The days of fat margins for Canadian systems and software dealers are over. The reason: tight economic times exacerbated by dwindling production funds, as seen in recent cuts to the Canadian Television Fund. And when the film and TV production market suffers, the decline trickles down to post-production houses and, from there, to the companies that supply them.

‘Post houses used to buy new products as they became available, to stay on the cutting edge of technology,’ says Sebastien Bertrand, systems engineer with Ordigraphe in Vancouver, which sells products by manufacturers including Discreet, HP/Compaq, SGI and Snell & Wilcox. ‘Now we see more and more of them waiting to get their hands on a specific project before making an investment.’

Beyond cutting into sales directly, the tight market is affecting Canadian systems and software dealers in other ways. Overall, the economic decline ‘forces us to run our shops more tightly, without sacrificing quality of service,’ says Bert Silva, president of Toronto’s Solutions in Computing, which deals in offerings from Apple, Nothing Real (Shake), Alias|Wavefront (Maya), Avid, Discreet and Pinnacle Systems.

Reduced production dollars are also changing suppliers’ client base. ‘We find ourselves working increasingly with smaller independent post houses,’ Silva says. Adds Andre Allaire, president of Montreal’s 3di syntheses, a vendor of the wares of Discreet and Apple, ‘We’re doing a lot more with the software gaming industry.’

And what are customers buying these days?

‘There’s a lot more people wanting 24p hardware,’ says Silva. ‘Canadians are starting to embrace high definition, because of its versatility and the ability to repurpose footage shot in this format for multiple uses.’ HD computer systems and software aren’t the only products in demand: ‘There’s lots of interest and opportunity to sell Snell & Wilcox upconversion equipment,’ says Bertrand.

Meanwhile, although Mac remains the dominant platform for low- to mid-range video editing, ‘the combination of HP’s superior engineering with Compaq’s mass-production facilities is resulting in some interesting, competitive products for post work,’ says Bertrand.

Still, it is software that makes the difference to these suppliers’ bottom lines. ‘There’s no money in selling computers,’ says 3di’s Allaire. ‘A small company like us can only succeed by offering turnkey solutions and expertise.’

In fact, ‘value-added’ is critical to this sector, because software profits are falling as well. Due to serious price cuts by software makers – beginning at NAB2002 with Alias|Wavefront slashing the price of its flagship Maya software, and other makers following suit – ‘software is starting to become like the hardware industry, where you can only sell products at a minimal margin,’ says SIC’s Silva.

Meanwhile, the makers’ decision to provide product upgrades direct to purchasers – thus cutting dealers and resellers out of the loop – isn’t helping matters either.

For example, Montreal’s Discreet recently announced its ‘shock your system’ program, whereby a shop can trade in its existing nonlinear editing system towards the purchase of a smoke standard definition or HD editing, conforming and finishing system. Customers are requested to deal directly with the manufacturer.

‘It does cut into our business,’ Silva notes. ‘Being able to offer upgrades through the reseller channel helps build customer commitment.’

Still, not everyone is worried by price cuts, even though software such as Discreet combustion has dropped from $7,895 to $1,695 in just one year. ‘Money that customers save on software can be used to buy other products from us,’ Bertrand says. ‘So we think the price cuts are good news.’ Adds Allaire: ‘Price cuts attract new users that we’ve never met before. Once they’re in the door, we can sit down with them and sell our services.’

In other positive news, each of the three suppliers had ‘hot sellers’ to report. For 3di, it’s the $1,695 Blackmagic DeckLink 2 video card. Despite its relatively low cost, this Mac card inputs and outputs uncompressed SD (SMPTE-259M SDI I/O) video in both eight- and 10-bit. ‘I would never have imagined that the time would come where you could buy a board with SDI and realtime effects for $2,000,’ Allaire says. ‘Today, anyone can buy an uncompressed SD editing suite for $10,000.’

Over at Ordigraphe, which also has a Montreal office, ‘Our major sellers are high-end Discreet products such as inferno and flame,’ says Bertrand.

At SIC, it’s Pinnacle Systems’ CineWave 4 for Mac. ‘CineWave 4 has a great choice of I/O options, plus it can do SD and HD editing for an unbeatable price,’ says Silva.

Those interviewed were asked to name one product they consider either the pick of the crop or a hidden gem.

For 3di, Allaire says it’s Discreet combustion 2.1, which offers high-end F/X manipulation capabilities with an easy-to-use interface – integrated animation, visual effects, painting, and compatibility with other Discreet software.

Bertrand calls Discreet smoke 601 SD his hidden gem. ‘Smoke is a very affordable online editing and finishing solution that lets smaller post houses move to a higher level,’ he explains. ‘It allows you to finish more projects in-house, rather than across the street.’

-www.ordigraphe.com

-www.sicinc.com

-www.3diweb.com