It’s digital or bust for post industry

The rest of the broadcasting industry may be still trying to tell the difference between transitional tech and what the future really looks like, but the post-production sector is in the summer of its move to 1s and 0s software.

It’s digital or bust, say industry players. Post houses keeping a tight reign on equipment budgets in the last couple of years are now in the flat-out buying stage, confident that digital is not a soon-to-be-extinct technology.

‘We were holding back to see where the chips fell, but this year was pivotal. The push is on for more programming, so we decided we’d better get on the bandwagon and go non-linear in a big way now, or get left behind,’ says Rob Engman, director of marketing at Catchlight/The Edit Sweet in Toronto.

The editors behind the machines have always been key to a company’s success, but their importance was overshadowed when the digital revolution, and the new toys that came with it, took the industry by storm early in the decade. But as the digital evolution progresses, the competition for market share isn’t revolving around the boxes in-house, but rather by what’s between the chair and the keyboard.

‘We have to pay more to keep the editors. The market value of those artists has gone up,’ says Jacques Bilodeau, general manager of PMT Video in Montreal.

A few years ago, start-up post companies might have fought for market share by coming out of the gate with the latest in digital equipment. But the shift in focus from the toys to the talent is changing the way even new post houses position themselves.

The Post Group, which opened its doors in Toronto last month, is staking its reputation on its staff, made up of editors long on experience including Allen Banting, Jim Hossack and Gary Freedman.

‘When I began, I wanted to build a place that emphasized the editors and the creative process instead of the equipment,’ says Roni Aharon, The Post Group’s founder, president, and an editor.

Frontlining the in-house talent is consistent among the post companies, but there is no indication that fighting for the latest equipment will be a thing of the past once the move to digital is complete. The emphasis on talent doesn’t mean compromising on tools. You have to stay competitive on the equipment front, says Aharon. Start-up costs for The Post Group ran about $500,000, and over the next several months a $600,000 investment will propel its expansion into digital.

There are things you can do on a Henry that you simply can’t do in a regular edit suite, says Aharon. ‘But it’s the editors that make the show happen. You can buy a Rolls-Royce, but if you don’t know how to drive itÉ’

Michael MacDonald, partner and editor at Ocean Digital Post Production in Halifax, says start-up companies on the East Coast are placing a similar emphasis on talent, despite the fact the post world at that end of the country has made major shifts from analog to digital only in the last 18 months.

Ocean Digital, which opened last year, is the first completely digital post house in Halifax. Start-up costs ran about $170,000, and the Avid Media 100 system is an integral part of the operation, but it’s not the heart of the company, says MacDonald.

‘The equipment has become the backdrop and now talent and service are key. We’re less of a post house and more of a design service. When you’re surrounded by affordable micro-post houses, you’d better have the service.’

MacDonald and partner Johanna Eliot are both veteran editors, but unlike The Post Group, which is carving its niche based on the creative talent of experienced editors, Ocean Digital is adding some freelance editors to its mix, some of whom have never worked in analog.

The young, funky perspective MacDonald feels is important has to be coupled with the ability to stand up to the client, he says. ‘They have to give them what they need instead of what they think they want. Yes sir, no sir, three bags full sir, won’t work. You need ideas that will help the client save money.’

Survival strategies

While there is general agreement that the post-production business is picking up steam this year, there’s no denying that profit margins are smaller now than they were 10 years ago. Clients aren’t prepared to pay a premium for service, but the pressure to keep buying new equipment stays constant, says Howie Gold, vice-president marketing for Toronto-based Creative Post.

‘It’s a tough problem because you have to keep up with technology to hold on to the business, but at the same time, it’s difficult to make a profit and you need profit to expand.’

Post houses are taking different tactics to hold on to market share. Some have bought toys that position them for a very targeted market. TOPIX Computer Graphics and Animation in Toronto, for example, is taking on the high-end post and special effects market with the purchase of Discreet Logic’s Flame suite last month (see story, p. 21). Likewise in Vancouver, Rainmaker Imaging, a division of Gastown Post and Transfer, bought Kodak’s Cineon system, the godfather of digital effects systems, also geared towards high-end projects.

But others, like Creative Post, are expanding the business and relying on volume to keep prices down. ‘Some of the bigger companies don’t want to work with the small and mid-range projects. We don’t want to lose any business at all,’ says Gold.

