WHAT DOES THE RISE IN ENERGY PRICES MEAN FOR THE BROADCAST INDUSTRY?
TVBEurope speaks to a number of vendors to find out how they are preparing for the price rises, and what impact they think it will have on the broadcast industry as a whole.
Amid reports the new UK prime minister is planning to freeze the energy price cap for domestic customers, there is no news on what businesses will face in the coming months. It’s been reported that some business are facing rises of between 60 to 300 per cent on their energy bills. The broadcast industry will be one of the areas where the price rises will have a significant impact. From broadcasters producing or storing content in the cloud or on-prem, to a manufacturers creating new hardware, to studios employing virtual production, they all need energy.
TVBEurope spoke to a number of vendors to find out how they are preparing for the price rises, and what impact they think it will have on the broadcast industry as a whole.
How is the energy price increase likely to impact your business?
Andrew Culley, chief operating officer, dock 10
As a fully integrated and highly technical facility electricity is a significant cost in running our business. With the exceptional price increases that continue to be imposed those costs are rising exponentially.
Marc Wilson, Glensound managing director
The increase in energy pricing will affect every part of our business given the day-to-day gas and electricity required for our four buildings, not least the air conditioning units which have always cost a lot to run. This is especially true in our surface mount room where our circuit board oven always heats the room so it needs to be cooled down again! We have several machines that run most of the night and across the weekend, so we will feel the rise as we are a relatively high-energy user. Glensound doesn’t have any particularly high energy usage products and we have always been careful to ensure that consumption with our products remains low as many operate from 12V battery or PoE switches, but we will certainly have to consider this even more moving forward.
Chris Perkiss, head of operations, Cerberus Tech
Like all businesses, the impact of the energy price hike on our overheads will not be insignificant. The issue that is most stark for me, is that whilst all businesses are set to feel the impact in some form or another, the same is true for the individuals that make up our businesses. Our staff are our biggest asset and the huge increases in personal outgoings, not just energy prices, is affecting everyone at home as well as at work. This will undoubtedly cause a great deal of stress and uncertainty, during what has been a very uncertain time anyway. So we’re committed to ensuring that Cerberus Tech is not adding to that uncertainty.
Do you have any plans in place to lessen the impact?
AC: Before the energy crisis we had been working on a programme of activities to reduce our electricity usage. We will be reducing our carbon footprint by 5 per cent each year, becoming carbon neutral by the end of 2025 and offsetting any imbalance immediately. We are reviewing all the of the kit we use to see where we can upgrade for more energy efficient alternatives. A good example is the virtual studio where we use low-powered LED lighting. Even the most basic actions of switching off the lights in studios when not is use can make a big difference.
MW: Like most domestic homes, there will be an emphasis on warmer clothing rather than turning the thermostat up this winter! The manufacturing energy is concentrated in areas that we cannot compromise on so we will still have to use these in the same way as we do now – even with the increased costs.
CP: Our staff predominantly work remotely and, in line with our Environmental and Sustainability Policy, the vast majority of our lab and testing equipment is switched off unless it is being used. As a result our office energy usage is already relatively low. Whilst Cerberus Tech has always had a remote workforce, the pandemic has proven that our team’s productivity is maintained with reduced office presence. Therefore, we are starting to explore options to downsize our office commitment or perhaps transition to a fully remote model in the next 12 months, as an overall cost-reducing exercise. There are obviously other operational challenges associated with these changes, but it seems that the theme of the 2020s is striking a balance.
What impact do you think the increase will have on the UK’s broadcast industry as a whole?
AC: Like any business in the UK, the current energy crisis is going to be an issue for everybody, and the broadcast industry is no different. Whatever we are doing in television requires electricity and energy saving can only go so far. I know this will be a huge issue, especially for some of the smaller organisations in the industry.
MW: As with all other areas, the costs will have to be passed on. Glensound operates pretty efficiently so we don’t have a buffer to absorb the price hike. As we look at capital investment, energy efficiency will be a more and more important issue when selecting new machines.
CP: The fact is, energy prices will not stabilise for some time and therefore the only options for all businesses will be to increase revenue or decrease expenditure. This energy price hike will almost certainly force suppliers to increase prices, and some organisations will look at streamlining both headcount and resources. But buyers will respond to a changing market by seeking cheaper products and solutions. Cerberus Tech is fortunate to have relatively small premises commitments and an efficient staffing structure. The nature of broadcast-grade IP and cloud based services, also align well with organisations looking to enhance their workflows and reduce costs simultaneously.
David Radoczy, cloud solutions consultant, Three Media
Broadcasters will need to be smarter in how they manage and consume power but need the flexibility in their operating platforms and business models to make the change when the opportunities arise. At Three Media we believe the cloud provides this opportunity and for operators thinking smart working it will further justify their cloud, software enabled and virtualisation strategies.
We have been promoting the strategic imperative for broadcasters to define their cloud-based services approach. Through virtualisation and software defined solutions, the cloud enables businesses to totally re-engineer their technical, operational and financial approach. If done right, these next-generation operating models are geared to respond and manage industry as well as environmental challenges just like we are seeing with the current energy crisis.
Where the commercial dynamic works is on two major fronts. For broadcasters and all stakeholders in the media and entertainment sector you get the ability to right size your platforms and power consumption.
Steve Levy, head of HR, GB Labs
Sadly, there isn’t a price cap on energy bills for businesses. Fortunately, we were able to secure a fixed rate for our energy with our supplier, and this gives us some security during these troubled times. However, these increases further impact our entire business and our ability to keep our operating costs manageable. Our suppliers have passed on increases and our staff need support to help them cope with increased costs.
So we made some changes to address these issues;
- We have reduced our expansion plans
- Slowed our recruitment
- Merged departments to keep running costs lower
- Renegotiated supplier contracts
- For our staff, we introduced more flexible working options and increased salaries.
For production and post production, changing the way they operate may be something of a new norm, leaving equipment on and operational at all times may need to be reviewed. We at GB Labs have always been committed to providing solutions that are stand-alone servers that require less energy and reduce the need for cooling, which has always been something at the heart of what we wanted to create .
There is no doubt that price increases will be a challenge for the broadcast industry, especially in a time when consumers are making decisions about their own expenditure, we are already seeing cuts in household budgets that could impact on how many times we go to the cinema or if we cancel subscriptions to a streaming services. That said, with people less likely to have disposable income, staying in may be the new going out and consumers will be very grateful for new and exciting content.