December 5th, 2014 Report From Your Los Angeles Representative
WEEKLY UPDATE December 5th, 2014
from Kelly Graham-Scherer, Los Angeles Representative - firstname.lastname@example.org
Happy Friday everyone,
There were lots of interesting articles to read this week, in no small part because the Los Angeles Times published an entire state-of-nation section on the television industry and where it's headed.
The Times section contained too many stories to present individually, so I have just highlighted a few key ones for this report. If you have the time I encourage you to click on the link below and navigate through the section, as it contains a wealth of interesting articles, as well as salient observations in the comments section.
How do we define television these days? The article below attempts to answer that question and in doing so yields an informative and engaging history of the medium.
What will television look like in the future? The extensive feature below looks at how streaming has capsized the industry and the ways in which major programmers, with billions of dollars and their long-term survival at stake, have been shifting gears and are looking for ways to harness the power of digital media.
Who is watching television these days? It's an important question in an industry which has built its economy on advertising to a measurable number of eyeballs. The article below looks at how the industry is racing to modernize its metrics in a multi-platform world.
A story this week from CBC news makes a provocative bookend to the L.A. Times pieces: as reported below, speaking at a recent industry event in Mexico City, Netflix CEO Reed Hastings predicted that broadcast TV will be dead by 2030.
Also catching my attention this week were a few articles regarding tax credits in jurisdictions against which Ontario competes for work.
Analysts in Maryland are urging lawmakers to scrap the state's film tax credit, arguing it hasn't benefited enough from the $62.5 million poured into television and movie companies since 2012. As reported in the Baltimore Sun below, Maryland is facing a $600 million budget shortfall and reports are that all but 2 percent of tax credit money since 2012 went to just two productions: HBO's Veep and Netflix's House of Cards.
Once again the U.K. has upped the ante in its quest to lure even more film and television production across the pond. As reported in Variety below, the U.K. government confirmed this week that it will extend its existing production tax credits for film, animation and high-end TV to include children’s live-action programming.
In feature news this week the Times had a fascinating look at the challenges Universal will face marketing the Angelina Jolie-helmed film Unbroken in China and Japan, which are the number two and three box office markets in the world, respectively. The article below is an interesting reminder of how increasing globalization will continue to affect how stakeholders produce and market content.
And finally, the Hollywood Reporter shared the good news this week that the star-studded upcoming Warner Brothers feature Suicide Squad will shoot in Toronto this spring.
You'll find the full text for the linked articles below my signature. Please feel free to distribute this e-mail widely and to get in touch with me with comments or links for inclusion.
Los Angeles Representative
Toronto/ Ontario Film Office
How should television be defined nowadays?
What is television? It seems a fair and timely question to ask, now that it's coming at us from so many angles, on so many platforms, from so many producers.
Let's begin near the beginning.
Once upon a time there was a thing called a television set. You knew where you stood with it, and you knew where it stood: in your house, in a fairly stationary, semi-permanent, prominent way — a box, sometimes a very big box, a piece of furniture. It didn't hang on a wall, you couldn't carry it around in your pocket or wear it on your wrist.
For many years, everything that came into a television set came out of the air, on invisible waves of light. Just how much TV you were able to see had to do with how the frequencies in your area were apportioned and how close you lived to a transmitter. There wasn't much of it, compared to today, but there was still more than anybody could watch, even if, like Lyndon B. Johnson or Elvis Presley, you had three sets going at once.
Then television started coming through a cable as well, bringing dozens upon dozens of new channels to what was now just a figurative dial. Eventually it would also arrive through the telephone line or off a satellite or by way of a computer modem — and not into the squat single-purpose set of yore but into other machines that would become televisions just for a time and then go back to being computers, cellphones or a thing to play video games on.
Each new technology created new sorts of content, some of which bore only a cursory resemblance to the TV that preceded it and new sorts of business models that remodeled the older models. Now, for instance, HBO, a premium cable network, and CBS, one of the original broadcast networks, are making their wares available directly over the Internet — doing a Netflix — while Vimeo, the arty YouTube, is selling its first scripted series for $1.99 an episode (It's called "High Maintenance," and it's about marijuana), as if it were iTunes or Amazon.
I once would have described television in terms of the formal qualities of its content: its standardized length, its episodic nature. And, as a professional critic, it seemed for a time necessary to limit the definition, almost as if one were defending "real" television against the barbarian hordes of terrible first-generation Web series — things that either tried to be like real TV and failed, like the twentysomething soap "Quarterlife" from the creators of "thirtysomething," or that wrapped themselves prankishly in the medium, like "Lonelygirl5," revealed to be nothing but a limp conspiracy thriller once it stopped pretending to be an actual vlog.
