When Should Production Companies Bring Resources In-House?

The temptation to expand in-house services is commonly faced at least once (and often multiple times) during the lifespan of a successful production company. For full-time creative directors to post-production facilities, new in-house production capabilities can offer many advantages, but there are risks involved. If a production company is in the wrong position, expanding its capabilities or slate of services can do serious damage to a company’s bottom line.

So how are you supposed to know if it’s right for your company?

In this post, we’re breaking down the dos and don’ts of bringing production resources in-house by looking at four scenarios when a shift to in-house resources may or may not be beneficial for a production company. We’ll fill you in on what in-house services and capabilities can look like and show you some questions to ask when deciding on your own.

But first, let’s cover some basics. 

What are in-house production resources?

In general, “in-house production” refers to a company’s ability to produce media materials entirely with internal resources and without engaging the services of any external facilities or personnel. For the sake of this post and the industries we’re interested in, in-house production usually involves hiring a media department that then produces media internally. 

However, the concept of in-house production resources is considerably more open-ended. In-house resources can mean way more than just hiring a full-time media team. Instead, bringing production resources in-house may refer to anything from personnel to equipment to facilities and beyond.

Many production companies employ a healthy mix of internal and external resources. For instance, a producer might be the owner of the production company with a full-time production manager (keeps some in-house staff) who then hires out a production coordinator (external). You could look at it another way. A production company uses mainly external personnel but has their own resources for equipment.

Production companies generally act as hubs, developing projects primarily from a creative and organizational point of view. They are hired by brands, agencies, or others to produce a project. 

When a company chooses to outsource resources, a production company will rely heavily on freelancers, external services, facilities, and vendors to get the job done. This external personnel is often hired on a project-by-project basis to manage the actual production of a project, providing oversight until each project is wrapped. For instance, a freelance producer is hired during pre-production and spearheads all other on-the-ground logistics.

But with In-house resources, certain services and capabilities can completely change the way the company works. At its core, bringing new resources into the company means that production companies can manage more elements of a given project’s workflow, streamlining logistical communication tasks like budgeting and scheduling in the process.

Each production element carries its own advantages and opportunities, but it’s important not to forget that each has its own price tag too. Whether it comes in the form of salaries, increased overhead, or related expenses, bringing production resources in-house almost always comes at a cost.

And that begs an important question:

Is it better to keep resources in-house? 

In general, neither in-house production resources nor outsourcing production resources are inherently superior to the other, but one of them could be more beneficial than the other for your production company. It all depends on your unique needs and circumstances.

So when should you consider bringing resources in-house?

There's no standardized answer to this. There are so many different situations a company could find itself in where this could be a great idea or a terrible one. 

So we're breaking down four types of circumstances under which it might make sense to bring new production capabilities in-house. It outlines opportunities, challenges, risks, and questions worth considering when expanding the services of your production company. 

With that in mind, let’s dive in. 

1. When the price is right

When it comes to the debate over in-house resources, the bottom line is the bottom line. The most straightforward way to determine whether or not bringing new production capabilities in-house might be worthwhile is to do an in-depth cost-benefit analysis based on the prospect’s financials.

Simply put, the goal of the cost-benefit analysis is to figure out if bringing a new resource in-house makes sense. There are many abstract levels on which internal resources might create value or incur costs (some of which we’ll touch on later), but the sense you want the investment to make first is that of dollars and cents. You need to carefully analyze whether the extra money you spend will likely be outweighed by the extra money you earn or save.

Take the common example of a production company considering the option of bringing post-production services in-house.

In-house post-production capabilities refer to the ability to edit and finish projects without hiring an external service, and they usually come at a high cost. The technology and infrastructure investments alone can be quite significant, not to mention the potential cost of hiring in-house editors or artists.

At the same time, in-house post-production capabilities can also offer a major cost advantage. Being able to edit projects internally can reduce post-production fees for every project on the company’s slate, and in-house post-production might even open doors to new or increased sources of income.

