Private weather providers hopes soar as they undercut dominance of government institute
For 80 years, IMGW has dominated the weather forecasting industry. Today the state-owned institute is still a giant, but private competitors are nipping at its heels and grabbing some juicy media contracts from its grasp.
"We do see the competitors coming," said Ryszard Klejnowski, head of IMGW's weather forecasting division. "Not that we are particularly worried, but we do see them coming."
The Institute isn't worried because for a majority of Poles, IMGW remains the source for day-in, day-out weather forecasts.
The institute has more than 3,200 meteorological posts and 1,400 employees. Last year alone it compiled more than 121,219 different weather forecasts. And IMGW does more than just tell people if they need to grab an umbrella before leaving home. The institute is the only organization in Poland that combines hydro-meteorological services with dam control, air pollution control and oceanographic data gathering.
Weather services sold commercially provided about 20% of IMGW's 1998 revenue of about zl. 50 million ($12.8 million), Klejnowski said, adding that a large portion of these contracts were media related. "Practically we still have most of the media market here with just a few exceptions," he said.
The exceptions, however, are pretty well known. Private competitors now provide weather services such as forecasts and maps to leading, national daily newspapers such as Gazeta Wyborcza, Rzeczpospolita and Super Express, as well as private television stations such as Polsat and tvn. These rivals are also trying to lure away existing IMGW customers from the state sector such as Telewizja Polska (TVP).
The institute doesn't totally lose out when competitors take these customers because they still use its data as support or verification tools. In addition, 80% of IMGW's revenue comes from government contracts with the Environmental Protection, Transportation and Marine Economy, Defense and Agriculture Ministries.
But the institute is starting to realize that even if Poland will always have weather, it has to become more market oriented if it is to always provide it.
"As much as we may dislike it, we do have to sell our services on a commercial basis since what we are getting from the governmental deals is not enough," Klejnowski said.
While IMGW's state-owned status is in many ways its greatest asset - it somewhat protects it from the stormy market place and guarantees some business - it is also a huge weakness. Private competitors have greater access to capital for upgrading systems or purchasing sophisticated computer applications.
IMGW, by comparison, has to struggle to get enough funding from its shareholder, the government, just to cover its operating costs. These are high because of the sprawling nature of the institute.
More than 60% of IMGW's annual revenue is eaten up by payroll for its 1,400 employees, Klejnowski said. With the business based on efficient data transfer, the institute also shells out about zl. 2 million ($512,000) or 4% of its revenue for telecom services annually. To gather data for its forecasts, the institute uses a network of 3,200 meteorological posts, including 60 meteorological and hydro-meteorological stations, 10 radioactivity-pollution measurement stations, four air-pollution measurement stations, three aerological stations and one radio-sounding station, which measures vertical ozone distribution up to 35 kilometers.
"All of that has to be operated and maintained," Klejnowski said.
As a result, the institute is barely profitable. "We don't report losses, but we don't report a major profit either," Klejnowski said, although he would not give detailed figures related to profitability. "We are not a non-profitable business."
But neither is it one where the business itself is the main priority.
"First and foremost the institute serves the public; its business side is just a necessity," Klejnowski said.
That view, and the fact that the institute provides some services that would only be of interest to specific ministries, means that no one is thinking of privatizing the agency. "I'm almost positive that such a thing will never happen, the institute is just too big with too much inertia," he added.
Nor would anyone look to hive off even just the weather business, which in many ways is dwarfed by the institute's other activities. "With such a huge scope of activities and government contracts there is no way one can make a real business of a weather institute," Klejnowski said.
A different view
Private competitors have no such constraints and believe that you can make weather into a viable business.
Last July, Transferring Technology and Promoting Innovations (TTPI), a commercial promoter of high technology products, set up shop in Warsaw and quickly grabbed Gazeta Wyborcza as a client. The relationship with the paper then gave TTPI entry to eight local radio stations owned by Gazeta's publisher, Agora.
The country's leading publishing company went with the newcomer because it offered sophisticated weather services. "TTPI does what nobody else on the market does," said Stanislaw Turnau, head of Agora's Warsaw division. "It uses computing systems that are used by all major institutions, which provide such services in the world, except for IMGW."
He added that Agora believes TTPI's forecasts are the best available in the country. "Otherwise we wouldn't pay for it, and we pay a lot," he said, but declined to give details of how much the contract was worth.
Based in what is to become Warsaw University's technology park on ulica Banacha, TTPI unites academic specialists from different fields including molecular modeling and simulations, advanced computing and system designs and information management and databases.
