With high-profile HD launches scheduled for next year, the pressure is on OB companies to convert their equipment. But our end-of-year round-up finds the level of investment required, at up to£4m a truck, is not being matched by the premium broadcasters are willing to pay for the new format. By Simon Meek.
Sky's promise to launch an ambitious array of HD services early next year has had a dramatic effect on the world of outside broadcast in the UK this year. Money is being committed like never before by the industry in a bid to be HD-ready by the time the satellite broadcaster and others - including the BBC - kick off HD broadcasting next year.
With new HD trucks costing between£2m and£4m a go, around£40m is being spent on readying the UK's OB fleet. But not everyone agrees that splashing out on HD OBs is the way forward, including Nigel Cubbage, managing director of TTL, one of the UK's smaller OB outfits.
Cubbage says the level of investment required to compete in an HD world is something that can only be afforded by the larger companies. "The smaller truck market is disappearing," he says. "HD is forcing a monopoly in the OB world."
While the bigger players are being sold off to companies with deeper pockets and an ambition to compete in the HD world, the smaller independents are finding themselves having to reassess their businesses and decide whether they have a future in the sector.
Says Cubbage: "The question for us is do we invest in HD kit or do we get out of the business?" And the answer for TTL is clearly the latter. "We are getting out of the operational side of things," he says. "We are running our trucks into the ground, but our business is also diversifying." He adds that new business for smaller OB outfits is effectively OB without the OB - acting as consultants and systems integrationalists on large events such as Premiership football.
The bigger OB companies are faced with a different dilemma: which comes first - the HD truck or the contract? OB players who are spending heavily on HD are clearly gambling on there being enough HD work in the UK to justify the spending.
"There are going to be some big winners and some big losers," warns Mark Tugwell, director of BBC Outside Broadcasts. "I don't see how this sort of investment is sustainable."
The amount of investment needed to stay at the cutting edge is certainly one reason that the past 12 months has seen five major OB outfits put up for sale. Visions and CTV OBs have been bought by multinationals, while the sales of Roll To Record and ITV's 021 are still pending. The sell-off of BBC OBs has been postponed until June 2007 - much to the disappointment of Tugwell who feels the division was in perfect shape to be sold off.
But now he's seeing it as an opportunity to make the business more cost efficient.
"We are looking at perhaps moving out of Kendal Avenue into a smaller base, which would save a nice bit of overhead," says Tugwell. "We are also taking the opportunity to replace our scheduling system, which doesn't seem like much but it's a lot of work."
BBC OBs now has two HD-ready trucks in its 13-strong fleet and has another on the way. "Our migration to HD has started but at some point there's going to have to be a big push on swapping over a lot of trucks," Tugwell adds.
For many, 2006 will be the crunch year for their business decisions as the OB market's biggest customer Sky brings HDTV to UK homes - although no one is sure quite how much content there will be.
Visions is one company that has invested heavily in HD. Managing director Vicki Betihavas forecasts there "will be no issue of capacity in HD OB units" in 2006. "This means that producers will have choice in HD, which is not all like-for-like in terms of engineering and monitoring." Visions, which currently holds the contract for Sky's Premiership football coverage, hopes to have its fifth HD OB truck ready by the end of the month in preparation.
Arena Television has also taken a leap of faith and built what it claims is Europe's largest HD truck, with a kit list tailored to Sky's specifications. "This is our first HD truck," says managing director Richard Yeowart, who prides his company on still being independent. "While one or two have jumped into HD before us, we have been waiting for our customers to know exactly what they will need." Arena is already putting a second£4m HD truck together, and Yeowart says the firm's entire fleet - seven scanners and three VTRs - will be HD-ready "in the next 12 to 18 months".
"We're very much going for the volume in the market," he adds. "You are future proofing your business by going HD whereas if you buy SD kit you will have to write it off in two years." Yeowart also argues that the SD market will become more competitive with fewer SD contracts up for grabs. "SD players have to decide if they want to go HD or just run their trucks until they conk out."
However, most of the small- to mid-sized players are playing a game of wait-and-see. "I don't think HD is as significant as people are making it out to be just yet," says Dales Broadcast managing director Julian Boden. "We are looking with interest at the BBC's HD trials next summer, but we are not seeing a big demand for it at the moment."
The problem for many is that HD trucks - which cost around£80,000 per camera channel to put together - won't be able to command a big increase in price, claims Boden. "And every time they go out as SD trucks they are losing money," he says. "We're probably two years away from migrating to HD."
BBC OBs' strategy is dictated by the plans of its major client, the BBC, which is already producing a number of high-profile events in HD. "We've got the BBC saying it will make everything in HD by 2010, but it feels like it's all going to be a bit quicker than that," says Tugwell. "And it all depends on what they decide to do when it comes to this test channel next year. If it's the London Marathon, then all of a sudden we need the whole fleet in HD for one show."
