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Video Compression/Conversion Business Idea

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Edmond BinaVideo Compression/Conversion Business Idea
by on Jul 29, 2008 at 6:31:25 pm

I have been working with encoding/compressing/converting video for a few years now, and I consider myself pretty savvy about the subject.

With the proliferation of web and mobile video, I think video encoding is going to be needed more and more by businesses and individuals.

I've had the idea of offering compression/conversion services as a business. I would invest in some high powered equipment, even create a "compression farm" of computers.

I am just wondering if you guys think there would be a demand for this kind of service and if its worth investigating further. My other question would be figuring out how to charge for this kind of services.

Any feedback/ideas/suggestions are appreciated. Thanks!

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Zane BarkerRe: Video Compression/Conversion Business Idea
by on Jul 29, 2008 at 9:36:28 pm

In my personal opinion limiting ones business to compression is over limiting oneself.

Most people looking to have a video done and compressed for the web, or mobile devices, will simply have the company that does the production and editing compress it for them.

There are no "technical solutions" to your "artistic problems".
Don't let technology get in the way of your creativity!

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Jason SirotinRe: Video Compression/Conversion Business Idea
by on Jul 29, 2008 at 11:22:17 pm

I agree with Zane 100%. When we do video projects for our clients we always do the compression in house. It makes it easier for the client to have a one stop shop. Adding another vendor just complicates things.

Good luck.

Jason Sirotin
VP Business Development
ECG Productions

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Bill DewaldRe: Video Compression/Conversion Business Idea
by on Jul 29, 2008 at 11:59:27 pm

Perhaps you could market yourself to networks, government agencies, and other organizations with large video archives, and specialize in digital archival transfers.

I think that volume would be the only way to make this pay. Most post facilities have the tools for compression bundled with their edit software, and it doesn't make sense to send small jobs out for compression.

Good Luck!

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Brendan CootsRe: Video Compression/Conversion Business Idea
by on Jul 30, 2008 at 2:21:49 am

I just recently witnessed this business model fail after two years of struggle, and they serious money, serious gear and a lot of high level contacts.

I agree with the other posters, it might be a little too limiting given that most people handle their own compression in-house.

Brendan Coots

Splitvision Digital

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Todd TerryRe: Video Compression/Conversion Business Idea
by on Jul 30, 2008 at 4:49:58 am

Agreed... I can't really imagine a business that purely specializes in compression making it.

I would imagine that production companies or post houses that are not equipped or capable of doing their own compression easily in house would be very few and far between. I've never heard of one.

I'm not saying that there would never be clients, but considering the plan to "... invest in some high powered equipment, even create a 'compression farm' of computers" would require a lot more business to pay for itself than I can see happening.

The chief problem is that although encoding/compressing/converting video is not something the average Joe on street knows anything about... it is within the scope and ability of every production company I've ever dealt with.... and I personally know none that consider that more than a very minor part of their business.

Not to rain on anyone's parade or quash any dreams... but I agree with the other posters, I don't see how it could work... unless there is some unknown compression-needing non-do-it-yourselfer client base out there that I'm unaware of.


Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.

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Mark SuszkoRe: Video Compression/Conversion Business Idea
by on Jul 30, 2008 at 1:58:39 pm

I think there's a market for companies that ingest all your old analog legacy materials and unify your archives into one compressed format with a searchable database. Right now we're trying to do that job in-house, on shoestring resources, and I predict that with the manpower and equipment we can throw at it, the realtime playback of analog tapes, and considering the archive has fresh tapes added every day, it is going to take about 2 years of 5-day weeks to catch up. If we could find a trustworthy and competent service that would make this process faster, more reliable and cost-effective, we'd probably jump on it. We can't be the only outfit that could use such a service.

There's also currently a service gap in bluRay production; a market space between the expensive, fully-licensed mass-replication and the private, small-time setup that's using a stack of burners.

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Edmond BinaRe: Video Compression/Conversion Business Idea
by on Aug 5, 2008 at 1:03:16 am

Thanks for your feedback.

What you describe is something I have also thought about. But I wonder how much I have to invest in it for it to really work and be profitable.

For that kind of business to be a attractive to you, what would it need to have?