It has only seven employees, exactly 200 times less than IMGW. But it does not need thousands of employees to check weather measurements every hour as the institute does. Rather TTPI produces its weather forecasts using weather models created by the country's most powerful computing system located in Warsaw University's Interdisciplinary Center for Mathematical and Computational Modeling (ICM).
ICM specializes in large-scale computer simulations in natural sciences. The center developed its own Numerical Weather Prediction (NWP) system, similar to ones used in the United States or some European countries. The resolution of the model is about 17 kilometers.
"Other systems used in Europe usually use much lower resolution," said Bogdan Lesyng, CEO of TTPI. "This makes our system very precise."
Using its own CRAY and NEC SX supercomputers, ICM compiles and processes raw observational data as well as boundary conditions for the region provided by a weather center located in the U.K.'s Bracknell.
TTPI specialists then verify the weather models based on additional data compiled by IMGW and the British meteorological office and puts them into graphics.
While Gazeta is a national newspaper, TTPI also prepares detailed regional forecasts for each of the paper's 18 regional supplements. This was a key point for the paper, Turnau said. "A regional focus is something we really care about and only TTPI was able to give us what we wanted," he said.
Despite the big-name contract, TTPI said it wasn't rolling in zlotys. The costs of getting the ICM-generated data as well as additional data eat up more than half of revenue, Lesyng said. But TTPI is taking a longer-term view. It sees great potential in having a relationship with Agora, one of the country's leading media companies which will list next week on the Warsaw Stock Exchange (WSE).
But TTPI doesn't have a lock on newspaper weather services. The country's third-largest daily paper, Rzeczpospolita, also chose a private company over IMGW. But as of last June it has been getting weather information from IMGW's Swedish counterpart, the Swedish Meteorological and Hydrological Institute (SMHI).
The data on Poland is gathered and processed by SMHI and then sent to the paper via an ISDN connection, said Krzysztof Szeloch, head of Bulls Press Poland, the company that brokered the deal last year.
Air time
The newspaper contracts are prestigious and a blow to IMGW. But the most important venue for weather information is television and radio. This is because newspapers are not widely delivered on a subscription basis, Szeloch said. So by the time a reader buys a paper, the weather information isn't as useful.
"The weather forecast is a very valuable read," Turnau said. "However, in Poland it's more often the case that people leave (home) without an umbrella and then on their way to work they read in the paper that after all they may need it."
So most people seeking weather information tune in, making weather reports on television both hugely popular and profitable. The weather is the highest grossing time slot for many television stations.
For example, on Saturday, April 10, at 8 p.m. TVP1 showed "The Accidental Tourist," featuring Geena Davis and William Hurt. It managed to attract a 9% viewershare. The preceding weather forecast, however, grabbed a 19.9% viewershare. That rating even trumped TVP's most popular news show "Wiadomosci," which appears just before the weather and that night reported an 18.8% viewershare.
The two commercial breaks surrounding this one particular weather report on that particular day brought TVP1 zl. 480,600 in gross ad revenue, according to data compiled by market research firm AGB Polska.
So far, IMGW has managed to retain the most important broadcast contracts and counts public broadcasters Polskie Radio and TVP as its most devoted clients.
"In the case of public radio it has always been the institute, and I don't think we'll be switching anytime soon," said Tadeusz Fredro-Boniecki, programming director at Polskie Radio. "It costs money, but it's a business for both the institute and the station."
He would not say how much the broadcaster pays the institute on an annual basis, but said the contracts were indeed getting more and more expensive every year.
"But in the case of our two main channels (national 1 and 3) we have some sort of weather service every half an hour," Fredro-Boniecki said. "And that has to cost some money."
According to the Institute, a single, detailed, 48-hour weather forecast typically costs zl. 20-zl. 25.
TVP also relies on IMGW, but that could soon change. The public broadcaster is reportedly thinking of switching to a private weather company. "We are in pretty advanced talks with TVP," TTPI's Lesyng said.
While most have looked to the institute or a new competitor, Polsat, the largest private television station, took a different approach. The station has reportedly signed contracts with members of the Military Weather Forecasts Bureau, which provides weather information to the country's air force.
Romuald Folaron, head of Warsaw's forecast office, said the station used to have a contract signed with the service, but now just signs individual contracts with meteorologists working there.
"As far as I know some meteorologists who work for us also perform similar after-hour services for Polsat, but it's definitely not a deal between the army and the station," he said.
