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Producing Commercials: Morphing Business Models

Television commercial production houses are adopting new and different business models.

By Michael Fickes

Commercial production and post-production houses aren’t just morphing characters in the studio anymore. Today, they’re morphing their business models. On any given day, one of these houses might be producing a television show, developing a visual effect for a commercial that someone else is producing, or working with the creative team at an ad agency on an innovative concept. These 21st century studios will work on any and all varieties of video being produced today, handling part of the production or post-production or all of each.

To be sure, the traditional model is still in use, but the new model, in which a company can handle every step in the process, has gone mainstream. The new model makes creativity king and aims to put the right creatives in the right slot on a project—no matter which company they work for.

That’s the way the industry is going, today. Many observers attribute the change to the decline in cost of key production technologies. Technology used to be an important differentiator for production and post-production houses. Now, for the most part, everyone has access to the same excellent tools. As a result, the essential piece today is the talent—the talent for creative, design, and execution.

In other words, a successful business model has to be able to fit the right creative talent to each part of a job. When multiple firms with talented people can compete for production, post-production, visual effects, and color grading, the best creative talent tends to pull in the projects.

Granted, this isn’t universal. Many agencies work in the traditional linear model with separate production, post-production, and visual effects firms. That model may never go away, but the new model with firms that have mastered all the different trades is competing with tradition.

Here’s a look at how four production/post-production/visual effects houses (Alkemy X of New York and Philadelphia; Hostage Films of New York City; Nice Shoes, also of New York City; and Timber in Los Angeles) structure their businesses to deal with the many different kinds of video productions for which today’s clients are demanding.

February 9, 2015