The changing face of the corporate video production industry.

Technology has had a dramatic effect on the video production industry over the last 5 years. A few years ago video production was a highly specialized service that required very expensive equipment. Today anyone can pick up some cheap equipment and start making videos. At the same time many businesses are starting to embrace video, primarily on the web, as a means of reaching their audiences with engaging and persuasive new content. It’s both the perfect storm and the perfect opportunity for providers and purchasers of corporate video production services.

I am often asked about the state industry – how it’s changing, where it’s going, so I created this brief summary of how I see the industry evolving.  The numbers are my own – based on observation, research and discussions with other video productions companies.

Level 1. Equipment Owners
(Trend – Growing number of providers, resulting in both new opportunities and risks for businesses).

For under $5,000 you can pick up an HD camera, a cheap three point lighting system, audio equipment, computer and software to edit the video and just like that, you are now a video production services supplier.  It may take you a few weeks or months to get the hang of it but eventually you’ll be able to produce some decent video: Simple point and shoot projects, talking heads and perhaps even a corporate overview. Most new entrants will start by providing free or virtually free services and most will exit the industry in under a year realizing that, in spite of hype, it’s difficult to make a full time living in video production. We’re bound to see a lot of churn over the next few years.  This trend is not new to the creative services industry. We’ve seen the same thing with photography and graphic design. When anyone and everyone can provide services the market has difficulty in discerning value and as a result, there is bound to be a fair degree of uncertainty and disappointment in the marketplace. Who benefits? – the businesses who find capable low cost video production suppliers and the video equipment manufactures. Those suppliers with both perseverance and talent will evolve to the next level:

Level 2. Experienced Videographers.
(Trend – numbers are growing but the capabilities of this group are also changing quickly)

The two principle distinctions with this group are 1. Experience and  2. They are usually one person businesses. Whatever their legal business structure (i.e. sole proprietor or incorporated business) this group have been shooting for a while – both for their own clients and also doing freelance work for larger video production companies. Some of these guys (over 90% are male for some reason….) specialize in weddings or events and some do mostly corporate work. The big change for this group is that they are doing more now than ever. They are having to sell and promote themselves in different ways. They are being squeezed by the equipment owners on price but they are also competing for the first time with the larger video production companies. It’s okay today if you are a one man band. It didn’t use to be –  primarily because it was very difficult (and expensive) to do it all. Today you can. Many videographers used to be just shooters, either because they didn’t want to do editing or they didn’t want to appear to be competing with their principle source of income –  the next group in the food chain – the video production companies. {Interestingly, you are also seeing video production companies downsizing to three, two or one man operations working from home – again, because the market and technology allow this to happen and also because the ongoing cost pressures demand it.}

Level 3. (Pure) Video Production Companies.
(Trend – this group is experiencing the most pain, the numbers of these providers are shrinking)

The traditional video production companies (two or more staff and lots of experience) are getting squeezed from both ends. They are seeing tremendous price pressure and are not able to sustain the same high rates that used to comfortably pay their overhead. Big studios, lot’s of expensive equipment, layers of management and admin are all luxuries that few production companies can afford today. Most people in this group started in video – doing sound, doing lighting, etc. The entrepreneurs eventually started their own production houses. Having experience isn’t enough, however. Sure, the market will still pay for experience – but what it will pay is a moving (lower) target. The other challenge this group is facing is that they are seeing people with other talents and backgrounds (i.e ad agencies, marketing consultancies, online media companies, etc) jump into the fray. The traditional video production companies will argue that these new entrants don’t have the required video production skills but the reality is that the market places more value on ideas and application than on technical competency. Shaky camera, focus hunting, imperfect lighting and a litany of other video transgressions are not only acceptable today, they are sometimes preferred. New entrants often shape a market in strange and wonderful ways…

Having great video production skills today are becoming table stakes for higher end productions. The next level is application – what do you do with the video.

Level 4. Value-added Corporate Video Production.
(Trend – this group will grow quickly over the next few years)

The ‘value’ in the video production industry used to be in the expensive equipment and the experience in using it. A few years ago ‘corporate video’ meant either a TV commercial or a ten minute video containing a whack of superfluous motion graphics. The number and uses of video are growing faster than anyone can keep track of (here are 51 different types of video being used by businesses today).

