Staying Afloat in the Stupid Economy - A look at the Film/TV Industry
Matt Armstrong
February 17, 2009 Source: Studio Daily
With a recession that has no end in sight, companies in virtually every industry are hunkering down for hard times. The film and television industry is no different. We’ve already seen a number of companies go out of business, from large VFX houses like The Orphanage to smaller boutique editorial/design outfits like Version2. We spoke with a number of heads of companies about strategies they are implementing to weather the economic storm and found a few consistent themes. All are looking to improve workflow
efficiencies, some are diversifying their services to offer clients a more complete package and most have a hiring freeze. And while all of
the respondents we spoke with said they have no plans to cut their rates, their replies of “no” were followed with a conditional “but...”, so take that with a grain of salt.
Read below the strategies a variety of companies — from mid-level edit/design shops, to large, full-service post facilities, to those targeting new media outlets — are taking to make a profit in the current recession.
Meg's note: I've included a few here but there are tons on the website. Click the title to view entire article
Sean Henry, Calabash Animation
executive producer
animation production
What has the state of the economy meant to your business?
For us it may still be a little bit too early to tell. Business has remained strong for us as far as cereal commercials are concerned, but the
rest of the advertising industry seems to be tightening their belts and re-using or re-purposing old spots rather than investing in new
productions. One possible telltale sign of the struggling economy is that while we have seen a marked decrease in new business from
the agencies, we have also been seeing an unusually high number of job inquiries from more experienced animators and other artists.
What strategies have you had to take for the short term? Long term? In terms of personnel? Investment?
We are expanding in certain areas and showing more restraint in others — adding new animators, producers and new technology. On the one hand, we are generally trying to be as fiscally conservative as possible, but at the same time we have been investing into new
technology to create products that may be more relevant in this current economic climate. In the near term, we are refocusing our sales efforts to address an increased interest in Flash animation for the web, as well as other non-traditional media such as CG, which
provides an additional dimension of flexibility. For the mid term and long term, we are re-vamping our Shorts program to be able to release new material more often, and in a more strategically targeted way that will be more effective as a sales tool. We put a lot of emphasis on cross-training our full-time staff in all the various tools of the trade, and we rely heavily on a network of local (and not-solocal)
freelance talent. These strategies have allowed us to remain very flexible and effective.
Have you redirected your business to other areas that you were not focused on before?
We have greatly expanded our capabilities for Flash-style animation for the web and mobile platforms. Whether or not it is because of
the economy, many companies are looking away from traditional media and more toward the internet, which also lends itself to more
economical styles of animation. In addition to web animation, we have been receiving a lot of interest in 3D computer animation and we
are investing heavily into our CG department. Calabash has the advantage of being able to apply our many years of traditional experience
to these new media, whereas many Flash-only animation companies may have the technical skills but lack the artistry.
The danger for us is that with a higher volume of smaller projects, the overhead is greater and the profit margins are smaller.
Are you cutting your rates?
We are not cutting our rates per se, but we often find that we can offer cost-saving alternatives to clients without sacrificing too much of
the original concept.
How will you survive a prolonged recession?
We will do our best to stay flexible, keep our eyes open for new opportunities, adapt as necessary, and roll with the punches.
Ray Carballada, Shooters Post & Transfer/DIVE
president
post production facility
What has the state of the economy meant to your business?
We have seen things slow down a little in some areas from the crazy pace of the last few years. Shooters' diversification in advertising,
producing television programming and films has helped. We are also working with more clients who want to benefit from the resources
and talent of our diversification.
What strategies have you had to take for the short term? Long term? In terms of personnel? Investment?
Short-term we are holding off adding the staff we had budgeted for 2009 and using freelancers as needed. We are still investing in
technology and equipment. Long Term we feel very confident in Shooters’ business module. We expect that the industry we are in will
continue to mature. We don’t expect things return to the past as far as pricing, deadlines and workflows.
