The RED ONE Economy

K

Kholi

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Gunliek over at Reduser.net posted this: http://www.twenty398.com/

What a GREAT read. Please, no political debates in this thread. Although feel free to debate about the price of equipment rentals and the state of video production.


The point of all these ramblings?


R1 and the current crisis is revolutionizing everything… back to «normal».
People don’t buy kit. People buy talent.

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Mmhmmm! (I suck at what I do, but I hope to get better)
 
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Surely a must read, very informative and insightful about what is happening in filmmaking, the rental market, and what to expect.
Thanks for the link...
A.
 
With the market shrinking I guess there are going to be two types of businesses that will survive, those with cash reserves and low or no debt and those who are innovative. There will definitely be less operators at the end when all is said and done, and then prices will stabilise to reflect increase in demand and less availability. These are the guys who will make $$ on the back end of all this, but the longer it takes for this to roll up the less operators there will be and there will be more to be made until the market then resaturates itself. Good thing is we are probably unlikely to see an economic downturn this bad again in our lifetimes (but never say never).

You only have to dig around to really see the effects already taking hold, and if this isnt a depression I dont know what is. Figure on at least 2-4 years before recovery slowly starts to take place. Im in Australia and the thing we have going for us this time around is a low dollar. Regardless of anything else when things get very hard, countries will be looking for bargains, and our present lower dollar ensures we can compete.

Pertaining to video production, Im pretty sure that most smaller operators simply dont have funds to start spending in new equipment etc, let alone survive. which puts those who outlayed (when our dollar was high in Australia) the last one to two years and made their money back, a little ahead. I know what I paid for all my equipment, and that price has jumped by 40% locally. Even if you travel to another country to purchase because of lower prices, like in the US, it only improves your outlay by around 5%.

I could literally sell everything today and take a 40% hit as second hand equipment and recoup all my expenses (on my local currency), should do it and start trading in shares, bargains everywhere at the moment and could make much more $ - bit easier too when you come from that background. If your a large company then debt may be viable during this time. But for smaller operators, this isnt the time to risk a big debt unless you have a surety such as a project to pay it out quickly .

Good luck to everyone and stay positive.
 
Good stuff in there, if a bit rambling. We decided years ago to build our arsenal, over time, on a cash basis instead of borrowing for a faster start. We have no debt, and virtually no overhead. My wife and I run things and we sub out for crew with a well developed and reliable network that returns the favor (including RED owner/operators, which is something we are not).

We've never bought a piece of gear (or software, etc) that wasn't subsidized in whole or in part by a client for a project. We have found a niche market (in addition to our indie projects), that is actually still growing, despite the economic times. We had our best year ever in 08, and the first quarter of '09 alone looks like about half the revenue for all of last year. Although I am only talking in the 5-digit range, I'd rather have that in terms of revenue with no debt and no overhead, than 6 or 7 digits with creditors and employees to worry about.

I feel very blessed that things have been going well for us, but I am not naive either. If this keeps up for a while (which it probably will), our revenue will start to plateau and shrink as well. But we can old our breath for a long time.

I'm glad he talked about what really matters (not the gear). If more people chased an improved skill-set instead of the newest piece of gear, they would spend less money, and be far better off.
 
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Noel Evans said:
With the market shrinking I guess there are going to be two types of businesses that will survive, those with cash reserves and low or no debt and those who are innovative.
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Indeed. Honestly, I don't have any debt. Every single thing I buy is with cash, never had a credit card so I've been seeing the benefits of all these things as I continue to take steps forward. Innovation is the second part of all this.


I like how he touched on the "reformation" of the industry. I had this thought the other day when I went to Apple trailers and view several low-budget feature trailers. About two or three having VERY VERY HORRIBLE trailers!!! I couldn't believe my eyes.

It started me thinkin' "Well, the cream's certainly gonna rise to the top MUCH faster in the coming years." And Gunliek is saying just about the same.

It'll hit a brickwall then start going backward. Kind of like fashion trends, huh? Anyone see the "Greek Sandals" females are wearing these days? Gross!!!

