It’s been a memorable yet forgettable some eighteen months for post houses. From actors’ strike to air strikes, from recession (economical) to depression (emotional), commercial postproduction has been hard hit by a series of events beginning in May 2000 and leading up to today…and there is not a lot of relief in sight.
Each day brings on new circumstances to which the industry must adjust, especially for the New York market. Budget cuts and lost clients at agencies, the tragic events of Sept. 11, Wall Street predictions, new sociological sensitivities—each presents different challenges.
Some cite last year’s six-month-long strike by actors against advertisers as one of the events that led to the slump. John Palestrini, CEO of The Blue Rock Editing Company, New York, characterizes his company’s year as "a little flatter.
"We were cruising along and the industry was doing pretty well," he continues. "Once the SAG strike happened, we never really recovered or regained the momentum."
Mark Polyocan, CEO of The Tape House (The Tape House family of facilities encompasses the New York-based firms Black Logic, Tape House Digital, Tape House Editorial, Photomag, Editing Concepts and The ANX)—where staff was reduced from nearly 200 to 165 this year—has a slightly different take. Although he acknowledges the SAG strike as a major factor, he feels New York is not, in some ways, a level playing field "How do you attract good talent to New York?" queries Polyocan. "It is maybe easier in California because the lifestyle there is a little different. Some of the young people are saying, ‘Why would I want to live in New York if I can make a living in Wisconsin?’ … Those kinds of things have been happening all along and it is really starting to chip away at the talent pool. I really feel that that doesn’t just go back to the strike, but goes back even further."
Those hoping to make up for the losses brought on by the SAG strike were met with a slowdown in advertising in ’01, as well as the tragic events of Sept. 11. "The impact was amazing," remarks Polyocan of the terrorist attacks on the World Trade Center and the Pentagon. "It was something I don’t think we will ever be able to calibrate. It prevented a lot of people from doing the kinds of things they thought they could do. There was a loss of two weeks to begin with, and then I think everybody started rethinking the work that they were doing. When something like that happens, a lot of the [spots] that existed are being run, and a lot of [planned projects] aren’t being done."
Bright Side
But the events of the last year and a half have seemingly hit the postproduction market like a tornado—randomly. One facility suffers major damage while the next is seemingly unscathed. Of the post houses SHOOT spoke to, almost everyone acknowledges the downturn, but the impact of that downturn is not necessarily profoundly affecting every post shop.
"Frankly, we are doing better [this year] than we did last year," says Marilyn Timmsen-Aden, president of Hi-Wire, Minneapolis, adding that some of the growth may be due to the fact that the shop is only three years old.
Richard Cormier, managing director at R!OT Santa Monica, which is a part of the Liberty Livewire Pictures Group, says ’01 has been "OK, but soft." He feels that R!OT’s business is back to it’s pre-Sept. 11 levels. "[The work flow] is getting back to normal," relates Cormier. "There is still advertising to be done, and slots to be filled. That doesn’t go away. Overall we are back to the soft year we [were experiencing before the attacks], so we need to be very mean and lean and conscientious about our costs."
To cope, some post houses are looking to diversify but diversity means different things to different companies. For Hi-Wire, it means helping to make the most of a client’s budget and offering them more. "We had to really diversify," says Timmsen-Aden who characterizes this year as "fair to good. We do agency work, corporate work, Web banners, music videos, kiosks, independent films, and more."
The diversification strategy is taking place across the board at post facilities. Blue Rock shares a similar view. "We have been expanding over the last seven or eight years," notes Palestrini. "We have expanded our services this year—we have three Infernos and we upgraded those. We installed a database system that’s based on MPEG-2 technology where we store and move video, and we installed a Unity system with all twenty of our Avids, so they are all connected."
Blue Rock’s expansion philosophy didn’t end with new hardware. The firm also opened a new floor for up to four editors with a strong design sense. Palestrini feels that there is a greater need for editors "who are design-driven" and believes "ads are getting more stylized and design is becoming a much bigger element in the process of getting the message across."