We have moved on from there into a world of video wonders. Now I am inclined to define television as any moving picture — at all — watched on any sort of screen not located within a movie theater. From a 30-second clip of a baby wombat to a fancy long-arc drama starring people whose other job is being a movie star, whether it was made by unionized professionals or rank amateurs, for fun or for profit, for crass reasons or noble purposes, art, garbage or garbage-art — I am happy to call it all TV. Whether you are shelling out for a full menu of premium channels and streaming sites or just consuming what you can pick up off the Internet for free, there is more to watch, and worth watching, than any reasonable person could ask for, or want.
Many distinctions, which I would call "real but imaginary" — that is, based on actual differences but mostly psychological in effect — have been applied to the medium through its history. In the unimaginably long time before cable, it was understood that VHF channels were qualitatively different from UHF (in L.A., the old home of public broadcasting and of Spanish-language). There was a perceived difference between network television and local television, between older networks like ABC and newer networks like Fox, between broadcast television and cable television, and between basic cable television networks and premium cable television networks. Those perceptions faded with use. Now we are reckoning with streaming services like Netflix and Amazon and Hulu making the jump from content distribution to content creation; they are already lining up for Emmys.
There is a certain amount of trauma that attends these changes. Television networks seem to regard one another as enemies engaged in a total war in which ratings get banner headlines and victory is claimed for dominating such and such a demographic at such and such an hour on such and such a day in such and such a week. They play a zero-sum game in which every pair of eyes tuned in to another network's product is two fewer eyes you can take to the bank.
Regard the apocalyptic hubbub whenever a new brand of competitor edges into the Emmy race to challenge the last-established version of the establishment — first premium cable, then basic cable, now streaming systems like Netflix, each wanting a piece of the pie, each fighting for a seat at the table. The TV table.
As writers about television, we do tend to note the differing circumstances, economies, legal or practical constraints and degree of freedom that influence the kind and number of programs being made. As viewers, however, we do not — one channel is as good as another to a remote control. Obviously, there is a difference — many differences — between a piano-playing cat shot on a smartphone and a scripted program whose creation required hundreds of professionals and hundreds of thousands of dollars. You can't judge one by the standards of the other. And yet, as I would declare it, each is television and, as a televisual life experience, potentially of equal value.
The Emmys, for their official part, have acknowledged that their universe is an expanding one, with awards for original interactive program (including crowd-sourced and/or user-generated narratives) and social TV experience (a synchronous or asynchronous social experience that supports audience communication and interaction for a linear program or an original interactive program) and expressly naming mobile (smartphone or tablet), computer, over-the-top set-top box or console, or Internet-connected/smart TV as platforms to be considered. There is an Emmy too for programs lasting less than 15 minutes — "Too Many Cooks," anyone? — including those that are Web-based. (There is a chance for you too, "The Future With Emily Heller.")
In 2014, and beyond, television is everything and anything that pours into whatever it is you watch it on. Without getting up once from the couch you might on a given evening watch a 1950s sitcom, a cartoon a teenager made in his bedroom, a TED talk, live broadcasts from the Senate or space, highlights of last night's late-night talk shows, a concert video shot on a cellphone, a Korean soap opera, soccer in Spanish and half a dozen cats playing half a dozen pianos. Where the material originated can be interesting and even useful to know, as it is interesting and useful to know that the Mississippi River, which is partly fed by the Ohio River, which is partly fed by the Cumberland River, flows into the Gulf of Mexico or that the Amazon empties into the Atlantic. But it is all one watery body of water in the end.
So it is with television, a stew with ever more ingredients, in an ever bigger pot, and pleasure is limited only because you have to sleep, probably work and will most likely not live forever.
Media monarchs have finally seen the future, and it is digital
Don't be surprised if the future monarchs of media look a lot like the ones that rule today.
After spending several years on the defensive, traditional media giants are making bold moves to reinforce their dominance. With billions of dollars and their long-term survival at stake, major programmers have been shifting gears and are looking for ways to harness the power of digital media themselves.
This fall, two major programmers — HBO and CBS — announced subscription streaming services that would be offered directly to consumers.
HBO's foray, expected to roll out next year, represents the first time the premium channel's latest content would be legally available to viewers who do not subscribe to the top-tier pay-TV service. Many viewers cheered the development, figuring the HBO initiative in particular might set in motion the long-awaited breakup of the pay-TV bundle.
Not so fast, some experts said.
"The shiny, colorful, rainbow-filled unicorn world where people can order just the channels they want and nothing else is really just a fantasy world," said Matt Smith, chief evangelist at Anvato, a Mountain View, Calif., technology firm. "The audience is shifting, but consumers are becoming pawns in the larger game."
Media companies, including the Walt Disney Co., NBCUniversal and Time Warner Inc., would like to protect the established industry economics. But they recognize that they must evolve to remain relevant, particularly among younger audiences, the so-called digital natives who have never known a time without an Internet. And many don't subscribe to pay TV. Ask 22-year-olds what device they consider most essential, and the answer is likely to be their smartphone — not the big-screen TV in the living room or even their laptop.
