Film & Television


Nova Scotia’s film industry is to get the tax incentives it sought (see previous DISCONTENTS entry).

A news release from the Premier’s office on 13 September indicates that the industry will receive its requested 50 percent tax credits for films shot in Halifax, and a 60 percent tax credit on films shot in rural areas. Any company who films 3 or more films in a year will receive an extra 5 percent on top of the applicable rate.

The tax credits, calculated on the number of local residents employed, is aimed at boosting employment in the industry. According to the press release however, it is not just the tax credits that make the province attractive for filmmakers:

Nova Scotia is known for many positive attributes that help attract film production including experienced film production crews, talented actors, impressive locations and a solid infrastructure.

The release also quotes Ann Mackenzie’s analysis of the need for government assistance:

“A number of factors are coming into play this year including a short ACTRA strike, a stronger Canadian dollar, and more attractive incentives in other jurisdictions. We do not want to lose our position as the fourth largest film centre in the country, a position we have held for the past ten years.

David MacLeod, chair of the Nova Scotia Motion Picture Industry Association believes the increased tax credits will allow the film and television industry to be “intensely competitive and ensure employment for hundreds of Nova Scotians.”

There is no mention of making ‘Canadian films’, no policy drive for local companies to retain the copyrights for the productions being made. Are there any data on the numbers of foreign (including U.S.) versus Canadian productions shot in Canada disaggregated to the provincial level?

Tax credits for labour might keep a certain number of locals employed and technically trained, but just how sustainable is that? Does it encourage or enable these employees to eventually make their own commercially viable productions? Or does the model lock the industry into a fee-for-service model indefinitely?

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This one from the Chronicle Herald on 12 September.

Nova Scotia film makers point out that tax credits and ‘infrastructure support’ are better in other provinces, and argue that this is leading businesses away from investing in the far eastern province.

Inter-provincial or regional competition can be healthy if it means that residents and businesses have choice of service provision, rather than being faced with a virtual monopoly.

The provision of incentives such as tax concessions to attract investment however, can be a different game to ensuring effective and efficient services. To what extent are these incentives in place to attract sustainable investment, and how much of these policies merely pander to local rent seekers?

In this case, criticism of the government comes in varying shades. Some are aimed at municipal governments, others at the Nova Scotia provincial governments.

“MacKenzie (CEO of provincial film fund) pleaded with Halifax Regional Municipality to up the ante on its contribution to film production, …[stressing] the importance of tax incentives, free rent on municipal buildings used for filming and even discounts on goods and services.”

“Like the industry association, MacKenzie wants the Nova Scotia tax credit raised to 50 per cent from 35 per cent.”

Others indicate the frustration filmmakers feel in less subtle tones.

“We are going to lose a lot of people in the industry if the government maintains its current policy of inaction. I’m really pissed off by the half-assed action of the government,”

“We are losing millions, a lot of talent is dropping out of the industry or moving away and we can’t get that back overnight. My two films speak to the fact that . . . we can create higher-profile film projects out of the region. It’s a show of hope for others in the region.”

– Nova Scotia filmmaker Chaz Thorne

 

One question that comes to mind is, if Thorne’s films are indicative of the high-profile films that can be made in the province, why can it not be done in the current environment?

 

Nevertheless, this plea still follows the ‘rent seekers rule’ of demonstrating how valuable the industry is, then showing close the industry is to being wiped out, and all that economic value with it.

As with most ‘perks’ in life, aren’t financial incentives really a way of encouraging people to choose an option they would normally judge as sub-optimal? In this vein of thought, the larger the incentive, the greater the signaling effect of the option’s underlying demerits should be.

But when it comes to location shooting, production certainly seems to follow the money, and hence the incentives that are being offered in various jurisdictions around the world. But just how sustainable a policy is that? Location shooting is one of the most mobile forms of investment there are, but it possibly looks good for politicians as it almost definitely means local jobs.

But do such policies allow for the development of local talent through knowledge spillovers? Do these financial incentives become catalysts for further investment? Or does it result in local focus pullers and gaffers waiting around until producers can convince investors that the state will offer them adequate tax credits to make their investment viable?

