It all used to be so simple. Designers working on a show would go to the shop they'd always gone to, work with the same people they'd always worked with, get the same service they'd always gotten, and everyone would be happy. The next project would come around, and the cycle would begin again. The industry was small, the equipment was low-tech, and the projects rarely had the word "mega" attached to them. Mom-and-pop shops for a mom-and-pop industry.
Things began to change in the last decade. Technological advances brought the advent of the moving light, the digital console, and myriad other bells and whistles that provided designers with a wealth of new tools. The notion of entertainment grew beyond both coasts to include theme parks, retail, trade shows, and industrials all over the country and all around the world. And the role of producer began to move away from a single entrepreneur to a corporation intent on making both the shows and the profits bigger and better.
One of the most significant results of these changes was the rise of the so-called one-stop shopping company. Under this concept, a company provides a total package to the end user--lighting, audio, staging, and full support--usually at numerous locations around the country, even around the world. Though end users obviously aren't forced to go with the entire package, there are instances when this turnkey solution is the most viable option: industrials, corporate events, and other huge projects where there is a need for a large amount of equipment in a short amount of time are the most common scenarios. Megashops for a mega industry.
It's not a new concept in the business world at large, to be sure, but it is definitely a new development for an industry as bifurcated as entertainment technology. Jere Harris, president and CEO of Production Resource Group, is most often credited with first taking the turnkey blueprint and adapting it to this industry on a large scale. He points to his work as the producer of EFX at the MGM Grand in Las Vegas back in 1994 as the springboard for this concept.
"It was right there in front of me," he says. "They had hired me [for EFX] because I had the ability to execute the integration of all the disciplines. I came from that experience--it was not like working on Broadway, because it was not as departmentalized--feeling that the person who could integrate the technologies would have a significant advantage in how this industry is developed. The idea behind it was, what would my customers want to have? They'd want somebody who could supply them with a turnkey product that would integrate all the products and services that live entertainment requires."
To achieve his goal, Harris set about acquiring a series of smaller shops around the country specializing in lighting and audio to complement his existing companies, Scenic Technologies and Harris Production Services (which recently combined into one entity under the name Entolo and is now the one PRG company geared specifically to turnkey projects). Beginning with the acquisition of lighting supplier Vanco, first announced at LDI95 in Miami, Harris gobbled up other lighting companies such as Cinema Services, Production Arts, Bash, and Light & Sound Design. On the audio end, A-1, ProMix, SPL, and Thoughtful Designs were among the companies brought into the fold. Each of these companies had their own niche, be it theme parks, concerts, permanent installations, or theatre, and each had locations in all the major entertainment hubs in the country.
Others soon followed suit. Westsun, a mainstay in its native Canada with offices in Winnipeg, Toronto, and Vancouver, expanded into the US market, opening office and warehouse space in Las Vegas and New York, acquiring the Canadian-based scene shop The Edge & Co. and Jason Sound, and merging with the LA-based concert lighting supplier The Obie Co. "The industry had been very fragmented," notes Westsun founder, chairman, and CEO Marc Raymond. "There had always been lots of small companies that would typically only specialize in one discipline. What we found is that the client typically needs at least several if not all of those disciplines. So the opportunity to wrap it up in a turnkey solution for a client is something that became apparent not just to Westsun, but to others as well."
The other major player in this trend is Matthews Studio Group. Formed by Carlos D. DeMattos, chairman of the board and CEO, Matthews Studio Group has targeted the film and video, theatrical and live entertainment markets. In the last few years the company acquired lighting shops Olesen, Four Star Lighting, and HDI, and the broadcast rental company Duke City Video. "At Matthews Studio Group we began our growth consolidation in the motion picture equipment rental business. After going public in 1989, Matthews Studio Group acquired a number of companies in this market segment," explains Matthews executive vice president Bob Johnston, "then realized the companies that rent motion picture equipment have all kinds of needs for other types of equipment. And that's really how it went throughout the years, branching out into multiple services to create a true, full-service, one-stop shopping scenario for the end user.
"Look at some of the other markets in the world," adds Johnston, "the banking market, the real estate market--consolidation has been the name of the game in the 90s. So we just followed with the way all the other industries were going. I think, if over 30 years of building relationships, you can say to a client, 'We now have this component,' they'll say, 'Great, we've been doing something for 20 years together, there's no reason why we couldn't add this other product from you guys.' The industry embraced that idea, so that's why we moved in that direction."
Johnston says Matthews Studio Group has seen growth in all its markets since adopting the one-stop shopping concept. "Our television clients have been using more and more of our theatrical-type equipment because of technology changes," he notes. "Independent production companies embrace the concept, because they like to come to one spot. A lot of networks and studios own their own equipment, so we tend to supplement what they need. But the big guys realize they might need four or six of the multiple product types we offer. Our goal is that if people take one product or service and have the ability to take another, then that's full service as far as we're concerned. We don't dictate to them what they have to take, we just present to them the option."
