of those remaining.

It is an often heard cry that it is hard to make money in the new media sector – because margins are under pressure from low-cost groups willing to knock out websites at cheap prices to clients keen to gain a Web presence.

That 20/20 decided to quit competing in that market, in favour of concentrating its resources on strategic work for long-term clients, shouldn’t come as a shock. The number of rivals to follow its example, however, might. Richard Mott says one of the chief problems of 1/2/1 was that it was moving further and further from 20/20’s natural base. “I imagine quite a lot of companies out there are changing their base on a six-monthly basis,” he says.

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