Facilities in the broadcast post-production market are rethinking their businesses. There is no shortage of TV work around, but rates have reached rock-bottom with only the faint glimmer that high-definition work may bring them back up.
"It's been a busy year but no one wants to pay rate," says Resolution managing director Mike Saunders. He fears that the advent of lower-cost desktop editing platforms has created a false perception in the market that post houses are making a lot of money. "People appreciate what we do, but they don't understand the costs."
If anything, however, costs are increasing for the post market, as facilities upgrade to cope with the requirements of HD projects. Outfits such as London's Resolution and Evolutions are now preparing themselves for the higher volumes of HD work expected next year, spending in the order of£1m on infrastructure alone. "It's like building a new facility in the same building while keeping your existing business going," says Saunders.
The problem remains that the premium for HD does not reflect the investment facilities are making, says VTR plc operations director Neil Lane, especially when the volume of work is not yet there. Worse still, he fears that with post houses becoming wise to HD and upgrading to meet anticipated demand, this fledgling market is becoming saturated and aggressive competition could force rates down. "I hope everyone maintains prices, we've been holding them where they are," he says.
The distribution of HD work varies across the country. Bristol's Films@59 says 30% of its business is HD, as does Welsh facility Mwnci. However, the majority are citing more modest figures of between 5% and 10%, with fingers tightly crossed that this percentage will double in 2006.
A small but growing number are seeing additional opportunities outside HD. VTR is using its reversioning and restoration arm, TMR, to spearhead a move into content management, digital distribution and 3G mobile content. It plans to plough a third of the group's 2006 investment into these emerging markets - an investment that matches its commitment to HD next year.
Technicolor Creative Services is also looking at digital distribution, although "nothing is concrete", says general manager Simon Forde. He also feels that there is a growing dependence on facilities that offer an end-to-end post-production package. "It's more economic and takes the worry away from the customer. I get the impression that the smaller outfits may have suffered as a result of this trend," he says.
Sports production and post outfit Input Media consolidated its facilities because of this trend towards having "all post under one roof", according to managing director David Wood. "It's increasingly competitive in the mid-range facilities market. We need to be able to offer bigger projects a single solution."
VTR is noticing greater demand for a one-stop shop approach to post, but Lane is relying on new business opportunities and a more inter-national scope to pull the group free of the financial doldrums it found itself in during 2005. "We can't rely on the UK market alone," he says. VTR Plc's sales fell from£25.3m to£21.5m in 2005 and while£1.9m was saved by restructuring and shedding 40 staff, Lane stresses that "it's not all doom and gloom. We've had a tough year and everyone knows our problems because we're a plc."
Ascent Media also ended the year with a restructure, attempting to get its core post facilities "to work together better" explains Keith Williams, creative services vice-president of operations. Williams adds downward pressure on rates prompted Ascent to lock off prices and he says there was a tendency in the industry to do the same. However, a number of smaller independents have been offering a "book one week, get another week free" deal which "is a 50% discount in my books". With prices locked off, bigger facilities like Ascent are selling their facilities as package deals.
The vfx houses are another group raising concerns about post budgets for broadcast work. Framestore CFC's chief executive, William Sargent says: "I'm concerned about the feasibility of meeting the broadcasters' ambitions when their budgets are not matching those ambitions." He adds that this client group are not in a position to demand more for less, and should prices drop too low there may be no option but to refuse the work. "If one discipline becomes uneconomic we have to move into another area. There are emerging markets or more film and more commercials work we could do."
He adds: "There's an education process we need to put time into during 2006.The broadcasters don't contribute to the high-end infrastructure and technology that they get the benefits of."
There has been a push among London's facilities to broaden their client base and diversify the types of work through their doors. "We don't want any one client to be doing more than 10% of its business with us," says Evolutions managing director Simon Kanjee, "that puts us in a dangerous position." The facility, which acquired Vivid Post Production in May, has been pushing into more high-end online and grading work, installing a Pogle tape grading suite earlier this year.
Soho's DGP, traditionally a corporate-fed post house, has also been after a greater variety of work. "Broadcast work is something we've been trying to push into," says managing director Julian Day. "Budgets are tight, but we're seeing people wanting more from the high-end/finishing side of things, which is where we are positioning ourselves." DGP is also trying to turn its expertise in DVD creation, which now makes up 55% of its business, into a fast turn-around encoding and distribution service for its new clients.
Meanwhile, Frontline TV has found a niche posting interactive TV content, with high-profile projects such as Shakespeare's Stories and Spooks for the BBC now making up its portfolio.
In contrast the regions' facilities have built their businesses on being able to accommodate almost anyone who walks through their doors. "The market is not big enough to specialise," says Leo Casserly, managing director of Manchester's Flix Facilities. "It's post for everyone."
Manchester is still buzzing from the BBC's decision to move children's, sport and new media production to the regions and Casserly says Flix's city-centre operation has this year picked up new work from indies such as Hat Trick Productions opening up in the area. There have been no new arrivals on Manchester's post scene, but an HD investment by Sumners means it is now taking on 3sixtymedia for drama work.
BBC Resources - 10% owner of Granada's 3sixtymedia - has been continuing with its investment in HD and tapeless post across its London, Birmingham and Bristol sites. It is involved with Red Bee in what it claims to be the first tapeless delivery-for-transmission project in the UK: an interactive session on the CBBC channel. "A process that would usually take a day to deliver can now be done in 40 minutes," says Lesley McMahon, director of BBC Post Production.
