Our latest Spotlight event saw heavyweights from across the TV and film production sector come together to discuss some of the biggest challenges facing the industry right now. We covered everything from soaring budgets to dwindling studio space, offering real-world insights from leaders in TV and film production.
Higher budgets for cast and crew
As the pandemic saw people across the world spend more time at home, the demand for streaming content skyrocketed. This caused a huge shift in the market and propelled streaming platform giants like Netflix and Amazon into the stratosphere.
Our board members noted that this demand has had a knock-on effect on the industry, with higher budgets than ever before being pumped into the production of streaming content, including the resourcing of cast and crew.
These growing budgets pose a huge risk for smaller production companies who simply don’t have the resources to offer competitive pay against the big players, making cast and crew resourcing within budget increasingly difficult.
As well as an increase in pay, event attendees noted that cast and crew are increasingly looking for a stake in the production, furthering the struggle to remain on-budget.
Ongoing issues with funding and banks
This meeting saw us continue our previous discussion regarding the challenge of obtaining financing from banks. This session, we delved deeper into the reasoning behind banks’ lack of confidence in production companies, uncovering possible factors that could influence their decisions.
- High risk: It was concluded that many banks perceive the TV and film industry to be high risk due to the success of a project relying on various unpredictable factors, such as audience preferences. It’s this high level of uncertainty that makes banks hesitant to fund productions, making it difficult for them to assess the potential return on investment.
- Intangible assets: A production company’s most valuable assets are often intellectual property, such as scripts. For this reason, banks may be more reluctant to offer financing, finding it difficult to value and secure loans against these intangible assets. Again, this presents production companies as a more risky investment and makes banks less inclined to finance projects.
- Inconsistent cash flow: Unpredictable cash flows and large upfront costs make it challenging for banks to back production companies, often opting to invest in companies from more stable industries that they perceive to be less of a risk and more profitable.
- Complex financial structures: We touched on this briefly at our last board event, but one of the biggest challenges TV and film companies face when looking to secure funding from banks is a lack of understanding of how they operate. Companies within this sector often have complex financial structures, such as co-productions, tax incentives and multiple revenue streams. This can make it difficult for banks to evaluate the financial stability of the company.
The wrath of the pandemic continues
Along with a shift towards streaming content, the pandemic triggered a change in the industry’s approach to health and safety, seeing new protocols put in place to protect cast and crew. Whilst businesses across the globe were forced to implement protective measures such as regular testing, contact tracing, personal protective equipment (PPE) and sanitisation measures, those working within the TV and film sector had an additional obstacle to overcome. Production companies had to take steps to ensure social distancing could be adhered to at all times. These measures increased the costs and complexity of the production process.
Whilst testing requirements have largely been phased out, for those working across different countries, this is not the case, often having to test multiple times. A positive COVID test can delay production, increase costs and exacerbate an already complicated process.
If there is one positive to be taken from the situation, it’s the industry’s ability to adapt in the face of change. Although every sector was impacted in some way by COVID-19, those within the creative industry were arguably one of the hardest hit, so to come out the other side and continue to evolve to overcome the lasting effects of this unprecedented global event is quite the achievement.
Lack of studio space
Having the right studio space is fundamental to the production of high-quality content – so the growing lack of access is posing a big risk to companies across the industry. The issue lies in the fact many established production companies have forged long-standing relationships with the most sought-after studios, preventing other brands from using the space.
And it works both ways, with new studios struggling to compete with established facilities across major production hubs such as Hollywood, New York, Vancouver and London. This, coupled with the rise of location filming, has meant there’s been a decline in the construction of new studios, making it incredibly difficult for the smaller players in the industry to secure studio space.
Where we are seeing new studios emerge, they’re typically abroad where production costs are lower, locations are more diverse and tax incentives are favourable.
The cyclical nature of TV and film production
The cyclical nature of the TV and film production industry sees constant peaks and troughs, causing uncertainty across the sector. Due to factors such as changes in consumer preferences, seasonal patterns and economic cycles, over the years the industry has experienced huge fluctuations in production volume, demand and revenues.
The lack of stability across the TV and film production sector has had a knock-on effect, causing many to cut their losses and seek more stable roles outside the industry. As talent flees, the skills shortage grows, meaning remaining talent is really in demand. And with increased demand comes increased costs, again putting a strain on smaller production companies.
Our events aim to uncover the industry’s biggest challenges and devise solutions to tackle the root causes. With peer-to-peer insights from across the sector, we’re positioned to offer real-world fixes to help you navigate the world of TV & film production.
Applications for our next board event are still open, so be sure to apply now to avoid disappointment.