The corporate/industrial market still seems to be the ideal target for this concept. "The corporate/industrial side, where there are organizations not necessarily in the full-time job of mounting productions, then it becomes a real opportunity for us to add value, where we can tie some of our services together to solve problems," says Raymond. "It's much more easily accepted that this customer is looking for that type of expertise," adds Harris.
Karen Jorgensen, president and creative director of Kaleidoscope Productions, which specializes in corporate work, notes that the idea of a one-stop shop is for the most part a bonus for her market. "You work in such a short lead time in the corporate world that you don't always have the luxury of running around to a lot of different companies. And when you know you're getting a fair price, this is obviously the easiest and most productive way of doing an industrial. There are always some special situations where you have a relationship with someone else. But it's that 'convenience thing' as much as anything, which in this day and age helps you work more effectively.
"There is an upside and a downside," she adds. "The upside is it's easier, it's more convenient, and it's potentially a cost savings. The downside is that less competition in our economy is not necessarily a great thing. You wouldn't want there to be only one company; you don't want it to turn into a monopoly. But as long as there are other companies doing the same thing, then it becomes easier to make comparisons or to bid out situations, where you have three or four companies you can go to, as opposed to 100."
On the concert front, the idea of one-stop shopping has yet to catch on; lighting and sound are perhaps more bifurcated in the land of touring than any other genre, and set design is still something of a rarity despite the rise of huge tours like the Rolling Stones over the years. Still, inroads are being made. Jim Lenahan, a veteran concert lighting and set designer who worked on Tom Petty's most recent tour, worked with LD Seth Jackson on a concept for a Kenny G tour that was later scrapped. "It was going to be a jazz club on Bourbon Street, and it had ceiling fans with lights in them," he explains. "Seth specifically wanted to have certain moving lights, so when we bid it out, we were talking to places that were just scene shops, places that were just lighting companies, and people like PRG, who were both. And it was kind of attractive to be able to have that kind of synergy, because a scene shop might know all about ceiling fans, but it might not be too hip on what they needed to make it interface with the moving light, and a lighting company might be vice-versa. So I was talking to Scenic Technologies about working with either LSD or Morpheus. That was one of the good parts about being under one roof."
All the major players are quick to point out that the concept of one-stop shopping is not a viable choice for all markets. "I think it really varies," notes Raymond. "There are certain segments where it's been done a certain way for a long time, and the market isn't about to change all that quickly. Probably the best example of that is Broadway, where even though there are some examples where we are providing multiple services, typically they were bid out one at a time and we may or may not have been awarded these contracts individually."
Charlotte Wilcox, general manager for the Broadway production of Ragtime, notes that most shows treat these companies as they would any traditional vendor. "I think when Westsun got into the market it helped prices because you had yet another vendor to compete, but I don't think it had anything to do with being a large company," she says. "It's just that you have yet another vendor, and that always helps you get better prices. The more the better, as long as there's work for everybody, which in this day and age there is."
But Harris adds that the economic climate of Broadway may eventually force producers and general managers to fully embrace the one-stop shopping concept. "The theatre business is more individualistic, the design element is more defined, and the management structure is more defined or less defined, depending on how you look at it," he explains. "It's a different dynamic. But that will last for only so much longer, because when the price of a musical is $15 million, and 60-75% of the cost of a Broadway musical is in the physical production side, things are going to change. It's going to have to have a more focused and concentrated effect, unless there are entrepreneurs who can still go out and raise $15 million and not be so concerned with the end result. The angel of today is a major corporation, and the angel of yesteryear was a couple of guys at the country club who said, let's throw a few hundred thousand into the show."
How is this trend being received by the end users? There is concern, especially among designers in the theatre community. The consolidation that came as a result of this concept is a very new thing to the relatively quaint entertainment technology industry. The dizzying speed at which these mergers and acquisitions occurred--a conservative estimate of about 20 between the Vanco deal in November 95 and the PRG purchase of UK lighting companies Midnight Design and The Spot Co. in September 99--created more than its fair share of anxiety among designers, manufacturers, technicians, and other dealers. It has consistently been the hot topic at load-ins, tech rehearsals, chat rooms, and trade shows: who's being bought now, what will this do to the prices, etc.
"Our industry is being influenced in the same way every other industry is," says lighting designer Don Holder, who won a Tony for his work on The Lion King. "It's the age of buyouts and mergers and consolidations. The difference for us is we've always felt our business is a personal one, and one-on-one relationships are key to the experience. We've all associated individuals with the lighting shop we tend to work with. I think the fear for us designers is that instead of dealing with an individual or operation that's possible to comprehend in terms of scale, you're now dealing with huge corporations, and you feel like your small production or individual interests are somehow minor in the scheme of things. And I also think people are concerned that ultimately there's less competition out there, which means higher prices and less available for your show, especially if you're working at a non-profit theatre with a limited budget."
Interestingly enough, many designers interviewed for this article noted that prices have gotten lower in the last few years. But rather than seeing such a change as a benefit, they are worried about its long-term effects. "I remember working at Masque Sound back in 1982, when Cats had a rental of $7,500 a week," says sound designer Brian Ronan. "Now, a musical that big would probably cost about half that. The one thing that concerns me about these large companies is that because of their resources, they're able to bid at very low prices, which hurts the mom-and-pop companies. I think they're mistaking low prices for a relationship, and that's really not the case. This is a longstanding industry that has been served in its own unique way for a long time. Granted, it is going more corporate, like the rest of the world, but as long as you have directors and producers so closely linked in how they work, it's something that's going to have to be catered to."
