Film companies are back on set, but they’re facing unique challenges thanks to the new state of the country. Inflation has hit the US economy at large, and the film industry is feeling the impact in surprising ways.

A Set Apart

We’re facing an unprecedented shortage of construction materials in the US. However it’s not just the housing market that’s suffering. Film producers are facing the impossible task of trying to build a movie or TV set within budget when the price of construction materials has skyrocketed since budgets were approved.

“The price index for steel mill products more than doubled, soaring nearly 142 percent since October 2020,” explains Ken Simonson, chief economist for the Associated General Contractors of America.

It’s not just steel either. Everything from wood to glass to paint has jumped in price in the past few months. Construction companies are reporting a huge spike in the price of building materials – or in many cases, a complete lack thereof.

According to the Wall Street Journal, these supply shortages “stem from a series of supply-chain disruptions hitting industries around the world, from port congestion in Asia and the U.S. to labor shortages at factories.” Pandemic-mandated changes to the labor market have further complicated any attempts to restore the flow of materials.

“At the start of the pandemic, construction companies laid-off employees and tried to work through inventories. Then demand for new homes jumped, and supplies for builders haven’t caught up, in part because of labor constraints in manufacturing as the pandemic drags on,” explained Lisa Ellram, a professor of supply chain management at the Miami University Farmer School of Business in Oxford, Ohio.

While construction companies can opt for adding a project on hold until supplies arrive, film productions have no such luxury. The show must go on.

Some productions are opting for less expensive materials with a similar look – such as swapping in a veneer or thin plywood for the traditional luan. The sets will get built, but they might not be as long-lasting – not a great option for a production’s ecological footprint.

A more sustainable alternative is to reuse parts of old sets that are still in good condition. “We’ve been recycling old sets and making modifications to try to get the job done,” says 41 Sets COO Rafael Loza. “We’re trying to do what’s best for the client and the design based on the budget.”

Other productions are opting for location shooting to avoid constructing sets with materials they can’t afford. “It’s certainly easier to shoot on a stage and build a set that you can control and light from a stage, but we can go to real places and shoot there in almost 90 percent of the cases,” notes one production executive in an interview with THR.

However, thanks to COVID restrictions for travel, location shooting isn’t always the better option.

“Normally, I would’ve gone on location,” says Michael Petok, an executive producer on Black-ish, Grown-ish and Mixed-ish, “but because of COVID, I’m forced into buildings and therefore forced into excess material costs.”

While productions haven’t resorted to simply building fewer sets (and thus detracting from the richness of their shows), sources say it may force them to do so soon.

Until then, set builders are content just to break even. “As business owners, we’re trying to do our best to ride the wave and keep our doors open,” says Loza. “Even if we don’t make a profit, we’re trying to be positive and make sure our guys stay employed.”

Like all businesses, production houses are constantly adjusting balance sheets and relocating funds towards new investments. With the exponential growth of streaming, content production has exploded, yet ballooning budgets might be the thing that reels it in.

COVID Hits Hard

If new variants keep arising, studios will be forced to make some tough decisions about their futures. With the price of materials so high, budget cuts might mean fewer productions overall – an option that could, at least temporarily, increase the value of older content.

Streaming’s rapid, exponential growth created a need for an incredibly large amount of content in a short period of time. Production houses stepped up, churning out show after show. However, with supply chain clogs causing budget overtures, content managers need new ways to fill the gap.

Looking through libraries might be the salve that saved the industry. Content owners and distributors are opting to license classics, in a shift which is inadvertently increasing the value of these older IPs.

Lucky for streamers, these licensing decisions seem to align perfectly with consumer choices, as comfort and familiarity gain a greater importance during strange times.

With all of the uncertainty in the world, it turns out that viewers aren’t so keen on getting thrills on screen. In fact, 2020 was dubbed “the year of the rewatch.” As reported by the BBC, “Nielsen data showed that the most streamed program in the US [in 2020] was the American version of The Office, which finished in 2013 – Americans cumulatively streamed a total of more than 57 billion minutes of it.”

Results were similar across the pond. Between March and October 2020, “UK streaming service NOW TV reported a 122% increase in views of old mob favorite The Sopranos.” The show became so popular that The Guardian dubbed it “the hottest show of lockdown”.

These rewatches aren’t just due to increased costs onset. Studies have shown that there is the anxiety alleviating factor of the familiar. Classic Sitcoms in particular saw a huge spike in viewership since the start of the pandemic, as they bring an aspect of friendly familiarity back into unstable lives.

A 2013 research paper by Jaye L Derrick, associate professor of social psychology at the University of Houston, “investigated the ways familiar fictional worlds help to restore self-control in individuals.” In that paper, Derrick described the “restorative nature of repeats as creating a sense of “social surrogacy”, like the kind of friends-by-proxy relationship you might feel with Seinfeld’s Jerry, George, Elaine and Kramer.”

“In some of the research that I have done we have discovered that just thinking about favourite TV shows was sufficient to make people feel better after a rejection event such as a fight or a period of loneliness,” Derrick told the BBC in an interview. “There is an association between favourite narratives and feeling better which doesn’t occur if we’re watching something new.”

Needless to say, rights holders to the best-known shows are cashing in as media companies compete to license timeless content. “NBCUniversal committed to paying $500 million to bring The Office exclusively to its own streaming service Peacock from 1 January 2021 for five years. Meanwhile, WarnerMedia picked up Friends for $425 million, also for five years, for its new streaming service HBO Max.”

That’s truly big money to be investing on classic content, but as 2022 rolls in with more uncertainty than we’d like, distributors are right to take a mixed approach. The dust of the pandemic hasn’t entirely settled, and content owners and distributors are diversifying their 2022 licensing portfolios. Older IPs may take just as heavy a role as new pilots, thanks to continued inflation, alongside previously overlooked international titles.

As Squid Games taught us, it’s impossible to predict which IPs will prove most popular. All we can do is sit back, grab the popcorn, and see which shows pay off dividends in the upcoming year.