The change is not simply generational. Older Americans have been gravitating to streaming services too.
"This is the new world of TV," said Roy Price, vice president of Amazon Studios. "The convenience of on-demand viewing just makes sense for a lot of people. A few years ago, it was a little exotic and forward-thinking to have your TV talk to the Internet and send you television shows, but today it is pretty normal."
Nearly half of U.S. homes now have at least one TV connected to the Internet, enabling viewers to watch digital video from services such as Netflix, Hulu and Amazon.com, according to a recent report by the Leichtman Research Group. Even more Americans have watched videos on YouTube. In fact, so many people stream videos that Netflix and YouTube account for 43% of all Internet traffic during the peak prime-time evening hours, according to estimates by Internet traffic managers.
YouTube, owned by Google, boasts that users around the world upload 100 hours of video to its servers every minute and that each month people watch 6 billion hours of video on the site.
"We are in the midst of a massive change," said Christopher Vollmer, a partner of PricewaterhouseCoopers' Strategy& consulting unit. "People are getting their content from different platforms, different networks — and in different ways. The hours that people are spending consuming content continues to grow — and that trend is being driven by digital media."
Consider that Netflix expects to generate $3.4 billion this year on its U.S. streaming service alone. It now has more than 37 million subscribers to its streaming service in the U.S.
Amazon doesn't break out its customer numbers, but "there is no question the segment is growing," Price said. "Just being able to set your own schedule and start your favorite show on your schedule, and watch it all the way through, has become mainstream. Streaming is rapidly catching on."
A high-speed Internet connection has become a new gateway to entertainment.
But there is a rub: Entertainment companies derive much of their revenue from relationships forged in the 1980s. These companies, including Disney, 21st Century Fox, NBCUniversal and Nickelodeon-parent Viacom, collectively take in $47 billion a year by licensing their channels to cable, satellite-TV and telecommunications companies, according to consulting firm SNL Kagan. The distributors then sell huge packages of channels to consumers.
Those hefty programming fees underwrite the high cost of producing feature films and TV shows, and they have kept profits high at the media companies. Such lucrative partnerships with pay-TV operators have prevented media companies from blowing up their business models — until now.
But the sound of snip, snip has helped alter the television companies' point of view too.
Companies have been bracing for more defections, with as many as a half-million households in the U.S. canceling their pay-TV subscriptions this year. The bounty of options has led many to conclude that they no longer need to fork over $100 a month or more for cable or satellite TV-subscriptions.
Meanwhile, the high-cost of premium cable service has prevented millions from watching first runs of HBO's critically acclaimed programming, including such shows as "The Sopranos," "Game of Thrones" and "Boardwalk Empire." That will change with HBO's streaming service, which is expected to be offered for about $14 a month, competing with such low-priced options as Netflix and Hulu Plus.
"We can't ignore the growing opportunity," Jeff Bewkes, chief executive of HBO-parent Time Warner, told Wall Street analysts this month.
CBS has also taken the digital plunge, last month launching a $5.99-a-month subscription service, CBS All Access, that enables Internet users to stream such shows as "NCIS," "60 Minutes," "The Good Wife" and "The Young and the Restless" as well as episodes of classics such as "Star Trek," "Cheers," "MacGyver" and "Melrose Place." However, NFL games that air on the network won't be included on the streaming service because CBS lacks the streaming rights.
The network has also introduced a free CBS News streaming product, CBSN, that allows people to get the latest headlines and reports on their mobile phones, tablets and computers.
"These new platforms are complementary to established mediums," said Jim Lanzone, chief executive of CBS Interactive. "After all, the invention of television didn't kill radio, and television didn't kill movies. And the invention of the Internet has not killed television."
Experts caution that HBO, CBS and others that offer their content "over-the-top," via the Internet, bypassing the cable box, will do their best to avoid alienating their longtime partners, the pay-TV providers.
Time Warner's Bewkes stressed that the HBO Internet offering would not be targeted at pay-TV customers. Instead, he said it would be designed to woo new customers among those who live in 10 million homes equipped with high-speed Internet — but not a pay-TV subscription.
He and other CEOs have financial interests to protect the lucrative, existing pay-TV model as they navigate the changes in audience behavior.
"The TV industry is still in this gray area," said Albert Cheng, chief product officer for digital media for the Disney/ABC Television Group. "Every company has different business reasons for doing what they are doing, which is why we are seeing so much experimentation in terms of what content is available, when it is accessible and where it can be seen."
For example, Disney, Fox and NBCUniversal jointly own the streaming site Hulu, which has long provided insights on consumption patterns — and which programs are most popular.
There are early indications that the established media companies are well positioned for the future.
