Movie and TV production studios' move to internalize postproduction will continue to drive industry revenue down
Los Angeles, California (PRWEB) November 02, 2011
Demand for the Video Postproduction Services industry will fail to counter previous losses during the five years to 2016 because developments in digital technology have enabled movie and TV studios to establish in-house postproduction units, according to IBISWorld, the nation’s largest publisher of industry research. The economic downturn has made producers cut costs by doing more in-house postproduction, and it has also hurt the availability of financing and investor confidence. This financial crisis led to a drop in new-movie starts and limited spending on TV postproduction between 2008 and the first half of 2010.
The Video Postproduction Services industry provides production-support services, ranging from animation to format conversion. The industry relies on three markets for nearly all of its demand: TV production, advertising and filmmaking.
The Great Recession negatively affected demand from the Video Postproduction Services industry's key downstream markets. First, a drop in consumer spending reduced advertisers' budgets and resulted in fewer produced commercials, which has hurt demand from this segment. The credit crunch also has made it harder to finance new movies and shows, and producers have internalized many parts of the production process, drastically cutting demand for industry services. Last, because of the delay between the start of movies and the need for postproduction services, the effects are expected to adversely affect revenue in 2011.
According to IBISWorld analyst, Agata Kaczanowska, technology has changed how the Video Postproduction Services industry does business. “Advancements in user interfaces recently enabled movie- and TV-production companies to internalize many tasks, reducing demand for some postproduction services, such as content duplication and subtitling,” says Kaczanowska. Previously, industry work was performed once the initial production had wrapped, but with digital workflows, postproducers are starting to work alongside production companies during video creation to expedite release times and collaborate with producers, especially with digital animation. As a result, establishment numbers have declined in the five years since 2006 at an average annualized rate of 7.0% to 1,504. This trend is anticipated to continue, with establishments declining 1.9% per year through 2016.
The full impact of the drop in demand from advertising, movie and TV studios will be felt through 2016 as the pipeline of projects slows to a trickle. This factor is projected to decrease revenue 0.6% in 2012. The industry will continue to benefit from its diversity across revenue sources, though, particularly as rebounding TV ad budgets lead to higher demand from the ad segment. The three related industries are forecast to grow after 2010, but movie and TV production studios' move to internalize postproduction will continue to drive industry revenue down. IBISWorld estimates that revenue will stagnate through 2016 and remain at $4.1 billion.
For more information, download the full report from IBISWorld on the Video Postproduction Services industry
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