Throughout steadily increasing volume, Creative Post has managed to almost triple the size of the company and back two stages of expansion over the past three years, spinning off Art & Motion, a computer graphics and animation company, Tape Works, a tape supply company, and vds, a duplications division.

Topping off the expansion will be General Assembly’s Serial Digital Component Room, a high-end editing suite catering to long-form projects that’s scheduled to open at the end of next month. After spending about $500,000 on equipment over the past two years, this year’s investment will top $1 million for four digital Betacam machines, a GrassValley Digital Component Switcher, a Chyron Infinity Character Generator and other equipment.

You need to be constantly increasing the breadth of services available, and staying busy keeps the bottom line strong, says Gold. ‘(Expanding) is a combination of value-added for the client and diversification for us. If one area is a little slow, then the other divisions round out the month, and in the process, we offer the client everything they need.’

Expanding is the best long-term strategy for a post house, says Mark Ury, director of marketing for General Assembly in Ottawa. ‘I really question the long-term viability for shops with a vested interest in a single area. You need a breadth of services that integrate vertically to compete in this business.’

Monster post houses sprouting up across the country seem to support the theory that broader is better. At ga, Ury has been part of a massive expansion over the past few years that has turned the company into a one-stop shop for everything from traditional post, audio post and paint and design, to cd-roms and development of home pages on the Internet through a new arm of the company, working title Enterface, that will officially launch this fall.

In Vancouver, Gastown has expanded with Rainmaker Imaging, and in Toronto, The Kessler Group is incorporating post-production and multimedia services into a multifaceted studio that incorporates an array of production and special effects services and a Softimage training center.

Toronto-based Dan Krech Productions opened Filmsite this year, installing an Imagica dfs 3000 film scanner and Solltaire film recorder, and tackling the film special effects and finishing market. Software platforms at dkp include Cinefusion, Flint, Mojo, Prisms 3D, Alias, Photoshop and Primatte.

‘One box is not right for every company. With these options, we can fit the client with what best suits their needs,’ says Krech.

Increasing the number of services offered isn’t the answer for every company. Post houses large and small are dealing with steady costs and smaller profit margins using a variety of strategies, including sharing the responsibility with a partner. It’s expensive to stay current in this business and two people are more able to shoulder the costs than one, says Peer Engelhardt, an editor with Toronto-based Reel Ideas.

After more than a decade as owner and senior editor at Lonestar Films, Engelhardt teamed up with Reel Ideas’ Marty Kravshik two years ago.

The merger was a smart financial move, enabling Reel Ideas to bring an Avid 1000 in-house last July and share the $120,000 investment between the partners. There wasn’t any pressure to buy a really high-end system, says Engelhardt. ‘I prefer to edit and not have the cost and problems of a $1 million overhead. Avid lets us do the editor’s job.’

Kravshik adds the real bonus is being able to bounce creative ideas off one another. ‘The technology is such that everybody has the same, so the creative becomes that much more important because it’s what sets you apart.’

Although pressure to buy new boxes continues, smaller profit margins have become easier to handle because the price of the equipment has come down, say other editors.

Stephen Young Chin, president of Grove House in Toronto which opened three months ago, says service fees are lower than a decade ago, but operating costs have come down too. The Grove House studio, which is specializing in non-linear editing with Avid’s Media Composer, cost less than $500,000 to put together but can do far more than a $500,000 studio could do five years ago, says Chin. ‘We may charge less, but the overheads are less.’

But The Post Group’s Aharon says the lower priced, more flexible equipment now has to be amortized over a lesser period of time because the upgrades to non-linear systems come fast. Taking that into account, companies like Command Post and Transfer and Magnetic South are increasing the life span of their equipment through do-it-yourself adjustments that increase the flexibility of the pieces.

Command Post announced a new research and development division last month, Command Advanced Technology, with a mandate to find ways of maximizing the capabilities of the equipment in-house, including its four Rank Cintel telecines.

Mag South got hands-on this year too, integrating its Avid online system so that any video format from any system in the house can be passed in and out of the box. In one session, film in Betacam, digital Betacam, Hi-8, 3/4′, 1′, D1 or D2 can be accessed for digitizing in the Avid.

‘The Avid normally works as an island. This is a way we’ve found that the Avid can be linked up with the whole place and allow for more flexible, faster access,’ says Robert Adams, operations manager at Mag South.

