The Latest Industry News for the Exciting World of Production.
Creative Handbook puts together a bi-monthly newsletter featuring up-to-date information on events, news and industry changes.
Add My Email
By: Tiger | February 19, 2020
A Q&A with Tiger Group's Jonathan HolidayAmong the topics that will be presented at the PERG General Membership Meeting at NAB this year will be the market for used equipment and the question of what a rental house can do with underutilized gear.
Jonathan Holiday has had a busy 24 months selling excess pro Audio Video (AV) gear on behalf of PRG/VER, Keslow Camera, Illumination Dynamics and Birns & Sawyer, to name a few. The veteran auctioneer and Director of Business Development leads the AV vertical at Tiger Group's commercial and industrial division, which has emerged as an industry leader in AV dispositions. With sales volume jumping 50% in 2019 from 2018, the momentum continues in this space. Tiger conducts auctions, liquidations, turnkey business sales, asset appraisals and more for professional rental companies, production companies and studios. Recently PERG sat down with Holiday, who is based in Los Angeles, for his take on the state of the market.
PERG: With the popularity of TV, movie and digital content continuing to grow, how is this affecting demand for AV gear?
HOLIDAY: The changes in the market are definitely driving demand. We are seeing specific areas where purchasing is being made to handle the acceleration in production. Buyers are being very specific in their needs. For example, lenses from Cooke, Zeiss and Ultra Prime, as well as digital cameras, continue to have demand in the marketplace.
PERG: How are international markets fitting into the content picture?
HOLIDAY: Demand for content continues to be global, but it's interesting to see how the patterns are changing. In 2018, China was a prolific buyer. The trade war and tariffs last year have really slowed down their purchases of gear. More recently, we've been seeing demand from buyers in Israel, the United Kingdom, Australia, New Zealand and Latin America.
PERG: What is Tiger doing differently with all this rising demand?
HOLIDAY: In today's environment buyers want to know that the gear they buy is ready to roll. We've started to provide supplemental information about the gear we put on the market, with much more asset-specific information than traditionally available. Whenever possible, we'll tell buyers things like, "Here's the testing or servicing that's been done on this, here's its history, and here's what you can expect about performance based on what we and our clients know." In some cases, we've hired third-party technicians and projectionists to evaluate gear. It bolsters interest in equipment by giving buyers more confidence in the used gear they are purchasing.
PERG: Can you explain why a rental company would engage a firm like Tiger rather than sell excess gear on their own?
HOLIDAY: Some companies assume that because they've struggled to sell gear via third-party websites or through other internal methods, a company like Tiger may have the same difficult experience. Tiger has a holistic process for marketing AV gear and equipment, and our sell-through rate is nearly 100 percent. We take the time to understand the gear, where it is being sold, the pricing and other market factors. Our team works diligently, and our focus is only on selling equipment, which is a key ingredient to meeting our clients' objectives. At Tiger, we have spent years honing our skills in AV marketing, sales and customer service. We have extensive relationships with buyers in this space, and that does make a difference. Finally, we want our clients to be able to focus on what they do best and that is rent gear!
PERG: There were some noteworthy M&As in recent years, such as Keslow Camera acquiring Clairmont Camera and PRG's merger with VER. Could you talk about how that affects the market for excess and underutilized AV gear?
HOLIDAY: Those were very important events, and we assisted both Keslow Camera and PRG/VER in eliminating inventory redundancies. We implemented key strategies to open up much-needed warehouse space and eliminate redundant and older gear, without impacting their ongoing business. Additionally, the revenue generated from surplus sales allowed the companies to purchase new gear to support their rental demands for next-generation productions.
PERG: What other significant transactions took place that required an innovative solution?
HOLIDAY: We had the good fortune of selling North Hollywood-based Cineworks a 40-year-old lighting and grip rental company at the eleventh-hour last year. This really highlighted the benefits of turnkey sales: The owner of Cineworks ended up with a recovery value that was nearly double what likely would have resulted from an auction sale. We were also very proud that the company was able to continue operating.
PERG: Who is buying gear these days?
HOLIDAY: Overall, we continue to see buyers from a gamut of stakeholders-production houses, rental companies, directors, cinematographers, AV dealers, and in-house marketing departments. Our focus on global marketing also drove demand from international buyers. In one recent unconventional case on the buyer's side, cosmetics company Anastasia Beverly Hills wanted to disrupt the usual approach of outsourcing marketing and advertising production. Alex Smith, the company's Director of Media Production, leveraged our sales to help build an in-house production company and advertising agency from scratch.
PERG: What gear is in highest demand right now?
HOLIDAY: We are seeing a strong demand for Arri Alexa Classics, 4:3 and XT and the Sony PMW-F55 digital cameras. Lenses are always a fast-selling mainstay. Cooke, Ultra Prime and Zeiss are particularly sought-after. We also recently sold more than 18,000 Tiffen filters-one of the largest inventories of filters to be sold on the open market.
