Light entertainment and HD are driving a boom for some studios, while others are hit by falling wet hire demand and deferred commissioning decisions. Nicola Brittain reports on a sector in flux.

Rarely has the studios market been such a hotbed of activity as it has been in the past six months. Studio closures, expansions, upgrades, and a boost in light entertainment work have all contributed to the sense of a sector in flux. “We are really in the thick of it at the moment,” says The Hospital's Anne Marie Phelan. “There's never been so much change.”

Arguably the biggest sector story in recent months has been that of BBC Studios. On 10 March the corporation said it would retain the division. Pinewood was believed to be preferred bidder for the division. The reason behind the sale collapsing are commercially confidential but it has been speculated that it had failed to close the deal because it was not prepared to meet staff commitments, such as pensions.

In the short term this means BBC Studios will continue to operate as it always has done. However the closure in 2012 of TV Centre and its studio space will radically alter the London market once again. One scenario is that the closure of TV Centre will provide the London studio market with lucrative BBC entertainment commissions.

Another possibility is that the BBC will partner with a London-based studios supplier to meet its studio needs. This would mirror the arrangement the BBC has in Salford where property company Peel is currently building seven HD studios ranging from 1,000 to 12,000 square feet. On completion in January 2011 the studios will be available for hire. The BBC is Peel's anchor tenant and both parties are liaising closely on specifications for the new premises.

Looking ahead to 2012, the BBC's portfolio director for production studio and technical facilities, Jim Brown, believes the BBC partnering with a London-based studio supplier is the most likely outcome. “It would make more sense than the corporation building new studios,” he says.

Peel already has studio interests, with its owner, John Whittaker's investment vehicle, Goodweather Holdings, owning 21% of Pinewood. This may mean that despite Pinewood's recent failure to buy BBC Studios, it could be in the frame to provide studio space to the BBC after 2012.

Despite clear dynamism in the sector, the rising cost of real estate - particularly in London - and the squeeze on margins across TV production means that the studios business is tough and getting tougher. Over the past few months, several studios have either closed or said they plan to. Capital Studios, home of Ready Steady Cook, will close its Wandsworth-based premises this summer, as landlord Minerva plans to sell the site. It was mooted that at least part of the business would relocate, but director Rhys John says the company still hasn't reached a decision. “If part of the business does move, realistically we'll have to locate further out. The studios business is heavy on space and the land value in London is ridiculously high.”

MTV's 1 Leicester Square premises in central London are no longer used as a studio. MTV Networks Europe vice-president of studios Jane Anderson explains: “The key driver for the decision to close was the fact that we have enough space with our three studios here in Camden.”

Another high-profile closure was Channel 4's 124 studio which shut in January. “The studios were run by the same management as the rest of 124, and we knew we would be outsourcing 124's channel operations and parts of post-production to Red Bee, so the investment [the studios needed], including an upgrade to HD, didn't make sense,” said a 124 spokesman.

But it's not all doom and gloom by any stretch of the imagination. The shake-out of studio businesses is balanced by an increase in work for other small central London studios with both MTV in Camden and The Hospital reporting a strong year.

As well as a full HD facility, The Hospital is also a private members' club, which helps to balance the books. It attributes its year-on-year growth to more demand for HD and securing the music and links for Channel 4 teen strand T4. The company, which hosted the last series of Strictly Come Dancing, now plans to expand in New York, Berlin and Shanghai although it has yet to secure buildings in these cities.

MTV's Camden studios are also reporting a record year, with shows like Missing for Sky and programming for Five kids strand Milkshake! on the books.

Dry hire upturn
One area experiencing huge pressure is the more expensive wet-hire large studios market. Kent-based Maidstone studios can provide both dry and wet hire but is seeing increasing demand for the cheaper dry-hire facilities, where production companies will source their own people and kit, a service traditionally offered by soundstages such as 3 Mills and Elstree. Recent dry hire shows Maidstone has secured include Cape Wrath for C4 from Ecosse Films and Basil's Swap Shop for CBBC from RDF.

Maidstone general manager Kenton Oxley recognises that the drop in demand for wet hire presents a potential threat but adds: “We have positioned ourselves to be able to compete with the sound stages on price.”

In some cases, production companies with entertainment shows have gone direct to sound stages which have traditionally hosted film and TV drama.