Bowtie TV - one of the sector's earliest adopters - was contracted by the BBC to shoot this year's Live8 concert in the new format. "There are only a few companies with HD facilities and experience and that pays dividends," says managing director Duncan Smith. Bowtie has two HD-capable trucks, but Smith has no immediate plans to upgrade the two remaining SD vehicles to match. "They perform well in what they do. The plan isn't to take every truck and make it HD."
CTV is of the same mind. Commercial director Adam Berger says: "OB is a volume business and you need the volume to protect your profits. There is a slight premium we can charge for HD work, but it is nowhere near enough. At the moment there isn't enough volume in the HD market, and I don't think there will be for quite some time."
Despite Berger's reservations, CTV - now owned by Europe's United Broadcast Facilities - has two HD trucks on the way: one a modification of an existing vehicle, the other built up from scratch. "Both will be up and running before spring 2006," he says. It is likely that CTV is upgrading a truck to accommodate Sky broadcasting next year's cricket, although the broadcaster will not confirm its HD schedule. CTV admits that the conversion is for "a sports commitment", and says its second truck is to accommodate "ad hoc" demand from the market.
"It could be difficult over the next few years to decide on our business plans because you need contract work with a guarantee and formal intent from the customers that they will be producing in HD," Berger adds.
So far Arena TV, BBC OBs, Bowtie TV, Neon Broadcast, Scanners, Telegenic and Visions all have HD trucks up and running. CTV and SMG have vehicles on the way, putting nearly 20 HD OBs on the road. And future business looks promising for those able to keep their heads above water.
A raft of new customers, traditionally shooting on film, are also likely to migrate to HD. This is already apparent in the live music arena, with artists like Robbie Williams having gigs recorded and broadcast in the format.
So if there are disagreements about the wisdom of investing in HD, at least all OB outfits agree that long-term contracts are the lifeblood of their future business. And with many of their hopes pinned on Sky's HD offering next year, there's little doubt there's a lot riding on the launch.
Who's got what in OB
· 021's contracts cover European Champions League football for ITV and Question Timeand Top Gearfor the BBC. Global events include four Olympic Games, the Fifa World Cup, two Rugby World Cups, Commonwealth Games and boxing world title fights.
· Arena TV holds contracts with Sky Sports for the greyhound racing and the BBL basketball finals; ITV for Celebrity Fit Cluband Ant & Dec's Saturday Night Takeaway; and has been involved in the Six Nations Rugby and Match of the Dayfor the BBC. It also holds the contract with Silverstone to cover the British Grand Prix.
· BBC OBs provided back-to-back coverage of the funeral of Pope John Paul II and the royal wedding this year. The outfit holds contracts for coverage of the Glastonbury festival; the World Rally Championships for ITV; Match of the Day, Six Nations Rugby, Wimbledon and Open Golf for BBC Sport; and the Proms for BBC Classical Music. It also provided live onboard camera coverage of the new A1 GP series broadcast for Sky.
· CTV is contracted through Sky for its cricket coverage, which is anticipated to be one of the events to be covered in HD next year. The outfit was also hired in for Five's reality show The Farm, Channel 4's The Gamesand the BBC's Fame Academy.
· Telegenic covered Skating in St Petersburg for ABC, The MTV Music Awards, CBS' Winter Olympics in Japan and the Rugby Union and Super League for Sky Sports.
· Roll To Record has continuing contracts with Endemol UK and C4 for reality TV show Big Brother, and Cactus and C4 for Richard & Judy. Its trucks were also used for The House of Tiny Tearawaysfor BBC3.
· Visions currently holds the contract with BSkyB for Premiership football coverage. It also covers C4's horse-racing and cricket.
2005: a year in OB
· JANUARYThe Television Corporation sells Visions for£16.8m to US outfit NEP.
· FEBRUARYTelegenic's board directors Peter Bates and Terry James buy a controlling share of the OB company. Dave Barber and Mike Spencer leave the firm. It commits to go fully HD in "five to seven" years.
· APRILBBC OBs gets to cover both the funeral of Pope John Paul II and the royal wedding in what turns out to be one of the busiest OB weeks of the year.
· MAYThe BBC delays the sale of Resources in a bid to resolve a dispute with unions over plans to overhaul finances ahead of the renewal of its Royal Charter. BBC OBs sale postponed until June 2007.
· Neon Broadcast builds its first HD truck - a 12 camera OB unit fitted with the UK's first Snell & Wilcox's Kahuna switcher.