Cormier also looked to the diversity of R!OT’s offerings to help the bottom line of the shop. "The beauty of R!OT is we are involved with so many different market segments that we have the ability to compensate with other types of activities [when one area is down]," explains Cormier. "We are approximately forty percent commercial, twenty percent music video, twenty percent feature film, and twenty percent visual effects. So we’ve been able to very smoothly and nicely change the mix."
In addition to diversification, Timmsen-Aden feels partnership strategies are another way of getting her company through the tough times. "We have partnered with Red Car to set up a virtual edit facility," she notes. (Editorial house Red Car has offices in New York, Santa Monica, San Francisco, Chicago, Dallas and Toronto.) "Anyone from the Minneapolis agencies could come into our facility and edit with anyone, anywhere in the world as long as they are on the Red Car network. This gives them the opportunity to work in town on several different projects at once. Also, some [clients] are leery about travel." The Red Car network is a proprietary system throughout the Red Car post facilities that enables remote real-time editing sessions and creative exchanges. (SHOOT, 8/31/ p. 1)
The Job Market
The companies SHOOT spoke with did not, for the most part, have to lay off employees as a means of combating the economic slowdown. In fact, some have even done some hiring. Hi-Wire reports bringing on a new general manager, Charlotte Mardel, and announced plans to staff its audio division with two more hires soon.
Blue Rock reports no layoffs but is "keeping a closer eye" on staffing, according to Palestrini. R!OT, Santa Monica, also reports no layoffs at the California office, which currently has 150 staffers. The Tape House is the exception. It has laid off employees each year for the past three years—shrinking the company from 240 people in 1998 to the aforementioned 165 today. Polyocan cites an overall slowdown in business coming from the ad agencies, increased competition in New York City and difficulties maintaining employees.
"We went from making a lot of money [three years ago] to making a lot less the year after," Polyocan explains. "Competition grew. A lot of facilities opened up in New York within the last three years. Smaller editorial facilities with their own graphic divisions impact on the larger companies. We…lost a couple of people that impacted on our bottom line."
The Buying Barometer
How facilities spend money is perhaps the best indicator of how they are coping with the economic downturn. All of them have invested heavily in high definition products over the last few years. Hi-Wire was built on the premise that HD would be the de facto format in just a couple of years. Although the firm has one HD project come through a week, Timmsen-Aden feels it will be another three years before HD is ensconced in the business.
Blue Rock, on the other hand, has not seen that kind of action. Palestrini notes that besides "little projects" they haven’t been called on to do any HD. Polyocan says that HD is an area in which The Tape House is still heavily involved after being among the pioneers in this area two and a half years ago. R!OT also feels HD is a "good thing." Currently, they are doing The Sopranos in HD and "cutting more and more commercials in high definition," according to Cormier, who feels HD will not be an established format until ’08.
While Blue Rock does not do a great deal of HD work, the firm remains aggressive with regard to new technology. "We actually did quite a bit of buying this year," says Palestrini. "Technology has not stopped, and we have to keep on top of it. I wish we could hold off on buying [but] when a new piece of technology comes out and it works, it doesn’t make sense not to buy it. You are not really saving money there."
Polyocan is taking a more cautious approach with The Tape House—a company known for staying on top of new technology. "[Purchasing] is an area I have been very reluctant to jump on," he says. "I just hope that the suppliers that we have, like Sony and Panasonic, don’t come out with something new and try to hammer the world with another format, which is certainly not needed at this time. I think people are trying to, more than ever, to get some use out of the equipment that they bought."
R!OT is holding strong with its plan but is giving itself a little wiggle room. "With a company the size of R!OT, we have the ability to renew our equipment or move forward in the technological world but we are going to be cautious in 2002," explains Cormier. "There are some plans that we have put forward and we think we will be able to move [on them], but we will wait for a few months to see if business is picking up. There is a question mark about investing in technology at this point or adding capacity to a shrinking market."
"I think people are just going to hang on for another year and wait out the storm," concludes Timmsen-Aden.