I can imagine I would have to buy a massive amount of tape decks of different formats, a machine for each one, and massive amounts of storage space.

What are your thoughts?

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Michael HendrixRe: Video Compression/Conversion Business Idea
by on Aug 5, 2008 at 4:37:21 pm

The other thing to consider is the investment. This business is really the new "Dub House" which brings the serious question of what formats do you need to support. More than likely someone would want to sent you a tape, and having every flavor of tape in-house would get very expensive.

The only way I could see this working somewhat is to build your business around a specific need, say MPEG-2 conversion and then figure out who your clients are and fulfill their need. One possible scenario is Digital Signage, hook up with a company that does this and doesn't want to fool with the conversion, then that company can set a standard, say 'Media has to be deliverable on X,Y, Z format". Then you have just narrowed the equipment needed from hundreds to three.

The biggest mistake would be to try and accomodate everybody from day one, buy a bunch of equipment, put a open sign up on your door and wait for the phone calls.

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Mike CohenRe: Video Compression/Conversion Business Idea
by on Aug 5, 2008 at 5:21:28 pm

I think just compression, or just digitizing, is too limiting.
In 1997 perhaps a MPEG encoding business might have had a chance, but as others have mentioned, compression and archiving is generally an in-house capability, and different formats of the final video are just part of the services production companies offer.
Is your background in production - in other words, how are you currently making a living?
Certainly identifying a need for a unique business in your area would be great, but be careful you do not create a business without a need for it.

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Mark SuszkoRe: Video Compression/Conversion Business Idea
by on Aug 5, 2008 at 7:31:28 pm

I think in the transcoding/dub thing I was suggesting, what you'd do is lease or rent all your harware as needed, depending on what clients were going to bring you. Then fold those expenses into your rate and mark it up. No, I wouldn't try to set up a broadcast museum of working decks of every type and then hope for clients to find me.

What large companies and government agencies usually don't have are the people and time to assign to a large migration project like this. That's where you can find an opportunity.

An outside vendor need only identify the specific formats the client has, and then lease or rent only that gear for the duration of the project. You make it a business by figuring out how to do it faster and cheaper than the large company can do in-house on their own. If you find two clients with the same format needs, you have an opportunity to double your production or halve your expenses.

Basically, you first identify the customer, run the numbers in such a way that you can do the transfers and transcodings cheaper than them, set up the deal, and conform your operation specifically to their needs, then end your equipment leases and temp labor contracts once done, until you find the next customer. Kind of like high-tech migrant workers. This shop needs all their beta SP dubbed, that one has D-2 tapes, this one here has umatics and one-inch...

Now, If I found a one-inch reel-to-reel machine in good working shape, I'd probably just buy it because it would cost peanuts to own, but I could charge a hefty price to run dubs off of it. Probably same with umatic; they are dirt cheap right now.

The hard part, I think, is to figure out number of machines and their real-time transfer capacity, versus hours of programming to be transferred, and see what kind of hours/profit/expense matrix you could configure that makes a profit, yet is cheaper than the company client doing the job themselves. The faster they want it done, the more you have to charge for decks to keep up. The less you spend in hardware, however, the more you spend in time, i.e. rent, utils, and personnel costs. Makes for an interesting mini-max problem.

It might be that you would roll some of your profit over into owning the decks you use most, as well as backup repair parts like heads and belts and transports. The more jobs you do, the cheaper the bought gear gets by comparison.

Then there is all the value-added business you can generate off the digitized materials by offering a service to organize and annotate the material for easy access and use.

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Edmond BinaRe: Video Compression/Conversion Business Idea
by on Aug 6, 2008 at 12:33:37 am

Does anyone know of any companies that do what Mark is describing?

Basically offering a service for entire analog video library conversion to digital.

This is something that I am interested in and would like to see if other people have a model setup for it.

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Mark SuszkoRe: Video Compression/Conversion Business Idea
by on Aug 6, 2008 at 1:05:23 am

I always first think of Vidipax for this, because I used to correspond with Jim Lindner, and they had been doing it for a long time. I don't know if they are still in business or not.

A google search for broadcast format conversions will give you thousdande of hits, hundreds after you filter out people transferring VHS home movies to DVD.

But here's a partial list:

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