After Time Warner last month announced that HBO would soon roll out a streaming option, the company's stock gained ground. That same day, Netflix disappointed Wall Street when the company missed its third-quarter subscriber growth targets. That plus the HBO announcement resulted in Netflix's stock dropping about 20%.
Satellite TV giants Dish Network and DirecTV and electronics giant Sony Corp. also have been busy preparing to defend their turf. They are designing small packages to sell to customers with high-speed Internet who want to stream traditional TV channels, such as ABC, ESPN and Discovery, over the Internet. DirecTV is working with Spanish-language broadcaster Univision Communications to tailor a small package of channels for Spanish speakers.
Chet Fenster, head of content for media investment agency MEC, summed it up this way:
"The established media companies will continue to be major players, but they will be standing alongside new brands that most people don't even know their names yet," Fenster said. "One thing we know from the history of media is there is strength in numbers. And there will always be a market for smart, scripted programming."
Count the TV audience? Not so easy to do these days
Like Barry Allen of CW's "The Flash," the changes in TV viewing habits are moving at superhuman speeds. And the industry, which relies on accurate measurements of audiences, is racing to catch up.
While the majority of viewers watch the old-fashioned way — live and seated in front of a TV screen — new technologies are rapidly transforming the way programming is consumed. The upending of television is being led by digital video recorders, video on-demand and streaming sites such as Netflix, Hulu and Amazon that can be watched on mobile phones and tablets as well.
The new TV behavior patterns, which are expanding as viewers become more comfortable with technology, are dramatic and come with potentially far-reaching consequences for the industry. This season, time-shifting has accounted for 37% of non-rerun, non-sports viewing up to seven days after day-of-air on the four major broadcast networks, according to Nielsen. That's up from 33% at the same time last year and up significantly from just 26% in 2009.
The bigger the window, the more pronounced the trend appears. An estimated 14 million people watched the premiere of Fox's Batman-inspired series "Gotham" in the 30 days after it aired, a huge increase from the 8.3 million who tuned in on the day of the show's premiere.
The problem: At least 5 million of those "Gotham" viewers don't count in Nielsen's ratings, the main currency for TV networks and advertisers.
Nielsen's metric doesn't include those who watched the episode on streaming sites like Hulu or Fox's own website, nor does it count those who watch via video-on-demand more than four days after the original airing. That's an issue for networks that want to use those viewership totals with advertisers.
"There's value in those viewers who are time-shifting," said Will Somers, head of research at Fox.
Overall, people are likely spending more time with television programming, given all the ways they can watch. The downside for networks is that they are viewing increasingly in nontraditional ways that make it harder for networks to make money.
The major broadcasters are trying to show advertisers how many people are really watching their shows at the same time as the live TV audience dwindles. Overall television ratings are down from a year ago, despite strong results from some newcomers. Total prime-time viewership among the key 18-49 demographic was down about 10% on average over the last two quarters.
Doug Creutz, an analyst at Cowen and Co. in San Francisco, said the trend could be a troubling sign for the big media companies. The time-shifted viewing measured by Nielsen is not making up for the decline in the drop-off in live ratings.
Also cutting into the network's overall ratings is the rise of online streaming services. Subscribers between ages 18 and 54 watch about 20% less traditional TV than before, according to Nielsen, which for the first time next month will begin measuring audiences for the streaming services. (Nielsen won't include data from shows watched on mobile devices, however, since they don't have the technology yet to do so.)
Most returning network TV shows are down, noted Creutz, while new picks haven't picked up the slack. This environment could foreshadow a future in which digital media eats more of TV's slice of the advertising market.
"Probably for the first time, there's real evidence that national television is coming under pressure from an audience perspective and an advertising perspective," Creutz said. "The question is, how much?"
Analysts and advertising firms say brands are increasingly taking more of their money to the Web rather than the traditional tube, even as critics say the industry is experiencing a golden age in television programming quality.
That's partly because advertisers are reluctant to buy time based on numbers of DVR users, who can easily skip ads. Also, some ads don't work if people see them a week late. Film studios, for example, want people to see commercials before a movie hits theaters.
"No one wants their Halloween message seen on the first of November," said Darcy Bowe, a vice president at advertising company Starcom USA.
In a note to clients in October, BTIG analyst Rich Greenfield went further in expressing skepticism.
"Ads are not watched on DVRs no matter what studies from Nielsen indicate and torturing consumers with unskippable ad breaks ... cannot possibly be the correct answer for a brand trying to build a meaningful relationship with consumers," he wrote.
The holy grail is the ability to measure everyone across all platforms. No one is doing that yet. - Alan Wurtzel, head of research at NBC
Network executives push back against the naysayers, arguing that the prevalence in ad-skipping with DVRs is overblown. After all, people have been avoiding advertising all along, and even those watching live TV can leave the living room during the commercial break. (Video on-demand does not allow ad-skipping.)
