League Technology Summit: Remote Production Execs Discuss Keeping Up With Tech While Maintaining Profits
Having fought its way through the financial troubles of 2008-2010, the mobile production industry is thriving but continues to be an evolving organism.
Truck executives at SVG’s League Technology Summit in New York City agreed that while the market has stabilized, it is a consolidating business.
“We always look at what is going to be the right company fit for our potential growth,” said Mike Werteen, SVP, Sales at NEP Broadcasting, which over the past 12 months has acquired U.S. vendors Trio Video and Corplex. “From personal experience, sometime consolidation can be viewed as a negative. We have seen that its good for the industry. It led to success for some of our companies.”
Financing of new trucks has improved lately for many brands in the industry. Still, vendors have differing strategies when it comes to deciding when to approve the build on a new truck. Larger companies such as Game Creek Video will not build a truck unless it already has a contract tied to it.
“We probably couldn’t get financing to build a mobile unit unless it was tied to a contract,” said Pat Sullivan, President at Game Creek Video. “I’m not sure what other models really exist out there. We have just pursued a process over the last 19 years where we build a truck when we get a contract for it and that’s worked well for us.”
In the meantime, some other companies are willing to roll the dice, build a truck, and dive into the market looking to give it work. At CSP Mobile Productions, three new mobile units were built in the past 16 months alone.
“None of them had contracts,” points out Len Chase, President at CSP. “We’ve been very fortunate that the clients and the relationships that we have built over the years have allowed us to be able to bring those trucks out into the industry and find work for them very quickly. The financing part of it is very, very difficult.”
The biggest overarching challenge for mobile production vendors is striking a strong balance between profit margins and maintaining an edge in the rapidly changing technological world.
“We have to make money and we have to keep up with the technology changes which seem to happen every couple of years,” says Barry Johnstone, chairman of CTV OB out of London. “In France, they are still trying to adopt HD and in London there’s talks going on about 4K. To be able to finance that and stay viable is a tremendous challenge for us.”
A key to maintaining a competitive edge is securing talented staff. Aside from necessary gear investments, the panel agreed that a viable workforce was the most critical key to success.
“The cost of labor is the most important part of our business,” said Werteen. “You need to make sure that you stay competitive. There’s going to be differences over five years of what’s the most expensive part of the business, but you have to be able to secure the top talent and maintaining the trust with clients the way they are expecting it to be maintained. We want to make sure that the labor is the lifeblood of our business.”
“They are your frontline, your advertising, and they are the ones that have the direct relationship with the client,” agreed Chase. “Your staffing is one of the most critical things. One thing that I think all of us run into, though, is all of the intangibles. It’s the flights, the car rentals, the hotels; all those costs that we can’t project. Those are the hard ones that we face and getting your clients to understand that side of your business is critical.”
A common concern amongst the panelists was address by moderator Jerry Gepner, an SVG advisory board member and industry veteran who spent time at Vitec Group, Fox Sports, and National Mobile Television, who addresses the business as a “greying industry.”
Each company represented had established a relationship with at least one university to train future employees; like at Game Creek Video, for example, which has established a partnership with UMass-Lowell.
“[The students’] intent when they enrolled in this was to become music mixers,” said Sullivan. “We used them throughout the summer as they matriculated through school and when they graduated, if they were good, we offered them a job. Of those six people, four of them are running $8 million assets for us and they are under 28 years old. We’ve been very fortunate in that respect; it’s been a great pipeline for us. You can’t have enough [talent] coming in.”
Still, the chief concern among the panelists was the battle to keep pace with the rapidly changing world which is reaching for 4K when some of the industry is yet to fully incorporate HD.
“The new box or the new graphics engine comes out; those are things that you expect,” said Chase. “When you start changing formats though, that’s where things start to get difficult. Everyone here is geared up their trucks to do 3G and we’re hedged on that. Now we’re already starting to talk about 4K. So the problem is, you have invested $6 or $7 million on a new truck and than to turn around and have to change its entire base, that’s where it becomes very difficult when at the same time you’re trying to do all this and make a profit at the end of the day.”