THE CHANGING BUSINESS OF POST

How does a post house not only survive but thrive in an industry that never stands still? Five veteran executives share longevity secrets and discuss the democratization of post, new profit models and how they’re positioning their companies for the future.

POST: You and your companies have deep roots in the post industry. What are some of the major changes you’ve witnessed in the business and how have you adapted to them?
TIM MCGUIRE: “Instead of continuing to do things as we had in the past, we made a commitment to change so we could be competitive and offer the services our clients — who primarily make commercials — were looking for. Cutters started as an offline editorial boutique in 1980. By the early ‘90s there was a trend to offering all post services under one roof, and digital finishing was just beginning. So in the fall of ‘92 we opened [an] all-digital online finishing facility. The next year we followed with an all-digital sound mixing room. In 1994 we purchased Flame serial number 001.
“By the late ‘90s the trend was turning back to the boutique environment. At this time we decided to create three different business units by rebranding the different services we offered. We created three boutiques: Cutters Editorial, Sol Design and Another Country Sound. There were several benefits for the company, because today much of the work done by Sol Design and Another Country come independently of Cutters. We opened Sol Design in Santa Monica in ‘99 and Cutters Editorial in Santa Monica in ‘07. Then in the fall of ‘08 we opened the production company Dictionary Films in Chicago to provide the full range of production and post. All of these moves have opened new doors for the Cutters family of companies and enabled us to better service our clients. With the advent of all the new media opportunities, we're excited!”
ROB HENNINGER: “We started the company in ‘83 when all videotape was analog and editing was strictly linear. Video was just beginning to supplant film in the documentary world, which is a key part of the Mid-Atlantic market, and this created a great opportunity for an upstart in the business. Our first suite was interformat: 3/4-inch and the new Betacam mastering to 1-inch — improving quality by saving a generation. The next big thing was the advent of digital disk recorders, tape machines and digital audio workstations, which again improved quality and flexibility. About the same time, the early ‘90s, nonlinear editing was introduced as well as big improvements in computer graphics and 3D animation. We embraced all these technologies early and sometimes even led the way. This let us build up a true ‘one-stop shop’ and grow rapidly. In ‘91 I got the notion we were heading toward a networked world and developed a hub-and-spoke strategy, getting up to nine locations and over 230 employees. We got into high definition early, too, and by the late ‘90s got a little ahead of the market. Networking was adding more cost than value and the power of desktop systems was leading clients big and small to do more and more in-house. So we changed strategy and began concentrating our operations, equipment and talent in Arlington. The big things now are file-based workflows, asset management and digital distribution — these are creating fundamental changes to the business.”
GRETCHEN PRAEGER: “Optimus was founded in ‘72 by Jimmy Smyth as a creative boutique, went full service in ‘79, and then Smyth sold the company in ‘86 to Anheuser-Busch. The current team of owners bought the company back in ‘96, and in the past 15 years we’ve seen a lot of changes. We were early proponents of HD finishing, which is now standard. The biggest recent change has been around workflow issues. Data jobs are becoming more and more prevalent, and we're seeing lots of different formats — Red, Phantom, P2, the Canon 5D and 7D. Ingesting files on Avid and Final Cut varies by format, and then there’s the question of whether you finish in the box or opt for a standard finish with online, color correction and graphics. Each job is its own puzzle to figure out.”
TERRY CURREN: “I opened AlphaDogs in 2002 after spending 16 years at Matchframe Video in Burbank, where I had been their first employee. When Avid introduced uncompressed SD computer editing with Symphony, the vision of the future didn’t look rosy for traditional post houses as equipment prices would just come down from there. I had to decide what I wanted to do with myself — I didn’t want to be one of a ton of editors looking for work when larger post houses closed. So I looked at desktop publishing as the best comparison and came away with the idea that you should sell talent, not the gear. I was originally going to buy a Symphony and four-wall a room, but in TV you need redundancy, so I got two Symphonies and was joined by friends who are designers and audio mixers, and we were able to offer all the finishing services. But because we didn’t have a huge overhead we could be very flexible in pricing.”
CRISTINA MCGINNISS: “Broadway Video was founded in ‘79 by Lorne Michaels. In the fourth season of Saturday Night Live, he was asked to deliver a series of SNL home videos to RCA. He rented space on the 10th floor in the Brill Building and hired editor Randy Cohen from EUE. The SNL franchise provided a foundation for our business and Randy had a following that migrated to his new location, so we grew from there. Today, we do a lot of work for NBC, USA Network and Syfy. We’re also editing the new pilot, Beach Lane for NBC, and the movie MacGruber, which was shot on Red, is being edited here on Final Cut.
“We have responded to the changes by remaining consistent with our founding principals: talent and service. At the same time we have continued to change with the technology: HD, Final Cut Pro, Smoke/Flame. Our model as a classic facility has changed in that we now offer space to independent production companies whose involvement in shows feed our core post business; we are accommodating MSG as a four-wall tenant as they build their new facility; we are adding an in-house producer to package the post business as a one-stop shop — sound, graphics and audio; we will take jobs in supervised or unsupervised, man them with staff, freelancers or bring-your-own editors. We have become imaginative in terms of our model. Our model now is totally dictated by the circumstances of the client.”