The big broadcasters, CBS, NBC, Fox and ABC, are trying to get the data crunchers who analyze TV ratings to pay more attention to the lifts shows receive from delayed viewing rather than fixating on the initial viewership counts. The companies have even begun including projections for the three-day and seven-day upticks in their morning releases to journalists.
Nielsen is working on ways to include more of the audience in its measurements, such as those who watch while away from home and on smartphones and tablets. Earlier this month it revealed the results of a test in Chicago that said ratings got a 7% to 9% lift from the inclusion of out-of-home viewing (meaning people watching at bars or at the gym).
Dounia Turrill, senior vice president of client insights at Nielsen, is optimistic about the state of the TV industry as a whole. Giving consumers more ways to watch shows means they can experiment with and keep up with more shows than ever.
"We definitely feel that video consumption overall is increasing, fueled by this opportunity for extra discovery," said Turrill.
Before the advent of new TV technologies, many shows — particularly those with serialized story lines — were hard-pressed to build an audience if they didn't debut strongly. But once streaming services began airing old programming, viewers could find or catch up with shows they might originally have missed.
One of the most notable examples is the AMC drama "Breaking Bad." The dark series about a chemistry teacher turned meth dealer saw its audience — and its Emmy recognition — skyrocket once Netflix began offering past seasons to its tens of millions of subscribers.
Some advertisers have been willing to make deals with networks based on the seven-day viewing window. But TV has a long way to go before the industry can translate its big nonlive audiences into advertising dollars.
"The holy grail is the ability to measure everyone across all platforms," said Alan Wurtzel, head of research at NBC. "No one is doing that yet."
Netflix CEO Reed Hastings says broadcast TV will be dead by 2030
The current model of TV programming distribution will be broken and non-existent within the next decade and a half, the CEO of streaming media company Netflix says.
Speaking at an industry event in Mexico City, Reed Hastings told reporters that he thinks the current system where television channels are grouped into free-to-air network television and premium cable channels is becoming obsolete.
"It's kind of like the horse, you know, the horse was good until we had the car," newspaper The Hollywood Reporter quoted him as saying. "The age of broadcast TV will probably last until 2030."
That's probably not a shocking statement from a man who runs one of the world's fastest growing content companies. But it does indicate how fast the pace of change in the industry is happening.
Recent data suggests Netflix makes up more than a third of all internet traffic in North America during peak periods. That's far more than any other source, and an indication of the type of heft that the once upstart company now has in the content game.
Netflix no longer breaks out its Canadian subscribers numbers separately, but boasts more than 34 million households in the U.S. — comparable to the reach of many television networks.
To keep up with that growth and pay for exclusive content like Orange Is the New Black, the company recently announced a price increase of between $1 and $2 a month for new customers.
The company showed off its disruptive influence in the industry in the summer in a testy exchange between a Netflix executive and the CRTC, which was demanding that the company hand over reams of subscriber data — something the company says it has no legal obligation to do.
That exchange came as the regulator was looking into changing the rules on "bundling" cable whereby customers are forced to pay for packages of channels — as opposed to picking and choosing the ones they want.
Although Netflix is the giant of the streaming space, others exist. Earlier this year Rogers and Shaw launched Shomi, a streaming service that's meant to rival Netflix.
Netflix has seen roaring success of late making popular programming, but Hastings comments come at a time when there's upheaval in the way that the industry even monitors what consumers are watching. Ratings company Nielsen is going to start tracking Netflix viewing in its ratings numbers, something it hasn't done before.
That's sure to be a sea change in terms of tracking what people are actually watching. As of yet, there hasn't been a reliable way of comparing how many people are watching a popular cable television show such as The Big Bang Theory, for example, versus a Netflix show like House of Cards on a real head-to-head basis.
Although Netflix likes to boast about the popularity of its shows, Hastings downplayed the significance of Nielsen's move because, by the company's own admission, it won't include mobile usage.
"It's not very relevant," Hastings said. "There's so much viewing that happens on a mobile phone or an iPad that [the new ratings] won't capture."
Analysts urge state to scrap film tax credit
State analysts urged lawmakers Tuesday to scrap Maryland's film tax credit, arguing the state hasn't benefited enough from the $62.5 million poured into television and movie companies since 2012.
The hearing in Annapolis marked the public opening of a debate expected to last through the General Assembly session as politicians try to determine whether the lucrative program that brought "House of Cards" to Maryland is worth it.
So far, it remains an open question.
"We have a limited amount of money. How do you use it?" said Sen. Richard S. Madaleno Jr., a Democrat and chair of a task force examining state tax credits.
Film industry advocates implored the panel to continue the program, dismissing analyst conclusions that taxpayers were getting a poor return on investment.
The nonpartisan budget analysts, charged with evaluating the film tax credit, concluded that lawmakers should let it expire in 2016 because it generates only temporary jobs and not enough money for state coffers. Unlike other tax credits that launch an industry, film companies depend on continued subsidies.
