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Production 100 2011 Back to Reports & survey Listing

New Indie Horizons

Indies diversified during the downturn in a desperate bid for new revenues. Many are now reaping the benefits, says Tim Dams


Ask most indies about their outlook for the next year, and their replies are largely upbeat and positive. Some 34% think 2012 business will be better, while 28% believe it will remain the same – this at a time when many are reporting strong revenues. By comparison, 28% think the production climate will deteriorate next year.

A busy first half of 2011 has imbued many producers with confidence for the year ahead. Several say they have had as many filming days in the first six months of the year as in the whole of 2010. Others are shaping up for a busy 2012, having booked in orders already.

“It looks very good – we have already secured most of next year’s turnover target,” says Henry Cole, md of Grimefighters producer HCA Entertainment. Much of this confidence can be attributed to a pick up in commissioning by UK broadcasters as they have bounced back from recession, as detailed on page four of the Production 100 supplement.

But it’s also down to efforts by indies themselves to diversify their businesses. During the three year TV downturn that began in 2008, many producers were compelled to look for new sources of income as orders from British broadcasters dried up.

Many sought revenues from international markets, with the US a particular focus for new business. Pact’s latest annual Census of the production sector revealed that international revenues grew by 34% in 2010 to £590m – and now account for 25% of total sector revenues. The producers’ organisation reckons that international sales of UK finished programmes rose from £70m to £87m, and that direct commissions from overseas broadcasters rose from £296m to £400m.

Reacting to the figures, Pact chair Debbie Manners said they reflected the drive and entrepreneurialism of the sector: “The strong growth in primary overseas commissions clearly demonstrates that UK indies are building global business by making programmes directly for overseas broadcasters, as well as selling programmes around the world.”

Meanwhile, indies have also moved into digital production, creating games, apps and interactive content. Branded content has become a significant area of growth, with indies taking advantage of a relaxation of rules around ad funded programming and product placement.

Some producers have sought to ride the 3d production wave, or to save money by bringing post production inhouse. It’s also now more familiar to find broadcast indies working in corporate production, film or commercials.

In effect, the last few years have been about indies broadening their customer base. Their focus is no longer on a handful of terrestrial broadcasters, the BBC, ITV, C4 and C5.

International expansion

For many indies, the US is a key target for growth in the coming months. The All3Media group, for example, aims to double output there to $100m this year. Six All3 outfits are now producing in America, each with their own offices and set ups rather than one centralised American group. All3 owned Studio Lambert has had particular success, making Undercover Boss for CBS, while Company Pictures has produced US versions of Skins and Shameless. The focus on America is crucial, says All3Media chief executive Steve Morrison. “My view is that the UK is a fantastic springboard – you can’t be a great exporter without a strong home market. But America is a magnifier, a megaphone of your idea which then sends a louder signal about being successful around the world.” Morrison describes All3 as ’50-50’ UK and international.

DCD Media also has a significant US presence, with its indies having offices in both London and Los Angeles, where it makes shows such as Bridezillas for WEtv and Billy the Exterminator for A&E. Chief executive David Green says 45% of his group turnover now comes from the US, and he wants to get this up to 50%. “I’m not full of huge optimism for the UK business expanding any more than it has since the depths of the 2008/9 downturn,” he says. Growth, he believes, will come from diversifying further into US production, as well as DCD’s rights business and publishing operation.

His points are echoed by medium and small sized indies too. Spun Gold says it is now pitching directly to US networks. Bath-based Touch Production has made a series of shows for US broadcasters in the last year – Taking on Tyson for Animal Planet USA and Discovery Worldwide, Tattoo School for TLC and Love in Numbers for TLC. Touch chief executive Malcolm Brinkworth says: “The UK has been disappointing but the US business is growing and 2012 looks likely to be a much stronger year.”

Belfast-based kids producer Sixteen South says its feeling ‘very positive’ about the year ahead, largely because its making a new series, Pajanimals, for the US market. Says creative director Colin Williams: “Pajanimals is a major production for Sprout, which will be aired across the NBC network and gives us major exposure in the US.”

Likewise, Cardiff-based Modern TV describes its outlook as cautiously positive, even though it thinks the UK market is challenging. Director Clare Byrne says: “We are developing projects with international broadcasters and expanding routes to broadcast outside the traditional ‘UK primary broadcaster then get a distribution deal’ hamster wheel that many UK independents find themselves in due a lack of funding or lack of viable contacts.”

