I’m standing on the set of A Lonely Place For Dying. We’ve spent hours setting up a green screen and a 1970’s phone booth. James Cromwell’s trailer is in position. Everything is lit. Our Red One is in position. Jamie walks onto the set. He says hello to everyone and walks over to the camera.
“So, that’s it? That’s the Red One?”
A dozen thoughts race through my head. I’m proud to have put together such a professional micro-budget feature. I’m proud we’re shooting on the world’s most advanced camera system. I’m proud Jamie is impressed. And, I’ve been thinking for months how I have to buy one of these for my rental company.
“This is amazing. My son is buying two.”
“Is he in the rental business?”
“Oh, no. He’s a director.”
Suddenly, all those hubristic thoughts are drowned out. A light starts flashing in my head. I get these warning lights from time to time. I don’t fully understand them at the moment, but they always signal the same thing…it’s time to do some research.
Flash forward a month later. One of my business partners mentions he wants to buy a Red One for the rental company. We can split the revenue and have our own Red for free for our next film. Flash forward to the Santa Fe Film Festival. My camera operator mentions he’s getting a loan to buy a Red One package. He’s concerned about competing with my rental company and wants to work out a deal so we don’t canabalize each other’s businesses. Two days later someone at a party mentions they’re buying two Red Ones. Someone else mentions that the Red Ones are no longer backordered…they ship immediately upon purchase. The red lights are going like mad now. Then, I’m at another party and someone says “Hey, did you know Red has already shipped over 5,000 cameras?” Sirens have joined the warning lights in my head. They’re screaming for attention. And, finally, I understand what they’re saying:
The Red One rental market is saturated.
This is lousy news for rental houses. It is great news for independent filmmakers. Forget the Epic and Scarlet for a moment. They’ll effect the market as well, but that’s not the economic lesson worth focusing on for now. They’re a year away.
The Red One’s supply already exceeds the rental community’s demand.
The studios produce and acquire about 300 motion pictures a year for theatrical distribution. Another 600 go to DVD. Film Festivals report an average of 1,500 submissions. The last comprehensive statistic I read stated that about 10,000 “movies” are made in the US each year. But, that dubious claim needs to be examined. That statistic included every amateur film shot with a camcorder.
Now, I apologize that I’m not citing my sources here. These stats float around filmmaking conversations with ease. Let’s be conservative and cut the volume in half to 5,000 total feature films shot in the US every year.
That means there are already more Red One cameras than there are amateur feature film productions. If we eliminate the amateur and prosumer markets then there are more than ten times as many Red Ones as there are studio feature films. And, Red is still shipping Red Ones like hot cakes.
In addition, I believe the D90 has the potential to become the de facto micro-budget filmmaker’s HD camera of choice. And, there are already thousands of HVX200’s, HVX200a’s and HPX170’s in the marketplace. That’s a lot of cameras competing for a limited number of projects.
In comparison, I once read that the total number of Arri 535’s was less than 1,000 worldwide.
With 5,000 (and counting) Red Ones available and thousands upon thousands of prosumer HD cameras (which gobble up the semi-professional and low budget market, reducing the potential customer base for the Red One) and the impending release of The Red Scarlet and The Red Epic (which attacks both market segments simultaneously) it is easy to see that the rental market will never be the same. Ever.
That’s great news if you’re a filmmaker. That’s lousy news for rental houses. I own Prodigi Rentals and I’m a filmmaker, so when I see my therapist he’ll understand why I’m so conflicted.
Rental houses have no choice but to lower their rental rates. They’ll resist, they always do. Rarely are they run by economists…so, they may not fully understand the free market principles at work here. They may not fully understand how the free market is about to hit them like a tsunami.
If you are a filmmaker, now is the time to learn how to negotiate, to play rental houses against each other and to calculate what the actual rental value of a Red One is.
If you spend any time on the Red User forums you’ll see owner-operators who are already talking about the collapse of their camera rental rates. The camera has only been on the market for one year and the published day rate is already 1/2 of what it was. If you know how to negotiate, it is even lower.
As an example, I handled the negotiations for The Red One on ALPFD. We received almost identical quotes from three companies (18K, 15.5K and 15.2K) for a six week shoot starting in September of 2008. The 18K company insisted the camera was so hot that they would not negotiate the price at all. So, we focused on the final two companies.
I faxed each company’s quote back and forth over a four hour period. By the time I was done the price was now $8,300.00 and $8,500.00 from the two companies. They threw in free lenses, free CF cards, free cheeseburgers (well, the last one I made up). They made wild promises about service. And, they insisted the other company was run by criminals and gangsters. I probably could have negotiated even lower, but I was out of time. So, in less than half a day two companies canabalized each other’s quotes by nearly 50%…and all I did was hit the fax button.
It gets better. When the third company heard about our quotes (and I don’t know how they did, but they did) they lowered their rate to $7,800.00. It was too late. I’d already issued an insurance certificate to the winning vendor.
