In a business where the competition is fierce – whether it comes from your own backyard or south of the border – the strategies are consistent from one post-production operation to the next: build a facility which provides virtually anything a producer could ask for, keep your talent happy, make sure you’re equipped with the latest technologies, and ensure the co-operation of a solid community.

It sounds like a simple equation, but beneath the fundamentals is a myriad of contradictions and particulars that make for an ever-changing competitive arena.

Thorny issue

For example, the common act of low pricing to keep the clients flowing in is a thorny issue. Where some post executives say it’s essential, others say it is a useless strategy.

Curtis Staples, vp business development at Gastown Post and Transfer in Vancouver, estimates that about 70% of his company’s business, including servicing Canadian-based productions done for American companies, comes from the States. Last year, Gastown serviced eight tv series, four pilots, 20 mows and a couple of features the company was ‘intimately involved with.’

The dollar has been bouncing around lately, but Staples averages the exchange at 73 Canadian cents to the u.s. dollar. The low Canadian dollar sounds to be a perfect opportunity to play a price war with Los Angeles-based competitors (which are Vancouver’s toughest challenge), but that’s not the case at all.

‘We have to be conscious of being price competitive but it is not our primary tool for attracting business. If it becomes your primary tool it’s only a matter of a few years before you can’t keep your facility current,’ says Staples.

The problem in playing the price war is twofold. Keeping post-production facilities up to date with the latest technologies means for a highly capital-intensive business, and with an approximate investment of $2.2 million in equipment last fiscal year at Gastown, prices have to be high enough to cover the investment. To make matters worse in Vancouver, the l.a. companies are buying the same equipment in the u.s. at about a 27% discount over Canadian buyers.

‘An item that costs in l.a. $500,000 u.s. costs us $700,000, so we can’t afford to not make a profit,’ he says. And there’s no way around it, even if keeping up with the pace at which new technologies, gizmos, digital advances and new media are changing is akin to tracking the pattern of a shooting star with the naked eye.

As Joe Scrivo, vp of Toronto-based Medallion pfa, points out, the issue is exacerbated by just trying to keep up with new technologies. ‘The dilemma is as soon as you make the commitment to something you know something else is coming down the pipeline to replace it,’ he says. Scrivo estimates his company also invested somewhere in the $2 million range in equipment last year.

Magnetic Enterprises president Doug McKenzie says price is an important strategy for competing. ‘In Toronto, growth will come from an influx of foreign business and the community will have to re-examine itself price-wise because l.a. has become very competitive the last couple of years, even considering the dollar exchange,’ he says.

The push from south of the border, while it is welcome business, does not always come with a welcome offer. ‘On occasion, because the trend has been that American productions expect to come to Toronto to save money, they drive a bit harder (a bargain) than we like at times so there is a little more disparity than we like,’ adds McKenzie.

It’s an ongoing struggle to keep service productions in Canada for post. Staples estimates as much as $50 million in post-production services are untapped or leaving the province. So how do you keep some of that business here?

McKenzie says a necessary component is a well-established post-production community with ‘a good co-operative attitude among post houses.’ The International Teleproduction Society, an American group with a Toronto chapter, is set up to show producers just such a community. ‘Part of it is getting the word out and demonstrating a community that is co-operative,’ says McKenzie. ‘And that is very important to producers.’

McKenzie estimates that American clients account for about 25% of his company’s business overall and about 40% of long-form episodic work and mows.

Dangerous game

It’s a substantial chunk, although depending too much on foreign production is a dangerous game, say these post execs, whether it’s a matter of counting on the continuation of the exchange rate or the production boom overall.

Although the difficulties recently faced by production across the country – ranging from loss of government subsidies to the implementation of a new tax credit – have yet to trickle down to the post industry, it doesn’t mean the impact won’t soon be felt.

Medallion is servicing 13 series in house at present, including Road to Avonlea, The Wind at my Back, Mysterious Island, Talk 16 and The Rez. Scrivo estimates his company gets about 25% of its business overall from south of the border, a significant change from a 50-50 split a few years ago.

‘We’re rather fortunate that we are not affected as of yet, but that doesn’t mean sometime in the future we won’t be. It will probably take at least a year until the effect is felt,’ says Scrivo.

‘Not nomadic’

If local production slumps, the post houses cannot pick up and move, as McKenzie points out. ‘We are not nomadic, we’re bricks and mortar and we have many millions of dollars invested in Toronto.’

Establishing a balance between servicing foreign and indigenous clients is key, says Staples, but that’s only part of the answer. ‘Production continues to grow year after year, but it won’t always necessarily be that way, which is simply another good reason to diversify as a corporation.’

Evidence that diversification is a popular strategy is in the company mergers of the last few years and the vigorous efforts to get into cutting edge technological services.

Gastown is the latest to become part of a larger corporation, Rainmaker, which includes a digital imaging division and Rainmaker Interactive. Staples estimates that about $5 million was invested in equipment for all three divisions last year.

‘In our view it made a lot of sense to be able to handle any image requirement on the part of our clients whether it was film, digital film, video or multimedia,’ he says. Why? ‘Look at the traditional way of servicing clients for production services. If a producer is moving into a new area and you can be there to supply services, by the time this new area is booming, you have already crossed the biggest hurdle which is that of trust.’

Magnetic Enterprises has gradually become a collective group of companies that can provide film and audio post, with transfers, online edit facilities, digital optics, offline, graphics, audio and music post. Formerly under the ownership of Maclean Hunter, the company is, along with many of mh’s assets, waiting to see what new owner Rogers Communications is going to do with them. ‘There has been a bit of attrition in the last six months,’ says McKenzie.

Wholesale conversion

Medallion is part of Command Post, a company that has expanded to offer anything from film labs, video post-production, film-to-tape transfers, video editorial, and full audio services. Also, the company did a wholesale conversion of technologies to digital components about one and a half years ago ‘to be able to provide Canadian and American clients state-of-the-art technology,’ says Scrivo.

Shape-shifting appears to be more than simply an effect in this business, it’s essential to stay in the game. And sometimes, even that may not be quite enough.

As Staples says, ‘We probably have a very broad base of integration, more so than the people in l.a., but by no means does it make us more superior. In order to be competitive, it’s essential to grow our business significantly for the same reasons the entertainment mergers are going on in the u.s.’