With IBC looming, Andy Stout looks at the various routes that manufacturers in different sectors take when it comes to getting their products to market.
In the past, it was all so much simpler. Cameras shot on tape, post was done on tape, and that was really that. Yes, the tape format might change every once in a while, but all broadcasters, production companies and facilities would have to do was hang back, wait for any bugs in the new kit to be ironed out, then buy new cameras and new decks, plug it all in to their existing infrastructure and off they went. Products were announced at trade shows and packaged in boxes. Resellers sold boxes, the contents of the boxes worked: end of story.
Except it wasn’t. The story in question has grown labyrinthine plots and subplots, footnotes and appendices, as first HD with its bewildering array of different formats and then IT-based systems have come onto the market. In turn, shifting the kit has become more complex, to the point where it’s less a case of selling a single, commoditised unit and more one of consulting on workflow components from an array of vendors that have to fit precisely into an interlocking and ever-evolving jigsaw puzzle.
Stroll among the stands at IBC and the sheer number of formats, options and technologies quickly becomes dizzying. It’s no surprise that the organisation has had to introduce special sessions such as the free ‘What Caught My Eye’ series in an attempt to demystify and explain what’s going on to attendees - who have almost become lay members of the public as the pace of technological change has accelerated.
Even the manufacturers are being set adrift in the process, with an increasingly insecure anchor into the wants and needs of the target markets as the plethora of choices has multiplied. This, though, is a key area where the reseller comes in.
Role of the reseller
“As manufacturers become increasingly competitive, offering multiple product options for single tasks, the role of the reseller as a solution partner has become increasingly important in the design and workflow stages of a project,” says Tim Stiddons, sales manager at Gearhouse Broadcast.
Stiddons highlights the fact that the reseller is the point at which everything comes together. Manufacturers and clients alike expect a modern reseller to be able to couple the sale of a camcorder with anything provided by third party sources, from a camera bag to finance to a full tapeless workflow including SANs and NLE systems. The reseller stands at IBC really will provide you with a ‘soup to nuts’ service. But it’s not just about the products, as they also act as repositories for probably the most valuable resource in the current broadcast ecology: information.
“Clients say that they have a problem and we work out how to solve it,” says Root 6 director John Harris. “We only tend to specify a product as the second or third thought.”
Increasingly, however, resellers are not alone as the struggle to keep up with the sheer information volume that the IT-centric systems generate has given rise to a range of specialised information brokers. This is an added layer of complexity in the route to market. The stable triangle that joined manufacturers, buyers and resellers has mutated as a result, with kit sales now passing along any number of routes through a dense cloud of resellers, systems integrators (SIs), consultants, agents, technical advisors and more. “When we physically draw out our route to market internally at Sony, we end up with a piece of paper with arrows all over the place,” says Mark Bainbridge, general manager, media at Sony Professional UK.
“SIs are certainly more involved in the purchasing process than ever before,” says Steve Owen, director of marketing at Quantel. “They are writing requests for information (RFIs) and requests to tender (RTTs), they are designing systems and even coordinating equipment evaluations. There are usually still lots of other people involved in the final decision, though.”
The adroit resellers are working closely with this new breed. “In the same way that manufacturers can’t be everywhere, neither can resellers,” says Lewis Brown, broadcast business manager at Jigsaw Systems. “So we work closely with consultants that serve specialised markets - education or corporate, for example - as they maintain strong relationships with their clients.”
That resellers have maintained their pre-eminent position amid this ferment is testament to their ability to adapt to the changing conditions. Partly this has been driven by manufacturers. Sony, for example, culled its number of resellers from 28 to 13 when it set up its Specialist Dealer Network a couple of years ago and puts a lot of effort into its relationship with them. “A fully engaged reseller channel is the way to the mass market for commoditised products such as cameras,” says Bainbridge.
Siddons points out the symbiotic nature of the relationship. “It is very important to have a close relationship with the manufacturers we represent: our futures and success are inexorably linked,” he says. “We work very closely with a number of manufacturers in the development of future technologies, often being the first organisation to field-test products pre-release.”
Competition among resellers themselves remains fierce and, in an era where global availability of products on the internet constantly drives down prices, that has meant that many have had to invest in value-add services beyond the expertise, backup, support and in-house engineering that customers have come to expect as a matter of course.
“You will always have people who will shop around and buy just on price,” says Nick Frith, marketing and operations director at Altered Images.
“[But] for the vast majority of customers, ‘value added’ is the deal clincher - an understanding of their workflow, and how that product integrates into it. We invest heavily in training for sales and support staff to offer the best solution advice.”
