Production costs are rising, adding to pressure on production budgets. According to a recent Ofcom report, producers are reporting average cost increases of 80% across various production resources over the last five years, with the most significant inflation in roles like directors, on-set technical resources, and post-production.
This is driven by macroeconomic factors like inflation, as well as industry-specific issues like skills shortages and increased demand from new content buyers.
At the same time, production finance is being squeezed. Broadcaster commissioning budgets have come under pressure from declining linear TV advertising revenue, the lingering economic impact of the pandemic, and public funding pressures on the BBC.
As a result, commissioners and producers are having to find additional sources of funding to meet rising production ambitions and costs.
These financial constraints are manifesting in projects being delayed, scaled back, or cancelled altogether. For example, Channel 4 has recently had to pause, cancel, and phase the release of numerous shows to stretch its programming budget, which hit a record high in 2022.
Independent production companies are also suffering, as Channel 4 and other broadcasters pull back on commissions.
The situation is exacerbated by external factors such as the Hollywood strikes last year, which insiders have described as having an immediate and catastrophic effect on the UK film and TV industry, with major studios described as ghost towns.
This has led to widespread instances of freelance crews being out of work, with one industry executive estimating three-quarters of freelancers in recent times have been unemployed at one time or other.
While the UK industry remains resilient and adaptable, it is clear that producers and indies must navigate a challenging landscape of rising costs, tightening budgets, and external shocks. Beyond careful budgeting, diversifying funding sources, managing cash flow closely and maintaining flexibility will be crucial for weathering this storm and ensuring the continued production of high-quality content.
In order to work within the financial constraints in TV and Film, production companies are increasingly turning to specialised project management and accounting tools like OctopusPMI to help navigate these pressures.
OctopusPMI is a leading production cost management, and financial accounting management solution developed by industry specialists KAI Consulting.
It is designed specifically to address the unique needs and complexities of the creative industries, providing a comprehensive suite of features to help producers and production companies maintain control over their budgets and finances by providing ‘real-time’ information. In fact, unlike other well-known products in the industry, it is the only solution that brings these two vital areas together very effectively.
Production managers using OctopusPMI benefit from being able to see all the data, live, and across multiple projects. This is a real game changer in terms of control, making decisions based on facts, allowing producers to track costs across all aspects of the production, without having to wait for accounts to cut off, reconcile and then share reports.
From on-screen talent and technical resources to post-production and physical costs, this level of granular oversight can be crucial in an environment where production costs can rise rapidly.
The advanced budgeting and forecasting capabilities of OctopusPMI, enables producers to model different scenarios and make informed decisions about how to allocate resources to where it matters most.
This can be particularly helpful as producers navigate the challenge of finding additional sources of funding to meet rising production ambitions and costs.
The platform also includes features to streamline production workflows and improve collaboration, document sharing, and real-time reporting with drilling down to the source.
These capabilities can help production teams work more efficiently and effectively, reducing the administrative burden and freeing up time and resources to focus on more creative aspects of the project.
OctopusPMI has the seal of approval from the Production Guild of Great Britain, providing a crucial lifeline for producers seeking to maintain the quality and viability of their projects.
We hope you will join us as we answer more of your questions at an event hosted by the Production Guild of Great Britain later in the year.