NAB and the format wars


By the time you read this article you may be sitting comfortably on the plane ready to take-off to Vegas. Every year the show comes at a strange time – just after the shooting season has started in the northern hemisphere. As a result, most of the camera companies at the show will have already sorted their purchasing needs for the year ahead, especially with major broadcast events on the horizon, such as the much hyped royal wedding.
Taking a punt
So, what will I be looking for as I spend time wearing out my leather soles on the plush carpets of the convention centre?
Well, traditionally I analyse a trade show by what I consider to be the three main constituents of the television industry: acquisition, post-production and playout. As a specialist finance provider it’s important to understand trends and changes in each sector and how they impact one another.
“Why?” you ask, the answer is very simple: if you understand the forces influencing business across the industry, you can assess kit purchases, take a view on risk and better separate safe technology investments from riskier purchases.
Time was, the DVWa500s were more valuable than Long Run at the Cheltenham races. And for 15 years or so they were a safe investment, but, in one month last year, all that changed. Almost overnight, the technology devalued from a sort after and solid £10,000 investment to a £3,000 piece of kit that nobody wanted. This just goes to show, that whether you’re a buyer, hirer or lender, you have to be mindful of market conditions and be sure to think of the long term value before you act.
Back in the good old days
One thing that makes these decisions more difficult than ever before is the proliferation of formats. For the third or fourth year in a row, each and every manufacturer will have a new array of cameras on show, in a dizzying variety of formats.
A couple of decades ago, it was easy to work your way round an exhibition: you headed for the Sony stand to see the latest Betacam camera, whether SP or HD, and then worked your editing requirements backwards from there. This kept the industry alive for 20 years and it gave the market a general consistency, so much so that cameramen could safely invest in kit. Back then, businesses looking to invest in new technology, assessed risk in simple economic terms, considering the number of days for monthly lease versus hire. The world was a simple place.
Hire companies benefit most
Today, format wars have made it nigh on impossible for a cameraman to commit to any one format. A flurry of new cinematic digital-style cameras have added another layer of complexity to the average cameraman’s rental or purchase decision, with the advent of the Arri ALEXA, Sony’s F3 and the upgraded RED creating burgeoning stock lists at hire companies and making it almost impossible for a cameraman to make any longer term capital investment.
As a result, cameramen with lower daily rates are losing out on potential supplementary income, because money has moved up the food chain to the hire companies, who seem to be flourishing in this state of uncertainty, both in acquisition and post production.
Adding to the uncertainty, with an increasingly number of films shot on lower cost digital cameras, and with drama and commercials losing large chunks of their budgets, the post industry has become incredibly cut-throat. This makes it almost impossible for people to know which equipment will be used on future projects.
What now? And what next?
Let’s consider SRW decks for a moment, these very expensive pieces of kit currently retail at between £60,000 and £75,000. Twenty years ago, people would buy a D1 or a D2 machine, in order to master their tapes, safe in the knowledge that it would last for 10 years and provide a very good return over its useful life.
Now, most post houses will hire, not buy, an SRW deck because they fear, not only that there will not be enough work for it, but also that mastering will become a tapeless function – both of which add up to … hesitation.
The same is true for non-linear solutions as well. Originally, kit costs were expensive despite being computer-based products. Now the key is in the ever-cheaper, but better-performing, hardware. The software, the cheapest part, needs to be supported by numerous plug-ins and that means … more hesitation. The hire companies win again.
Please don’t think I am bashing hire companies. I am simply trying to show how inconsistency and multi-formats have changed the shape of our industry. Consequently, many post-houses are now talent pools, rather than kit and talent pools, and this has caused a shift downwards in both size and set-up costs.
It seems the only part of the industry to be left untouched by format wars to date is playout, this solid, no thrills sector is just about the only part of television that has stayed consistent. With an entry-level point that is still prohibitive to smaller players and consistent visibility of kit it’s a stable sector for lending!
Dazed and confused
So if your feeling more bewildered than usual at NAB this year, remember, it’s not just the NAB staples of sleep deprivation and alcohol to blame, those multi-format changes will be taking their toll too…
If you have any questions or if you would like advice on buying or leasing equipment, or on management and business issues, do email me at peter.savage@azule.co.uk and/or write to the TV Bay editor. To read other articles in this series, visit our website: www.azule.co.uk.

Tags: iss052 | nab2011 | format wars | srw deck | azule | business | finance | N/A
Contributing Author N/A

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