Harris is not so sure. "Look at the technical nature of this business," he says. "In 1985 it was very benign. Today, at a technical rehearsal, whether it's an industrial or a Broadway show or a concert, there are 20 people in the audience with sometimes as many as three computers trying to integrate everything from projections to audio to lights to moving lights. The reality is that the economic model of the mom-and-pop solo entrepreneur being able to go out and buy the inventory every year based on cash flow just doesn't work financially anymore. The economics of the development of technology changed the whole paradigm of the industry.
The other major worry among designers is service; many interviewed for this article expressed concern over whether a large company would provide the kind of personal care they are used to from smaller shops. "This is such an important issue in the sound design world," says Ronan, "because a lot of designers can put huge systems together, but they need technical breakdown help. You can't be a designer and a bench guy at the same time; you don't have the time to open it up and replace the chips that might be a little faulty. You really do need the backing of a shop. I don't think that structure is in place just yet. And that's not to say the smaller shops necessarily have it down, either. It's just that you can pick up the phone and yell at the guy who made the sale personally."
Others say that the big shops are ideal for large projects, but there doesn't seem to be the same interest in the smaller shows. "These large companies are less interested in servicing a low-budget client," Holder says. "Their priorities are different. Instead of serving the little guy, they're more interested in grabbing the big corporate account and the big cash cow as opposed to some non-profit theatre Off Broadway."
Harris, Johnston, and Raymond all acknowledge that maintaining the same high level of service in all facets of their business will be a key to their success. "It is a major concern," Raymond says. "Historically, most of the companies in the industry were owner-operated; typically the client would talk to the owner and work out a solution to a problem. The industry has come to expect that level of service. So the big challenge for companies getting bigger is providing that level of service in the context of a bigger organization. We try to staff our company, motivate our people, and set up systems and procedures in such a way that the level of service is certainly no less than what it was when you had the smaller owner-operators, but in fact even exceeds it, because now you have multiple locations and huge pools of equipment.
"That being said, you can't just rely on bigger being better," he continues. "You still have to focus on what the industry expects in terms of that level of service. But I don't think the people themselves, whether they're working for a small company or a large company, ever forget the importance of service. The big challenge is, if you're going to become a bigger company, you've got to make sure you set one up so that the bureaucracy doesn't get in the way of the desire of the people to service the customers."
"It's important to completely integrate the components you bring in, before you try to expand too quickly," adds Johnston. "The end user has the potential to be let down, if the internal communications are not complete."
What will the future bring? Though further acquisitions aren't out of the question, the three major players acknowledge that their focus right now is the integration and stabilization of their existing operations. Matthews has taken the concept of one-stop shopping onto the Internet with the debut last June of ShowbizMart.com, which allows end users to buy and sell a variety of merchandise, as well as providing a variety of industry-related information. The smaller, established single-niche companies--Big Apple Lights, Masque Sound, Barbizon, ELS, Sound Associates--continue to thrive Off Broadway and in other markets, though whether they will be able to continue to stay in the running for larger projects could depend in part on their service and the loyalty of their clients. And new companies--4Wall Entertainment in Las Vegas and Candela Controls in Orlando--have recently been formed by former members of PRG, which, if successful, would conceivably take business away from the big companies and provide more competition for the medium-sized shops.
And what about the designers? They continue to have concerns about the future, especially those in theatre. Some, who asked not to be identified, predicted doomsday scenarios in which large corporations will not only produce the shows, but also have their own in-house shops, as well as their own design staff. Others are much less pessimistic, but still worry about the future of the small shop. But interestingly enough, many designers, while expressing fears over what companies like PRG, Westsun, and MSG could mean to the industry in the years to come, have to date rarely experienced any service problems firsthand; most were pleased with their relationships with these companies.
"I've worked with Westsun for several years, and even though they've grown astronomically, I haven't found that their responsiveness and interest in individual accounts, and a real passion to please, has at all diminished," says Holder. "I haven't done a lot of shows with PA since they were acquired by PRG, but I still use them for some of my commercial work, and their service is still fine. So I don't know. Maybe the fears are unfounded."
"It's fear of the unknown," suggests Harris. "And probably what we've done a bad job at doing, which we're looking to improve upon, is defining why we've done this. We haven't gone out and actively campaigned and said, 'Here's what PRG is, here's why we've done PRG, and here's what it's going to be in the future.' I think the fear is that people are afraid there's going to be less choice...[But] you'll never be able to have a monopoly in this industry. It's a personality-based industry and some people are going to want to go to LSD and some are going to want to go to Obie, even if they both have apples and apples."
"It's this sort of Bill Gates fear," adds Jorgensen. "But what's important for me is that at the end of the day all of this doesn't mean that I'm going to have a poor quality product. Whether they're all folded up into one company is to some degree immaterial."