How the boxes actually work aside, equipment budgets have been maxed this year in a general buying spree precipitated by the digital frenzy that’s taken hold and an increase in demand for services, says Doug Morris, vice-president marketing and sales for Toronto-based Soho Post and Graphics.

Soho, formerly The Image Group Canada, invested in Quantel’s Edit Box 4000 and Hal Express this year.

‘Post in the early ’90s was not a brisk business, and many of us didn’t buy new equipment. But now you’re seeing more things happen, the specialty channels have initiated work and you have to make sure you’re prepared to handle the demands. We either got into digital this year or we were falling behind,’ says Morris.

At Catchlight, Engman estimates a 50% increase in equipment spending this year, including an investment in the Avid Media Composer 8000, a 3D digital video effects add-on piece to be delivered in July, and the CamCutter, the new Ikegami/ Avid camera with removable hard drive that’s generating a lot of excitement in the industry.

The CamCutter will open up a whole new market, primarily made up of newsmakers, sporting events, and companies that need immediate feedback from special events, says Engman. It’s a conservative estimate to say the camera could increase the company’s bottom line by 50%, he adds.

‘We’re going into virgin territory and no one knows exactly how far this will go. All I can say is we’re very optimistic.’

Doug Munro, president of dmci, Calgary, is also anxious for the CamCutter to make its appearance. ‘I want to be the first in line once the bugs are out. When the technology is there, we’re there. Our bank manager knows that. It will allow people to make deadlines they’ve never even had the guts to ask for.’

In the meantime, dmci is taking its portable Avid suite around the world. In April, it took three camera packages and an Avid 8000 and boarded a cruise ship in Venice for an Apple Computers celebration and completed daily broadcasts of events. The spine running through both the portable suite and the CamCutter is flexibility, says Munro.

‘It’s a market in itself. Producers with these crazy ideas about shooting tonight and broadcasting in the morning can do it now. They’ve got to pay for it – but it can be done.’

While post houses are normally reluctant to disclose rates for their services, they are even more so now as everyone completes their stock of digital equipment. Says one editor who asked not to be identified, ‘It’s cutthroat as hell out there and there’s no way I can release my rates without giving the edge to the competition.’

A similarly gritty competition exists in the Montreal market, where companies like pmt, Hybrid, Centre montage electronique, Buzz, Supersuite, and AstralTech have a broad base of digital facilities. Also evident is the emphasis on crafting and editorial talent and the buying craze characterizing the post industry as a whole.

Francois Garcia, general manager of Supersuite, says the company spent about $2 million on equipment last year, versus a few hundred thousand spent over the last four years. New pieces in-house at Supersuite include five digital machines and a Da Vinci Renaissance color corrector.

Supersuite invested in equipment that would address the needs of producers to work in a completely digital environment in either ntsc or pal, says Garcia. ‘We wanted to enable Canadian producers to compete in world markets and help facilitate their presence in coproductions. If their partner wants the footage shot here in pal format, we can do that now.’

Montreal’s AstralTech also made equipment buys this year with an eye to tapping the lucrative post market of Canada/France coproductions. At the beginning of May, AstralTech built a digital and D1 suite to do work in pal and secam, along with a Da Vinci color corrector and an Ursa. With less than a half-dozen fully digital post houses in Montreal, ‘digital gives us the edge,’ says Pierre Leger, director of post-production for AstralTech.

‘Analog is getting less lucrative. It’s getting harder to compete with so many analog suites all over town. At least 80% of television series will eventually go digital, and I don’t feel the battle on the equipment front is over. Clients are asking for this technology.’

On the topic of cd-rom and multimedia production, the majority of post houses are already working on new technology projects, or are making plans to get on board once the quality levels have stabilized.

According to pmt’s Bilodeau, the Montreal post house is looking at multimedia as a cornerstone of business in the future and already has a Flint and five Softimage workstations working overtime on 100 episodes of a 3D animation series. The equipment in-house used for traditional post services also facilitates the production of cd-roms; there was no need for a large equipment buy. The media may be new but the process isn’t any different from what post houses have been doing for two decades, says Bilodeau.

‘We look at it as another way to deliver our computer animation projects to the market. To make them is simply an extension of what we do best – edit the pictures together for the most effective communication.’

Similarly, building home pages on the World Wide Web will employ the sgi workstations, server, design and sound tools ga already has, plus the creative talent that is the foundation of the post-production industry today, says ga’s Ury.

‘I look at post as a dead industry. We’re simply people putting entertainment together.’