All but 2 percent of the taxpayer money spent on film tax credits since 2012 went to just two productions: HBO's satirical show "Veep" and Netflix's political thriller "House of Cards," which has filmed in iconic state buildings and at The Baltimore Sun.
"It'd be different if we had a surplus, but we don't," said Jacqueline Adamson, a volunteer with an arts organization that saw its funding cut last year to help pay for the film tax credits. "We're broke."
Maryland faces a $600 million budget shortfall next year, and Gov.-elect Larry Hogan was ushered into office on a promise to curb state spending.
Hogan has repeatedly declined to offer thoughts on the film industry subsidy since he was elected, but during the campaign he called it "outrageous" that lawmakers would divert money from the arts and "give it to Hollywood millionaires to produce subscriber-only TV shows."
Representatives of "House of Cards" and "Veep" did not testify at Tuesday's hearing.
Analysts from the Department of Legislative Services described for the task force their assessment of the subsidy. They found that the tax credit — which in practice is often distributed as a check cut to a production company — is "significantly more generous than other business tax incentives," said Robert J. Rehrmann, a department analyst.
Unlike other programs, where a one-time investment yields dividends down the road, the major film companies have threatened to leave if the state money dries up.
Analysts also questioned the fairness of a state program that disproportionally benefits just one region of the state. More than 80 percent of the companies used by productions have been based in just four jurisdictions: Baltimore, Harford, and Anne Arundel counties and the city of Baltimore.
The analysts' biggest criticism: The government gets back just 10 cents in tax revenue for every dollar spent.
Maryland is one of 37 states and the District of Columbia that offer financial incentives to lure television and film productions. Maryland has offered some form of incentives to film companies since 2007, but its more generous version took effect in 2012.
Competition has driven the generosity of the credits, which analysts said have become increasingly less effective at creating jobs.
The production company for "House of Cards," MRC, wrote a letter this year threatening to leave if lawmakers did not provide enough funding to deliver up to $15 million in tax credits for Season 3.
"In the event sufficient incentives do not become available, we will have to break down our stage, sets and offices and set up in another state," Charlie Goldstein, a senior vice president for the production company, wrote to Gov. Martin O'Malley.
This month, the series is filming part of its Season 3 finale in New Mexico.
Hannah Byron, assistant secretary for tourism film and the arts at the state's Department of Business and Economic Development, said Maryland's program is "in the middle of the pack" compared to other states, and that the current tax credit program has worked exactly as planned.
Before, "we were simply not competitive with the other states. With the tax credit, it worked immediately," she said.
Byron and others said the budget analysts overlooked all the indirect benefits the film production industry has brought Maryland, from tourism to catering.
"The businesses like lumber and paint and florists, how can you not look at them in this analysis?" Byron said, calling the tax credit "absolutely critical" for small businesses. "It has really made the difference between keeping their doors open and closing them."
She pointed to a February 2014 study by the Regional Economic Studies Institute at Towson, which counted a broader array of impacts and concluded Maryland gains $1.03 in tax revenue for every dollar spent.
Jack Gerbes, director of the Maryland Film Office, told lawmakers about a Frederick County winemaker who sold out of her most costly vintage just three months after it was featured on an episode of "House of Cards."
And Susan Picinich, dean of fine arts at Towson University, told lawmakers the burgeoning film industry has ushered in new classes of students at her school, at the Johns Hopkins University and the Maryland Institute College of Art who can get first-hand experience at productions in Maryland.
A set maker, a stuntman and an actor told lawmakers that of course film industry jobs seem temporary, since each job is dependent on new projects coming on line.
" 'Veep' is now in its fourth season," said Sig Libowitz, a Bethesda resident who said he worked in the film industry. "By its very nature, those are not temporary jobs."
Lawmakers did not tip their hands as to whether they were swayed that Maryland should keep paying out millions to production companies.
"We represent people from other industries as well," said Del. Andrew A. Serafini, a Republican from Western Maryland. "They're going through hard times, and they would like subsidies."
U.K. Extends Tax Credits to Cover Children’s Live-action TV Shows
LONDON — The U.K. government has confirmed that it will extend its existing production tax credits for film, animation and high-end TV to include children’s live-action programming.
The Chancellor of the Exchequer George Osborne, who is in charge of government economic policy, announced the move Wednesday as part of his Autumn Statement, which updates the country’s lawmakers on the government’s economic policy.
“We will help one area of television production that has been in decline, with a new children’s television credit, alongside our new animation credit,” said Osborne. “The government will introduce a new tax relief for children’s television programs from April 2015.”
The kids’ TV tax credit amounts to a 25% saving on 80% of the U.K. production spend.
The tax credit already applies to bigger-budget scripted television shows, but is restricted to programs of more than 30 minutes in length, and with budgets exceeding £1 million ($1.57 million) for each broadcast hour.
