The 21st Century Business Model

[Joe Sanders]

A lot of people (myself included, for some time now) have serious misgivings about the role China is playing in de-industrializing the rest of the world and the United States in particular.

However there is a bright side to this equation.

First let me say that as David and Charles pointed out on the Socket Block thread the future of rig manufacturing is in China, period.

Here’s how I think its going to play out. First you have to remember that the vast majority of Chinese manufacturing has been contract manufacturing; that is American, Japanese and European companies mostly hire them to build things for them at a reduced rate. For the most part this rule has been followed with very few exceptions, one notable one is IBM selling off its PC division to focus more on it core business of providing services to large corporations.

To prove that point. How many Chinese brands do you see on the shelves in Wal-Mart, the absolute single biggest player in the China Syndrome (a little movie humor there)?

Back to what’s going to happen. Another axiom that you have to except is that for years, rigs have been extremely overpriced. That is a result of exquisitely written patents, a small overall market, and traditional cameras that were very expensive; making it hard to get into the business in the first place.

We will see rigs of almost the top quality being sold retail for, I’m guessing, $1500.00, before the end of 2006. Leaving everyone building them in a small shops; well, out of business. This includes what you may consider the big guys, because the big guys are really not very big in the industrial world. They’re kind of like small fish in a real small pond.

But that is about to change. All you have to do is look at the Canon XL1 or a more accurate example the JVC DV500U.  Before the DV500, cameras capable of broadcast quality started at around $20,000, now you can buy one for $4000.  That’s a 5 times decrease in cost.

As soon as you can buy one for that kind of money, everyone and her sister will want one. Even people doing the most modest pro-video and even super enthusiasts will buy one from the local camera shop, or order it from the internet.

Now back to the bright spot.

The rules have changed folks.  The initial cost to go into manufacturing has like wise seen a huge drop in price.  So what does this mean for creative people…

My friends it means the world. It means that any one of us can come up with a better mouse trap, and get it made. It means that the next few years will see an explosion of well engineered products on the market. It means inventors will have more control of their futures than ever before.

Anyway that’s my take on it.

[Phil Kindred]

Not to throw cold water on you, Joe, but the company I work for has a lot of stuff made in China.  And it is crap.  Does not conform to drawings, bom's, or test procedures.  You get what you pay for.

[Tom Wills]

That also raises the problem for those of us wanting to become pro ops of operators flooding in.

This has been discussed a lot on SteadicamForums, but I figure that I might as well spread my opinion on this issue.

The widespread mass-production and sale of rigs will NOT threaten jobs as operators. Just because Joe Schmoe will get a rig, doesn't mean that he will be able to operate it on a professional level. Also, I believe that while semi-pro rigs will come down in price, the truly professional rigs will stay up in price, because there will still be so few people using them. Pro rigs will stay a boutique item, and pro ops will still be a small-ish number.

Really, you can draw a lot of parallels to the video world. Cheap prosumer cameras have infiltrated the market and are giving low-level professionals and high-level amateurs great equipment, but that doesn't mean that people who know how to operate an Arri or a Panavision are losing their jobs.

[Phil Kindred]

Let me put it this way--anyone can buy a 6 dollar paint brush.  That does not make him a competent painter or an artist.

[Trevor Crump]

Good on you Joe, and well thought comments Tom.

There are some things in the world we have NO control over, and suppliers getting their products made over seas has been with us for a long time. Australia has lost most of is manurfacturing to Malasia, China, hell in fact anywhere labour is cheap/er, this in it's self in not bad, but the trend to move towards reducing business by forming Duopolies can only lead to higher costs.

For a business to survive, it must get its products from the best cheapest source, yes think about Asia. I dont feel that high grade rigs will come down to $1500US, but a GOOD rig will.

The more people that handle rigs, the better chance the industry has to find the talented ops. Remember the 'cream rises to the top'

Is you glass half empty... or....

[Alan Dague-Greene]

I'm torn about labor going to places like China. On the one hand, as Phil mentioned, boatload after boatload of crap is being churned out without regard for quality.

