Growth holding up but subdued year ahead
When the booming online entertainment business threatened the future of film and television production company Cutting Edge, it invested in digital channels to diversify the business and boost the bottom line. The strategy paid off with expected growth of 20 percent in 2016.
When film and television production company Cutting Edge first opened its doors in 1992, its ambition was to create a world-class creative content company based in Brisbane.
Fast-forward to 2015 and Cutting Edge has grown into a major creative communications company with offices in Brisbane, Sydney, Melbourne and Tokyo, and plans to launch into China and the US.
However, it hasn’t always been smooth sailing for the Cutting Edge business. The changing media landscape has thrown some curve balls at Cutting Edge owner/directors Ray Smith, Matt Lawson and Michael Burton over the company’s 23 years in business.
In the late 2000s as more and more people went online for their entertainment, there were genuine concerns that the internet would overtake TV. For the Cutting Edge –
a business deeply embedded in television production – this was a worrying trend.
In a bid to secure its future, Cutting Edge made the decision to embrace the threat and began to invest in digital services to help grow their content business.
While the business had planned for the changing landscape, “how exactly it was going to affect our business was hard to predict,” says Lawson. “At that point, being a content business largely reliant on television advertising, at times we were concerned about a reduction in TV advertising content spend. However, we quickly learned that whether our clients were advertising on TV or the internet, they still required content.”
With the media landscape changing dramatically, the directors took the opportunity to reassess the company’s structure and identify opportunities to diversify the business, creating a suite of companies, all centred on content.
The Cutting Edge Group now employs 150 staff across five businesses with its combined turnover forecast to hit its 20 percent growth target for 2016. At the core of the business is Cutting Edge’s Post-Production business, which accounts for the majority (60 percent) of the group’s revenue.
Cutting Edge employs 100 staff to work on a portfolio of TV, film and advertising projects. This includes feature films The Great Gatsby and Pirates of The Caribbean; TV series Deadline Gallipoli and House of Hancock; and TV commercials for clients such as McDonald’s, Flight Centre, Suncorp and Super Retail Group.
With the continuing growth of digital channels driving an increased appetite for content, Cutting Edge realised it was well placed to make the most of its creative content foundations to expand its services.
Lawson says, “Within Cutting Edge we had these strong digital and technical divisions and both these areas were growing very well. We decided to pull these skills out of Cutting Edge and create separate businesses, to ensure we could grow them to their full extent.”
The company launched Cutting Edge Tech Services, a fast-turnaround technical solutions company, which specialises in reality TV. It holds contracts for shows including Big Brother, Hell’s Kitchen, and I’m A Celebrity, Get Me Out Of Here.
Then in 2014, Cutting Edge acquired a majority interest from its partner Australian Institute of Management in e-learning company TCI and rolled its digital team into the mix to create a digital e-learning solutions business.
Cutting Edge has continued to diversify, launching a content and corporate communications company Oculus and digital and brand strategy company Campaign Edge.
“All of the businesses are reliant on good creative content, and Cutting Edge is a great anchor to provide support for the other businesses,” says Lawson. “We have evolved and incubated all of our new businesses within Cutting Edge.”
Remaining relevant over a 23-year period means taking risks and being prepared to change and grow.
“We have taken risks at times,” he says, citing the example of borrowing $30 million in 2008 to grow an outside/live sport broadcast division, which was sold to Global Television in 2011. “For the majority of our 23 years in business we’ve adopted a growth strategy. However, we’ve always listened closely to what our clients needed and have never hesitated to change our business to support them. Over the last three years, in particular, our business has gone through a massive period of change. Based on our clients needs our business is changing on a daily basis these days. We now have five different businesses, and we’ve become incredibly diversified, but we remain focused on maintaining our excellent client service offering and culture.”
Cutting Edge Group has more mergers and acquisitions on the horizon and plans to expand its presence in Japan and launch into China and the US. It’s also looking to expand further into these markets and double the group’s size over the next three years.
Lawson is confident the business model is future-proof, thanks to the overwhelming client demand for great content and storytelling skills.
“Our business has been positioned to create great content for our clients, whether that’s for film, TV or online,” he says. “While the platforms where the content is being viewed has changed, what hasn’t changed is the demand for content. More and more businesses are looking for engaging content, and we anticipate helping lots of businesses tell their stories in the future.”
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