AGS4 Executive Summary
Based on the performance of the individual companies within the 2018 dataset, the footage industry is stable, with total industry revenue now estimated at $570 million, which is 3% higher than our 2015 estimate of $552 million. At the company level, 55% said that their revenues had increased over the last two years, and only 14% said their revenues had decreased.
The overall industry revenue estimate is derived from a statistical analysis of the per-company revenue reported by survey participants using a method known as the Weibull distribution, which measures company-to-company variability and allows for a variety of statistical shapes, including the skewed distributions typically associated with industries that are dominated by a small number of large companies. From this analysis, a per-company mean revenue is estimated. In this case, the per-company mean is $1.374 million, with a 95% confidence interval of $0.900 million to $2.336 million. To get the total industry revenue estimate and the associated 95% confidence interval, we then multiplied $1.374 by the total number of companies in the footage industry, which is estimated to be 415, producing an estimated total industry revenue of $570 million.
Based on our analysis of the 2018 dataset, it was also determined that companies with revenues of over $3 million, which make up roughly 13% of the total companies in operation, generate 95.2% of the total industry revenue. Eleven companies with revenues of $3 million and above participated in the 2018 survey, and an analysis of responses from the Top 11 companies is shown separately throughout this report.
The estimated per-company mean dropped by 4% between 2015 and 2018, from $1.433 million to $1.374. Because the revenues of the top performing companies are orders of magnitude greater than those of the smaller companies, the mean is disproportionately affected by the revenues reported by the leading companies, and the drop is indicative of flattening revenues for companies at the top of the revenue spectrum, compared to 2015 results. This does not mean that the top companies did not grow, as 75% of Top 11 companies reported growth over the last two years. That said, their rates of growth were lower than companies with revenues below $3 million. Whereas 52% of companies with revenues below $3 million grew by 10% or more, only 38% of Top 11 companies grew at that rate.
The 2018 median revenue number, which half the companies in the industry would exceed, is $330K, which is 5% higher than the 2015 estimated median of $314K. Because revenues among the smaller companies are so much lower than those of the top performing companies, the median figure is disproportionately affected by the performance of the companies at the lower end of the revenue spectrum. Thus, the 5% increase in the median estimate is indicative of revenue growth among the smaller companies. Of the companies that grew their revenues by more than 10%, 75% had revenues under $1 million.
Freestanding stock footage companies continue to be the leading company type, though their dominance has declined by 29% since 2011. The percentage of companies identifying as footage departments of larger media companies has remained stable at around 24% across all four surveys. Freestanding stock photo & footage companies are a factor, but not in a big way at around 19% since 2015. While only 5% identified as online digital marketplaces/microstock sites, one of these companies was in the Top 11.
A clear majority (67%) of footage companies are small, with 1 to 5 full time employees, and 66% have been in this range since 2011. 84% have fewer than ten full time employees, which has been more or less the case since 2011 as well. Average headcount across all companies has returned to the 2007 level of 14.9, after dropping 45% between 2007 and 2011, and jumping up by over 150% to 20.7 between 2011 and 2015. That said, average headcount for 2018 companies outside the Top 11 went up, from 8 in 2015 to 11 in 2018, indicating that staffing contractions among the top earners is driving the downward shift in average 2018 headcount.
Nearly half the companies in the 2018 sample group have been in business for 20 years or more. And while 20+ has been the leading age group across all four surveys, the number of companies now in this age-bracket is up 32% over 2015.
Despite significant industry consolidation, including most recently the shuttering of ITN’s footage licensing operation, the overall number of footage companies trading in the global industry has increased rather than declined. We identified 415 footage companies currently in operation, 7% more than the 385 identified in 2015. Of the 415 total companies, 84 participated in this survey over the course of three months, beginning in mid-July 2018, representing 20% of the total companies in operation.
Archival/Newsreel remains the leading footage category among 2018 companies, and has been at the top across all four surveys, and owning footage rather than representing it on behalf of individual filmmakers is the leading content acquisition model. That said, the majority of companies do represent some footage on a non-exclusive basis, believing that “customers will come them anyway based on other core strengths.” The digital media marketplace model, where footage is uploaded to an online platform by a wide variety of filmmakers and non-professional shooters, is not a common sourcing strategy among this sample group. This was also true in 2015. 1080p is the most commonly held native HD format and the most common HD delivery format. Digital holdings have increased since 2007, though the progress toward an all-digital industry has been uneven and appears to be losing steam. 24% are now 100% digital, down from 34% in 2015, but up from 19% in 2011. Top 11 companies are more fully digital, with 54% in the 75% to 100% range, versus just 27% of the total sample group.
