Yesterday I spent some time completing a business model canvas (1) for a post house. The process was thought-provoking because I saw that the cost structure for running one is very complex but the customer segments are very small. Basically: a post house is a viable business because it bundles all of the complexities of flexible workspace management, post production equipment management, video engineering, video IT services, talent management (for Colorists and Audio Engineers), and client services.
On the other hand, for a small or mid-sized post house, there are only two primary customer segments: 1) small production companies without the capital or experience to build out their own offices, or 2) the overflow for large production companies.
The challenge of balancing rising real estate prices, the diminishing complexity of ‘basically-free’ editing tools, and a small market of potential clients put the business model in a precarious situation. A post house that’s too small, while reducing their risk, may not be able to accommodate large productions and loose opportunities. A post house that’s too large has the ability to attract more productions but might have to settle for low-margin office space rentals just to keep the lights on. Tricky business either way.
Enter the Netflix color pipeline:
Netflix is a blessing for the post house business model. Look at their color pipeline! Not only is that workflow complex as heck, but it works so much better when offline & online editorial shares the same storage infrastructure. And it’s doubtful any single production company has enough Netflix finishing work to justify the expense of keeping all the pieces humming smoothly.
Business Model Canvas is a strategic management and lean startup template for developing new or documenting existing business models. It is a visual chart with elements describing a firm’s or product’s value proposition, infrastructure, customers, and finances. It assists firms in aligning their activities by illustrating potential trade-offs.
The Business Model Canvas was initially proposed by Alexander Osterwalder based on his earlier work on Business Model Ontology. Since the release of Osterwalder’s work in 2008, new canvases for specific niches have appeared.