Korean content producers, supported by government, are looking to extend their reach further into international markets, beyond Asia.

An article in Variety

  • Korea’s content industries are likely to produce ‘more nuanced’ properties rather than relying heavily on the local star system, . Big names appear not to be getting the pre-sales that they were overseas.
  • Film commissions in Seoul and Busan are becoming more aggressive at establishing Korea as a viable shooting location.
  • The film industry is looking to the US and Hollywood both for distribution and co-production opportunities
  • The technological savvy of local firms is helping to give Korea a leg up in certain sectors like special effects and new media.
  • Korean animators, who have gained technical expertise through years of outsourced U.S. work, are becoming strong contributors. KOCCA and other government organisations provide significant funding for training in the industry.

My question though, is how developed their storytelling ability has become, and to what extent government policies are aiming to develop these non-technical creative skills.

A post regarding a piece of Australian federal budget news on film investment policy – which points to a whole set of questions about the political economy of investment attraction and (sustainable) industry development.

The following Sydney Morning Herald article indicates that the Australian Government is planning to increase the refundable tax rebate for local film and television production as part of a A$283 million package.

Domestic film productions will receive a 40 percent rebate, other productions (eg television) will receive 20, while international films will attract a 15 percent rebate (up from the current 12.5%).

On the one hand, providing tax concessions may be a necessity for Australia to continue attracting international productions if it wishes to stay competitive and attractive in the face of many other international locations. This is particularly so when considering the effort some nations in the region are expending to promote their local industries.

But on the other hand, the question needs to be asked: is promoting the use of Australia as a site for location shooting and other production the most sustainable way to grow the industry? How much of the foreign investment that is attracted in this way will be used on “fee-for-service” work that does not provide local industry players with ownership of copyrights? In theory, “service work” provides locals with income and international exposure (provided a local subsidiary is not being used for the work). Yet without owning any of the property’s rights, firms have little in the way of reusable assets.

Singapore’s Media Development Authority (MDA), for example, gives very little consideration for where the production of projects it supports, such as animated TV series, are taking place. The most important factor for the MDA is that Singaporean firms are engaged in the high-end creative work and are retaining at least part of the rights to the content that is being produced.

In contrast, the Australian Federal Government’s 2007-08 budget seems to suggest that Australian policymakers are still too interested in attracting foreign capital and creativity to utilise the services of Australian talent. Given, the production process of an animated TV series is different to a live-action feature. Yet on first glance the tax incentives appear somewhat short-sighted or parochial on the policymakers front by exacerbating an artificial division between supporting “Australian stories” and allowing international films to use local locations and talent.

The differential tax treatment between local and foreign productions if its aim is to encourage foreign investors to put their money into productions that classify as “Australian” by employing a certain number of key cast and crew. Still, the question remains whether productions that the government has classified as “Australian” will be saleable in the international market.

Why is the government keen to promote the industry? And just what is the notion with ‘bringing Hollywood home’ (was Hollywood ever in Australia to begin with)? Are we witnessing a case of government pandering to lobbying from the local film industry? Australian games developers, for example, are eager to gain access to these funds that are only available to film, television, and documentary properties. While the games developers, who predominantly develop games for overseas publishers, would naturally be eager to access such lucrative tax rebates, it begs the question why does the film industry and not other ‘content’ industries receive such government support?

Should support be provided to the local games industry for the creation of ‘original’ IP rather than service work for international publishers?

See also SMH article ‘Filmmakers get…’

Several sources (IndianTelevision, C21Media) picked up the story of Singaporean firms chalking up US$128 million in sales deals at the recent MIPTV market in Cannes (S$193 million according to ChannelNewsAsia).