That was nearly four months ago, when only half as many Red Ones were available. I am certain I could negotiate an even better deal today. I’m willing to wager that rental houses reluctantly agree with me.
I’ve concluded that the collapse of the Red One rental market is so severe that it isn’t a good investment for my rental house. At least, not now…not until the speculators start selling them off at 60 cents on the dollar (and that will happen. Most of these Red Ones were bought on credit. A lot of mom-and-pop shop rental houses were born because of the Red One. They all dreamed about becoming rich from camera rentals. When reality proves differently, these same people will have bank loans to pay back…and they’ll be selling their cameras for deep discounts.)
I suspect that the people at Red Digital Cinema knew this would happen. They’re smart people. A fully loaded entry-level Red One is only 30K. I’ve heard of people who load it up with extremely expensive glass and then make the argument it is as expensive as a 35mm camera…but they’re wrong. The body is still a fraction of the cost of a 35mm body. And, no one needs 70K in lenses to make a great movie. Although I can’t prove it, I believe that Red Digital Cinema never intended The Red One for the rental market…it was always intended to empower owner/operators.
Now, that reality (intentional or otherwise) is crashing down on the speculators.
If you’re unconvinced, consider this. I founded Prodigi Rentals to make gear revenue neutral for my films. My clients pay for my gear allowing me to use gear for free on my films. I own a fully loaded 14′ truck. It takes me less than 15 hours a month to run my rental business. I love the Red One. I want one. I want two. And, I have two investors who are willing to buy Prodigi Rentals a Red One package today.
And, I talked them out of it. When I ran the numbers, it was obvious to me it would take two years to earn back the cost of the camera. It wasn’t a good investment for them. I ran the numbers and it is cheaper for me to rent on whatever project I do for the next 1-2 years.
If you are an independent filmmaker and you thought a camera like the Red One was out of reach, I strongly urge you to reevaluate. By calling four to five companies and faxing the price quotes back and forth for about a week I bet you’ll get a deal that makes my negotiating skills look sad. And, let those companies know that you’ll be in the market for a used package once they realize the gold rush turned out to be only fool’s gold after all.
January 8th, 2009 at 10:48 pm
You that 5000 RED Cameras is the number for total worldwide shipments, right?
January 8th, 2009 at 11:50 pm
I think the article is a mixture of reality and wishful thinking. The thing is that you, as a filmmaker still want to use a Red One: add to that that after the Scarlett/Epic announcement (provoked in part by the Canon still camera) not many people will be buying Red One.
So we have a fixed pool of cameras for a year or so and many people wanting to work with the cam. Anyway, I don’t really now where you get the 30.000 fugure: with zeiss standards, tripod, matte box, follow focus, monitoring, etc it is more around 50.000 $.
So, it may have been late for you, but anyone getting the cam in april or june has done good business and will continue to get money from their pack (less of it, of course) in the following months.
January 9th, 2009 at 8:53 am
Don’t forget that your local film school will be happy to take your overstocked camera for a nice tax writeoff. I personally see the Red One and Scarlet making it into many nooks and crannies (government/education/churches) where only HD was being considered.Rock On!
January 9th, 2009 at 10:14 pm
I think you’re absolutely right, total oversaturation. I bought a Red Camera because I was tired of having to upgrade cameras on my P+S adapter. I thought this would be a cameraI might not have to replace for 2 maybe 3 years, seemed logical. And I have a relationship with a rental house that took it in so when I’m not using it - it may make some money as a return on my investment. So far, It’s only been 10 weeks, but my first several jobs since buying it did not want to use the camera, they wanted the one I just sold. Either they didn’t understand it or their editor didn’t want to deal with it. So, it’s been at the rental house collecting dust like my Aaton super 16. I know I will eventually get it out on some commercials - if that biz ever returns. Meanwhile , I’m investing again, this time in a short project just to get a workout on my Red, so I’ll have something to show and tell perspective clients. In a lot of ways I miss the film shooting, when everyone knew what had to happen in post. What was so difficult about that ? Shoot, Process, Xfer/ CC. Edit.Simple.
January 11th, 2009 at 8:04 am
Hmm! Interesting article/story. As my producing partner and I are looking into the possibility of purchasing a RED ONE, your experience is helpful in our decision making process. To P.Sensor. I would love to be able to shoot on film but financially I don’t see it to be that simple.
January 12th, 2009 at 12:26 am
I guess it all comes down to demand. No sense in charging high amounts if demand is dying. Probably better to charge less for more rentals? For a higher turnover. Within reason of course.I don’t own a RED One; can’t afford it (not even to rent for a day), but I dream of using one almost everyday and I am amp’d about what is happening currenly with EPIC and SCARLET. Because of that I read a lot about RED; what is happening and what people think, and I can only see a greater demand for RED as time goes by.Ok, current RED Ones might loose their luster when the new ones come out and the whole Brain thing will mean that some people might only be renting out Brains. But I thing that RED Ones will still have a life for about 5 years - for even 4K is over the top for most indie filmmakers at the moment.