Digital expansion
A number of indies say that they are looking for growth by creating digital content in the year ahead. Somethin’ Else, the producer of Channel 4’s Evo Music Rooms, reports that 35% of its £8.1m revenues now comes from new media. Managing director Steve Ackerman says the outlook for next year is very strong. “Our main growth has been in digital, creating games, apps and interactive content and there is a very buoyant market in this space.”

Other indie production companies very active in the digital space include ETV, Keo Films, Pulse Films, Glasshead, Proudfoot and Raw TV. A key ambition for Pulse Films in the year ahead, says chief executive Thomas Benski, is to “continue to be at the forefront of cross platform content.” 15% of its £12m revenues already come from new media. In the past year, for example, Shed Media Group, owner of Supernanny producer Ricochet, partnered with ETV Online to create the Supernanny iPhone app. TalkbackThames’ digital division has just unveiled the first app for The X Factor.

Meanwhile, Keo Digital – the digital arm of River Cottage producer Keo Films – created the River Cottage app. Other TV apps include Shine TV’s MasterChef and All3Media’s The Cube. Jamie Oliver’s indie Fresh One has also made big strides in new media. Its ambition for the year ahead? “We will continue to aim for steady growth, especially in digital and drama.”

Welsh indie Tinopolis employs 35 people in its interactive department in Llanelli; just last month it launched a weather app for S4C.

Ad funding
With broadcasters’ revenues under pressure, advertiser funded programming, or branded content, is an increasingly important source of work for indie producers. It’s complex and still something of a rarity on television. But it’s becoming more mainstream, and was bolstered this year when the long standing ban on product placement was lifted, allowing advertisers to pay for their goods to be seen on British TV.

Several indies cite AFP as an exciting new opportunity for them. Dan Chambers, director of Blink Films, made Chinese Food in Minutes with backing from Sharwoods for C5. “We have made great strides in finding new opportunities such as AFP,” he says.

Twofour has made two branded content shows in the past year: New Look Style The Nation and The Future Family both for C4. The former was backed by fashion retailer New Look, the latter by energy firm E.On. Both series came with budgets of over £1m each, says Melanie Leach, md of Twofour Broadcast. “Business models are changing so fast,” she says. “As long as you are an indie that embraces that, there’s a world of opportunity out there. 12 months ago I don’t think we would have had a conversation about how we can add a retail layer into a second screen application for a fashion show for New Look on C4. Viewers can immerse themselves in the content to such a degree that they can make a transaction. That is a completely new opportunity in the market. It allows you to have loads more conversations with people.”

3d production
The hype surrounding 3d has died down significantly in the past few months with a widespread acknowledgement that it’s a format best reserved for event TV. Nevertheless, several producers have made great strides in 3d, and can see good opportunities for growth.

Atlantic Productions, Oxford Scientific and Touch all cite 3d when they weigh up the outlook for 2012. “We have thrived by seeking out new opportunities – particularly in the 3d and theatrical spaces. Traditional broadcast has been much harder,” says Atlantic head of content distribution James Taylor. “3d is becoming a big part of our business and we’re focusing on ambitious projects in this area, some of which will have a theatrical release.”

Commercials and corporate

It used to be rare to find TV indies working in areas such as commercials, film or corporate production. No longer. Traditional specialist barriers are breaking down. Pulse Films, for example, has built a successful business across TV and commercials. Says chief exec Thomas Benski: “The market has evolved a lot and people are generally more comfortable with [production companies that operate in both worlds]. In fact they get quite excited about it.” He reckons that for AFP or branded content particularly, being active in both fields gives his company an advantage.

Another indie Rondo, which made The Indian Doctor for BBC1 last year, reports that it has started to win work in corporate production, producing a film on Anglesey food producers. Twofour has long been active in corporate production, but decided to bolster its offering in this area with the acquisition of corporate communications specialist The Rocket Science Group in November 2010.

Bringing post inhouse
With budgets in decline, many indies have worked hard to bring as much of the production process inhouse in a bid to protect profit margins. Some have done this by investing in inhouse post such as Rondo, Reef and True North. Reef’s head of production Paul Hanrahan says: “Our post department has recently upgraded all eight suites to HD and this continues to bring revenues into the company. We have completed post production for Reef’s own productions and for other other independent producers.”

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