· JUNEBBC OBs battles with 4ft of water at Glastonbury, miraculously managing to keep the event on air. Hairdryers were sent for to dry out key items of kit.
· JULYCTV Outside Broadcasts is bought by European resources group United Broadcast Facilities, for a fee believed to be around£15m. A total of 13 trucks and 85 staff are transferred as part of the deal.
· SEPTEMBERBBC OBs develops the world's first HD plunge camera for diving competitions, to be used at the 2006 Asian Games in Doha.
· OCTOBERITV confirms that its OB business 021 is up for sale after being designated "non-core". ITV wants to sell off 021, which employs 58 staff, before Christmas.
· Reality TV specialists Roll To Record is put up for sale, with management citing personal rather than financial reasons for selling up.
· Arena TV's first HD truck, claimed to be the biggest in Europe, hits the road with a second vehicle holding a similar specification planned for the New Year.
· DECEMBERArena TV commits to having its entire OB fleet HD compatible in the next 12 to 18 months.
Consultancy string to hire bow
Our annual round-up continues with a look at the hire market, where HD consultancy is increasingly the name of the game. Simon Meek reports.
The rapid increase in the number of acquisition formats available to the broadcast market has given producers a few more headaches than usual this year.
It's also given kit hire companies a new string to their bows - as consultants steering programme-makers through an increasingly complicated maze of production decisions.
"We've always given advice but we're giving a hell of a lot more now," says Shooting Partners director of operations Doug Hammond. "Of course, we get to sell the kit on the back of the advice."
HD is the area that is causing most confusion in the production market and hire companies have been quick to seize the opportunity it represents, with timely advice promoting loyalty for clients. The hire community is reporting solid turnovers as a result.
While most are more than happy to field questions and invite clients in for demonstrations of new kit, others have taken their expertise on the road, staging workshops for clients to ask about HD cameras and formats. "We are getting out there and we have seen a return for that," adds Hammond. Shooting Partners claims 25% of its hires are now HD, up from 10% last year.
Some of the braver hire outfits have thrown caution to the wind this year, however, and declared that their future business is exclusively HD. One such outfit is Transmission TX, supplier of Sony HDW-750P cameras to the BBC drama Supervolcano. "We found the SD marketplace was saturated with kit and a lot of freelancers have their own," says general manager Steve Lloyd. "So we've essentially moved out of that market and gone back in at a higher level."
Lloyd insists there's "no chance" of the outfit buying more SD kit unless this purchase falls into the "specialist" arm of its business and is something that cannot be matched in HD. Lloyd is keen to point out that Transmission TX is meeting demand rather than trying to pre-empt a market. The outfit ends the year with 50% of business made up of HD rentals.
Presteigne Broadcast Hire is also convinced its future is in HD and has spent£7m building up its stock ready for 2006. "It's going to be a big year for us in terms of sporting events," insists business development manager Andrew Murray, who will be supplying kit for three major HD sporting events in next year's calendar; the Winter Olympics, the World Cup and the Asian Games.
Top-end HD cameras have certainly helped breathe new life into hire companies' rate-cards, which have remained static for SD kit over the last few years. As The 400 Company's managing director Mark Sloper admits: "We charge the same amount of money now for a DigiBeta crew as we did 10 years ago when we first invested. You just can't get the rate up."
However, the bottom line in the HD market is already being eroded by companies desperate to get a return on their kit. "Some of those people who have bought a machine for£70,000 and watched it sit on a shelf are panicking and hiring it out at low rates, and that is setting a precedent. If they hire out at low prices, it puts a great stress on the market," says Presteigne's Murray.
But not all hire firms are convinced that HD rental is yet as popular as their peers would have us believe. "At the moment everyone is totally happy with DigiBeta," says Sloper, who says the format still accounts for "99.9%" of his company's business.
Without any mandate to shoot in HD "people are still reluctant to go down this particular avenue", adds Duncan Martin, joint managing director of Pro Motion, a hire company formed by ex-Video Europe staff earlier this year. "There's still SD work in abundance. Everyone is still finding their way in HD at the moment."
While HD chips away at the top end of the rock-solid DigiBeta market, however, the format's market dominance is being undermined by lower-cost DV cameras. Optex Broadcast Rental says it is now supplying "quite large" drama-documentaries with DV cameras such as Sony's DSE450.
"There has been a recent move in certain places - within the BBC, for example - towards using low-cost editing platforms such as Final Cut Pro," says Optex Broadcast Rentals technical manager Brian Rose. And because these desktop systems allow easy ingest of DV material, work can be edited on a standard computer/Mac. "This has led to the desire to move away from established high-end formats such as DigiBeta towards what are seen as more cost-effective DVCam," he adds.
