The pinch on rental companies has been intense over the years that I have been PERG Manager. But recently, with the pandemic followed by labor action that brought production to a halt, the pinch became a crushing force for some. Many rental companies are now faced with digging themselves out. We have seen businesses being bought up and sold off, and sadly some well-respected and valued rental companies have been forced to close their doors.
This is occurring during a period when there are more outlets for content than there have ever been and the revenue from television, streaming, and box office combined is around $31.6 bn and the market has had steady growth at a rate of around 3.4% per year over the past five years according to IBIS World.
As every rental house owner will tell you (in private), there are many factors that have converged to put the squeeze on our industry. These include expected challenges like the increasing investments required by the changes and acceleration of technology. But the bigger issue lies with the budgets for commercials and episodic television shows, which are created from templates that carry over unrealistic allocations for equipment rental. Producers use the competitive market and every tactic in their arsenal to secure impossibly low rates from rental companies. Producers are willing to rent from low-cost equipment providers, crew members who invested in a camera and some lenses, peer-to-peer platforms, and online companies that do not have local technicians, replacements, facilities, and support. It is a challenge for professional rental companies to convince producers, who look strictly at prices, that one of these things is not like the others.
What can be done? Professional rental companies generally believe that their prices should reflect their value, expertise, know-how, and equipment quality. Rental companies need to assess, measure, quantify, or clearly identify the key outcomes that they offer—their true value proposition. As an industry we need show exactly how what we offer is different from competitors, and to market and promote the differences to producers. Professional rental companies know how to support a production and minimize the risk that an equipment problem will slow down or adversely affect their project. Professional rental companies have the wealth of experience to know how to avoid issues. A production can stumble because of the simplest of reasons, like the firmware of two cameras not matching, leading to expensive color grading fixes. The value proposition to producers includes benefits that are both tangible and intangible. Producers often don’t make the connection between their choices and subsequent expenses and delays.
Another part of the equation is that, especially in places like Los Angeles, there are so many small companies that jumped into equipment rental, that they are all forced to undercharge, sending a message to prospective customers and attracting more customers who will pay bottom dollar. An article in Forbes, put it this way “Thinking you’ll get more great clients and customers this way, you’re missing a critical point – people who underpay also tend to make you crazy in the process of working with them. They nickel and dime you, second-guess you, and refuse to honor, respect or value your great experience and expertise. People who undercharge also tend to think that pricing is what brings in customers, and often neglect critical endeavors like marketing, promotion, social media engagement, publicity, events, thought leadership, networking, affiliate and referral partners, and more. In short, they don’t know how to market their work or generate more business. [Companies must] develop stronger boundaries. Start saying “no” to outlandish requests for your time and effort. Know what your time is worth, and demand respect for that.” (Why You're Not Charging Enough for Your Work, and How to Change That, Cathy Caprino, 2014)
Industry leaders privately fear that, if we stay on this trajectory, the rental industry will change into something we cannot be proud of. Rental companies thrive on their ability to provide the excellence that focus pullers, gaffers, and DPs rely on to do their jobs seamlessly. That is what ESTA-member PERG companies stand for. As the industry comes back from several years of setbacks, PERG will continue in its efforts to promote our members and ask the question, how can we better educate producers and future producers on the value proposition provided by our members?