A similar military weather operation in Poznan also provides competition for IMGW. Aura Centrum is a company in that city that grew out of the local military weather forecasting office. Now the company provides information to the country's second-largest daily newspaper, Super Express, as well as its five regional supplements, said Jaroslaw Bernatowicz, president of Aura Centrum. The company also supplies information to national Radio Zet and a few regional newspapers.
Outside threats
Like IMGW, Aura uses existing raw observational data gathered by Germany's Deutscher Wetterdienst (DWD) weather institute for its forecasts. But instead of using supercomputers like TTPI, Aura uses the expertise and experience of its staff meteorologists to compile forecasts.
"It's the experience that counts the most," Bernatowicz said. "People that work here for years used to be responsible for the safety of military aircraft and they really know what they are doing."
While Bernatowicz would not detail the value of Aura's contracts with Super Express and Radio Zet, he said the business was making a tidy profit. On a daily basis, the company offers 48-hour weather forecasts for the country and a given region for zl. 10 and zl. 20 respectively. "Of course in the case of big clients and longer contracts the retail price is much lower," he added.
The threats to IMGW don't only come from Polish companies, however. Weather, of course, is a global event and foreign companies can get in on the act as well. Private supraregional television station tvn gets its weather information from Minneapolis, U.S.-based, DTN Kavouras Weather Services. Founded in 1976, Kavouras serves as a designer and manufacturer of advanced meteorological technology.
tvn went with the American outfit when it started in October 1997 because of a relationship between Kavouras and the station's minority shareholder Central European Media Enterprises (CME). Although CME was bought out in December by majority shareholder ITT Holdings, tvn is still with Kavouras.
"When we started we chose them because CME was working with them in its different stations in the region," said Tomasz Zubilewicz, head of the station's weather team and one of the most popular weathermen in the country. "But we're more than happy with what we're getting and that's why we're still with the Americans, even though we're not with CME anymore."
What makes the service special, Zubilewicz said, is Kavouras provides the station with cloud-pattern pictures over Europe and Poland, refreshed every half hour via satellite.
"It gives us something none of our competitors have," he said. "This gives us movement, while other stations offer only static visuals for Poland."
But tvn doesn't only rely on American data. It also uses weather statistics provided by IMGW. The station's two meteorologists then combine all the data to put together a 10-day forecast, Zubilewicz said.
Given the variety of competition facing IMGW, the company may soon find that a forecast for its future includes even more rain on its 80-year-old parade.
"We do see the competitors coming," said Ryszard Klejnowski, head of IMGW's weather forecasting division. "Not that we are particularly worried, but we do see them coming."
The Institute isn't worried because for a majority of Poles, IMGW remains the source for day-in, day-out weather forecasts.
The institute has more than 3,200 meteorological posts and 1,400 employees. Last year alone it compiled more than 121,219 different weather forecasts. And IMGW does more than just tell people if they need to grab an umbrella before leaving home. The institute is the only organization in Poland that combines hydro-meteorological services with dam control, air pollution control and oceanographic data gathering.
Weather services sold commercially provided about 20% of IMGW's 1998 revenue of about zl. 50 million ($12.8 million), Klejnowski said, adding that a large portion of these contracts were media related. "Practically we still have most of the media market here with just a few exceptions," he said.
The exceptions, however, are pretty well known. Private competitors now provide weather services such as forecasts and maps to leading, national daily newspapers such as Gazeta Wyborcza, Rzeczpospolita and Super Express, as well as private television stations such as Polsat and tvn. These rivals are also trying to lure away existing IMGW customers from the state sector such as Telewizja Polska (TVP).
The institute doesn't totally lose out when competitors take these customers because they still use its data as support or verification tools. In addition, 80% of IMGW's revenue comes from government contracts with the Environmental Protection, Transportation and Marine Economy, Defense and Agriculture Ministries.
But the institute is starting to realize that even if Poland will always have weather, it has to become more market oriented if it is to always provide it.
"As much as we may dislike it, we do have to sell our services on a commercial basis since what we are getting from the governmental deals is not enough," Klejnowski said.
While IMGW's state-owned status is in many ways its greatest asset - it somewhat protects it from the stormy market place and guarantees some business - it is also a huge weakness. Private competitors have greater access to capital for upgrading systems or purchasing sophisticated computer applications.
IMGW, by comparison, has to struggle to get enough funding from its shareholder, the government, just to cover its operating costs. These are high because of the sprawling nature of the institute.