There is a separate tax credit for animation intended for broadcast, which again amounts to a 25% saving on 80% of the U.K. spend. There are no restrictions on budget size or program length.
Producers‘ body Pact welcomed the decision.
Pact chief executive, John McVay, said: “Nowhere in the world does better kids’ TV than the U.K. Time and time again, British TV producers have created the most successful, innovative and creative programs for children.
“We have seen how successful a tax break for animation has been and we look forward to the boost it will give to children’s live-action TV – it will make a real difference.”
Pact’s research found that the tax relief for animation, which was introduced in April 2013, has attracted £52 million ($81.5 million) of production spend to the U.K. in its first year.
Valerie Ames, director of production for children’s production company Kindle Entertainment, said: “Prior to the introduction of the tax credit, the U.K. animation industry was really struggling. Children’s live-action TV is in exactly the same state today, with even the most successful companies finding it either impossible to fully finance their productions or impossible to justify the time, effort and cost it takes to get that finance in place.
“The advent of the animation tax credit turned the animation industry around completely; a live-action tax break will similarly make it possible to continue producing our world-renowned British children’s programs.”
Osborne also said Wednesday that the government would look into reducing the minimum U.K. expenditure for high-end television tax relief from 25% to 10%, and “modernize the cultural test” — which defines whether a program is “British” enough — to bring the relief in line with film tax relief.
Marketing 'Unbroken' will be delicate in key Japanese, Chinese markets
As this year's Oscar race goes into the home stretch, Universal is preparing to roll out its top contender, the highly anticipated World War II epic "Unbroken." But as it looks ahead to the movie's wider release worldwide, the studio is facing a complicated and rather delicate situation in two of its most critical foreign markets: Japan and China.
In Japan, "Unbroken" is bound to meet considerable resistance due to its depiction of the brutality of Japanese POW camps. In China, which was occupied by Japan during the war, it will likely be welcomed with open arms — for just the same reason.
Adapted by director Angelina Jolie from Laura Hillenbrand's 2010 nonfiction bestseller, "Unbroken" hits American theaters on Dec. 25. It chronicles the remarkable life of Olympic runner turned war hero Louis Zamperini, who survived the crash of his B-24 bomber in the Pacific, spent 47 days adrift on a raft and then endured 21/2 years in Japanese prisoner-of-war camps before finally being liberated by U.S. forces at the end of World War II.
In the book, Hillenbrand depicts the treatment of Zamperini and his fellow prisoners at the hands of the sadistic Japanese Cpl. Mutsuhiro Watanabe and other prison guards in unflinching and harrowing detail. In Japanese prison camps, she writes, "to abuse, enslave, and even murder a captive or POW was considered acceptable, even desirable."
While Universal is still developing its strategy for the film's Japanese release, Universal Filmed Entertainment Group Chairman Jeff Shell acknowledges that selling the movie there will be a challenge.
"Obviously, the content of the book is a difficult one in the Japanese market," Shell said during a recent visit to China. "So we're probably going to wait a little bit and release it later in the year there than in the rest of the world. We're going to delay it a little bit so we can have a different kind of launch there."
A lot of money is riding on how Universal positions the film in both countries. China represents the second largest film market in the world after the United States, and Japan is No. 3. In China, American tent-pole films that win one of the coveted release slots under the government's quota system can often earn upward of $100 million, though the studios collect only 25% of the grosses. (This summer's "Transformers: Age of Extinction" earned a record-setting $301 million at the Chinese box office.) In Japan, the numbers are not as big, but they're still substantial, with Hollywood blockbusters routinely pulling in tens of millions of dollars.
Although "Unbroken" is not the type of big-budget, CGI-packed action spectacle that tends to draw the largest audiences abroad, Universal, after investing $65 million in the film's production and millions more on its promotion, hopes to maximize its box office receipts everywhere it can. And with the studio having released only one film in China in 2014, "Despicable Me 2," "Unbroken" offers a chance for Universal to improve its performance in that crucial market, where it recently launched a new Beijing office and announced plans to open a $3.3-billion theme park.
Though the movie has not yet been approved by the government for release in China, it is poised to find an enthusiastic audience there. Hillenbrand's book has been translated into Chinese and earned largely positive reviews there, and WWII movies like "Pearl Harbor" and "Saving Private Ryan" have performed strongly at the Chinese box office. Jolie also has a large and enthusiastic following in the country.
Most important, given the history of deep animosity and conflict between China and Japan, Chinese audiences have long embraced films and TV series with an anti-Japanese bent. In China, anti-Japanese films constitute a veritable industry unto themselves; in 2012 alone, more than 200 were made by Chinese studios, most to be shown on television.
"The government looks very favorably on anti-Japanese dramas," said USC professor Stan Rosen, an expert on Chinese film.