By the way, I have definitely been guilty of Gear Lust. I stopped it recently and have reformed a new strategy for the gear I own. So don't spank my hand!
 
As a cinematographer, my biggest complaint is the indie mistake of hiring a DP simply on the merits of his/her camera package. I'm sick of untalented hacks getting jobs and screwing up films simply because they dropped the dough on a RED and the production can't afford to hire both a Cinematographer and a camera package.

Sigh* So many jobs I have gotten is because of my camera package and I still hate the system. I have been trying to get away from that, and be requested for my services based on my ability to light and visually tell a story. Not because I have some poo pooing nikon primes and a 35mm lens adapter HVX.

I have seen some sets with HORRIBLE Dp's who are only there because they own a camera or a dolly or a etc.

Let me say there are exceptions as there are talented DP's with cameras and there are productions who do hire a DP based on his merit and not just what he comes with.... but the scenario of my complaint happens much to often in the low budget indie world.

This is a fear I have in the wake of the death of rental houses.... when cameras will no longer all be Panavision, Arri, etc. When they are affordable to the masses. I hope the line between camera provider and cinematographer are still plainly divided.

Cinematographers do not need to own camera packages. Some of the best don't. Please hire based on skill not equipment list. Rant over.
 
This is a fear I have in the wake of the death of rental houses.... when cameras will no longer all be Panavision, Arri, etc. When they are affordable to the masses. I hope the line between camera provider and cinematographer are still plainly divided.
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The bad thing about the democratization that low cost digital is providing is now every kid with a Red is a DP and Every High School student with a Macbook is a production company.

It gets worse before it gets better, but once the market has become so saturated with everyone having the same tools, talent will become the great equalizer.

It might take a bit to get there, but given enough time you will no longer be able to buy your crew position with a piece of gear you own, because we will all have the same gear. The new production economy will belong to the story tellers and and the ones that seek to develop their craft and not their gear collection.
 
We decided years ago to build our arsenal, over time, on a cash basis instead of borrowing for a faster start. We have no debt, and virtually no overhead.
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This is the way to go. If everyone did this not only with video/film but with housing, cars, etc. the economy most likely wouldn't be in this shape. However, the current situation is a good refiner, because those that got in over their head with gear and expenses will start to get out of the market as well as those who don't adapt to the changes. Which will leave gear and talent available for a bargain for those who have put themselves in a situation to stay in the industry for the long hall.

You could almost draw a direct comparison between the video/film industry and the house flipping market. Those that got into it because they watch Flip That House and could get a huge loan for nothing, but don't have the talent or experience yet are jumping out of the industry as fast as they can, taking huge losses while those who have been doing it for a long time and have been doing it wisely and responsibly are picking up deals of a lifetime that will make them huge amounts of money down the road.

So yes, the current situation can be painful because things aren't going to be as easy as they once were, but if you're willing to work that much harder this can be a great opportunity.
 
A friend in LA sold his red a month ago (body only) for $11,300, most of his offers were for $10k. I mentioned that in a thread on reduser and got attacked by all the red guy's who were pissed off that thier camera's had depreciated that much.

This article is saying used values will be around 50% of the new price 6 months after orders are caught up. It's getting close to that time.

Now there are going to be 500+ used bodies on the market from all the Epic Trade in's on top of the big depreciation hit they have taken.
 
Chip I was reading that thread last night as a matter of fact, I found it kinda amusing that a lot of red owners dont accept the fact that the bottom line is that the red is an electronic and all electronics depreciate sooner or later, the market has or almost is saturated by red's for the amount of work and very soon the people that took out those loans to buy the camera are waking up to a crude reality because they expected to make loads of cash on rentals and its just not happening, and there is always the dudes that argue that a RED body cost 17.5k and will always sell for the same amount, no matter if its 5 years from now
some interesting times ahead for sure
 
What I find more amusing is in that thread is a freind of mine here in KC that own's two Red's and is a professor of business and economics. I told him to sell his camera's body's 6 months ago after he wrapped on his first feature and buy them back in 18 months for 50% of the price when he starts his second feature film. He laughed at me. Time for a wake up call. It's as true and real as it gets! Did I mention what he does for a living?
 