In deciphering this example, real-world data comparisons are the key. If you compare the costs with the benefits and find that the financials are sound, you can begin to think of other ways that new in-house resources might add value to your company.

2. When size matters

For commercial production companies, the size of the company and the types of work it performs are vital factors when considering whether to bring a particular resource in-house. However, it’s important not to presume that bigger equals better. Large companies are not necessarily better situated to take advantage of expanded in-house production capabilities compared to smaller companies.  

For instance, consider the position of a very large commercial production company that handles a high volume of high profile, union shoots. 

At a glance, it might seem like maintaining a stable of trusted producers on staff would be a wise decision for this particular company, but a closer look at the logistics would quickly call that wisdom into question. 

A roster of in-house producers means that overhead will be increased on a full-time basis, regardless of the natural ebb and flow of any production company’s workload. Plus, the production company will find itself in a position where it constantly has either too many producers (which means that some will be paid but inactive) or not enough (which means that the company will have to hire freelancers anyway). With a large enough production company, in-house resources can become complicated far too fast. 

Of course, that doesn’t mean that that’s always the case. Larger production companies may be able to leverage the advantages of internal equipment or facilities, for example, with a lower level of risk compared to a smaller company.

Similarly, we shouldn’t presume that a smaller company should pursue in-house production options. A smaller company may not be able to handle substantially increased overhead or a high cost of the initial investment. 

In short, size is a factor in the equation, not an answer to it. Each production company must carefully consider how in-house resources will integrate with its current capabilities and workload.

3. When you’ve got something special

Production specialization can offer a compelling argument for bringing some resources in-house. 

For our purposes, production specialization refers to unique services or expertise, particularly if those services explicitly attract clients. 

Specialized production types might include 3D animation, motion graphics, drone production, high-speed photography, macro-videography, motion capture, trans-media storytelling, and more. We’re already seeing production companies specialize in cutting-edge tools like virtual production and volume technology.

In the case of specialized productions, in-house resources make sense because the means of production are at least partially unique. You can’t hire generalist freelancers to do specialized work. Instead, you'll need specialist personnel. The same goes for equipment, infrastructure, and other components.

Production specializations can provide strong motivation for bringing new resources in-house.

All of that is to say that production specializations can be highly valuable specifically because what they offer is near-proprietary by nature. Increased in-house capabilities help send a clear message to clients and other customers: 

“Only we can do what we do.”

If you need an illustration, take a look at Milk Studios.

Milk maintains a reputation as one of the best photo studios in the business. While it isn’t your typical production company, Milk is the perfect example of a creative organization that’s leveraged its growing array of in-house production capabilities to craft a uniquely attractive experience. Starting with state-of-the-art photo studios, Milk has gradually expanded its offerings to include equipment rental, in-house DPs and technicians, production support, exhibition services, archival services, and printing services, among others. 

Armed with organizational offshoots like Milk DGTL and Milk Agency, Milk Studios is now a juggernaut capable of producing entire campaigns from start to finish, and it’s all thanks to bringing resources in-house to support the company’s initial specialization. 

4. When it gives you an edge

Bringing production resources in-house can be a tactic for spurring growth.

In-house resources can expand your production company’s capabilities and capacity, which might be a valid way to attract more clients or create new sources of revenue. Of course, this strategy does come with a certain level of risk. It all boils down to a single, near-existential choice:

Do you expand to get more business, or do you wait for more business to expand?

It’s a tough question, and the answer should not be taken lightly. However, if you take the time to define the type of growth you desire and to reflect on the current state of your production company, a well-considered decision will emerge.

If bringing new resources in-house gives you a discernible competitive edge, it just might be worth the risk.

Wrapping Up

To bring or not to bring production resources in-house, that is the question. Ultimately, the answer will be simple, but discovering that answer may be quite a challenge. In any case, the key to doing so will be an honest examination of yourself, your production company, and your goals for both.

Or if you’re interested in more information about production company growth, jump into our posts about how to ace the creative call and how to get more clients.