Mobile Vendors Enjoy Smoother Ride in 2010, Part II

(Continued from Part I)

The financing picture for mobile vendors hasn’t changed much in the past year, according to Garvin, since “it’s perceived as an industry that is not particularly recession-impacted.” However, he acknowledges that lenders may be a bit more cautious and “they’re a little more interested than they were” in seeing long-term contracts.

“The bottom line is, things haven’t changed,” says Garvin. “If you want to borrow a few million dollars, you have to have great credit.”

Meagher says that securing financing to build a new truck hasn’t gotten any easier and that it took Trio longer to secure financing for Tempo than originally expected.

“You have got to have a business plan that makes sense to the people with the money,” he says. “We were able to do this, but it took another year longer than we thought it would. I think it’s still a fairly tight credit market.”

Although Meagher has heard of some mobile vendors’ managing to secure loans for a new truck without having a guaranteed long-term contract from a programmer, he describes long-term contracts as “still pretty critical.”

Hudson, NH-based Game Creek Video rolled out two trucks and a B unit this summer. President Pat Sullivan also says financing is still difficult and requires showing lenders a long-term contract for a new truck.

“I think financing will remain a challenge for a long time,” he says. “Banks are just more reluctant to lend money and have a lower tolerance for risk than they had in the past. That’s going to stick around.”

Game Creek’s oldest HD trucks are from 2004. One of them, Yankee Clipper, was used by YES and was replaced by the new YES truck, Dynasty, which launched Sept. 1. The company’s other new truck, Larkspur, was built for ESPN.

The new trucks for ESPN and YES represent a “significant change in design philosophy,” Sullivan says, and are designed with 3-Gbps infrastructures to ultimately support 1080p/60 production.

“We like to plan these things so they last us some period of time, and you have to look into the future to a certain extent and make a judgment about where the future is going to take you,” he explains. “We feel a real push on the part of all customers to be able to ultimately deliver full 1080p product to the home, and we built these trucks with that in mind.”

Yankee Clipper and Patriot, which also launched in 2004, and Freedom, launched in 2005, are scheduled to be refurbished in 2011, 2012, and 2013. They will get new routers, new monitors to replace CRT units, and upgrades to their Calrec audio consoles.

“From a technical standpoint, no, we don’t need to do that,” says Sullivan. “But, from a reputation standpoint, we do have to do that.”

Recently, Game Creek has supplied its trucks for Web and interactive applications in addition to primary broadcasts. For the two latest U.S. Open golf tournaments at Bethpage Black in New York and Pebble Beach in California, Game Creek has taken the large mobile unit that Fox usually uses for NASCAR coverage, FX HD, and used it to support production of SportsCenter, interactive channels for DirecTV, and streaming video for the USGA. 

“There is an opportunity there, but I think it’s pretty limited to really large-scale events,” says Sullivan. “Occasionally, you’ll have a regular-season NBA game that will have a Web component to it. But the folks at Turner have made that really efficient and are able to support it from a standard game truck with a single guy on the back bench with a router.”

Corplex has supplied its B units for streaming applications, and West sees that trend increasing as networks look to monetize their video to the fullest extent possible and more consumers turn to the Web for specialized coverage, such as the Amen Corner Webcast during the Masters.

“It’s definitely a huge growth factor in the large events we work on like the Masters and the baseball and NBA playoffs,” says West. “I foresee that filtering down to standard events; it’s already being done.”

To this point, Corplex generally sees supporting alternative feeds as more of a value-added service to its large clients, not as a significant source of new revenue. Occasionally, the company has won additional business on-site at an event as clients come up with an unplanned job for a B unit.

Alliance’s B units have also been used to produce alternative streams. For example, one served as the “dotcom” control room for Turner Sports’ coverage of the PGA Championship.

“Everybody is trying to get more out of a remote now than they were 10 to 15 years ago,” says Farrell, “and the way to do it is to send the signal more places and brand it differently.”

3D or Not 3D
Another potential source of additional revenue for mobile vendors is supporting new stereoscopic-3D broadcasts. NEP has taken the early lead on 3D, building two 3D-dedicated units in conjunction with 3D specialist PACE. Game Creek Video has also done several 3D productions, working with 3ality Digital, and New York-based All Mobile Video has built a 3D truck based on 3ality rigs that so far has focused on entertainment production.

SS32, NEP’s brand-new 3D truck, has been dedicated to ESPN’s new 3D channel and is booked through the middle of next year, every week. SS31 is handling 3D productions for DirecTV’s n3D channel and has a backlog of several months.

Beyond those two anchor customers for 3D, Honkus says, there are “a lot of inquiries” about 3D but no new customers. Potential clients want to know “what the real cost is and how do I shoot it?”

Other vendors say that 3D is an interesting technology but express doubts about its long-term business prospects.

West says he has kept up-to-date on stereoscopic 3D technology but is not a “real proponent” of 3D at this point. He’s waiting to see if 3D sets sell this holiday season in any meaningful quantity.

“Nobody wants to pay for it,” he adds. “The set manufacturers want to sell their wares and are sponsoring it, but how long will that last and will it be long enough to grab enough viewers to make a business model out of it?”

Farrell is also skeptical and believes that glasses-free (autostereoscopic) 3DTV sets will have to be broadly available for 3D to take off. Until then, he expects that it will remain a niche technology used only on special events.

“We’ve done a couple shows in 3D, and we have a little 3D lab here where we play around with it,” he says. “People see it and are wowed by it. But how many people have seen it in the living room? Less than 1% of the public? That’s not a very big audience for people to go out and do a regional basketball game in 3D.”

The Bottom Line
Although business has been strong in 2010, mobile vendors say they haven’t been able to realize any price increases from the rebound in the economy.

F&F’s Orgera hasn’t seen any price increases except for some 2%-3% annual increases that were already written into contracts. “On extensions, we’re seeing flat pricing, and the equipment is not getting any cheaper.”

Meagher also hasn’t seen any real evidence of price increases across the industry, except pre-negotiated increases for adding a particular piece of gear for a truck.

“In fact, I think things are still very competitive,” he says. “It still seems to be a difficult time in football season to get enough trucks to cover the whole country, but the rest of the year is not as tight. I think people are being more aggressive on price. People are still focused on the low inflation rate and low ad revenues.”

Most mobile vendors are worried about a potential NFL work stoppage next season. West predicts there will be a stoppage, which would create a surplus of trucks. But he won’t hazard a guess as to how long it might last.

“The whole industry is concerned about that, as that would affect everybody,” he says. “We would like to see a resolution on that, but it’s out of our hands.”

An NFL work stoppage isn’t a huge worry for MTVG, which does only a few NFL preseason games. However, more trucks being available could increase competition for MTVG in its core RSN business. But Garvin, who lived through the National Hockey League lockout that lasted through the 2004-05 season, acknowledges that such strikes are incredibly damaging for mobile vendors.

“During the NHL lockout, they kept saying they were negotiating and they could come back anytime well up to the halfway point of the season,” he recalls. “What are you supposed to do? The same thing is going to be true for the NFL mobile-unit providers, as they could come back on two weeks’ notice. It’s a very tough spot for mobile companies; it’s a no-win deal.”

NEP’s Honkus admits to being very concerned about the NFL situation.

“We’re just hoping that people are smart enough [to avoid that],” she says. “Now that the economy is starting to turn around, the NFL owners need to realize that would just crush the economy. Not just the little old TV companies but everything else that has gone back up since 9/11. So that’s a huge concern. We’re going to buckle down and prepare for the storm, if it happens.”