The film and TV industries are booming. But companies face a challenge in making sure that success does not walk out the door.
The last two years have been tough on cinemas, with box office takings falling off a cliff under the impact of coronavirus lockdowns. But in other respects, the film and TV industries are booming. Stuck at home, consumers have turned to streaming platforms in their droves.
The global market for video-on-demand services such as Netflix and Amazon Prime is expected to see a compound annual growth rate of more than 18% up to 2028, according to San Francisco-based Grand View Research.
And these platforms are scrambling for new content, providing a steady flow of work for production companies. Global spending on new films and TV programmes grew 16.5% between 2019 and 2020, to a record $220 billion, information provider Purely Streamonomics reported last year.
This would seem like an ideal time for production company owners to cash in their success and seek a bountiful exit. But selling a business is not easy when it is built purely on talent that can walk out the door anytime.
That is the challenge facing many players on the creative side of the TV and film industries. And the talent problem is not restricted to big-name actors and presenters, who can pick and choose the media entities they work with.
Behind the scenes, ‘talent’ extends to the host of supporting staff, from script writers to make-up artists, that it takes to produce a winning screen product. The extent to which all these people can be said to belong to a company depends on often labyrinthine contractual arrangements.
Given the industry’s reliance on contractors and sub-contractors, the number of actual employees in a production business may be minimal, giving the company only limited allure as an asset. To demonstrate value, production company owners can adopt one of two strategies.
1. The first is to rationalise employment arrangements with captive collaborators.
Turning full-time freelancers into employees is fraught with behavioural issues (freelancers tend to enjoy the freelancer label, even if they are working full time, each week, every week). However, it may produce benefits from a loyalty perspective and will generally aid compliance with legal considerations including tax.
2. The second option is to create assets that cannot walk: technology platforms, apps, media brands and so on.
This may be difficult for companies that specialise in delivering something as intangible as entertainment, but the raw ingredients are basically the same-imagination plus smart people to turn an idea into reality.
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