POST: How have the democratization of post and reducing the barriers to entry in the industry affected your business?
CURREN: “Most production companies who have taken editing in-house do their own offline because the equipment is so cheap. But finishing TV requires the monitors, the scopes and the people who know how to deal with all that — it’s a different toolset and skill set. So we haven’t been hurt as much by clients going in-house with editing. We also realized that even if clients had their own editing systems, they wouldn’t have all the decks, so we created Digital Service Station, a Kinko’s of digitizing for Final Cut and Avid systems. It’s become so popular that we have branches in Culver City, San Francisco, Chicago, Columbus, Ohio and Largo, Florida.”
PRAEGER: “There’s certainly more competition these days, with editing and graphics platforms and software more accessible than ever. However, even so, there is no substitute for the expertise, teamwork and horsepower unique to a full-service post facility such as ours.”
MCGUIRE: “Agencies bringing work in-house makes for a smaller pie, so there’s more competition for this smaller pie, but at this point agencies aren’t going after the top-level creative work — they’re doing more retail spots and versioning. We recognize the changing economics of the business, but at the end of the day, people don’t hire us because we undercut someone by a $1,000 but for the creative product we offer.”
MCGINNISS: “Some of our clients have taken on Final Cut but have relied on our expertise to take full advantage of its tools and workflow. We have one of the best Mac specialists around, Joe Procopio, who has helped [them] integrate and become comfortable with the technology, and we are happy to accommodate our clients in that way. We first adopted Final Cut at Broadway Video to edit a series of Webisodes called The Line for Seth Meyers. We provided soup-to-nuts service, and that gave us a great start with the system. We have not balkanized ourselves into a boutique business, but we have amended our original facilities model. We can provide everything in between.”
HENNINGER: “The power of desktop systems today is awesome and the distinction between offline and online has less to do with equipment these days and more about the operator’s skill set. We rent editing rooms to producers and editors on a four-wall basis — anything from a few days to a year or longer. Working here, they can access support and services they really can’t get elsewhere. Right now our value lies in the ability to provide the digital mastering machines, HD datacine, color correction rooms, surround sound mixing and quality control that aren’t cost effective for independent producers to address on their own.”

POST: Have your companies reconfigured your space in the last few years to accommodate changes in the business or to meet the new needs of your clients?
CURREN: “Our finishing rooms were the size of old linear bays, so when HD became prevalent and you needed larger monitors, the rooms proved to be the right size: The technology grew to fill the space. In our finishing rooms you can put up a 50-inch plasma and not get a sunburn! We started with smaller sound rooms compared to other places doing audio for TV, but now sound rooms around town have gotten smaller and consequently ours are bigger by comparison. We even pre-mix features in them. We have added office and offline rental rooms for clients who suddenly get a show and don’t have a standing office. It’s scaleable for production companies and feeds our finishing services.”
MCGUIRE: “At the end of ‘06 we retooled our space to provide more collaborative work environments for our designers at Sol Design, and at the same time expanded our CGI capabilities. Each of our four companies has its own entrance to our 33,000 square-foot space. We’re fully networked and have a very large data storage system that all the creatives in the company are able to access. We have also invested in very fast pipelines to create efficiencies in our workflow.”
HENNINGER: “We’re constantly reconfiguring space because you really can do more with less now. With the new technology you can now change out an edit suite in a day — something that used to be a major undertaking of capital investment, build out and wiring. The concept of the core machine room is still important, however. Having the ability to concentrate heavy-duty computers, high-bandwidth servers, multiple formats and decks and route them to any of our 35 suites lets us tackle large-scale and technically-challenging jobs. Also, we do a big volume of political advertising, so we have to ensure a high level of privacy and confidentiality, and that impacts how we can design our space. The privacy issue is true for some cablecasters and commercial clients as well. We have to assure them that their project is absolutely safe and secure with us.”
PRAEGER: “The biggest change has been in our graphics department. Ten years ago we had three Flame suites and one Maya 3D workstation. We've grown that world to include a design group, with a team of eight artists working in After Effects and Cinema 4D. We're up to five Flames, which see more of the effects work, rig removal, roto, that sort of thing. The group has diversified as a direct response to our clients’ needs.”
MCGINNISS: “Catering to the client still means a lot to us. During our recent remodel, we could have created more editorial space by eliminating lounge, kitchen and meeting spaces, but our clients still appreciate comfort and service. We renovated and brightened our décor, replaced our industrial look that once was fashionable and brightened the tone of our signature teal blue. We kept our core group of edit suites while making room for new tenants, including two small production companies we love having and hope to have an ongoing relationship with. Until their space is ready MSG will be using two of our rooms 24 hours a day.”