BBC Post has also been involved in trialling Panasonic's P2 solid-state recording format with Avid Xpress Pro laptops. It has used this set-up to remotely edit content for BBC Sport's Football Focus and will be conducting further trials at the Olympic Winter Games 2006.
"We're using new ways of working to maximise the efficiencies in production, which is in line with the BBC's value for money initiative," McMahon adds. As part of this drive, Resources has also developed a remote viewing service for producers and directors, Web Review, which has already been used on BBC factual and learning coastal heritage series Coast.
Soho post house Nats has also put itself in a position to offer clients an internet review and logging editing tool, developed by Forbidden Technologies. Forscene has been trialled by Granada in September to log and perform rough cuts for its 10-part documentary series Trust Me I'm a Holiday Rep.
Facilities are looking for that edge that will differentiate themselves in a market where its core technology has become a commodity product; and 2005 will be seen as the year that desktop editing for the professional market came of age.
Avid has been forced to include a high-end feature into its Xpress Pro software to keep up with Apple and its Final Cut Pro product. PogoFilms has shown that it can make Apple's product work and use it successfully - the five-man facility is installing four extra online suites. Nats has also invested in an online FCP department and merged with Darlow Smithson's preferred editing outfit Difference to get a foothold in this market.
But the opportunities that these desktop systems are presenting have been overshadowed by the BBC's decision to buy into FCP and promote in-house editing. Factual and learning was the first to roll out the "creative desktop" initiative and has suggested that 75% of all post work will be done in-house by 2007.
Reactions from the market have ranged from shoulder shrugging acceptance to anger and denial. The impact so far has been minimal, however. Facilities body UK Post is in regular correspondence with the BBC to try and understand the intentions of the project.
The second series of the BBC's Full on Food used the creative desktop concept in full, giving rise to the "preditor": part producer, part editor. The facilities market is not impressed: "This programme did not get recommissioned and you have to work back from that," says Resolution's Saunders. He stresses that the post market was never "just about the kit".
Facilities are fully aware of the direction the market is moving, however, and they know realigning their businesses to suit what the BBC and other production companies do is the only option.
Post news round-up: 2005
Crow TV sets up a facility on the doorstep of Endemol, Atlantic Productions and National Geographic. The west London site has 22 suites, including sound studios and Pogle grading, reflecting a£500,000 investment.
Platform Post Production spends£200,000 on increasing and upgrading its online capabilities with an additional Smoke HD suite.
Flix Facilities spends£100,000 on kit for its Manchester city-centre operation, upgrading the SD kit and building a DS Nitris suite.
VTR Plc's managing director, John Banks, resigns from the troubled company after 20 years at the helm. He's replaced by corporate development director Paul Tracey.
· BBC Post Production invests more than£500,000 on HD kit and a tapeless infrastructure for its Bristol facilities. It also buys an additional Avid HD Adrenaline for its London operation.
BBC Resources sale put on hold for two years following strike action. UK Post recommends that any sale of Resources should not come with guarantees of ongoing work.
· Broadcast and corporate independent Twofour breaks into the facilities market with a£2m spend on video and audio post-production kit and new Plymouth offices.
· Nats buys into Darlow Smithson's preferred editing outfit Difference.
Sound house Strongroom Post expands into picture editing and a number of other production companies spring up in London's Shoreditch.
One of the UK's oldest facilities, Lynx Digital, enters administration after a slow trading year and the delay of some of its bigger contracts.
· Post house Dragon Digital launches in South Wales. It is the first facility to be based in the new£330m film and TV studio complex Dragon International Studios.
· VTR's reversioning and restoration business TMR branches out into mobile content with its first commission for 3G platforms.
Granada pioneers the use of internet-based editing system Forscene to log and perform rough cuts for 10-part documentary series Trust Me I'm a Holiday Rep. The system, developed by Forbidden Technologies, is represented by post house Nats.
· Covent Garden facility Pepper Post ditches plans to move into Soho Square after assessing the impact that the proposed Crossrail project would have on the area. The decision coincides with its move into audio.
· Newcastle post house Mere Mortals invests£250,000 in new premises, HD editing kit and an audio suite.
· DGP spends£350,000 on additional space for DVD department and finishing systems for broadcast post work.
BBC factual & learning reveals plans to move more offline editing in-house and install 60 Final Cut Pro machines.
· Newcastle post house Imagine spends£130,000 on kit after the promise of more work from Tyne Tees.
· Editing freelancers Mark Adams and Jules Barton Hill move to Bristol and set up Dog House Post Production.
VTR Plc reports pre-tax losses of£780,000 with sales falling from£25.3m to£21.5m. The group blames advertising recession, falling budgets and a poor economic client for the UK film industry. Forty staff are cut and savings of£1.9m are made.
· Smoke & Mirrors acquires Red Post Production for around£1m giving the vfx house telecine capabilities.
BBC factual & learning claims that only 20% to 25% of its post-production will be brought in house as part of its creative desktop scheme which amounts to a 3% saving in post-production costs.
· Molinare buys the Marshall Street premises of Grand Central Studios for an undisclosed sum, as part of an expansion of its audio department.