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Every digital video camera I've ever bought new has been worth half what I paid within 12 to 24 months.

I never thought Red would hold its value, and I bought anyhow. Trust me, you will be getting eqivalent images on a video-capable DSLR for $3K within three years or so.

The value of a camera package will drop in price, and increase in power, according to Moore's Law, just like computers (they're computers with lenses after all).

What happens to the value of talent will be harder to predict. More people with access means more talent in the field, putting downward pressure on talent's rates. But there might also be an increasing recognition that it's worth paying for the best humans, because it will return higher audience numbers (which means higher profits). If increased talent doesn't have anything to do with audience numbers, then the talent won't really be worth that much more either, and might continue to be worth less. A mediocre operator might be just as good as brilliant one when it comes to turning a profit or attracting audience.

Ultimately, I never even thought of the "rental market" having anything to do with "filmmaking" or what I do. As a filmmaker I would like the equipment to be free and worthless, so I can make more films and have a better chance of recouping my investment from the story and performances, not the camera body.
 
Ryan Patrick O'Hara said:
As a cinematographer, my biggest complaint is the indie mistake of hiring a DP simply on the merits of his/her camera package. I'm sick of untalented hacks getting jobs and screwing up films simply because they dropped the dough on a RED and the production can't afford to hire both a Cinematographer and a camera package.

Sigh* So many jobs I have gotten is because of my camera package and I still hate the system. I have been trying to get away from that, and be requested for my services based on my ability to light and visually tell a story. Not because I have some poo pooing nikon primes and a 35mm lens adapter HVX.

I have seen some sets with HORRIBLE Dp's who are only there because they own a camera or a dolly or a etc.

Let me say there are exceptions as there are talented DP's with cameras and there are productions who do hire a DP based on his merit and not just what he comes with.... but the scenario of my complaint happens much to often in the low budget indie world.

This is a fear I have in the wake of the death of rental houses.... when cameras will no longer all be Panavision, Arri, etc. When they are affordable to the masses. I hope the line between camera provider and cinematographer are still plainly divided.

Cinematographers do not need to own camera packages. Some of the best don't. Please hire based on skill not equipment list. Rant over.
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That happens every time a new camera is released. Remeber there were HUNDREDS of "DP's" with an HVX200 a few years ago... Now its back to the same 30-40 people working all the time, and lots of HVX200's up for sale...

The cream rises to the top. I dont own a RED, but im slated to shoot many projects on it. I ust rent it... buying a RED now is silly. The tech is gonna change so fast, that next year, every indie feature and short, Music Video and Industiarl is gonna be asking for the "epic" cause they heard its the best.... without knowing what it is ir what it entials.

I will be buying a SCarlet, but i will be buying more or less as a personal camera, but i can also say hey i got one if you want it.... I still get TONS of work with my HVX200 ( not an a) based on references, and Reel. After a while people hire based on what you can do with a camera. I shot a music video the other week, and i showed some stills to a firend, and he was like, Yea that Red camera is sick isnt it..... I was link, umm dude thats a HVX200 and Sgpro...

If you wanna see an exapmle of what good lighting and composition can achieve... this was shot on a Naked HVX 200.... Sam Chase DP:

http://www.samchasedp.com/reel/birthday_massacre.html
 
sean90291 said:
I never thought Red would hold its value, and I bought anyhow. Trust me, you will be getting eqivalent images on a video-capable DSLR for $3K within three years or so.
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This is why I question the future of Red. Scarlet is delayed for another year maybe two with all thier supplier's & manufactures going out of business. All the DSLR manufactures models's will be improving with many new models coming to market in the next year or two. There is no way Red can progress as fast as these other companies with thier small team. The Red bug's still haven't all been fixed after a year and a half or however long they have been out.

Yes, Red is progressing just fine via rumors and hype but these camera's aren't on the market yet. What's more important to me is what all the other camera manufactures are doing right now that you will not hear about until 30 days or so before they release them.

For now and the next 3-5 years Red will be selling camera's but after that?