POST: Is there a different model for profitability in post today?
PRAEGER: ”I think budgets are shrinking and everyone is trying to get more for their buck. There are efficiencies to doing everything here — editing, design, color correction, online, and now production — all the while keeping projects at a level everyone expects. Although budgets are leaner, it’s still about delivering quality and service.”
MCGUIRE: “We have created an environment with four unique specialty companies that are separately branded. Clients can buy their services a la carte or take advantage of the full package of services. In post production, packaging happens quite regularly — we provide editorial through finishing, design, sound mix and sound design. The idea of using all four services, starting with Dictionary Films shooting, is relatively new but growing all the time.”
MCGINNISS: “Between the recent downturn in the economy and the changes in technology, staying profitable is a daily challenge. We have a published rate card, but we’re always open to accommodating clients’ budgets; they can always talk to us. We will be adding a new in-house producer who will attract new business by packaging shows from the post end to include full-services, from writing and producing through editing, graphics and sound. We also have dedicated specific editors to our NBC, USA, Syfy, A&E and Bloomberg accounts; we love those franchises and the ability to provide everything under one roof. We have a lot to offer broadcast clients and feel that we can give them what they need faster, better and easier than they can get elsewhere.”
CURREN: “Digital Service Station lends itself to hourly billing, but pretty much everybody wants a package price for finishing services. We do packages that cover a certain amount of time: anything over that goes on an hourly rate. You can’t do flat-rate packages only or the client would have no incentive to ever finish. We try to keep costs as low as possible by staying on top of technology; we got in on the Red workflow in beta, so we were really familiar with it when clients were ready for it. But I’m not a build-it-and-they-will-come kind of guy. That’s a gambling model. I’m more about if they’re pounding the door down for something we’ll put it together.”
HENNINGER: “At its core, the post model is still fee for services. We see more work done on a contract basis around estimates of time, but there’s still a lot of incidental work, too. But the old concept of a published rate card has disappeared entirely. We have a more consultative approach with our clients: They tell us what they need and we find the best and most cost-effective way to do it. We’ve also done script-to-screen production for over 15 years, which is all contract.”

POST: What are you doing to adapt to future changes in the business or take the lead in new business strategies?
MCGINNISS: “It’s not like the ‘80s when we were the first post house in town to offer a Quantel Paintbox that cost $400,000. Back then, it was easier to take risks with technology. We will be cautious about jumping into stereoscopic 3D while we perfect what we do best in HD and SD. Our one-stop shop, sound, graphics and editorial, staffed by a talented and caring team, is well suited to these times.”
CURREN: “We got into Final Cut finishing early when others were saying Final Cut was a toy. For a while there were only three companies in LA doing Final Cut finishing, and we were one of them, so that has given us a huge edge. Coming back from NAB, the biggest announcement for me was Blackmagic’s DaVinci on a Mac for $995. That’s very exciting and will have a big impact on the industry. Now we will be able to advertise the same DaVinci color correction that larger post houses have, at a lower cost for the room. As for the other trend du jour, I think spending $100,000 or more to be able to finish in stereoscopic 3D is kind of hard to justify right now. How do you get ROI on it unless you have a client doing a 3D series who can make the system pay for itself? We’re up to speed with 3D finishing, but I don’t think the work is going to be there anytime soon or in any great quantity.”
PRAEGER: “Adding our production arm, One, to the roster has been a way to keep us ahead of the curve, and we have experts in post workflows of all types here. I don’t know if I’m sold on 3D. Right now we want to stay on top of all the current formats out there and offer efficient workflows.”
HENNINGER: “We’ve been doing 7.1 surround for a long time and working with the Red workflow for some time, although our market still goes primarily to HD resolution — we don’t see a lot of DI-style work. We’ve been closely involved with Digital SLRs, like Canon’s 5D and 7D; that’s been big for us. And we’re keenly interested in stereoscopic 3D, including the potential for 3D disc delivery through Blu-ray. It’s a constant challenge for a facility like ours that sees a little bit of every kind of work and has to maintain the older formats, too. It’s all part of our value proposition: whatever you’ve got we can get it ready for distribution. As for change, it always comes with opportunity, and our instinct and history has been to embrace it.”
MCGUIRE: ”In recent history we've been able to benefit more and more from Moore's Law. New computer formats and software have enabled us to work faster and smarter. We have 10 times more rendering power than we had two years ago. We've more than quadrupled our storage capacity in the last two years across the board. This allows us to be more flexible in producing the different jobs that are shot on multiple formats. We've also expanded our Internet capabilities that enable us to communicate better with our agency clients and production companies. Another Country is now doing 7.1 surround sound mixing in our new audio room. Emerging media is part of our everyday business now: We're working on television commercials, new media, digital signage and much more. It's a very exciting time to be in our business and for someone like me who loves creativity, it’s just fun!”