Renting cameras, lighting, support gear, and other equipment is standard operating procedure in the motion-picture industry. With the rise of digital cinema, however, some equipment has become affordable enough for purchase, particularly in the postproduction arena. Increasingly, production companies and producers face the question of whether to rent or purchase production and/or postproduction equipment. Every situation requires careful analysis of the pros and cons of either scenario. There are numerous benefits to renting, and quite a few for purchasing, so how does one go about arriving at a final, educated decision?
The important issues to consider are the specifics of the project or business you are taking part in. You have to know how long the project will last, and how long the equipment will be utilized. A solid budget or financial plan will also be a major deciding factor. Finally, you have to anticipate what you will be doing a year from now, and whether you will still need the equipment at that point.
Your overall timeframe is an important element in analyzing your needs. If you anticipate that your upcoming project will be of short duration, then renting is the option for you. If, however, you expect a continuous flow of new business and projects, you might want to consider purchasing.
As we all know, technology develops faster than we can keep up with, and before too long, you realize that all that new software and hardware you have is outdated, replaced by newer, faster, and more efficient versions. We all like to wrinkle our noses at the manufacturers, but in reality we should be thanking them for constantly improving on their products. Let’s face it: Whatever they can do to make our lives easier is more than welcome. The plain fact is that technology — especially digital technology — is advancing at an ever-quickening pace. That’s good news when it comes to improving creative tools, but it can be tough when it comes to amortizing upgrades.
Obviously, the cost of upgrading equipment every time there’s a new software development is prohibitive. The compatibility issues inherent in ever-advancing computer gear can also prove maddening — and expensive. Prudent producers and fiscally responsible companies inevitably cry “Foul!” And once they’re done venting their disgust at manufacturers reps, they inevitably pick up the phone and call the local rental house.
Renting’s major advantage is that it enables a producer or production company to be constantly up to date on the latest technological developments. And as updates occur the rental equipment is configured to the new technology, ensuring that users always have state-of-the-art equipment at their fingertips. Essentially, you are paying a premium for the top-of-the-line and most advanced equipment.
“We have very experienced technicians and long-standing relationships with the manufacturers,” comments Bill Weisman, manager of the rental department at Moviola, in Hollywood. “This ensures that the equipment or system being rented will be reliable and hassle-free. And if for some reason a client runs into a snag, we will be right on top of getting them a replacement, or repairing the problem in the most efficient manner possible.”
Renting also presents a consistent demand on your cash flow. You can budget rental fees far in advance, as there is only slight fluctuation in the market costs from year to year, and an accurate estimate is relatively simple. Perhaps the most attractive feature of renting is that it also eliminates the need to come up with the funds for the major capital investments that purchasing requires
When you own your own equipment, you are solely responsible for maintenance and repairs. These costs can be excessive, especially when you are dealing with high-tech digital items. As a renter, you typically have access to service and tech support 24 hours a day, seven days a week. Most of the time, the service contract is included in the rental agreement. In some cases, contracts can be purchased for an additional sum, much like securing an insurance policy or extended warranty.
Post Production Workflow is often the most overlooked element of creative production. Most budgets set aside a certain portion labeled as the “contingency.” This is to cover the costs of unforeseen circumstances beyond the control of the management that would be detrimental to the timeframe and the project itself. One way to assume more control over the workflow is to ensure the reliability and performance of the equipment you use. When you purchase a piece of equipment, you have to keep it up and running at top performance for the duration of your project. One can never predict when a piece of software will lock up or a piece of hardware will malfunction. When presented with a work stoppage as a result of equipment failure, most would prefer to make a phone call and have the equipment replaced without missing a beat. Those pressed by deadlines and pressure from investors and executives are the best candidates for renting. A reputable rental house will generally repair or replace the faulty item immediately. After all, customer satisfaction is their business. Their motivation lies in the happiness of their customers. In the rental arena, good relationships, customer service, and client satisfaction lead to consistent and repeated business.
If service and support fits into your business plan or budget, then purchasing the equipment may be the right choice. If you are considering purchasing, but don’t have the revenue to warrant a support department, you might consider a third party. Most companies that sell digital equipment also offer the option of a service contract, which for a fee will ensure that your equipment is performing smoothly for the duration. And don’t forget the manufacturers warranties; varying in length, your warranty will guarantee your equipment in the event of a malfunction or defect not caused by you.
Although it may overwhelmingly look like renting is the best option in any circumstance, there’s still a lot to be said for purchasing. There are many types of companies that benefit greatly from buying and maintaining their own equipment. Most advertising agencies will have in-house production, editorial, and graphics departments handling the various different aspects of a particular project. To maintain a smooth workflow, they will configure all of their hardware and software to work in sync across many computers. By purchasing, they have total control over the equipment’s configuration and operation. The same goes for media departments in major corporations, where the output is critical to the company’s overall communication and operations. These large companies can afford the service costs and benefits from owning. Smaller companies that cannot afford to do all of their media work in-house will farm business out to post houses, graphics, and media-design firms. It’s these companies that benefit the most from owning the equipment. Their revenue is based upon billable periods of time. When they purchase their equipment, they calculate the amortization, and charge accordingly. Once the equipment cost has been recouped through billable usage, the revenue is pure profit, less upgrades and maintenance.
“We are equipped to both rent and sell equipment and systems,” explains Randy Paskal, Moviola’s Managing Director. “Either way, our goal is to help the client determine their needs, and see that they receive top-of-the-line service and support for whichever route they choose.”
There is a financial benefit, both to renting and to buying. When you rent a piece of equipment that relates to your business, you can simply write off the expense. A rental is a clean transaction. This is ideal for those producers and companies that do not want any assets at the end of the day. On the other hand, if you are purchasing, you can depreciate the equipment and write off the loss. With the latter, you can amortize over three to four years, and integrate upgrades into your amortization schedule. This will allow you to maintain your margin of profit.
With rentals, at the end of the day, you have completed your project, delivered your product, and are left with no loose ends to tie up or equipment to pay for. When you own, you have completed your project, and can turn around and wait for the next one with the equipment in hand.
The demographic of renters versus buyers has changed in the creative industries. Major studios that have historically owned all of their equipment are now turning to renting to eliminate the service and upgrade costs from their bottom line. Smaller companies, which in the past could only afford to rent, are now purchasing and maintaining their own equipment. As the demand for digital content increases, so will the demand for companies to pump it out.
