Where now for production houses?
Posted on 2017 Mar,21  | By Iain Akerman

The production industry is in flux as the digital revolution continues to wreak havoc and advertising agencies struggle to survive. As companies redefine themselves, ArabAd asked some of the most active players in the MENA region what challenges do production houses face and how can they be overcome?

The past few years have been tough for production companies, just as they have for the advertising agencies and brands they work with.

To start with, 2016 was a hard market money wise. Brands that normally produce five to six campaigns a year were reduced to rolling out just one or two, with budgets half – or sometimes less than half – of what they were previously. It is a time of cutthroat price wars, tougher competition, change, and the harsh economic conditions produced by low oil prices and political turmoil. 

In the midst of all this, production companies are battling to both survive and evolve. Pop-up companies that think a Canon 5D and a laptop are all you need to produce meaningful content may struggle in the long term, but they are undercutting the market at a time when clients are slashing budgets even further.

“In the past we used to know all of the big, medium and small players, now half of the existing ones I have never heard of,” admits Eddy Rizk, managing director of Big Kahuna Films. Which is unfortunately translating into more and more lower quality productions, which is clearly visible by looking at the majority of the work that is being produced.”

As Shane Martin, film director and chief executive at Boomtown Productions, says, priorities are changing and there is continual downward pressure on budgets. “It seems that there is a perception amongst some advertisers and agencies that by simply calling a production ‘content’ then the production cost is halved,” he says. “This is so obviously not true that I sometimes despair. Regardless of which screen any particular production appears on, an actor/technician or crew member still has to be paid. They still have to eat. Calling it ‘content’ and then expecting the same production values and prep and hand-holding that traditional TV commercials receive is disingenuous.”

Martin says his own views on how the production industry is changing are neatly summed up by David Golding, the co-founder and group chief strategy officer of Adam & Eve/DDB, who recently wrote of a clear divide between culture and collateral. “Our industry will split into two types of company, which will set out to create two very different things,” wrote Golding. “The first will work to create culture through campaigns that generate fame, talkability and mimetic power. The second will create collateral driven by data and the ongoing ability to precisely target and reach audiences in new ways.”

“What this means to the production industry is a lot of new players on the block,” says Martin. The big media companies are now creators of content, primarily of the collateral type, driven by big data and designed to target specific audiences. What is remarkable is that even though broadcast media spend (traditionally 80 to 90 per cent of the campaign budget) has been taken out of the equation, there is still an expectation that the content production cost should be super low, and yet the expectations of clients that the content go ‘viral’ are correspondingly high. 

“Hopefully over time this situation will correct itself and everyone will see sense. ‘Shareability’ and going viral needs great creative, executed perfectly. This is where production companies can add value and shine by embracing the creative challenges and executing them in the best way, supplying the best creative talent and directors and then managing the production resources intelligently to enable them to create unique and original work.” 

Gabriel Chamoun, chief executive of The Talkies, agrees that more and more pressure is being applied by clients and agencies towards reducing cost, adding that: “There’s also more demand for digital content versus TVCs, which implies longer formats (60 seconds and above) at a lower cost.

“The client/agency/production house model is being questioned,” he adds. “We have been following this hierarchy for decades, [but] it’s not easy to change old habits. The challenge is, more than ever, producing high quality at competitive rates.

“Digital content often requires a smaller film crew, multitasking, younger less experienced directors, cameramen, editors, and other team members. It’s important to have client, agency, and production houses aligned on the expectations and what’s needed to reach those expectations.”

Chamoun says The Talkies is working towards streamlining the whole production chain in order to remain competitive and profitable, whilst developing new areas of activity. 

Joy Films, meanwhile, has adapted to the changing environment by creating two separate entities, each with its own identity, strategy and process. This has been done to be able to compete at both the high end of the market, as Joy Films does, and at the low-budget range, where Streetwise Films operates. Boomtown, says Martin, has placed a bigger emphasis on in-house creativity and is expanding both its production and post-production offering.

It has always been the case that industries and companies have to continually adapt to market conditions and new technologies, but with continued global confusion over the online revolution, businesses are still adapting. As such, the market is reactive and uncertain, says Ali Azarmi, co-founder and managing director of Joy Films and Streetwise Films, with a lot more questions than there are answers.  

“Commercial film production companies have always been dependent on advertising agencies, so whatever affects the agencies will affect production companies,” says Azarmi. “The advertising industry has been going through a lot of changes since the rise of online and production companies have to be aware of where the ad industry is heading rather than wait to react. 

“Digital technologies have made new forms of storytelling possible. Activations and documercials for example. It has enabled more people to become film directors and create new styles of storytelling without the confines of any filmmaking traditions. This has been a greatly influential evolution, which is ongoing. Right now there is a lot of overlap and blurring of traditional disciplines. Media agencies offering content ideas, advertising agencies creating their own content with their own in-house productions, production companies and their directors creating advertising ideas and scripts for online content. All trying to redefine themselves.”

For Valérie Lahoud, executive producer at Zoé Productions, the chief challenge facing production houses is the potential demise of advertising agencies. If they can’t find a solution to the digital revolution, the knock-on effect will greatly damage those in production.

“Everyone is asking us how we are going to face the challenge of the digital era,” she says. “How are advertising agencies going to evolve and survive, and where can we find a place to serve them? If they cannot survive, then we will have to change our business. Do we work with clients directly and take care of everything, including all creative, and risk upsetting agencies? Do we branch out into other forms of content? There is a big transition going on now and no one is finding a solution.”

An industry in flux, however, offers as many opportunities as it does challenges, even if, as Martin says, the production industry in this part of the world needs to be better organised and better resourced. To this end, he and others have been working hard on the creation of the UAE Producers Association, whose launch is to be announced in the coming months.

“We are thankfully beginning to see better and better work coming from the region and it’s refreshing to hear instances of agencies employing directors to originate ideas and then empowering them to make them,” says Martin. “No agency briefs, no over-tested strangulated storyboards, just faith and a belief that the filmmaker will come back with something that delights everyone. So from a production company perspective we are playing both sides of the equation, with a fondness for the cultural but an understanding of the collateral.”

“Survival is the strongest instinct and no one can take it for granted,” adds Azarmi. “Everything else is an opportunity not a challenge. We have to ensure every production we undertake is given every support from all quarters and fight for every frame if we have to and make sure it doesn’t fall victim to committees. We have to convince those who tick boxes to tick out of the box.  

“To survive we have to be consistent, persistent, relevant and competitive. To thrive and grow, we have to become an indispensable asset to our clients, a stakeholder and not a supplier. We have to diversify and use our core skills beyond commercial film productions to TV or cinema. We have to become a brand.”