What 's the futureshape for Production companies?

There's been a lot of chatter recently about how Broadcasters and the broadcasting landscape is being disrupted and changing, but the Production Businesses who are making programming are changing too.

In the UK, there are 3 distinct trends at work, two of which are having a major impact on the fundamentals of the industry.

Firstly, Broadcasters are increasingly choosing to narrow down the field of 'indies' they work with, instead of working with whoever has an idea, they have at least a 'preferred list' - people they believe deliver to their multiple internal businesses targets. Therefore one/two man 'lifestyle' indies are finding life increasingly tough. However, I think the broader industry trends, discussed next, are having as much an influence on these small operations. As the industry becomes more sophisticated, working harder to exploits assets, it is moving further from the traditional model of work being commissioned and paid for by one client.

A recent government report highlighted that the UK Creative Industry is now 2nd to The City in terms of its size and importance. City money, either from IPOs, VCs, Private Equity or just High Net Worth Individuals has flooded into the 'visual media' industry. Combined with the improved terms of trade between broadcasters and producers, and freed from the overt reliance on broadcasters the businesses have been better able to exploit their Intellectual Property, as well as hold onto residual value. But the flipside of this, is the pressure to fully exploit these properties on multiple platforms. There is the pressure for the business to expand, to increase revenues and profits year-on-year, to increase the value on the balance sheet through hit formats. There is also the pressure put on you by the hard-arsed 'suits' who expect (well, secretly hope) 10x (return of 10 times investment) on their money. Their lives and jobs are based on putting the pressure on you to do that.

Thirdly, the landscape for Production Companies is changing; they pretty much just used to make TV for TV Broadcasters. Now at the very least, they are content producers and brand builders for distribution companies. The Production business is now increasingly a varied, multi-platform, multi-client task.

We are in a world where TV production companies are increasingly turning into the kind of 'integrated' businesses most comparable to old style Hollywood studios. At the base level Producers sell their stuff to the commissioner, to TV stations abroad, to other platforms like DVD houses and do revenue shares with broadband TV outfits like Babelgum and Joost. Cranking up a level of sophistication you have the likes of RDF who represent artists (people who add value to content) but more importantly are looking at having their own TV internet distribution platforms, taking the middle man of broadcasters out of the loop. Look at Fremantle who do something similar by giving their game shows brands life as web games. I'm currently impressed by Ten Alps who look at a niche and decide to own it with content and distribution delivered via magazines as well as the web and web TV.

The long and the short of it is from Universal Studios working globally, to Two Four in Plymouth, what it is to be a production company is changing.

That's great for the big boys with the teams, finance and infrastructure to explore business opportunities, who can afford risks and have the scale of production to back a move into a new area. There is no right or correct answer for what a producer should be. Serious businesses need to grow and change, and that will be affected by content fashions, by the strengths of current managements, by the wider markets in whatever territories you are big in.

The more interesting question today is, what if you aren't one of the big boys. What if you're not yet big enough, or don't chose to have outside investors with their baggage of golden eggs and golden handcuffs.

To smaller people I'd say you cannot be an island; you can't ignore and not compete in this wider marketplace. Equally I'd say concentrate on what you're good at, where your skills are, and what is the best use of your time. If you can create a great narrative, don't stress if you don't have the killer boardroom tiger inside waiting to be unleashed. Equally the boardroom toughie can't do a lot if he has no successful product to work with. It's a co-dependent relationship.

I would hope that 2 models will grow and flourish to help 'small' and 'super-small' outfits:

1. Take social networking as your example; create a 'web' of related businesses and individuals who have the strength, resources, knowledge and skills you could with. You will need put ego aside and 'be safe' by getting a clear working methodology/agreement on paper early on if its anything deeper than friendly advice. But network and find people you can trust, don't be afraid to talk about your issues, and listen to other people experiences and advice. But it's not just advice I'm talking about, its operational and practical help too: There are always web companies looking to expand their portfolio and contacts; find an old successful business hand who can afford to give time, advice and contacts or a Mum who used to be a killer businesswoman and wants to ease back into 'the game'.

2. More formally I see the emergence of 'hubs' or 'super-agencies'. Essentially, a half way house to selling out, I'd see a business that contains back office operations, high level business, finance and strategy skills, commercial skills and operational, cross platform capabilities. I can also see these businesses having a more formalised version of the 'mutual help network' mentioned above. These agencies would probably work for a fee, but more likely for a 'cut of the cake' through profit share or an equity stake.

