Connections

As the world emerges from the events of the last year and we begin to see a return to some degree of “normal,” there is one industry that stands out amongst the crowd of industries impacted the most by COVID-19 both temporarily and permanently, the film and TV production business.

Streaming demand went through the roof as consumers were locked down at home spending more time on their devices watching more content than any other time in history, especially as several new streaming entrants launched. While demand was growing exponentially, producers were shut out from creating new content to meet that demand. This required some innovative and creative thinking.

This pause for reflection was a good thing.

Film producers have always invested and innovated around the production of content, but historically they have not focused on automation and digitization of their accounting and financial processes outside of the complex payroll side of production. The other approximate one-third of production costs consists of non-payroll transactions. We believe there is significant opportunity here to rethink these processes.

Why? Production cost in 2019 (clearly hard to get those for 2020 due to the shutdown), at around $118 billion for the top 15 content creators in the U.S., driving spend efficiency across its value chain should be the easy sell to a CFO!

Another good data point is from Deloitte. Since 2010, the number of scripted TV shows on US networks has more than doubled and streaming services are now paying up to $20 million per hour-long episode —several times the cost of just a few years ago. It is the right time to transform the production spend status quo.

This massive increase in spend, production velocity from increased demand for the streaming growth, compounded with the impact of Covid is forcing the move from a long standing non digital, but workable manual payables process, to a non-integrated contactless process with added effort and added risk.

As “contactless” needed to happen for safety, producers turned to various SAP partners including DocuSign, to make things work. Perhaps most prevalent was the move from paper check to ACH — itself a transition from a manual to a digital process. With it comes the need to protect confidential bank account information and mounds of reconciliation, adding both exposure and inefficiencies.

Productions pre-COVID operated with all people on set or otherwise together in one location, so walking an invoice around for a written approval was no problem, suddenly it needs to get to a production accountant sitting at home or in a remote location.

Payments pre-COVID were primary made via check and either handed to the supplier or mailed. Payments now need to be contactless, so producers turned to ACH. ACH requires on boarding a supplier, gathering payment information, including bank account details- mostly via email, inputting that payment information (often by non-production employees) into one or more systems.

Just as new digital entrants have created new business models like streaming, startup companies from outside our industry are seeing opportunities to bring processes, technology, and business models to the production world.

One such company looking at how to make the production supplier on-boarding, invoice approvals and payment more efficient is a FinTech company called Eved. With its roots in paying suppliers in the event industry, Eved is taking aim bringing innovation and best practices to our industry.

Eved has spent months understanding the biggest challenges and desirable solution across both the major studios and independents to help bring security, efficiency, and visibility to Production. The global payment infrastructure that Eved has built over the last 10 years that services some of the largest companies and top brands in the world, will solve for production’s biggest pain points of supplier on boarding and electronic payment.

Eved also learned that the key to a successful solution for this industry is to make sure the solution reduces systems and work for the accountants and doesn’t add more complexity. Eved consolidates the average studios’ five systems and three payments processes into one simple process for the accounting team.

That’s only part of the story though. By integrating directly with SAP, film studios, and content producers will be able to see details behind this spend category at the title, series, season, and episode level. We believe this expanded view of the data across the value chain will enable smarter budget decisions sooner in the spend process.

Add this to the other spend categories that SAP manages like production procurement, (catering, security, cameras, vehicles …), travel and other non- payroll non-gig economy workers (script, writers), suddenly you can have true cost transparency across the production value chain.

SAP has more than 89 percent of the revenue created by Hollywood processed on its platform so SAP was a natural partner for Eved to bring supply costs from the “coalface” of production directly into SAP. By bringing these costs in at the atomic level, against the resulting revenues at the title hierarchy level, studios and content producers can really start to understand the title P&L and resulting margins.

“We are very excited about the opportunity to partner with SAP to provide a solution that works for the unique aspects of production to make the process easier for Accountants, while SAP provides the insight into the production spend in a way that it is actionable,” said Talia Mashiach, CEO and founder of Eved

What is clear is that once we get past this initial rush of post pandemic production, things will change. Efficiencies must occur. We are already seeing some of our studio production customers achieving remarkable savings efficiency in their procurement processes.

Explore the art of the possible.

Imagine as a production starts all kinds of talent is on-boarded. Seamlessly the supplier details captured.

Goods and services procured on an automated platform and all those costs flowing directly into the planned budget at the detail item level, against the detailed episode or music video that those costs relate to.

Imagine production finance being able to look in real time and spend this occurred and adjust accordingly without the need to have a retrospective look after production has finished.

Imagine your suppliers like your make-up artist being paid seamlessly through an app on their mobile device for them to be able to look at any time during the process and see the status of the renumeration for the services rendered.

Imagine a world where the headache of paying the suppliers through bank transfers, through paper checks is a thing of the past.

Seem futuristic? Aren’t we just coming off a month where two businessmen were able to fly into space and be back before lunch? Anything is possible if the desire to change is there. We at SAP believe partnering with our clients and companies like Eved who share a vision will result in great change.

With this vision becoming an inevitable reality one thing is for sure. “The check is definitely not in the mail!”

* By Richard Whittington, GM and SVP for M&E, SAP