The value today is in how you apply video to your market, not in how you make the video. As such, there are a number of new market entrants to video production who are not only creating video but coming up with new ways to apply that video to specific business objectives. Social media, interactive video and mobile video are all examples of purpose-built content to solve a specific business problem. One size doesn’t fit all. You will start to see video production companies specialize in the creation and delivery (creating the video is only the first step) of video. You will also start to see video production companies specialize in certain types of video (like HR or PR) as vertical knowledge will become more important than general video production knowledge. As such, you are seeing either new hybrid companies with marketing or social media capabilities enter the video production industry of you are seeing very tight collaborations (sometimes evolving into new business entities) between creative or marketing agencies with video production companies. Ultimately all of these companies are trying to get to the top of the food chain:

Level 5. Regional Market Leader
(Trend – No change here, every region has a couple of leaders)

By ‘Market Leader’ I don’t mean “Our firm is a Market Leader that provides leading edge expertise in…”  Anyone can lay claim to leadership but there are only a couple of true leaders in every market. The leaders command the big budgets. They are the regional go-to companies for the biggest brands or government agencies. Every services company looks to become the leader for one reason (O.K…. probably more than one): Market Leaders command the largest budgets on jobs – and that means not having to compromise and that also means having the greatest latitude to do the best work. Sure, everyone is being asked to do more with less – but more is better.  These guys are easy to find. Their body of work speaks for itself. The reason they got to where they are will (most likely) be the reason they will also be able to adapt to new trends and changes in the video production industry.

Technology has had a tremendous impact on the corporate video production industry. That said, you still tend to get what you pay for ( you just get more now…)

Note: This post is also found in the Top Ten Posts for this blog.

 

20 thoughts on “The changing face of the corporate video production industry.

    • Thanks Nikc (I really want to switch those last two letters around…). Technology roles over every industry. There will be continue to be upheaval in video production but as a result, there will also be lots of new opportunities. Businesses can’t sit still… but often they do. Look at Kodak. They saw the digital revolution coming for over 20 years and still couldn’t figure it out. Now they are gone.

      Your business (just like your career) is moving in one of two directions. Things never stay still – people just want to believe they do.

  1. Great article. Succinct and to the point article. I’m attending a luncheon tomorrow to speak to college professors wanting to keep up on the state of the industry. They are asking industry professionals what the state of the industry is so they can better prepare their students for the “real” world of production. Most of the points you highlight will be in what I tell them. I’ll try and keep it upbeat, but there is sadly no “camera man” jobs left. They need to have a broad skill set to thrive in today’s production world.

    Thanks for your insight. I’ve been in the business of shooting in the L.A. market for 20+ years, and the last 5 have changed more dramatically than the previous 15-20!

    • Thanks Steve. There is no question that technological change has, and will continue to, dramatically effect the industry. That change also represents a great deal of opportunity for those willing to take risks and learn new skills.

  2. I have worked in law enforcement video production for over 29 years for a large Sheriff”s Department. These are looked over when you talked about corporate or government video producers. I see more of a trend of companies hiring in house experienced producers as full time employees. You can buy a whole system and camera, mics, lights etc for under 15,000 now. The organization can utilize them for all their video needs and get a million dollars worth of production for under 100,000 with benefits. In the coming years you will see more of these in-house jobs, which is a good thing. I have loved every minute of my job and I will retire in 24 months, At that point I will me in the free market again, but I am looking forward to it. Great article.

    • Agreed Josh. In-house will continue to grow as the cost of equipment drops and as the accessibility to great training and support services increases. Just like companies have taken some aspects of web production in-house, there will continue to be a lot of work at the middle and higher ends of the video production market as video becomes a mainstream communication tool for businesses.

  3. Great article, I agree with this. Falling equipment costs have drastically reduced the cost of video production. We create animated videos so no live action footage is needed, so we can cut costs even more. Live action is essential for some companies though.

    • Animation creators have an even greater challenge in some ways. Live action is usually restricted to local production companies because of the cost of travel. Animation on the other hand can be created anytime from anywhere. Great for potential customers but not great for animation houses who have to compete mainly on price.

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  5. Spot on. While I’d like to consider our agency to be somewhat of a regional market leader here in Vancouver, I can definitely recognize ourselves in #3 as we continue our attempt to transition to #4 – an on-going process for sure.

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