Production Company Myths: “We Handle Everything In-House”

A quick Google search for video production company services reveals numerous production companies touting some variation of “we handle everything in house”. This is meant to assure the client that they are a “full-service” production company, “from concept creation through the final production”. Some go so far as to state, “no part of the production process is out sourced”. The spin on this is that it allows them to “keep full control of the creative production process”.

Is the production company an “innie” or an “outie”?

There are two business models that production companies can operate under: low overhead with low margins vs. high overhead with high margins. Production companies that keep everything in-house generate a high gross profit margin, but that comes at a cost: a larger staff of creatives, producers, editors (payroll); more equipment (capital) and a larger infrastructure (rent).

There are certain production scenarios where this model can be beneficial to the client. If your project has a very tight deadline, a small budget and a short shelf life, then the “all-in-house” production company may be your best best. By keeping the job in-house production companies have more control over scheduling and the budget. To get the job, they may choose to absorb part of the budget, if there are little or no direct costs.

For many clients and projects, there is nothing wrong with the all-in-house approach. It can encourage long-term relationships and the client may indeed sleep better knowing that everything is being created under one roof.

One downside for the client can be whatever creative and technical limitations exist within the company. Production companies that are heavily invested in last year’s technology may have a harder time staying on the cutting edge. In our above example, there is no time or money to outsource a custom music score, 3D modeling or other added value elements. Plus, if the company unexpectedly lands another “quick and dirty” job, it can be very disruptive for everyone involved.

Do in-house production companies suffer from “creative inbreeding”?

My personal observation is that all-under-one-roof production companies (and their clients) need to be wary of “creative inbreeding”. This can happen when the in-house staff is rarely exposed to a wider variety of challenging projects, creative direction, production styles or workflow systems. A byproduct of creative inbreeding are projects that tend to look and sound similar to each other, using the same resources repeatedly (e.g., graphics, backdrops, stock footage, music, etc.). Ultimately, these projects may not deliver that extra WOW factor that allows your video to stand out from the crowd.

Production company clients like the idea that they are getting the best resources available to deliver the most bang for the buck.

Another potential pitfall of all-in-house production companies can be a certain lack of transparency. No matter what the sales rep told you, chances are that outsourcing is still necessary on some level e.g., scriptwriting, animation, package design, narration, etc. which can be potentially confusing or even embarrassing when the client realizes the reality. Better that a production company be honest and transparent up front. Clients like the idea that they are getting the best resources available to deliver the most bang for the buck.

The ongoing trends in technology that have lowered the barriers of entry to quality production have also diminished the need to remain all-in-house. The bottom line: filmmaking on all levels is a collaborative process; what’s “best for project” may mean going outside a production company’s in-house resources.

What are your thoughts?