More than 60% of IMGW's annual revenue is eaten up by payroll for its 1,400 employees, Klejnowski said. With the business based on efficient data transfer, the institute also shells out about zl. 2 million ($512,000) or 4% of its revenue for telecom services annually. To gather data for its forecasts, the institute uses a network of 3,200 meteorological posts, including 60 meteorological and hydro-meteorological stations, 10 radioactivity-pollution measurement stations, four air-pollution measurement stations, three aerological stations and one radio-sounding station, which measures vertical ozone distribution up to 35 kilometers.
"All of that has to be operated and maintained," Klejnowski said.
As a result, the institute is barely profitable. "We don't report losses, but we don't report a major profit either," Klejnowski said, although he would not give detailed figures related to profitability. "We are not a non-profitable business."
But neither is it one where the business itself is the main priority.
"First and foremost the institute serves the public; its business side is just a necessity," Klejnowski said.
That view, and the fact that the institute provides some services that would only be of interest to specific ministries, means that no one is thinking of privatizing the agency. "I'm almost positive that such a thing will never happen, the institute is just too big with too much inertia," he added.
Nor would anyone look to hive off even just the weather business, which in many ways is dwarfed by the institute's other activities. "With such a huge scope of activities and government contracts there is no way one can make a real business of a weather institute," Klejnowski said.
A different view
Private competitors have no such constraints and believe that you can make weather into a viable business.
Last July, Transferring Technology and Promoting Innovations (TTPI), a commercial promoter of high technology products, set up shop in Warsaw and quickly grabbed Gazeta Wyborcza as a client. The relationship with the paper then gave TTPI entry to eight local radio stations owned by Gazeta's publisher, Agora.
The country's leading publishing company went with the newcomer because it offered sophisticated weather services. "TTPI does what nobody else on the market does," said Stanislaw Turnau, head of Agora's Warsaw division. "It uses computing systems that are used by all major institutions, which provide such services in the world, except for IMGW."
He added that Agora believes TTPI's forecasts are the best available in the country. "Otherwise we wouldn't pay for it, and we pay a lot," he said, but declined to give details of how much the contract was worth.
Based in what is to become Warsaw University's technology park on ulica Banacha, TTPI unites academic specialists from different fields including molecular modeling and simulations, advanced computing and system designs and information management and databases.
It has only seven employees, exactly 200 times less than IMGW. But it does not need thousands of employees to check weather measurements every hour as the institute does. Rather TTPI produces its weather forecasts using weather models created by the country's most powerful computing system located in Warsaw University's Interdisciplinary Center for Mathematical and Computational Modeling (ICM).
ICM specializes in large-scale computer simulations in natural sciences. The center developed its own Numerical Weather Prediction (NWP) system, similar to ones used in the United States or some European countries. The resolution of the model is about 17 kilometers.
"Other systems used in Europe usually use much lower resolution," said Bogdan Lesyng, CEO of TTPI. "This makes our system very precise."
Using its own CRAY and NEC SX supercomputers, ICM compiles and processes raw observational data as well as boundary conditions for the region provided by a weather center located in the U.K.'s Bracknell.
TTPI specialists then verify the weather models based on additional data compiled by IMGW and the British meteorological office and puts them into graphics.
While Gazeta is a national newspaper, TTPI also prepares detailed regional forecasts for each of the paper's 18 regional supplements. This was a key point for the paper, Turnau said. "A regional focus is something we really care about and only TTPI was able to give us what we wanted," he said.
Despite the big-name contract, TTPI said it wasn't rolling in zlotys. The costs of getting the ICM-generated data as well as additional data eat up more than half of revenue, Lesyng said. But TTPI is taking a longer-term view. It sees great potential in having a relationship with Agora, one of the country's leading media companies which will list next week on the Warsaw Stock Exchange (WSE).
But TTPI doesn't have a lock on newspaper weather services. The country's third-largest daily paper, Rzeczpospolita, also chose a private company over IMGW. But as of last June it has been getting weather information from IMGW's Swedish counterpart, the Swedish Meteorological and Hydrological Institute (SMHI).
The data on Poland is gathered and processed by SMHI and then sent to the paper via an ISDN connection, said Krzysztof Szeloch, head of Bulls Press Poland, the company that brokered the deal last year.
Air time
The newspaper contracts are prestigious and a blow to IMGW. But the most important venue for weather information is television and radio. This is because newspapers are not widely delivered on a subscription basis, Szeloch said. So by the time a reader buys a paper, the weather information isn't as useful.
"The weather forecast is a very valuable read," Turnau said. "However, in Poland it's more often the case that people leave (home) without an umbrella and then on their way to work they read in the paper that after all they may need it."
