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Vertical Integration

Vertical Integration


Entertainment Design and Technology has gotten increasingly complex, creating unique opportunities for entertaining audiences. This complexity has also created the potential for large unanticipated expenses if all creative, construction, installation and operations departments are not integrated in the development, execution and maintenance portions of the project.

Working Together?

The live entertainment production process has typically been segmented into clearly-defined fields and even sub-fields, introducing inefficiencies during the production phases. A common example is the creative and design teams not communicating with the set construction teams or vice versa. To create a truly integrated product, these teams need to be fused together beyond the level of just two separate vendors communicating with each other. Each department must have a vested interest in the success of the other department, something that is difficult to achieve with non-integrated department vendors such as design firms, creative firms and set construction companies in this example. Designers will design something that is beautiful but that the creative teams cannot implement the live production into, or that the construction team cannot build within budget or timeline estimates. This example of non-integration of teams manifests itself in missed timelines, costly re-engineering of sets, poor integration of talent and physical sets, and can lead to a failed live entertainment project. This is a simple example of just three departments that should work closely together causing a large negative impact on the live entertainment project as a whole.

COMMON PITFALLS

If three supposedly closely-working teams are having trouble integrating, it is easy to expand the impact of lack of integration to the larger project:

  • Architecture and venue construction teams impacted (the set won’t fit into the space or through the door into the venue).
  • Marketing Team impacted (opening day is delayed due to set build issues).
  • Operations team impacted (creative team has created a production that cannot be supported by the operations team)
  • Ticket sales impacted (poor creative team execution leads to bad reviews and to poor ticket sales).
  • Budget impacted (construction cost overruns, increased marketing costs to try to sell tickets, increased operations costs)

The POET Companies’ corporate strategy of vertical integration allows us to take the project from concept to execution, all within our structure.

The POET Vertical Integration Advantage

Reduced cost

Reduced risk

Tighter product integration

Increased collaboration

Increased development speed

Superior product

In addition to avoiding the pitfalls of lack of communication between departments in the live entertainment production process, vertical integration in entertainment production creates a synergistic effect on the production process as a whole. Efficiencies lead to cost savings in one department being redirected to other departments who may need more budget and capital expenditure to achieve the desired effect.

Example Savings

For example, during the construction of the show, it is determined that during 10 years of operations, the live show will require 5 employees to properly staff and cast the production. Through analysis of the casting process, it is discovered that this is a largely repetitive and database-driven endeavor, perfect for a software product. Custom software can reduce the number of employees needed to operate the casting portion of the production to only 2 persons. Financial impact analysis is performed comparing the $100,000 initial custom software development cost plus $5,000 per year engineering support costs yields a total implementation and operations cost of $150,000. Three employees at $50,000 per year each including fringes and benefits ($150,000 total per year) over the 10-year period results in $1,500,000 cost to the production, or 10 times more expense. Unfortunately, the live entertainment capital expenditure build budgets have been set and the money needs to come from a different department. Synergistic effects due to vertical integration as well as departmental knowledge for the need of this software product makes funding this entertainment software initiative a priority across all departments. This lack of competition between departments for budget within a vertically aligned structure like The POET Companies eliminates any conflicts of moving budget between allocations, or even into a completely new initiative (the custom entertainment software in this example).

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