I wouldn't say these 'agencies' are about giving away your business. I'd say they would not only allow people to concentrate what you're good at, it would give you better capabilities to 'play at the big table' with the Endemols and RDFs in terms of apparent size whilst looking for commissions. On the business side you'd be aided in growth and profitability for example by having a hard-arsed MBA type negotiating your contracts and financing, or increased capabilities in selling your format to other countries or developing the show brand into other areas. That's a lot of potential added stability, growth, profit and commissions, all whilst still retaining ultimate ownership and ownership benefits of your business.

Follow Me Entertainment

I’ve been gazing into my navel recently contemplating how media, entertainment and entertainment formats will develop and change over the coming years.

The thing that struck me today was the concept of ‘Follow Me’ media, which is inferred to a certain extent by cross platform propositions. Now don’t get me wrong, I’m not going all soothsayer and saying all TV/entertainment will be like this, what I’m saying is this is a strand that will grow, develop and become a bigger element in the mix.

By now you’re going, what does he mean ‘Follow Me’? Well increasingly entertainment portals or ‘channel brands’ are becoming ‘Follow Me’; in short the brand you like is available wherever you are. Today that means you get BBC News on TV, Net, PDA, Radio; it means Channel 4 is on terrestrial, on digital, Video on Demand, Online, Radio; it means you get your Facebook, flickr or You Tube on your phone as well as on your computer; it even means you have Fame as a TV show, a theatre musical, a music album or that you have Gala Bingo on the high street, on interactive TV and on the net.

This reflects the fact that brands need to be able to cut through a lot of media clutter and chatter to connect with consumers and ‘get value’, but also that we the audience also multi-task our entertainment. Tell me you’ve never read a paper or magazine in the living room whilst half following a TV show or listening to the radio?

Pushing the analogy further, commercial brands are becoming ‘Follow Me’ too. Look at Orange, Virgin or o2 that are your broadband, your phone, your TV but also bring you music at festivals or venues, give you tickets to see a movie and sell you non-core add-ons that bring you the brand lifestyle . It’s all becoming ‘experiential’: The brand interacting with your life on multiple levels throughout the day, making sometimes material differences to your life beyond their core product.

The next logical step for me within TV and multi-media is an expansion of not the ‘distribution brands’ like ITV being fully ‘Follow Me’, it’s the ‘show’ - the format as well as the format brand becoming ‘Follow Me’ too. This could apply to dramas, quizzes, reality even documentaries.

The best recent example for me right now is the Glastonbury Festival. It’s a real-life event, but you can also ‘interact’ with it by watching it on TV, listening on the radio, coverage in newspapers and the web, chatter on social networks and message boards.. you are even bought extras by sponsors like Orange and The Guardian.

In drama there have been experiments with ‘mobisodes’ of 24 and Doctor Who expanding the show experience. It’s interesting how LonelyGirl15 creators, which played on You Tube have created a new drama KateModern that doesn’t just get ‘premiered’ on social networking site Bebo, it’s actually fully integrated with the site. It’s not that hard to imagine adding another distribution platform or element into the mix so you get it on your phone, or watch a catch-up show on say Trouble or Sky One.

Even X Factor or Big Brother have elements of ‘Follow Me’ as auditions hit your local town and local papers, you watch the show and you interact and influence the show through voting, or chatting on message boards (social networking). You carry on by seeing the X Factor live music show or in BB’s case, it’s a case of Panto and Heat covers. The fact that you see these shows played at pubs just reinforces how people want these formats and brands to be available as they carry on with the rest of their lives.

I’ve already previously posted about ARG (Alternative Reality Games: What is the next Big Brother? post) in the which take this ‘cross-platform’ format to the ultimate extreme where you’re in fact better off to interact with the quiz/game show/drama/reality format on multiple platforms if you want to, say, win a million.

If you can take control over more parts of these various format value chains, you are in a win-win situation. Advertisers and sponsors love the idea of experiential marketing that really connects a consumer with their brand, which builds loyalty and on-going opportunities. Audiences love a format that they can get involved with, that engrosses them and gives them opportunities to get more (look at ‘spin offs like Doctor Who Confidential or the Xtra Factor, or calling in to get onto Who Wants to Be a Millionaire).

The question for me is do we get there by creeping increments as show brands and formats develop onto multiple platforms over multiple seasons, or if we get that big break out hit that launches a new section within the media industry.

Gosh, after all that pondering I’m off to switch my brain off in front of a non-challenging, sit back, non-interactive and totally linear piece of TV.