January 13th, 2009 at 8:37 pm
When you see people shooting behind the scenes of a music video or feature using the exact same camera the project is using for acquisition it’s a mixture of sad and happy knowing that things are indeed changing. And maybe not for the better.
January 15th, 2009 at 8:41 am
I’m a gaffer in NYC and I think your numbers are a little off. All you seem concerned with are features. What about the thousands of industrials, commercials, infomercials, music videos and tv shows being shot every year. While I’m not a fan of the red, I think that there is a growing market for it, though it might not be there yet. Let’s not forget that this camera was sold as a wunderkamera that can bring more films to people, cheaper.
Derek
Sorry about any typos. Sent from my iPhone. On a set shooting 35mm
January 16th, 2009 at 4:26 pm
As well, the loose credit industry that supported so many camera purchases has evaporated. Enter the Scarlett of course but perhaps things aren’t as bad as they seem.
February 10th, 2009 at 7:37 pm
[...] With posts like these popping up??http://www.reduser.net/forum/showthread.php?t=25850??http://newbreed.workbookproject.com/2008/12/red-one-rentals-impending-crash/??http://www.reduser.net/forum/showthread.php?t=25858??It’s time to think seriously [...]
February 13th, 2009 at 7:52 am
Question.Were the rates you quoted in the article “the price was now $8,300.00 and $8,500.00 from the two companies” per week for one camera, or for the whole 6 week shoot?
Thanks for all the great info you are putting out.
February 20th, 2009 at 11:04 pm
Jack, the rates we were quoted was for the entire 6 week shoot. And, those rates would be even lower now. I believe I could get a basic Red One package for about $6,500.00 for a six week shoot.
February 22nd, 2009 at 5:40 am
Um… I think the market bought RED in droves because of it’s ability to give us images that compete with film at a price point less than higher end video. To think that it’s ONLY being used for feature work simply isn’t the case. It’s being used for everything that goes into post and is traditionally shot single camera, except by the folks shooting events… That’s a lot of shoots… The post workflow isn’t well understood, and I for one am going to do something about that. An affordable DVD is coming from the COW done by me on the workflow in FCS.
That said, time will make a difference in the acceptance of the format by more producers of everything. From my perspective, RED is proper for everything but live sports, news, and event videographers (though that will begin to change too I’ll wager)… The images it makes are wonderful, and they are at a price point just about all pro shoots can afford… I can recall days not all that long ago where top flight video camera setup would run $600-800/day… REDs can be had for less than that…
Pure economics will dictate before long that 35mm film acquisition is dead, and with the price point achieved by RED, Varicam, HDCAM, and other higher end video formats are also on their way out with projects that will be run through post… If the consumer can’t see the difference, there is no difference. If the DP’s out there will learn the camera, it’s over folks… Notable directors/producers are flocking to RED in droves. Heck, Peter Jackson bought 10 RED ones… Soderberg will no longer shoot film either… just a couple of the many… This hype from the high end drives the lower end of our industry to shoot the format more and more. It’s a matter of education. Every shoot whether it’s film, video, or RED should be processed with Color correction… so in reality, shooting RED really isn’t a ton tougher than shooting P2 iMHO.
May 8th, 2009 at 10:02 am
Of course the Red One was made to empower owners. They made that clear from the beginning. “Impending crash”, though? It may draw attention to a headline, but I very much doubt we will see any “crash”.
There’s competition for whatever you’re renting and I don’t see that the Red One is in so worse a position than the much larger number (and variety!) of HD cameras… and they still manage to rent.
Maybe it would take two years to pay back a Red, but how long does it normally take to pay back a similary-sized investment? Or a high-end HD camera? How is it going to look for a rental house that doesn’t offer a Red? And people are still going to want lenses and many other options that can make the package very expensive to buy.
Even if you don’t think so, lenses can still be a big issue and a big cost item for people. Sometimes the right lenses are the key part of a deal. And if you invest some time in it (as you apparently did for your pricing of a Red rental package) you can easily get a 35mm camera body for under $10k. The Red One isn’t as expensive as buying a film solution, sure, but it’s still a big investment.
The fact is that not everyone that is going to use a Red is going to buy it. Many people don’t want to invest all that money in a complete kit and then have to maintain everything (lenses, camera, media, etc.)
Red rentals aren’t going to make a rental house rich overnight, but there is still a business out there.
February 1st, 2010 at 5:32 pm
Well…it’s been a year and Indie Rentals is offering Red One bodies for free. I’m fairly certain this confirms my predictions from a year ago.
February 1st, 2010 at 5:45 pm
The lesson here is simple. Whenever supply outstrips demand a collapse in pricing will ensue. The Red One is my favorite camera. I love it. However, I was making an argument based on principles of economics and most of those who countered me were making arguments based on emotions. Do not buy a Red One. Rent it from someone who didn’t listen to me and will now give the body to you “for free” if you rent their accessories and lenses. My guess is you can get a fully loaded Red One package for about 3K for a six week shoot.