Featuring in the news were Singaporean production firms Big Communications collaboration with Flying Bark (EMTV) and Thunderbird Films based on a HarperCollins series (worth $6.5 million), and Scrawl Studios who concluded distribution deals for their animated series Nanoboy (on MediaCorp’s Kids Central), and co-production based on childrens book series Milly Molly was sold to various broadcasters around the world. Other companies striking distribution deals were or signing production MoUs were Upside Down Productions, Mega Media, Six-Six-Eight, Character Farm, and Media Freaks.

MDA CEO Christopher Chia held the sales up as an indicator of Singapore’s success, given the doubling from last year’s MIPTV sales. The biggest contributor to this however, was a collaboration deal by Singapore Technologies Electronics with Canada’s Nelvana Studios to co-produce three animated TV series and 10 DVD movies, which accounted for about US$100 million of the $128 million.

It is important to in the very least disaggregate this deal from the other deals, given that ST Electronics is the subsidiary of Singapore Techonolgy Engineering, and not necessarily the small to medium sized local content firms that the MDA is providing assistance to in Singapore.

Some related articles:
Channel NewsAsia: Singapore-made documentaries on Asia in high demand
Hollywood Reporter: MIPTV buyers pay attention to new media
IndianTelevision: $5 million India-Singapore-Korean TV co-production

Exports of UK television programming increased 20 percent in 2006 according to the UK trade association PACT.

Data referred to in the PACT press release, as does the reporting in World Screen News, indicates that this has been driven by a dramatic increase in revenue earned from sales of program formats.

The 87 percent leap in format sales is certainly notable, but it’s important also to look at the relatively small proportion of total export sales it accounts for.

Format trade was worth 56 million pounds in 2006 according to the “Sales by Type” disaggregated figures. If you do the math, this is about 9.5 percent of the total – an sizeable increase from 6 percent in the previous year, but can one say that it is driving export growth?

Sales of formats has received considerable attention in recent years and it is being looked at increasingly by producers as a way to increase exports by breaking into markets less receptive to foreign content, or similarly making headway into genres that tend to be locally produced.

“We make great shows that audiences throughout the world are watching and the UK distribution industry has benefited from the fact that, as rights owners, production companies are increasingly conscious of the international marketplace when they are developing ideas.”

Louise Pedersen
(managing director, All3Media International /
chair, PACT Exports Policy Group)

Exporting the intellectual property or idea of content for reproduction overseas also has governments all around the world excited, particularly those nations whose balance of payments are characterised by a significant deficit in trade in services, such as Japan for example.

Focusing on the international market is bound to make domestic industries more competitive, yet as an increasing number of production companies look to export their content via formats, several problems may well be on the horizon. I will leave addressing these issues to another post.

Figures released by the Motion Picture Producers Association of Japan (‘Eiren’) indicate that box office takings for Japanese films have exceeded those for foreign films for the first time since 1985.

The flailing film industry has been a constant concern for producers and industry stakeholders as they faced both a declining popularity in films, and a decreasing share of box office takings due to the popularity of Hollywood movies from the US.

Speaking to MPPA in 1998, they expressed considerable distress about the miserable outlook for Japanese films, but held onto animated feature films such as Studio Ghibli’s Mononoke Hime (Princess Mononoke) as a potential saviour for the industry both at home and abroad.

Looking at the breakdown of the figures, 2006 saw a dramatic increase in the number of Japanese films (or ‘hoga‘) from 2005. The positive sign for the local industry is that average revenue per film also increased to 258 million yen (according to my calculations), which is also above the average earning for foreign films by about 24 million yen.

While the top 3 Hollywood films (Harry Potter, Pirates of the Caribbean, Da Vinci Code) outsold top local films such as ゲド戦記, LIMIT OF LOVE 海猿, and THE 有頂天ホテル, a large number of high-performing Japanese films helped push them to scrape just over 53 percent of boxoffice takings.

Notably, 8 of the top 10 Japanese films were produced by Toho – an indicator of their dominant position in the local market – figures for 2004 and 2005 tell a similar story.

While the competitiveness of Japan’s animation sector has seen considerable emphasis placed on the importance of exports, it is interesting to see that feature films – at least for 2006 – have proved more successful at home than have imported ‘blockbusters’.

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