So most people seeking weather information tune in, making weather reports on television both hugely popular and profitable. The weather is the highest grossing time slot for many television stations.
For example, on Saturday, April 10, at 8 p.m. TVP1 showed "The Accidental Tourist," featuring Geena Davis and William Hurt. It managed to attract a 9% viewershare. The preceding weather forecast, however, grabbed a 19.9% viewershare. That rating even trumped TVP's most popular news show "Wiadomosci," which appears just before the weather and that night reported an 18.8% viewershare.
The two commercial breaks surrounding this one particular weather report on that particular day brought TVP1 zl. 480,600 in gross ad revenue, according to data compiled by market research firm AGB Polska.
So far, IMGW has managed to retain the most important broadcast contracts and counts public broadcasters Polskie Radio and TVP as its most devoted clients.
"In the case of public radio it has always been the institute, and I don't think we'll be switching anytime soon," said Tadeusz Fredro-Boniecki, programming director at Polskie Radio. "It costs money, but it's a business for both the institute and the station."
He would not say how much the broadcaster pays the institute on an annual basis, but said the contracts were indeed getting more and more expensive every year.
"But in the case of our two main channels (national 1 and 3) we have some sort of weather service every half an hour," Fredro-Boniecki said. "And that has to cost some money."
According to the Institute, a single, detailed, 48-hour weather forecast typically costs zl. 20-zl. 25.
TVP also relies on IMGW, but that could soon change. The public broadcaster is reportedly thinking of switching to a private weather company. "We are in pretty advanced talks with TVP," TTPI's Lesyng said.
While most have looked to the institute or a new competitor, Polsat, the largest private television station, took a different approach. The station has reportedly signed contracts with members of the Military Weather Forecasts Bureau, which provides weather information to the country's air force.
Romuald Folaron, head of Warsaw's forecast office, said the station used to have a contract signed with the service, but now just signs individual contracts with meteorologists working there.
"As far as I know some meteorologists who work for us also perform similar after-hour services for Polsat, but it's definitely not a deal between the army and the station," he said.
A similar military weather operation in Poznan also provides competition for IMGW. Aura Centrum is a company in that city that grew out of the local military weather forecasting office. Now the company provides information to the country's second-largest daily newspaper, Super Express, as well as its five regional supplements, said Jaroslaw Bernatowicz, president of Aura Centrum. The company also supplies information to national Radio Zet and a few regional newspapers.
Outside threats
Like IMGW, Aura uses existing raw observational data gathered by Germany's Deutscher Wetterdienst (DWD) weather institute for its forecasts. But instead of using supercomputers like TTPI, Aura uses the expertise and experience of its staff meteorologists to compile forecasts.
"It's the experience that counts the most," Bernatowicz said. "People that work here for years used to be responsible for the safety of military aircraft and they really know what they are doing."
While Bernatowicz would not detail the value of Aura's contracts with Super Express and Radio Zet, he said the business was making a tidy profit. On a daily basis, the company offers 48-hour weather forecasts for the country and a given region for zl. 10 and zl. 20 respectively. "Of course in the case of big clients and longer contracts the retail price is much lower," he added.
The threats to IMGW don't only come from Polish companies, however. Weather, of course, is a global event and foreign companies can get in on the act as well. Private supraregional television station tvn gets its weather information from Minneapolis, U.S.-based, DTN Kavouras Weather Services. Founded in 1976, Kavouras serves as a designer and manufacturer of advanced meteorological technology.
tvn went with the American outfit when it started in October 1997 because of a relationship between Kavouras and the station's minority shareholder Central European Media Enterprises (CME). Although CME was bought out in December by majority shareholder ITT Holdings, tvn is still with Kavouras.
"When we started we chose them because CME was working with them in its different stations in the region," said Tomasz Zubilewicz, head of the station's weather team and one of the most popular weathermen in the country. "But we're more than happy with what we're getting and that's why we're still with the Americans, even though we're not with CME anymore."
What makes the service special, Zubilewicz said, is Kavouras provides the station with cloud-pattern pictures over Europe and Poland, refreshed every half hour via satellite.
"It gives us something none of our competitors have," he said. "This gives us movement, while other stations offer only static visuals for Poland."
But tvn doesn't only rely on American data. It also uses weather statistics provided by IMGW. The station's two meteorologists then combine all the data to put together a 10-day forecast, Zubilewicz said.
Given the variety of competition facing IMGW, the company may soon find that a forecast for its future includes even more rain on its 80-year-old parade.
