Digital Cinema Cameras: The Impact of the Digital Revolution on the European Rental Channel
Film cameras still account for 25% of the rental stock of the European rental channel
(March 12, 2014)
The digital revolution kicked off in earnest with the launch of the seminal Red One digital cinema camera in 2007 and the high-end production market hasn't looked back since.
For end users, digital cinema cameras have dramatically reduced the cost of shooting high-end content - in theory at least - and have been embraced by most cameramen and DoPs, save a few traditionalists who remain loyal to film-based production.
However, for the rental channel things are more complex, with the move to digital undermining existing business models.
Historically, new launches of film cameras have been few and far between, meaning that investment in cameras could be amortized over a significant period of time, allowing rental houses to concentrate on providing the quality of service and support that has become expected of them.
The precision engineering required of film cameras meant that they lasted a long time, with it not being uncommon for rental houses that had been in business for many years to have a very old film camera gathering dust at the back of their store room.
According to research recently carried out by Futuresource Consulting, film cameras still account for 25% of the rental stock of the European rental channel and yet their average utilisation rate (proportion of time the cameras have been rented out over the past 12 months) is just 6%.
It is the digital revolution that has brought about this change. Fresh products are released year on year with new brands coming to market and vying for the attention of end users, who naturally want to try the latest and greatest products.
This poses a problem for the rental channel. They have to cater to the demand of their customers by stocking the latest cameras - not to do so would mean turning customers away. In an industry where reputation and relationships are key this may mean losing a customer permanently.
So the rental house purchases the new camera, but the next year another digital cinema camera is released and the process starts again. The issue here is that according to Futuresource rental channel research, the investment on high-end digital cinema cameras is covered approximately two years after purchase. Historically this would mean that the remainder of a product's life, another two years on average for digital cinema cameras, would be where the bulk of the profit is made.
Unfortunately, the influx of new cameras, as well as the hype and demand surrounding them, means rental rates have to be dropped to ensure that the utilisation rate is kept as high as possible.
Pressures on revenues mean that it is becoming harder for rental houses to provide the same level of support that has come to be expected, especially considering that problems with cameras are often of an electronic rather than mechanical nature and therefore potentially more complex or expensive to rectify.
Support from camera manufacturers is essential, with 85% of rental houses saying technical support is the most important form of support a vendor can offer. If cameras fail in the field they need to be fixed or replaced quickly, although other research by Futuresource indicates that having back-up cameras on standby on set is more common than it used to be. If the rental house's own support team cannot provide a solution, the camera will often have to be sent away to be repaired. It then becomes an issue for the vendor as well and some brands have better reputations for this than others. Unfortunately, if vendors can't provide a good quality of service it is often the rental house that suffers.
This point is particularly pertinent when considering that for mid-range digital cinema cameras it is estimated that around 50% of total volumes sold enter the rental channel. For high-end digital cinema cameras this figure is much, much higher. Working closely and effectively with rental houses is therefore important for the digital cinema camera manufacturers.
Another solution to the question around technical support is for rental houses to stock a greater number of cameras. This ensures that there is always a backup, but it also further impacts the business as the rental fleet is not being maximised to its full potential and is not always an option when the pace of product launch is so aggressive. In addition, where remote shoots are concerned, supplying a back-up from the rental fleet is not always practical.
The pace of product launch is unlikely to change any time soon with Arri bringing out the new Amira and Panasonic announcing its return to high-end production with its new 4K Varicam, to name just two new cameras coming out this year.
4K is only likely to exacerbate the situation, particularly as demand increases and more vendors look to capitalise on the new technology. 4K production is already well-established in high end production - such as experienced within the movie industry - though it is far from industry standard. However, this will change over the coming years, as demand for 4K permeates further down into the broadcast industry, particularly with the need for future proofing and building a backlog of content ready for any 4K channel launches.
Wider 4K adoption is already gathering momentum and was in the top four most wanted product features in three out of the six genres profiled in the research (drama, commercials and movies). This will continue to increase over time.
The digital revolution has delivered a wide variety of benefits to high-end production, but as with any development there is a trade-off. Unfortunately for the rental channel it appears that it is receiving the thin end of that wedge and that in the future it will be those companies that can change with the times that will ultimately prevail.
About This Report
Futuresource's 125-page European Rental Channel report, covering digital cinema cameras, ENG cameras, DSLRs and film cameras is available for purchase now.
The research was conducted at the end of 2013 and involved 187 participants across 18 countries.
The report features installed base and utilisation rate data for a wide range of nominated products, as well as providing information on brand perceptions, feedback on the most wanted feature sets and the rental channel's expectations on support from manufacturers, giving an unprecedented insight into the European rental channel and the digital cinema camera market in particular.
Please contact Adam Cox at email@example.com for further details.