PERG: What segments of the gear market is becoming obsolete?
HOLIDAY: Due to technology changes for traditional lighting, the shift to LED lights continues, and that's part of why there are fewer lighting and grip rental companies. Affinity for the warmth of traditional lighting hasn't disappeared, but these lighting rental companies are managing their inventories carefully, because demand is changing. With respect to cameras, we're continuing to see the effects of "good-enough" manufacturing from China. Top-of-the-line cameras are not always being used for productions, and this is ramping up competition among manufacturers to churn out lower-priced cameras that still perform well. Rental and production companies really need to stay ahead of the obsolescence curve. Illumination Dynamics chose to do this in 2019 with their lighting, which paved the way for new gear to be purchased and to get the older lighting off their books. Scott Sawyer of Illumination Dynamics was quite happy with the results of our recent sale of the company's excess event and conventional lighting. The company used the proceeds to purchase new equipment. Noting that our team was "very easy to work with," Scott said the process "went very smoothly" and was profitable for his company.
PERG: Any misperceptions out there about selling excess AV gear through third-party asset-disposition firms?
HOLIDAY: Some rental companies view putting gear on the market as something you do when it's time to shut down the company and then monetize every last piece of your gear. In fact, we routinely work with healthy rental and production companies to strengthen their competitiveness. In addition, we have the ability to look at a rental company's inventory and assess what may be best to currently sell, and it may just be a partial amount of gear. We take pride at Tiger to create flexible programs to meet our clients' needs.
PERG: Can you give an example of a success story involving one of our members?
HOLIDAY: Recently, I received a nice note from Bill Meurer, the founder and president of Birns & Sawyer, which has partnered with Tiger for more than 15 years. Bill pointed to the strategic importance of divesting underused motion-picture equipment and staying ahead of the obsolescence curve. In his note, he said that Tiger's auctions and liquidations have helped his company continue to grow after 65 years in Hollywood. The proceeds are part of what enabled Birns & Sawyer to become an employee-owned business. For us, that was really gratifying to hear.
PERG: What's the difference between auctions and liquidations?
HOLIDAY: We tend to use the term "sale solutions" because there's actually quite a bit of variability in terms of the approach you can take. With respect to auctions, you're talking about live, webcast or online events which take place on SoldTiger.com. Other solutions include, as I mentioned before, turnkey sales, as well as liquidations, sealed-bid offerings and private-treaty sales. We strive to make the process simple for both sellers and buyers. Our goal is to always customize each project to meet our customers' needs and timetables. As to the distinction between auctions and the liquidation process, it's important to understand an auction can take place as soon as 30 days and a liquidation may take 90-120 days. Liquidations take longer, but they yield higher values. A liquidation is a fixed price with possible tiered price reductions over time and leverages multi-channel marketing over time. It's social media, ads in trade publications, e-mail blasts, telemarketing, and online banner ads. We keep and maintain a database with thousands of proven buyers. To be sure, we do a lot of that same marketing for our auctions. However, liquidations are more controlled. You can exert more influence over prices and timetables. That's important because it helps us avoid flooding the market with inventory.
PERG: Do you ever combine auctions and liquidations?
HOLIDAY: Absolutely. We can leverage a combination of our solutions. Tiger wants to work with each company to find the pathway to the highest value.
PERG: Can you give our members a recent example of this type of program?
HOLIDAY: For 10 months in 2019 we leased a 6,000-square-foot warehouse in Glendale for PRG/VER and Keslow Camera. We had gear moved into the warehouse from all over the country. As we pointed out, many ongoing rental companies typically don't want buyers at their facilities and may need to open up space in a short period of time. The gear was moved and then much of it tested. It was all priced, catalogued and photographed, plus buyers were able to check the gear themselves, giving them additional confidence in purchasing the equipment. Over 21,000 pieces of gear were sold in those 10 months via the liquidation process and five auctions. With the warehouse and integrated sales process, both Keslow and PRG/VER really benefitted from our efforts.
PERG: What do you think about the macroeconomic situation moving forward?
HOLIDAY: I'm an optimist and am really happy to see the strong growth in content-creation continuing, and this is great for rental companies. However, I also think it's important to remember that the business cycle, sooner or later, will turn. When that happens, marketing and advertising budgets will shrink in proportion, with cascading effects on demand for AV gear. There is a lot of gear out in the secondary market and eventually there will be downward pressure on values.
PERG: That is why it is important to have multiple solutions to deal with gear?
HOLIDAY: Correct. Having an asset disposition firm as a partner can alleviate significant challenges in the present and future. We are here to listen, evaluate and take action. Most importantly, we really value creating long-term, fruitful relationships with our clients.
Jonathan Holiday is Director of Business Development for Tiger Group's Westlake Village, California-based Commercial & Industrial Division; email@example.com
TIGER COMMERCIAL & INDUSTRIALHigh Quality Professional Event Projectors & Lenses with a Multi-Million Valuation
Contact Us Today