I understand Red has a Billionaire owner that can feed it money for a long time but It will stop at some point. I'd love to see thier financial books :)
 
good work Tim by the way, regarding the issue of dp's owning a red package, I almost say next when that happens, say I am putting a project together and I need a dp, about half the people contact me saying " I have a red package with x amount of toys and it does this and that blah blah blah" what is funny to me, is that I dont care what camera you have, these dudes get so cought up in telling me about the red that they completely forget that "hello" I am here for your dp's skills not what camera you own, to me a profossional dp, should not own a camera, and if he does, please dont tell me (I undestand having a camera for tests and imporoving your craft) I kinda get the feel that when I need a dp, they call and automatically factor in how they can make money by fronting the red package, which I really dont care about because I am renting it anyway
 
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Ryan Patrick O'Hara said:
As a cinematographer, my biggest complaint is the indie mistake of hiring a DP simply on the merits of his/her camera package. I'm sick of untalented hacks getting jobs and screwing up films simply because they dropped the dough on a RED and the production can't afford to hire both a Cinematographer and a camera package.

Sigh* So many jobs I have gotten is because of my camera package and I still hate the system. I have been trying to get away from that, and be requested for my services based on my ability to light and visually tell a story. Not because I have some poo pooing nikon primes and a 35mm lens adapter HVX.

I have seen some sets with HORRIBLE Dp's who are only there because they own a camera or a dolly or a etc.

Let me say there are exceptions as there are talented DP's with cameras and there are productions who do hire a DP based on his merit and not just what he comes with.... but the scenario of my complaint happens much to often in the low budget indie world.

This is a fear I have in the wake of the death of rental houses.... when cameras will no longer all be Panavision, Arri, etc. When they are affordable to the masses. I hope the line between camera provider and cinematographer are still plainly divided.

Cinematographers do not need to own camera packages. Some of the best don't. Please hire based on skill not equipment list. Rant over.
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Agreed.

The DP I work with, when I first met with him.. it wasn't because he owned a camera.. all about the talent... and the people behind it.
 
ChipG said:
This is why I question the future of Red. Scarlet is delayed for another year maybe two with all thier supplier's & manufactures going out of business. All the DSLR manufactures models's will be improving with many new models coming to market in the next year or two. There is no way Red can progress as fast as these other companies with thier small team. The Red bug's still haven't all been fixed after a year and a half or however long they have been out.

Yes, Red is progressing just fine via rumors and hype but these camera's aren't on the market yet. What's more important to me is what all the other camera manufactures are doing right now that you will not hear about until 30 days or so before they release them.

For now and the next 3-5 years Red will be selling camera's but after that?

I understand Red has a Billionaire owner that can feed it money for a long time but It will stop at some point. I'd love to see thier financial books :)
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I believe RED will be around as long as they want to, because they innovate and listen to their customer base. That's an attitude and approach, not a chipset. They never asked to be all things to all people. As far as the 'bugs', I have shot and edited plenty of stuff on the RED, with no more problems than I faced with a DVX or an HVX. I don't own a RED, although I will probably buy a Scarlet (not for res as much as latitude and raw footage).

As long as people remember that a camera is a means to an end, not the end in itself. But everytime there's a new camera, hordes of people jump off the cliff thinking that's the thing that makes the difference. Those people either learn, or disappear. As has been said, most DPs don't own a ton of gear; that's an indie thing. ANd for most of us, that's a mindset hard to escape from.
 
Jim I hear what your saying, I really think things will get interesting in 5 years when the technology is so cheap and mainstream that we will be able to buy better camera's for $2k or less. Not sure how Red can make a profit spending $100 million to develope camera's that take 2+ years longer than anticipated to come to market and sell in low volumes of 10,000 maybe 50,000 for scarlet (Yes, I will be buying one).

I have had soo many problems shooting Red's with them overheating, having to reboot, footage that wasn't there, drop frames from the hard drive ect. Red is a greatg camera but a pain in the ass! I don't understand how a dvx could be as much hassle or trouble as a Red, I don't think that's an acuurate statement, VERY far from it for me and 999 out of 1000 people who have shot on Red.

Peace
 
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