Wu Renchu, a well-known film blogger based in Shanghai, said it was premature to predict the box office potential of "Unbroken," but he added that "any movie that shows Japanese people doing bad things is likely to have a market in China. But how exactly marketers will leverage this remains to be seen."
Given that some of the very qualities likely to help "Unbroken" in China could hurt its prospects in Japan, the answer is likely to be: very carefully. The last thing Universal wants is to be perceived as exploiting anti-Japanese sentiment.
Though Zamperini, who grew up in Torrance and died at his home in the Hollywood Hills in July at age 97, has long been celebrated in America, his story is essentially unknown in Japan. "Unbroken" has been translated into 29 languages since its publication, but it has never been translated into Japanese.
Nearly 70 years after the Japanese surrender, WWII remains a highly sensitive chapter in the nation's history. Last year, Prime Minister Shinzo Abe's conservative government launched an initiative to inject a more patriotic tone into Japanese textbooks, many of which largely gloss over the war. Indeed, the country's role in World War II remains a hot-button subject in many parts of the world.
The Japanese parliament, known as the Diet, has resisted calls for Japan to apologize for the mistreatment of an estimated 80,000 to 200,000 women from Korea, China and other countries who were forced to become sex slaves by the Japanese Imperial Army during World War II. In August, a federal judge dismissed a lawsuit seeking removal of a Glendale statue honoring these so-called comfort women.
Over the years, Japanese moviegoers have often embraced Japanese-made films that depict the country's involvement in the war honorably or that focus on the suffering of ordinary citizens in U.S. air raids and the atomic bombings. "The Eternal Zero," for example, which offered a sympathetic depiction of kamikaze pilots, was one of the highest-grossing films of 2013.
Though Hollywood movies about World War II have only rarely been released in Japan, Clint Eastwood's 2006 film "Letters From Iwo Jima," which looked at the conflict from the Japanese perspective, proved a major hit there, holding the No. 1 spot at the box office for five weeks and grossing nearly $43 million.
Films showing Japan's role in the war in a critical light, however, have been few and far between, and "Unbroken" will face an uphill climb in winning over Japanese audiences, said Timothy Tsu, professor in the school of international studies at Kwansei Gakuin University in Japan and co-editor of the forthcoming book "Chinese and Japanese Films on the Second World War."
"The Japanese audience for movies that are critical about the war is really very small," said Tsu. "There is an exhaustion and a revulsion about war apologies." As far as "Unbroken" is concerned, he said, "My guess is that not too many people would want to see it."
In marketing the film to Japanese audiences, the studio is likely to emphasize the movie's themes of hope and resilience of the human spirit and downplay the portrayal of the Japanese soldiers and prison guards as often ruthless torturers.
"The Japanese part is only one-third of the book," Universal's Shell said. "The story's really about Louis Zamperini surviving not just in a Japanese prison camp but on the raft and in his earlier life. The story is not about Japanese being bad; it's about persevering."
From the outset, Jolie sought to humanize the film's central Japanese character, Watanabe, who was nicknamed "The Bird" by his prisoners. "He's described [in Hillenbrand's book] as this beautifully crafted monster," Jolie said recently. "He was very well educated and a very complex person. It was very important to us that this was not going to be a stereotype of a Japanese bad guy."
For the actor tasked with playing Watanabe, Japanese rock singer-songwriter Miyavi, the decision to take on the role was a difficult one, given the controversial nature of the war in Japan.
"To be honest, I wouldn't have tried to do this if the script was all like the story of the book," said Miyavi (born Takamasa Ishihara), whose large fan base in Japan will be an asset to Universal in selling "Unbroken" there. "But the film is focused on the unbroken spirit of Louis Zamperini, how strong you can be as a human being. In the end, he came back to Japan and showed his love and his heart to the Japanese people. Even Japanese people can respect how he survived and he forgave in his life.
"In the country which lost the war, everything is bad — everything is their fault. But we need to look at this fact directly. We can't avoid it or run away."
David Ayer's 'Suicide Squad' to Shoot in Toronto For Warner Bros.
David Ayer's Suicide Squad will be shooting in Toronto.
The big-budget actioner, with a working title Bravo 14, has booked into Pinewood Toronto Studios for pre-production starting in February. The Fury director will then have the cameras rolling on the Warner Bros. and DC Entertainment feature from mid-April to September in and around Toronto.
Jai Courtney, Tom Hardy, Margot Robbie and Jared Leto are in the final stages of talks for roles. Colin Wilson is producing.
The Suicide Squad team, also known as Task Force X, was created by Robert Kanigher and Ross Andru, and first appeared in Brave and the Bold No. 25. Its most recent iteration includes the characters Deadshot, King Shark, Captain Boomerang and Harley Quinn.
The DC property about convicted supervillains who are given a chance to redeem themselves through dangerous missions has been in the works for some time at Warner Bros.
The studio will release the picture on Aug. 5, 2016, as part of a slate of DC Entertainment properties.