As equipment vendors struggle with an overall unwillingness among broadcasters to start new capital expenditure (CapEx) projects, they have had to become creative, both in their pricing structure and their technology offerings, in order to win new business.
Rodney Mood, chief operating officer and CTO of Crispin (www.crispincorp.com), a veteran automation supplier with hundreds of customers (commercial and public TV stations) throughout North America, thinks he has found a way to improve his bottom line while helping stations acquire the latest technology without having to own it. Leveraging the system-as-a-service (SaaS) model being applied to the broadcast industry with increasingly regularity (e.g., cloud-based processing and storage services), Mood has launched a new monthly subscription program for Crispin's Cameo (a standard system of up to eight channels) and Veranda (a customized system for larger, multichannel operations) automation platforms.
He calls it the right idea at the right time.
"Our watershed moment came a year ago during our negotiations with the PBS stations we regularly support," he said. "We realized something had to change immediately in the way technology is bought and supported because their grant money, like virtually every commercial station's budgets, is being reduced significantly. But they all still have a need for high-quality automation to keep their stations up and running smoothly in the most cost-effective way."
Mood quickly deduced that although grant money for CapEx projects was going away, stations still have an operations (OpEx) budget that is renewed each year.
"No matter what you hear, capital budgets are not coming back strong," he said, "I think we're locked into this era of 'careful spending' for a long time — even as the economy seems to be improving and ad spending at TV stations is actually up this year. But operationally, those budgets are still fairly predictable and highly necessary to keep the station on the air."
Having dealt with decreasing budgets for some time, Crispin has tried to attract customers by increasing its after-sale support; moving from seven years of service and support and three years of hardware maintenance, to four years or service and four years of hardware warrantees. Since 2006, this has been called the "Crispin 4 Life" program.
Apparently, however, it was not enough to get stations to start upgrading their aging automation platforms in any meaningful way, even though, as Mood sees it, there are "more than 60 percent" of the stations in U.S. that need a new system (meaning their existing equipment is more than five years old).
"The problem chief engineers have is that they must keep going back to management for new money to support an old platform," Mood said. "It's a tough sell because management wants a fast return on investment and a clear idea of how long equipment is supposed to depreciate. With an automation system, although it keeps everything running, it's hard to put a finite number on how much value it provides day to day."
"So, if we can offer simplicity, predictability, and a low cost per channel — even better than some of the 'channel-in-a-box' solutions now being offered — while at the same time provide higher quality signal processing and automated playout as a best-of-breed vendor, then I think we can be successful with our new subscription-based services model."
Crispin systems also offer channel branding and asset management capabilities that help stations establish "hands-free" workflow processes that save time, staffing and money.
Under terms of the new rental program, Crispin requires an 18-month commitment (which can be paid in full) and will provide all of the hardware and software required to get a station up and running. With the Cameo system, the company provides hands-on assistance remotely and provides documentation and instructional videos to help get started. With Veranda, a team of Crispin system engineers will come onsite to help with the integration and training as part of the package ordered.
Once the initial 18-months period has expired, stations can move to a strictly month-to-month commitment. The benefit to stations is a preconfigured system that is sure to work and the no-risk guarantee that they'll have the latest technology without having to pay incremental fees.
The new subscription program makes Crispin's entry-level Cameo system available for about $550/month for a four-channel system. There are a number of extras that increase the price and sophistication of the system. The Veranda system can be rented for $1024/month for a four-channel system and it also includes package options for a real-time interface with the WideOrbit and ProTrack traffic systems.
And the best part for station engineering staff — according to Joe Zaller, founder of market research firm Devoncroft Partners (http://devoncroft.com/) — is that they can often "bury" this payment within their OpEx budgets. This model also enables stations to take the automation piece out of their CapEx projects so they can then afford better routers, servers or graphics tools, while supporting automation with their OpEx money. The current weak economy (and the fear it has created) has made these types of "shell game" formulas critical to desperately needed facility upgrades.
And with a relatively small, predictable monthly cost for automation, station management could even consider hiring back one or two people to work in master control. Of course, they could operate a station without automation altogether, but it requires even more people.
"This subscription model will provide a way for us to introduce people to our technology and show them the true distinctions between our systems and others on the market," Crispin's Mood said. "While we'll continue to sell CapEx-based projects when possible, this program provides another means for people to get in now when they may have thought they'd have to wait several more years before they could afford it."
Many would say that the automation category is expensive for a vendor to support (in terms of regular software upgrades and bug fixes) and thus renting systems might make generating a profit impossible. Yet Mood says they've crunched the numbers and can generate new revenue for the company.
"We would not be doing this if we didn't feel we could make money at it," he said, "but desperate times call for creative measures that will stimulate the market to invest in their facilities for the long run. This new program brings us closer to our customers and lets them know that we are in this with them. We'll now have a highly vested interest in their success."