M&E Journal: Finding the Right Content Financials Solution for M&E

By Kedar Patwardhan, Global Head, M&E Business, Invenio Business Solutions

The unique creative drive of Hollywood to tell stories for enhanced consumer experience has been accelerated with digital technology, data analytics and social media. Digital and special effects now frequently dominate production budgets, in some cases accounting for as much as 60 percent of the investment in content creation. The resultant increase in investments in epic content has raised pressures on the bottom line where production budget overspend has become a concern.

While Avatar is notable for having one of the largest feature film budgets ever, at an estimated $425 million, many recent popular features ended up costing near enough that, at between $200 and $340 million. These budgets cover the cost of the cast, rights and writers, producers, director, production (including location expenses and transportation) and post-production, but not marketing.

With box office revenue growing only modestly through ticket price increases and DVD revenues continuing to decline, content creators’ cash crunch is exacerbated by the skyrocketing cost of marketing.

These trends together contribute to fewer than 10 percent of the films released becoming profitable and have spurred an increase in content being created by budget-conscious independents and direct-to-consumer (D2C) companies for a multi-platform distribution market. The objective of reducing waste and inefficiency while making smarter decisions and tightly controlling both production and marketing spending, has become pivotal for the resurgence of the M&E industry.

Managing production spend

Production departments in film, TV, home entertainment, video games and music are beset by issues that make accurately managing budgets and cash flow an exceptionally difficult task. Creative teams need to have the freedom and flexibility to turn vision into reality, but spending must be carefully monitored and controlled to ensure that overspend is eliminated and profits are maximized.

The production issues that can be altered are the following:

-P&L planning: Lack of P&L foresight on new content at ideation stage
-Production spend: Little control and visibility over production budgets results in overspending
-Transparency: No visibility between siloed departments that work with their own data
-Financial planning: Often segregated, with long-term forecasting and short-term budgeting being managed in different systems which limits visibility, reporting capability and reconciliation
-Managing series budgets with no granular visibility over individual episode costs: Increases the risk of overspending or restricting creativity.
-Little to no transparency of scheduled budgets: Insight into current project progress or upcoming payment milestones is necessary to initiate subsequent activities in a timely manner -Gaining approvals for supplemental spending: Can be slow and cumbersome because of lack of visibility
-Business users: They have a need for spot procurement, expense booking and time booking

Managing media spend

Invenio’s Content Financials solution has been developed for media organizations on SAP technology for easy implementation, both in the cloud and on premise. Available from the SAP App Store, the solution is also certified for easy integration with S/4HANA — SAP’s “Digital Core” platform built for the future. Media Spend Management Solution provides a complete and granular visibility over content production budgets, spending and cash flow.

System functionality

The new-age Invenio Content Financials solution starts with helping you in the green-lighting process. Various departments can contribute at this stage and you can make a more informed decision about whether or not to go ahead with an idea. Once approved, it becomes a one-stop shop to manage talent contracts, production house spend, vendor contracts and budgets.

This dovetails nicely into production accounting where the solution helps you manage the ongoing spend happening on day-to-day production activities: from invoice processing to expense booking. You can also perform inventory recognition for your assets and make automatic system provisions. All this while, you have a real-time view of budgets in relation to spending and completion. Finally, you can also amortize your asset based on amortization rules that you can set through a flexible grid provided in the solution.

Tighter budget control, improved decision making, increased visibility and enhanced reporting are delivered by the system with the following features:

-Automatic alerts for red-flag issues: Instant notification of overspend issues helps to keep a tight grip over production budgets with minimum disruption
-Align long- and short-term budgets: A single source of truth for managing future forecasting and current budgeting enables a complete overview of spend management and cash flow for full financial transparency
-Improved forecasting and reporting: Quickly and easily produce customized, highly detailed spending reports as well as more frequent and accurate cash-flow forecasts, all based on real- time financial data
-Complete cash flow transparency: Easily track available cash flow at-a-glance, with up-to-date visibility of approved budget vs current spending and notifications of upcoming payment milestones
-Granular budget visibility: A single- page overview provides real-time visibility of all budgets and spends, with the facility to deep-dive into detailed costs, marketing, production and studio expenses
-Streamlined and accelerated approvals: Manage approvals anytime and anywhere with notifications sent directly to Android or iOS phones, or create automated digital workflows to approve or decline supplemental spend requests

The Invenio solution was built for Star India (a 21st Century Fox company) which has defined the Indian media landscape for over two decades as one of the country’s leading media conglomerates. Recently, it revolutionized the OTT platform concepts again by reaching 300 million monthly active users — nearly double that of Netflix.

Content Financials manages 25,000 hours of content over 40-plus channels in 10 languages and the complete Hotstar online platform with nearly 6,500 vendor contracts and close to 2,000 artist (talent) contracts. Today, new content is green-lighted through this solution at Star and the platform has been extended to all content types — movies, series, sports events, documentaries, reality shows and live events.

Star TV has realized a 40 percent reduction in month-end closing activities and 30 percent more efficient accounts payable and forecasting since implementation. The cash flow predictions have become very accurate and the planning for business is far superior.

The solution is modular and can be implemented in accordance with the needs and priorities of the customer. This tool augments the creative process of production of content, whether it is for film, TV, home entertainment, video games or music, with a control and decision-making system to eliminate waste and ensure successful project completion in a timely manner.


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