Pressures mount to mitigate costs – Chuck Parker reviews key trends for M&E teams to consider in 2023
Filmmakers are struggling with critical pressures today including significant cost inflation in key areas of production. Cast, crew, studio space and fuel, flights and food have all been affected Covid protocols and contingencies are also adding 5-10% to budgets. Productions are writing inflation protection schemes into budgets while working to raise money and secure behind-the-camera talent to get to principal photography.
Crew shortages at all levels are especially threatening to the sector. Following a decade of extremely cheap and easy debt, the burden on producers has grown acute, and the wage inflation associated with scarce talent has only worsened this situation.
The British Film Institute (BFI) found that the speed and volume of demand for local production has exacerbated the strain on the UK’s indie sector in particular. It cannot compete with larger international productions from accommodating the rising cost of production to signing cast and crew and ultimately to reaching audiences.
Sohonet CEO Chuck Parker explores how all these rising costs might be mitigated.
1) Remote collaboration saves real money with tried and tested tools and workflows
The biggest and arguably most immediate reduction productions can make is slashing the cost of travel and accommodation, which has automatic benefits to sustainability policies and can make a real impact on the estimated 30% cost to every production.
Luckily, the tools to enable remote editorial are battle-hardened and will only get better. Better still, decisions about hybrid or entirely remote editorial are embedded into discussions at the point key crafts board a project.
The benefits are not all one way. Certain creatives (showrunners, directors) want their editor close to set even during principal photography. Reading the room with all its nuances in gesture and mood is something that remains tricky if not impossible to replicate when video streaming. Post creatives are flexible and will do as the job requires but the fact that choice is now part of the conversation gives those who prefer to work where they want a better life balance.
So whilst remote can definitively cut production cost it would be shortsighted it were not tied in to workflows supporting in-person collaboration when possible.
2) Virtual Production accelerates – but creates its own time and cost challenges
Significant savings on travel and carbon footprint can be achieved using virtual production. Volume stages are cropping up everywhere to satisfy demand to shoot locally – but being booked out as soon as they launch as demand for space continues.
VP is also the fastest developing area in our industry with technology, techniques and best practices still emerging. While the crew tasks and skill sets required for a VP shoot may differ to conventional production, the actual number of crew involved may not, in its current phase, be markedly different.
Consequently, the cost per day of shooting remains high. It may be one reason why several high-profile productions that might have been ideal for VP shoots (HBO’s House of the Dragon, Disney’s Andor, Amazon’s The Lord of the Rings: The Rings of Power) have eschewed the volume for the tactility of conventional location filming.
The current cost and complexity of virtual production needs to improve for it to become the first choice for production, with location shooting an aesthetic choice for those with the highest budgets or most prestigious auteurs. However, capacity and pricing are impacting the decisions as much as the changes in pre-production required to be successful in this creative approach.
3) Cloud workflow adoption remains hampered
The ability to push raw original camera files (OCF) from set to cloud for instant access by creative talent anywhere will bring sweeping benefits to production. True OCF will condense time scales and thereby cut costs and, by collapsing the traditional linear process, enable real-time geographically dispersed creative collaboration. Sounds like Nirvana!
But the catch is we are not there yet. Camera to cloud today is delivered as a proxy stream that can speed editorial and shot reviews but only real OCF pushed from set to cloud can revolutionise post. Even as workflows develop for OCF to be pushed in near-time to cloud editorial, there are still cost challenges to tackle. It is counterproductive as it stands today to put your rich data files in the cloud when many of today’s workflows start by egressing the data to local post operations and then uploading that data back to the cloud, resulting in additional time and costs for production.
The migration to public cloud workflows is the right direction of travel for the industry but adoption is still slow. In particular, larger scale projects are finding end-to-end cloud production problematic to manage on top of exorbitant penalties for egress between cloud providers.
At issue here is the continued lack of interoperability between major public cloud vendors. Studios would like their productions to be able to hop seamlessly from provider to provider, following the sun, taking advantage of economies of scale to render creative vision across multiple cloud providers, but such workflows remain stymied while cost effective interoperable data exchange is locked out.
4) AI / ML and ChatGPT promise practical benefit and a radical future
Automating workflows and jumpstarting the creative process using artificial intelligence/ machine learning is fast entering the equation. It’s too late to be worried about technology usurping jobs, and similar to other industries, AI/ML is more likely to unlock use cases for volume that was previously not economical. AI/ML is already in the wild all over our industry and we should be open to embracing it, looking to redesign roles and workflows and to create with it.
Media companies are adopting AI tools for everything from storyboarding in pre-production to streamlining asset management and powering search and recommendation engines for service subscribers. AI is already proficient at tackling time-consuming tasks like de-noising, rotoscoping, and motion capture tracking removal. Footage restoration, colourisation, categorisation, facial recognition, metadata enhancement and integration are all areas that are likely to benefit from AI/ML integration. Currently, the use of AI/ML in localization and versioning is likely to yield the most cost-saving benefit for Studios.
Longer term, expect generative AI text‑to‑image algorithms to evolve into text-to-video tools with such fidelity that it is no longer inconceivable that entire feature films from AI-generated script to audio performances with photoreal video will be made entirely in a machine.
5) Streamers cut their cloth to look like TV
The squeeze on cost of living translates into constant cancellation or rotation of streaming services and has caused major SVODs to rush to offer cheaper ad-supported alternatives. The goal for most is to reduce churn and increase revenues to sustain multi-billion-dollar content costs without decimating the existing linear TV and cable subscriber base, while the hard-core streamers (Apple, Amazon, Netflix) have no legacy revenue streams to protect.
Netflix expects to have 7.7 million unique viewers for its Basic with Ads tier by the end of the year after launching in a dozen markets. It also estimates that this tier could generate $1.9 billion in ad revenues by 2027 in Western Europe alone.
Virtually everyone agrees Netflix’s ad play will be successful. The question is whether getting into advertising changes a company which has closely guarded its own data and prided itself on forging a distinct path in the cutthroat world of entertainment.
It’s not just a Netflix dilemma though. Fundamentally the shift from pure SVOD into ads brings streaming TV closer to broadcast TV models. The popularity of linear free ad-supported TV (FAST) channels is another move in this direction as is the shift from fragmentation into aggregation. Consumers, for reasons of cost and convenience, seem to prefer one place to access live sports, music, gaming and news alongside premium TV and film
While Netflix has bolstered its gaming division, it is tech giants like Apple and Amazon as well as the muscle of Disney and Warner Brothers Discovery, which are jostling to bundle an array of digital entertainment in one place. The major difference between broadcast and streaming remains interactivity. Expect applications utilising ultra-low latency at the network edge such as gaming and Virtual reality to begin to take-off from 2023.
As the industry moves past the pandemic, charts the course of the return to the cinema , and fights for the hearts and eyes of audiences, the challenges facing entertainment companies are not just to thrive but, in some cases, to survive. While the domestic box office in 2022 is expected to land around $7.8 billion and up from 2021, it’s still 35% less than 2019. The economic impact of WFH may not be the overall solution, but it does offer creative and financial opportunities that will play a critical role in the delivery of content.