Ecommerce & Order Processing
The majority of 2018 are not ecommerce capable, meaning they cannot transact a complete order online without assistance from staff. Of the 26% that can fulfill a complete order online, nearly half transact 10% or less online. While Top 11 companies have made more progress in ecommerce, with 45% able to transact a complete order online, 60% transact less than 10% of their sales online.
Footage companies have gotten more of their clips online over the years, but the majority have less than 30% of their collections available for online screening. Top 11 companies tend to be further along in getting their screening clips online: 63% of Top 11 companies have at least 75% of their screening clips online.
Website traffic at most footage companies is relatively low, with 54% receiving 5,000 or fewer hits per month. Top 11 companies tend to get more traffic, with 27% receiving over 100,000 visits per month, versus 8% for the total sample group. Most 2018 companies have some clips available for screening on YouTube or a similar platform, but most have not uploaded significant percentages of their collections.
The majority of 2018 companies receives 25 or fewer initial inquiries per week, and fulfills ten or fewer final orders per week. And while turnover is not massive, the majority of 2018 companies said that the volume of both initial inquiries and final orders had increased over the last two years, which is a very positive sign. Top 11 companies tend to field more initial inquiries, with 55% receiving 25 to 50 per week, and fulfill more final orders, with 36% receiving 10 to 25 final orders per week, and 27% receiving over 100.
The majority of 2018 companies continue to price their footage by the second, as opposed to employing a newer, simpler or more innovative pricing scheme. Top 11 companies tend to employ a wider variety of pricing policies, with equivalent percentages practicing per second (64%), per clip (64%) and usage-dependent (64%) pricing. And while only 8% of the total sample group engage in subscription pricing, just under half (45%) of Top 11 offer a subscription option, and 28% of all respondents expect subscription pricing to become a more significant pricing model over the next one to three years.
Rights-managed licensing continues to dominate. 58% of the total sample group and 73% of Top 11 companies license footage exclusively on a rights-managed basis, and in-perpetuity is the leading rights grant for both the total sample group and the Top 11. And while the hybrid approach, where companies offer both rights-managed and royalty-free options has ticked up since 2007, it’s been relatively flat at around 30% since 2011. Royalty-free licensing has been a smaller factor across all four surveys, hovering around 10%, with a slight uptick in 2015.
Traditional production entities such as independent producers, commercial broadcasters, cable networks and public broadcasting services continue to represent the most important customer types for most footage companies, with newer entities such as “ad-supported streaming video services” lagging behind by a margin of up to 47%. That said, SVOD services have increased the most in their importance to companies’ billings. Documentaries remain the leading production type, followed by feature films and advertising, and most customers are based in the US or the UK. That said, most customer territories have increased in importance since 2015, and Top 11 companies appear to have a more global selling footprint.
The majority of 2018 companies do not spend aggressively on marketing, with 57% spending less than $10K per year and most identifying word of mouth and their own websites as their top marketing channels. Even among the Top 11 companies, marketing appears to be a low priority, with slightly less than half spending under $20K per year. Spending at the top end has dropped precipitously. In 2007, 23% of respondents spent over $100K per year on marketing. In 2018, only 4%, or three companies, spend at this level, and two of these companies are in the Top 11 group.
Just over half the companies are represented at some level by another footage company. 39% are planning to expand their operations by acquiring more footage.
General Confidence Levels in the Current State and Future Prospects of the Footage Business
While we did not find significant growth in the dollar value of the overall industry, we did find that the mood had shifted on many key issues, and individual companies appear to be more confident and optimistic. For example, 37% now say that the “footage industry is in solid shape and its long-term prospects are favorable,” an upward shift of 94% from 2011 in the companies that hold this view. 55% now think that the demand for footage has increased, a 57% increase over 2011. And only 37% believe that production budgets have gotten smaller, a downward shift of 55%. 62% believe their revenues will grow over the next several years, and only 5% believe their revenues will decrease.
Top 11 companies are even more upbeat about both the state of the industry and their own future prospects. 54% believe that the “stock footage industry is in solid shape and its long-term prospects are favorable,” and 81% believe their revenues will grow over the next several years.
Threats and Opportunities
Downward pricing pressure is still considered the most serious threat, as it has been since 2011, though even here the intensity of this belief has declined by 15%. Microstock is still perceived to be a threat, with just under half believing that microstock has caused most footage companies to lower their prices. Going forward, 22% think microstock will continue to have the biggest impact on the business.
To purchase the AGS4, please click here.