Equipment rentals: a sector in transition


To state the obvious, equipment rental companies are at the mercy of the
industry they serve. The relative success of the gear hire sector is exceedingly
sensitive to the rather unpredictable ups and downs of both the production and
tech industries. Rental facilities thus appear to ride intrepidly along the road with
no way of seeing what is waiting over the next rise or in the next valley.

As service providers to both the film and television industries, equipment rental
facilities offer an interesting window into the state of both. In an attempt to gain
an overview of the equipment rentals business, one is inadvertently offered a
look at the industry as a whole since equipment rentals are so closely tied to it.
The view through this window is a rather bleak one, though not without its silver

Scarce work, low budgets

The film industry in South Africa has undoubtedly experienced a significant boom
in the past few years. More films are being turned out at a higher rate than ever
before and, if recent offerings at local film festivals are anything to go by, the
quality is improving too. However this boom is not enough to drive the overall
production industry in the country. Films remain a minimal output of an industry
that relies on television for its bread and butter. According to owners and
managers of equipment rental facilities, there is not a sufficient amount of that
bread-and-butter work to keep the industry comfortably moving forward
Broadcasters, they say, are not commissioning large volumes of work. What is
commissioned, with the exception of certain “blue chip’ titles, such as some hit
reality shows, have low budgets. As a result, the crew members who pass
through the rental companies’ doors are often overworked, underpaid and
lacking motivation.

Knock-on effects

Lower budgets and less work mean less business for the equipment rentals. The
only way to compete in such a market is to lower prices, which most of the
businesses are willing to do insofar as is reasonable. Price, rather than service,
is the major consideration for production companies in an environment where
funds are scarce. So whoever offers the lower price is going to get the business.
Small rental companies can only go so far in this regard as they are, for the most
part, still trying to work much of their equipment as hard as possible in order to
pay it off. Some of the larger, better established companies on the other hand,
are in possession of certain pieces of equipment that are long paid for and which
can therefore absorb some of the costs that would usually have to be born in
the case of competitive price reduction. Competition, therefore, is often skewed
in favour of a handful of larger companies who are able to slash their prices in
order to undercut the smaller operations. Several smaller companies have
decried these aggressive pricing tactics, while admitting that they can hardly
fault the “culprits’ for using whatever competitive edge they can get in a very
difficult market.

Competition and cooperation

There are major barriers to entry into the equipment rentals market due to the
sizeable capital investments that need to be laid out to purchase the requisite
gear. As a result the sector remains small and very competitive. Yet, as might
seem strange to an outsider, there is a relatively high degree of cooperation
between the competitors. It is not unusual for one company, in attending to a
client’s brief, to find that it is short of a particular piece of equipment and then
simply outsource it from a competing facility, thus spreading the business around
a little. There appears to be a strong sense of everyone being in the same boat
and although the operators continue to compete, it is often with a certain
degree of mutual understanding.

Running after technology

The ongoing problems of the industry notwithstanding, probably the most
pressing and ever-present challenge faced by gear rental companies is that of
keeping up with the ceaseless march of technological development and the
accompanying fads and trends that pass through the industry. Time was, in the
heyday of film, when certain pieces of equipment – cameras in particular – would
remain industry standards for years. A gear rental company could hold on to an
Arriflex 35mm camera for an extended period of time, knowing that cameramen
would keep renting it out, and before long it would pay for itself. The advent of
digital cameras and formats completely destabilised the technological part of the
industry. Now there is little chance of predicting whether a camera in demand
today will still be what the industry wants tomorrow.

Goran Music of Visual Impact says that developers of production and broadcast
tech used to have a “roadmap’ that could be used to plan and predict the
development of new products. Nowadays, no such roadmap exists.
Manufacturers may start on a certain course, only to change midstream when
consumer tastes appear to shift. The end users’ side of the market is just as
fickle. Users are always on the lookout for the next camera that offers more for
less, or that perhaps gives a more filmic look or better definition. HD had barely
established itself before 4K was being pushed onto the scene. Now people are
already talking about 8K.

Henk Germishuysen of Puma Video says: “We carry significant risk by buying new
equipment and introducing it to the industry. The incentive and appetite for this
risk is becoming less and less.’ Martin Smookler of Nates agrees: “The object is
to buy the gear and ensure that you work it hard enough to pay back its cost.
Resale or salvage values are not the point. But sometimes you find yourself
having to settle for the best possible salvage value on a particular item because
it’s just not being booked out often enough anymore.’

It all seems so gloomy when this list of challenges are considered together. But
it is easy, when caught in the middle of rapid change, to perceive it as a
disastrous ending, rather than a transition. As Germishuysen says: “Like any
industry the game is constantly changing, as are the playing field, players and
rule makers. All this means is that we have to adjust our game plan… It forces us
to come up with new business models to try and make it work…’


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