CAPEX vs OPEX

Some of us who already have gray hair, remember the past as a time in which large investments were made in audiovisual equipment, VTRs, million-dollar edition rooms (in “Spanish pesetas”), normally in a purchase model where the amortization of technology was 5 to 8 years, and in some cases ended up extending to more than ten years …

But now, with the so fast advances and technological changes, there is a clear change of trend in the technical-economic management and investments of audiovisual companies, televisions and production companies that see the need to use their tools in a service or expense model.

CAPEX is the acronym for ‘capital expenditures’, it is used for investments in physical goods that improve or increase productivity. Fiscally, these investments are not immediately accounted for in cost, but they are amortized over several years based on the estimated depreciation.

 

OPEX is the other side of the coin, the “operating expense”, operating costs, personnel, recurring costs, rental of facilities, etc. It is a service, supply or rental, in short, a utility, something that is used, but not acquired.

As the technical director of a TV channel, the end of the year and the beginning of the next one forces to form budgets for the technological investment of the channel. This is always complicated and throws serious questions beyond which brand and technology are better than the other, the financial issue is, increasingly, a factor to consider when choosing a technology or provider.

An analyst, CFO, will tell the CTO that the expenses and investments can never exceed the income and that in phases of a total renovation of the plant, it is hard to fulfill. Confronted with this, there is the OPEX option, the economic amount initially necessary is minimized and it offers greater flexibility and agility in the face of an increasingly changing world with greater depreciation in audiovisual equipment.

Asier Anitua Valluerca

Asier Anitua Valluerca

Business Development Manager

Telefónica Servicios Audiovisuales

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