On the other hand, I don't think many people understand the conditions in China. The workers for many factories actually live at the factory, and work long days. They are happy to do so, because there is no opportunity for them anywhere else. It's like Americans reacting to Latinos coming into the US. I can understand why it might frustrate them, but those Americans probably have no idea what it's like to have absolutely no opportunities.

There are people in China who will spend the day trying to get killed by a car being driven by a foreigner, because the government will provide income for the family that lost their breadwinner. I certainly wouldn't like to have my job taken away to China, but if people are literally killing themselves over a complete absence of opportunities, then it's more complicated than just me keeping my job.

[Joe Sanders]

There are two issues here.

1.   The future of the rig manufacturing business.
2.   The flooding of the market, making it harder to earn money with your rig.

Certainly; there is no substitute for talent. And as Trevor says "How do you see the glass?"

It’s Funny, Tom talks about “cheep prosumer” cameras, like it's a dirty word, but the odds are, if he didn’t use one, he would never get a chance to get started out making movies.

I see this as a good thing, the stabilizer rig is going to become as ubiquitous as the tripod.

And good on it, I say.

[Tom Wills]

Oh yes, I do see it as an incredibly good thing. No longer will this tool that we know and love be out of reach of so many people. I can't wait to see the great new inventions that this could bring and the cool ideas that people will come up with.

Remember people, if motion picture cameras never got affordable enough for Garrett Brown to buy one, we most certainly wouldn't be having the kind of adventures in homebuilding Steaidcams we're having today.

[Joe Sanders]

Remember people, if motion picture cameras never got affordable enough for Garrett Brown to buy one, we most certainly wouldn't be having the kind of adventures in homebuilding Steaidcams we're having today.

What are you trying to say here Tom?

I’m sure that in 1979 or 1978 motion picture cameras where very expensive.  Pretty much only the major studios could afford them. Not that Garret didn’t have one you understand, but I don’t think I see the correlation.

[Alan Dague-Greene]

Not to put words in Tom's mouth, but I guess it comes down to the democratization of everything. Before Photoshop was revealed, the only digital imaging touch-up and manipulation software was upwards of $1,000,000. Before font creation tools were developed, the business of typography was controlled by just a few huge companies. I'm sure there are many other examples.

But I'm really skeptical about camera stabilizers ever being ubiquitous on par with the tripod, or even the external microphone (for the average consumer, or even the enthusiast). By its very nature, the stabilizer is a cumbersome and esoteric device that takes time to understand. You practically have to develop a relationship with it, or you can quickly become frustrated by not becoming familiar with how it moves with you.

A tripod is different. Even if you don't know how to properly frame a shot, chances are you can still screw on the plate and snap the camera on the top of a tripod be rewarded with a steady (to the point of being comatose) shot.

[Joe Sanders]

The French in an attempt to keep their language pure, created laws and a culture to ensure that.

Now English is spoken by at least 750,000,000 people, contains over 1,000,000 words and is the de-facto language for science, technology, commerce, air traffic control, and the internet.

And French contains less than 100,000 words.

Trying to keep other people out of participating by stifling innovation, efficiency, or distribution is an outdated model.

Alan,
You make some good points.  This thread was not intended to make people feel like their chosen careers were in trouble, but more of a warning to would be inventor/entrepreneurs.

We are in a time of huge innovation, perhaps one of histories greatest.  As such, the businesses and employees must continuously look forward and try to predict future conditions.

Just think how much you would have lost; if you had invested in a type setting machine in 1981.

[Charles King]

Well, I cannot add anything that you guys don't already know  or have mentioned. All I can say is that, regardless if production is tranfered to another country or not, the main goal is to aim for efficiency at a low cost result. Now someone mentioned about the quality of the work degrading as a cost of the transfer of production. Well, it does not have to be that way. It's up to the companies that send these jobs to ensure that quality is maintained regardless if it's home or abroad. Sure you get it cheap but how are you getting it? I think the cheapness that mose people are concern about can be avoided. It all depends on how you access the situation. But I do believe quality can be maintain if you really want to.

Alan has made some valid points which is somehow sad to know these facts. Most of the foreign companies are taking advantage of this awkward sydrome( I call it that) to get their production cost down and sales up. I never do like to take advantage of people but in this world of ours if everything seems to be going in the opposite direction than you, joined them. It's an ugly world.