The HDV format is yet to make big inroads into the professional market, although Sony's Z1 camera is proving popular as a replacement for the PD170 in its SD 16:9 mode. "I'm not aware that broadcasters are using it for HD production," says Rose, who has raised concerns in the past in his role as standards officer at the Guild of TV Cameramen over the use of HDV for professional broadcast.
Hammerhead has 20 Sony Z1 cameras in stock and outgoing business manager Dan Jarmany says they are always out, but adds they are rarely used for HD work. Prime TV reports a similar scenario. "You can't get the Z1s out quick enough," says head of operations Chris Earls, "but they are shooting in DV." And until picture-editing issues for the HDV formats are resolved, Earls isn't expecting much change.
The fact is that hire companies are dictated to by the post-production market and never has this been so apparent than in 2005. "It was only this year I realised how influential post-houses can be," says Jarmany. He explains that the rise in HD camera rentals is directly linked to more facilities buying HD-capable kit and post-production rates dropping as a result.
The same cannot be said for the tapeless acquisition formats, which have proved to be this year's damp squib for the UK's hire market. "It will be another year before this format kicks in," predicts Jarmany. "Production companies think in theory it's fantastic, but they are put out by post-houses that constantly say they don't support XDCam, which isn't true." He claims facilities are not willing to sacrifice the income made through digitising tapes.
The past year has also seen a "new insurgence of freelancers on the market with their own kit", says Sloper. And while the falling prices of camera kit has meant more production companies buy their own, "that is not really having a dramatic effect", claims Jarmany.
Competition remains fierce in the hire market, and in March this year VFG Hire became the latest rental company to become victim of the relentless move towards price-cutting. The outfit's kit was acquired by Panavision, while reseller and hire-outfit Visual Impact Group took on key VFG staff to start up a drama-focused hire arm.
Other resellers are also seeing opportunity in the hire market, with Mitcorp being one high-profile entry in the past few months. The firm is pumping£2.5m into a new rental division specialising in HD kit.
But other hire companies think that Mitcorp could be in for a shock. "It is going to find itself having to buy a hell of a lot of little bits and pieces to join this business and it will get a fright," warns Shooting Partners' Hammond.
Lloyd feels that success in this market is about knowing your customers. "If you want to hire a box of equipment and you know exactly what you need then you can go to Mitcorp or any of those. But our clients come to us not just for the kit, but for the service and to ask what is required to get the best out of the kit we're supplying."
So it all comes down to hire companies giving advice and using their expertise as a market differentiator. Optex's Rose says: "We have seen producers increasingly rely on the expertise of suppliers to advise them about both equipment and strategies and I can't help thinking that as this trend continues, it is the 'value added' rental houses who are most likely to survive."
2005: A year in hire and crewing
· JANUARYPrime Television spends£30,000 on 12 Sony Z1 HDV cameras and three recorders.
· MARCHVFG Hire, one of the UK's largest rental companies with 80 staff and four sites, goes into administration.
· OB kit-hire outfit Fine Point Broadcast spends£1m on Sony HD cameras and equipment, as a third of its business becomes HD-focused.
· The BBC turns down a Sony sponsorship deal brokered by hire firm VMI to use HDCam kit for the return of Doctor Who. The BBC says negotiations started too late and plumps for DigiBeta instead.
· The hire community lashes out at the BBC for drastically undercutting them for DVCam work via its internal hire department, branded DV Solutions.
· MAYPanavision scoops up VFG's camera, grip and lighting stock from administrators Kroll for around£3m.
· Visual Impact takes on five VFG staff and forms a video-based drama and documentary kit-hire arm.
· SEPTEMBERBroadcast's kit-hire survey finds 96% of the market plan reinvestment in kit, with an average spend of£1.15m over the year; 40% are planning expansion in the next 12 months; almost a fifth admit to having made a loss to get a job.
· OCTOBERPresteigne Broadcast Hire ploughs more than£6.5m into HD kit in preparation for "a big year of sporting events".
· Visual Impact invests£300,000 in HD, placing the first major order for Sony's tapeless HD acquisition system XDCamHD - 20 camcorders and 10 viewing decks.
· Reseller Mitcorp announces a HD rental division headed by ex-Gearhouse Rental manager Stephen Ratcliff.
· NOVEMBERClear Cut Hire buys Central Rental's Avid inventory for£300,000.
· Hire house Hyperactive Broadcast acquires audio facility SoundStation.
· Post-production kit hire specialist TVE expands operations into Birmingham to improve service to its northern and Scottish customers.
· DECEMBERTransmission TX says it won't buy any more SD cameras and repositions its business as an HD rental service.
· Hammerhead buys new premises in Manchester with an aim to expand its operations in the new year.