Loaning kit, setting up camera and workflow demo rooms, running free workshops, attending tradeshows, and a whole plethora of other initiatives have also proved important USPs for resellers looking to differentiate themselves. “You have to demonstrate added value, even if it’s not chargeable,” comments Brown.
With margins already tight and a recession underway, however, such investment is an unwelcome necessity. “New equipment purchases across the industry are at an all-time low,” says Stiddons, and times are tough right across the channel with a multiplicity of issues affecting sales.
Sign-off is coming in months, not weeks as before; finance is proving harder to source and arrange; recent exchange rate fluctuations have seen prices vary by as much as 10% from quote to sign-off; manufacturers have raised prices; and there are more entrants coming into the market from struggling industries such as the computer sector.
As a result, the delicate dynamics of the market are shifting again, with some resellers dipping their toes into the rental market and others looking to expand beyond geographic borders or adopting viral marketing campaigns to extend the reach of their business. The manufacturers are pitching in too. Sony, for instance, is currently tailoring events to enable resellers to sell out inventory and invest in new stock.
The plot might currently be mired in a Dickensian chapter, replete with economic woe and hardship, but everyone involved recognises that keeping all the main characters hale and hearty is the best way to ensure the narrative carries on.
“The one thing that has not changed in the reseller’s business is they can put together the complete package, which is something most manufacturers will never be able to do,” says Panasonic’s PBITS UK marketing manager, Marc Irwin. And there might yet be a happy ending.
“We think business for the rest of the year will be really good,” says Mark Cass, commercial director at Escape Studios. “There’s a huge amount of work coming into London and post houses are going to have to start ramping up for it around IBC-time.”
What Caught My Eye sessions are at 9.30am at IBC next Saturday, Sunday and Monday, 11-13 September
The Vendor’s View
Post manufacturers have flirted with non-attendance at tradeshows, but most of the majors - Apple excepted - are firmly at this year’s IBC.
There the consensus ends, as the routes to market they take are all a varying degree of direct and reseller approaches. Quantel and Digital Vision, for example, sell direct in the UK, but use resellers in territories that would not support a dedicated sales force.
Apple sells direct and via many resellers, as do Autodesk and Avid. The latter two are of particular interest, however, as they’re in the process of rejigging their channel in the wake of the downturn.
Autodesk has started focusing on market segments rather than splitting its channel between software and systems, and has also introduced a partner health programme to help with training and other costs.
“We’re a channel-based sales business and apart from our product portfolio, our channel is our second biggest strength,” explains Alex Micallef, who heads up the systems business for EMEA. But while it has a dozen UK resellers selling animation products, it only has one, XTFX, selling its advanced systems products. “If you had more, no one would be able to make it economically viable,” he adds.
Micallef estimates that about 10% of sales are done direct - predominantly legacy customers or global accounts - while over at Avid, Simon Brett admits that the company has changed approaches. “We have oscillated from the reseller model, to a direct one, and now we’re coming back full circle to supporting the reseller. Direct gives you greater margins and you’re more profitable in the short term, but the way to growth is through the channel.”
The Vendor’s View
All the major manufacturers follow a tripartite route to market covering resellers and direct sales. Panasonic’s PBITS UK marketing manager, Marc Irwin, estimates that about 20% of his sales are via the direct route, mostly to broadcasters.
“With the large broadcasters needing to stay with and ahead of the technical curve, there is usually a very close relationship with these customers,” he adds.
“In most cases, it takes them many months of appraisal and testing before they can sign off new formats, new equipment and even small advances in technology. Smaller companies are more flexible and testing can be done at hire companies or with the manufactures as there are less levels of management to convince of a technological direction.”
That picture, however, like many others in the current economy, is blurring. “Today everyone, from the freelancer to the biggest broadcaster, is shopping around for the best deals. So people we would have expected to sell direct to in the past are now getting quotes from distributors, and freelancers are coming to us direct,” says Phill Neighbour, sales director and UK COO of Grass Valley.
With production and sales both depressed, manufacturers are increasingly trying to contact their customers in different ways above and beyond the trade show circuit, often in cahoots with their reseller network. Among numerous initiatives from all concerned, Sony, for example, has pulled out of this year’s IBC and is focusing on a series of customer and reseller events under its Star programme; Panasonic has set up a user-driven website and launched a P2 workflow Experience Centre at Shepperton Studios called P2 Live; JVC was recently one of the main sponsors of the London Final Cut Pro SuperMeet; and Grass Valley is also on the roadshow trail.
“It’s getting the message out about your products and communicating with end users, and not just via the traditional route of the big trade shows,” says JVC sales manager John Kelly.