Incentivized Growth

Incentivized Growth

A Blog From iShindler

Over the past several decades, government incentives have been used to build industries in various locations, sometimes through augmenting existing businesses and industry segments, and other times through creating new ones.

Whether it was incentives for movie and TV production or the proverbial widget factory, in all cases, there has been one primary goal: jobs.

California is the clear#1 in the US in terms of movie and TV production.  New York is a distant, but clear #2.  Both have been production hubs for a very long time.  California has a limited incentive plan due to its significant industry base.  New York offers a better incentive package than California.

With the demise of the age-old studio system from the 50s and into the 60s, the democratization of tools and techniques, and, of course, the people and crews who make it all happen, significant production moved from California to the UK and Canada as well as to various states and locales for location specific shots.

Today, there are many locations around the world where Hollywood and others produce their content.

Over the past several years, Georgia has become a clear #3 in the United States in both motion picture and TV production.  Early on it was not a foregone conclusion that Georgia would be successful, not with Louisiana, Florida, North Carolina and other states vying for a shot at being a production center and each seeking the #3 designation.

Georgia persevered.  A key to this growth has been the incentives that the state and local entities have provided.  And, something that did not exist in other states, political will, according to leading local industry honchos.

Through the years, we have provided advisory services to organizations in several states, including California, assessing the local business and incentive climate in terms of their “if we build it, will they come?” goal.

In Georgia, circa 2013, that involved creating a strategic business plan and assessment for an investor group seeking to build a studio in what was then an “about to take off” production environment.  It was admittedly early, but there were many seeds that were in place that would enable a vibrant industry to grow and perhaps prosper.

We continued to follow the Georgia growth from a macro point of view as more and more movie and TV production migrated from California.  Recently, we were back in Georgia where I moderated a panel entitled Setting up a Georgia Outpost: Risks, Rewards & Challenges.

Today, there is a robust and rapidly growing content industry in the state generally and in Atlanta more specifically.  Several studios have established a major presence there, including Marvel for its sizeable slate of features.  The Walking Dead TV series is shot in the state and the location has become a major tourist destination.

And, of course, Turner Broadcasting, and its multiple broadcast and production entities, provided a strong base that has been present for a very long time.

How the state has grown to its present size is a question we have been asked by companies in both California and other locations that want to emulate the results, while learning from the mistakes elsewhere.

While there are many factors, the most significant include:

  1. Political will – The elected officials in the state and several cities are proactive supporters of the incentives that are paid to qualified production. They also have teams that assist with permits, personnel, location scouting and other vital functions of production.  At the moment, there is no sunset clause in the incentive legislation.
  2. Infrastructure – Several sizeable and a few smaller studios have been built to support the production requirements of major feature films. In addition, many support organizations for the wide range of equipment and services have sprung up in recent years to meet production needs.  This enables a “buy locally” mentality, which, in turn, increases jobs and is a basis for the incentives.  While not yet able to meet 100% of the tools required, the availability is increasing steadily.
  3. Crew base – By several accounts of people “in the know,” there are approximately 50 – 75 below the line crew personnel moving to Georgia on a monthly basis from various locations. In addition to the availability of work, many cite the ability to purchase a fairly priced home, something that is often out of reach in both Southern and Northern California.  As a result, while there are still occasional gaps in the various crafts that can be filled from within the state, that is changing.  Several leaders indicate that if crew members are not working, it is their skill level, not the availability of work, that is the cause.
  4. Training – Organizations such the IATSE to the many universities in the state and other training programs have been instrumental in developing new talent and building the skill level, with the goal of creating a self-sustaining industry.
  5. Streamers – In addition to the impact from Hollywood studio and independent filmmaker projects, the sharp increase in recent years from streaming services such as NetFlix, Amazon, Hulu and Google, among others, is boosting work in the state. This positive impact is being felt throughout the entertainment industry, and is not unique to Georgia.

While many consider the use of incentives to be the opposite of Robin Hood, paying the rich studios, most movies lose money for their investors.  To the extent that studios can reduce their costs, their losses are theoretically reduced.  That, in turn, creates/sustains jobs in the incentive states and it adds to the amount they can spend on “next year’s” production, creating a vicious circle.

The reliance of the studios et al on incentives raises the inevitable question as to what will occur when/if they are not renewed by the legislature.  It is possible that they will chase the next big locale where incentives are offered.  Or, due to the growth of the industry, including infrastructure and crew in Georgia, they will continue to work there.

There are, of course, several locations where the incentives have succeeded in their goal of creating jobs and building local industries.  The UK is the home to numerous sophisticated studio facilities as well as the many supporting organizations that comprise an effective ecosystem.  It could easily stand on its own with minimal, if any, need for “outside” resources.

Canada generally, and Vancouver specifically, have built a sizeable industry, with studios and significant post production businesses.  Vancouver in particular is the home of a robust visual effects and animation community.

Incentive programs in various states have failed and have pulled back from providing incentives.

Looking to the future, many industry observers have indicated that there is still ample room for further growth and that in due time, Georgia will be a state where content originates, not merely serving as a production location.

That is easier said than done as many places have found, but in these days of content democratization, it is possible.  They won’t be alone, though, as the competition is intense in the original content business.


Copyright © 2017, The Shindler Perspective, Inc.

No Comments

Post a Comment