East London-based sound studio 3 Mills has a 60:40 film/TV split, and has hosted BBC1 TV dramas such as Diary of Anne Frank from Darlow Smithson and the last episode in the latest series of Waking the Dead. Studio executive Derek Watts notes an increase in demand for light entertainment in recent months, with 3 Mills recently hosting BBC2's The Underdog Show, ITV1's Hell's Kitchen and C4's Jamie's Fowl Dinners.

But some production companies have bypassed studios completely in a bid to cut rates. Big drama producers such as Kudos Film and Television are increasingly going for warehouse-based shoots over studios with amenities, with Kudos choosing to make episodes of Moving Wallpaper and Echo Beach in this way.

Says Watts: “Many are looking to film in warehouses and of course it is much cheaper to just use a shed, but they don't benefit from additional facilities such as production offices, green rooms, prop rooms and catering.”

Commissioning cycles
Unusual commissioning cycles are another phenomenon to have affected business for some studios over the past few months. Riverside Studios technical director Duncan Stewart says the company experienced a slowdown in the commissioning of light entertainment shows as a result of the phone-in scandals affecting BBC and ITV. They have diversified into other sectors - acting as a venue for big parties and corporate events.

Now business is picking up again with Riverside completing Through the Keyhole for David Paradine Productions and Comedy Decades for UKTV.

Some industry insiders are reporting that a number of ITV productions have been delayed which they say may be due to senior executive changes at the broadcaster. Wembley-based Fountain Studios, which is about to go into production on ITV1's Britain's Got Talent, is facing a quieter spring than usual as a result of late commissioning, but a busier summer. Marketing manager Sarah Joyce says: “The delay can mean that we are unable to undertake maintenance and equipment upgrades which we would traditionally complete in the summer but otherwise our business is not greatly affected.”

The London Studios (TLS) director of studios and client liaison Kathy Schulz adds that commissioners are working on a more “last minute” basis than they used to. “This can cause problems with availability and mean that we have to turn down shows that we'd rather not,” she declares.

Light entertainment
The current light entertainment boom is one of the shiny highlights of the current marketplace. Several studios have seized the opportunity to invest in facilities to attract more business in this buoyant genre. Maidstone, which recently won the BBC's The Eurovision Song Contest from BBC Studios and Endemol's 1 vs 100 from Fountain, has just upgraded one of its studios to take a 2,400-strong studio audience. Maidstone also has two big Saturday night shows - yet to be announced - lined up for the summer.

Maidstone Studios and TLS also plan to upgrade the service side of their offering, with TLS planning general refurbishments and Maidstone investing in green rooms and a dressing room, as part of a£2.5m refurbishment programme over the next 18 months.

High definition
With C4 and the BBC committing to HD programming, the feeling is the tipping point for the format has been reached in the studios market. The BBC has just released details of its third HD studio upgrade, the£2m Studio 4 which is to be completed by August and will include a Sony MVS-8000 series vision mixer, eight Sony HDC-1500 cameras and a new gallery. This summer the 8,000sq ft studio will be ready to host The Alan Titchmarsh Show, A Question of Sport and Friday Night with Jonathan Ross.

TLS, has not yet committed to a date for its HD upgrade but recently completed RDF's HD show Don't Forget the Lyrics for Sky by employing OB company Arena to provide HD services.

If more proof of the appeal of HD were needed, Pinewood is about to make three HD comedies, including BBC1 sitcoms The Green, Green Grass, After You've Gone and Not Going Out from Avalon. The group has just invested in 5 Sony HDC-1500 cameras and five Canon Digi Super 25 lenses. Group sales director Paul Baker says: “HD is finally picking up for us and we have just made this significant investment as a result.”

Given the flurry of activity in the market in the past few months, how well is the sector doing?

As a whole it is in “rude health”, according to MTV's Jane Anderson, although changes in the studios market have meant that the most flexible, versatile companies are out in front.

If a studio can offer wet and dry hire, HD and high-end amenities as well as a USP - The Hospital's music expertise for example - it can do well in the current climate. Those extras can make a difference, as The Hospital's Anne Marie Phelan explains. “The studios market is really exciting at the moment, but it's increasingly about additional services. We are facilitators and must give production companies whatever they want.”