Regional Market Outlook on Video Production Industry

  • Most of the Fortune 500 buyers are currently engaging with their creative agency to avail production services. This is mainly due to lack of understanding of the supply market, due to fragmented supply base
  • High spend buyers are looking for opportunities to engage directly with production houses by signing them on short-term contracts on project-based models

Pricing and Contract Model

Retainer Model

  • Suitable for long-term contracts, as it helps in consolidating the spend and increase the scope for negotiation
  • The production companies get assurance of business from the marketer

Hourly Basis

  • Hourly-based pricing model is chargeable for third-party equipment cost that are paid on hourly basis
  • This includes technologies, such as the CGI, SFX, etc., which require to be upgraded on regular intervals

Project-based Pricing Model

  • Typically used for tactical activities that does not need involvement of specialist and is usually managed by engaging local production companies

Hybrid Model

  • This is a combination of retainer + project based. The industry will have a retainer model with their production company for a set of projects
  • Some projects are billed on project basis, depending on the requirement

Cost and Price Drivers

Prior understanding of elements, like billing rates, agency cost structure, allocation of junior vs. senior staff requirements, and other external cost factors help the to be in a better position to negotiate with production companies.

Key Insights–Internal Cost Drivers

  • Wage Growth Rate : Wage rate contributes to 60% of the overall cost. Any fluctuations in the wage growth rate will have an immediate impact on the cost of creative services
  • Infrastructure & Technology : With the advent of new technologies, especially in the digital and interactive platforms, it is becoming inevitable to improve the infrastructure of agencies at regular intervals. This is leading to a periodic technological cost, which is written off over a period of time
  • Service Requirements : As creative requirements are becoming more niche and product specific, local agencies are forced to hire skilled talents to cater to the same