Software Publishers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 12,700 software publishers in the US produce and distribute computer software. Major product categories include application software publishing, system software publishing, and resale of merchandise. Firms are increasingly delivering software through cloud-based services (Software-as-a-Service or SaaS), in addition to on-premise products.
Technology Drives Constant Change And Investment
The information technology industry is characterized by rapid change and constant evolution.
Talent Shortage
Software developers are in short supply and many publishers are resource-constrained due to a shortage of skilled workers.
Industry size & Structure
The average software publisher employs 52 workers and generates about $35 million annually.
- The software publishing industry consists of about 12,700 firms with 16,600 establishments that employ over 656,000 workers and generate about $446 billion annually.
- The industry is concentrated at the top; the top 50 companies account for about 69% of industry revenue.
- Large companies include Microsoft, Oracle, IBM, and Symantec. Large firms may generate a substantial percentage of sales overseas.
- Companies that offer primarily cloud-based services may be classified under the Census as Data Processing, Hosting, and Related Services. Software publishers may offer hybrid products that combine on-premise, private cloud, and public cloud services.
Industry Forecast
Software Publishers Industry Growth
Recent Developments
Jan 21, 2025 - AI may Undermine Established Firms’ Business Models
- Enterprise software companies are facing an existential shift with the arrival of artificial intelligence, according to Global Venturing. Enterprise software will shift from being designed around people to being designed around data. This will create a space for innovative startups to challenge incumbents. “Every software that’s been designed has been designed around users that are doing data entry,” says Deepak Krishnamurthy, founder of VC firm Gaia Ventures. "Software workflows aren’t going to be built around people; they’re going to be built around data and AI.” The switch to AI automating workflows also means that software companies, whose business models are built on charging businesses a fee for the number of users of their software, will have to rethink this strategy, according to Global Venturing. Fees will have to be based more on outcomes or results rather than the number of software users.
- Increasing use of artificial intelligence (AI) technologies, particularly generative AI, raises crucial questions regarding insurance for software publishers, according to Jean-Guibert Ciavaldini at the law firm Simmons & Simmons. Legal, contractual, and insurance challenges associated with the use of AI in sectors like marketing, process automation, and text analysis and processing differ across passive and active use of AI. Passive AIs exclusively analyze data and provide recommendations, while active AIs can make autonomous decisions based on these analyses. An active AI can lead to higher risks in terms of liability, requiring more robust coverage in professional liability insurance (PLI) and cyber risk insurance.
- Turmoil in the video games industry will continue through 2024 and likely into 2025, games industry leaders have told GamesIndustry.biz. Publishing, development, and investment heads have said that high interest rates, oversaturated video game stores, and cautious investors will result in more restructures, layoffs, and closures. The fate of any particular company may depend on its size, according to Wired. Large companies like Microsoft, Unity, Electronic Arts, or Ubisoft can reduce staffing levels to cut costs but the company itself still exists. Independent game makers are often run by small teams of fewer than a few dozen people, however, so shutting down may be the only option.
- Software publishers increased prices moderately during the first 10 months of 2024, according to the US Bureau of Labor Statistics (BLS). Software publishing industry employment and average wages for nonsupervisory employees increased slightly during the first 10 months of 2024, according to the BLS. Software publisher sales are forecast to grow at a 5.63% compounded annual rate from 2024 to 2028, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
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