Have you redirected your business to other areas that you were not focused on before?
We redirected our business into developing television programming and starting a film division several years ago because we knew that
the ad business was changing. The reasons for diversifying then are serving us well now.
Are you cutting your rates?
We have a different, more efficient business model than most so we haven’t seen a lot of pressure on our pricing.
How will you survive a prolonged recession?
We are pursuing additional marketing opportunities and finessing our sales strategies to address the current economy. Ultimately, our
business strategy has served us well to compete and weather this current economic storm. We are also partnering with our clients to help
them survive as well as seizing the opportunities to create new relationships.
Camille Taylor
owner/EP
Crossroads
multimedia and content creation
What has the state of the economy meant to your business?
There is no business as usual. The percent of billing that we are down for 2008 has forced us to cut overhead, rethink and revamp all
expenditures, and continue to work on how we can bill more while keeping costs down. With no end in sight for this economic downturn,
everything we are doing is for the long term. We have joined forces with other companies and executive producers who have come to us
with directors thus further amortizing the basic costs of doing business. We have been acting as a service company for long format work
in television and in feature film as well as servicing foreign productions. Cutting rates further on regular jobs is not a long term survival
option, although making bulk contract deals with either agencies or clients for a guaranteed amount of work does allow us to offer
certain price breaks. We continue to work on TV promos, TV programming, music videos, feature film production, design, and editorial
as well. This diverse profile is certainly helpful. More than ever continuing to look at advertising globally is key to remaining healthy and
successful. As all aspects of the entertainment business tighten their belts and lose frills and perks, so must we. Every company needs to
walk the tightrope of maintaining repeat business and high client service standards while spending less money.
Dan LaCivita
senior VP/executive director
Firstborn Multimedia
digital creative agency with Web design, live action, graphics
What has the state of the economy meant to your business?
We felt the economy last year though it was our best year financially. We’re probably going to feel it a little more in the first quarter this
year, with clients being more judicious in where they are spending money. We’re getting a lot of opportunities that we normally would
not have gotten if the economy wasn’t bad.
We’re getting a lot of larger brands that are looking at how they are spending their money and coming to us. We are a 45-person shop
and are not a 300-person agency, but I think clients are realizing that you don’t need a team of 35 people to develop a great digital
strategy and execute it. So in some ways we’re getting a lot more opportunities that we may not have got if people weren’t looking at
their numbers very closely.
What strategies have you had to take for the short term? Personnel? Investment?
One of the things, and this was born out of necessity rather than the economy, is that the fact that we’re able to produce video, 3D
graphics and Web development. Before a client may go to an ad agency, the agency will hire a production house and director to come up
with a video campaign, a 3D house to do the graphics and a Web house to do the Flash work. We’re able to do all that, which really does
increase efficiency and thus brings done costs a lot. Every time you outsource to another vendor you are going to pay their markup. Not
only will it bring the budget lower, it’s also going to be a tighter deliverable. Our web team and our video team are working right next to
each other so we’re working on a whole campaign together rather than working on each separate piece.
Have you redirected your business?
In the last three years we’ve bolstered our live action, 3D motion graphics and our software engineering teams, so we'll not only be
building great looking front-end Web experiences but also creating real software applications.
Ironically we’re hiring more people, we’ve signed a lease for another 6,000 square feet and we’re not cutting our rates. We’ve been
fortunate to be in a position to be able to do that. It is amazing that the resumes we see, these are not some mid-level guys we’re seeing
that are out of work. These are professionals that have been working for a long time.
Are you cutting rates?
We’re not cutting our rates and we’re not paying our employees any less, but there is a correction in the scale of salary happening now
and it will probably continue to happen over the next year. Two years ago when the economy was awesome you had guys who probably
should have been making $60,000 a year making $90,000. A lot of those guys probably don’t have jobs right now and their next job
isn’t going to be making $90,000.
How will you survive a prolonged recession?
Cross our fingers.
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