Post 9/11: the year in review - Post News - analysis of the video post production market - Industry Overview

Post, Sept, 2002 by Matthew Armstrong

After more than 20 years as a composer/sound designer/mixer, George Walker Petit decided to open his own music for picture studio. He had agreements from ad agencies to supply him with work, and despite a slowing economy he was confident that he could build a profitable audio post company. WalkerRecordings opened its doors on September 10, 2001.

"Monday was my first day of operation; and then Tuesday morning I was driving down Fifth Avenue and saw the mayhem," recalls Petit. "My first thoughts certainly weren't about my business, but about six weeks later I surfaced from the shock and first started thinking about how this was going to impact us."

The year following the terrorist attacks has seen many changes that far outweigh these pages. Still, the last 12 months have seen a tremendous shift in the landscape of post and many companies have closed.

While the attacks shut down almost all work for a week, those in the industry note that other factors -- the fall of the dot.com market, the threat of a SAG strike, runaway production and corporate accounting scandals that pummeled an already deflated stock market -- had more adverse effects on the business of post. Concurrently, other changes in the industry such as cheaper equipment and the overall reduction in traditional online work, have also significantly impacted the post community.

While no one could have predicted the outside economic factors, many say that a contraction in the post market was inevitable They note that the market became bloated in the '90s and the reduction in rates is a simple case of supply and demand.

"It was natural that the rates were going to come down," remarks Richard Cormier marketing director of Riot. "In 1985, you had one guy doing 3D, and now you have hundreds, maybe thousands, of qualified people. This was happening for a long time, but we all got caught up in the smoke and mirrors of the dot.com frenzy in the late '90s, and we have just woken up,"

Dave Tescon, founder of NYC's Edgeworx reiterates the impact of the dotcom crash with the tongue-in-cheek lament, "There's no more stupid money."

DIVERSIFICATION

The past year saw the demise of many well-established post companies, including post giants National Video and Post Perfect, the germination of a number of new boutiques and, for the most part, the restructuring and downsizing of the ones that have remained. The common theme for the companies that have survived is the refocusing of resources -- equipment and personnel -- to emerging markets, and aggressively seeking to build a wider, more diverse client base.

One of the largest players that has remained is NYC's Broadway Video, the post production arm of Broadway Video Entertainment In April, it underwent a significant restructuring of its business to reflect the new market Some layoffs were made, though they say the driving force in the restructuring was to redirect resources into areas of growth -- particularly its sound and duplication divisions and upgrading its entire editorial division to handle the rise of HD work

Until 2000, 90 percent of Broadway Video's business was for broadcast clients, according to seniorVP Marc Yates. With the lower cost of equipment, many of the cable networks brought its online work in-house over the past few years and the work on hundreds of shows evaporated for post houses. As online clients disappeared, Broadway Video had to refocus its efforts.

"The reason we're still here today is because we've diversified -- we're not relying on one large account or one area of the business," explains Yates. Today, Broadway's client breakdown is approximately 50 percent broadcast, 25 percent commercials and the rest is a mix of production companies, corporate and films.

Despite a growing tendency of companies downsizing and then relying on freelancers, Broadway does not see this as a long-term solution. "While it allows a company to trim its fixed costs in the short term, its not conducive to building a business," says Brian Offutt, COO of Broadway Video Entertainment

Riot's Richard Cormier disagrees. "There are a lot of very talented and accessible freelancers, so there's no reason to maintain a full-time staff. No company can maintain a large permanent staff without being able to downsize and adjust:"

Like others, Riot is doing well with its high-end work, particularly telecine, matte painting, finishing and HD. "The biggest challenge is in our CG department and compositing," says Cormier. "With some compositing work now done on systems with lesser capabilities, that is causing price erosion for compositing. We need to find the right balance between having the right talent and delivering projects at these rates."

CAUTIOUS OPTIMISM

"Right now we are, hopefully at the bottom of the stock market, we are at war; we've seen a business scandal comparable to the end of the 19th century. we can only go up from here," says Alex Weil, executive creative director of NYC's Charlex.

Companies like Charlex, who specialize in visual effects for commercials, have generally been hit hard as advertising dollars are down across the board. "Half the accounts that we've worked on over the last three years don't even exist anymore," notesWeil. "We did a ton of work for Enron, for Qwest... We've replaced those clients with retail clients, food suppliers, beverages."