Supply-side Dilemma 

1 December 2006

The fast pace of technological development and increased competition has its downside as well as its upside, in the broadcasting world as well as the consumer field. The big casualty is product support.

Way back in 1962, I started work as a Technical Assistant in Telecine at the Teddington Studios of ABC-Television – this ABC being Associated British Cinemas, part of the Pathé group, which held the commercial TV licence for weekends in the Midlands and North of England.

On my first day, Operations hi-jacked me to help move in their new pride and joy – the first-ever transistor VTR installed in UK. This baby was an RCA TR-22 2in quadruplex videotape machine, a mere 2m H x 2m W x 1.5m deep. It took eight of us to manoeuvre Machinus Maximus into place.

That day, two were delivered to ABC and two to the BBC. Within months the ABC studio complex was being served by four of these units – each with a pricetag around £250,000. To put it in context: my yearly pay was £1,250, so each VTR cost the equivalent of 200 TA salary-years.

These days I can carry a broadcast VTR under my arm and deliver it for about eight months-worth of TA take-home pay.

But there’s another aspect to those Teddington VTRs. They came as a complete deal – full spares kits, extender boards and detailed Service Manuals that explained (in clear English) how the machine worked, along with diagrams, waveforms and voltages throughout the circuitry. The studio kept an extensive maintenance department on hand (on both shifts) to fix problems and machines – backed to the hilt by RCA with a ready stock of spare parts, expert technical information and a willingness to fix any problem.

This comprehensive support was costed in upfront – ie part of that £250,000.

Today’s broadcast scene is vastly different. Cable and satellite TV, magazines, radio (AM, FM, DAB) newspapers, DVDs, computer games, the Internet, all compete for consumer attention and ad budgets. The world is faster, demanding instant gratification. TV News in particular has become fiercely competitive. Operations must be cheaper, faster, ahead of the next network. Digital technology now means smaller, smarter, more mobile equipment. And each new generation isn’t just more capable – it’s hotfoot, with developments overtaking each other in months rather than years.

The result is a supply-side dilemma, on several fronts.

First – how can manufacturers keep pace with spare parts when changing tape formats and new processing chips are being released faster than a 2-year design-develop-marketing programme can cope with them? For distributors it’s an inventory nightmare trying to service the TV, audio and AV industries with so many ranges, so many products.

And TV corporates are no longer interested in space, staff or money tied up in spare parts stock that will be obsolete before next year’s rating war.

Next – reliability. It’s so good, techies tend to take it for granted. Yesteryear equipment, like a valve-driven vision mixer, could be full of quirks that needed to be handled hands-on, inside-out. Any engineer worth the name could diagnose and fix faults down to component level. Not so today – LSI technology packs so many features into a single processor chip that if it fails, the only solution is to change the whole PC board.

The result is a diminishing role for station maintenance staff – but corresponding rise in the call for manufacturers/distributors to provide professional back-up.

Next – the “global village” syndrome. Everyone knows what’s happening around the world, almost as soon as it happens. The Internet has revolutionised the way we do business (how often do you send a fax these days?) especially in accessing product information, including pricing in other markets – European, Asian or US.

Next – the dilemma of price. Approved/recognised suppliers operate an established pricing regime that includes funding buffers for warehouse/workshop infrastructures, spares inventory and support services. This pricelist was intended to keep everything upfront – ie “orderly marketing”.

Not any more. These inbuilt margins are currently under intense pressure from “grey importing” – short-term traders who operate via invoice-only and the Internet. Their cost structures tell the story: no overheads, so no after-sale service. Right now this low pricing has put the squeeze on competitive pricing at all levels. But when margins shrink, so does the ability of reputable suppliers to provide the specialist service that a professional broadcast industry needs – a situation made worse by the pace of change in new models, new media formats, new technologies.

The question for broadcast engineers then becomes a strategic decision – pay less now, ignore the long term, and risk hefty servicing costs and downtime delays because there’s no back-up in parts or expertise.

Or think of it as investment and insurance – because at the end of the day, advertising, staffing, training, support, spares, stock-holding and industry support all cost money and have to come from somewhere. A fair price not only ensures a viable supplier: it means a sustainable industry for the benefit of all.

These days, many problems can be sorted out by downloading the latest software patch or update, and support can be done by phone and email – so long as the support person not only knows all products inside out, has instant access to sourcing more information, and understands time-critical imperatives in modern broadcasting; but can also diagnose a difficulty and communicate back a solution sight-unseen via the phone.

Such skills are not easily found – and not cheap. Rather than carry these costs, some suppliers are looking to the specialist services of independent consultants for after-sales support as a way to streamline margins on actual equipment, but still keep faith with clients.

In short, the Film, TV and AV industry is under enormous pressure from pricing, competitive pressures, technology developments and audience/advertiser/training demands. Manufacturers and distributors are required to provide more support and stock of spare parts than ever before, as customers try to cope with their own cost pressures by reducing engineering support and spares inventory.

It’s a balancing act the supply side has to win to survive.

An earlier version of this article appeared previously in Content & Technology Magazine (Australia) and is published here by kind permission of the author.

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