Online Streaming Services Beginning to Disrupt Traditional TV and Film Industries

Caifu Magazine | by Caifu Global


*All dollar amounts are in U.S. dollars, unless indicated by CAD

Written by Catherine Skrzypinski

Hooray For Hollywood – And Hollywood North

The United States is still the toast of Tinseltown, but Canada is the rising star of the North American film industry.

Even though more and more North Americans are buying big-screen televisions and are subscribing to streaming online channels like Netflix and Shomi, the film industry is not slowing down by any stretch. Movie buffs still long to escape the real world in a dark movie theatre during the steamy days of summer, cradling a big bucket of buttery popcorn.

Both the United States and Canadian box office totaled $10.4 billion in 2014, down 5 percent from $10.9 billion in 2013, according to the Motion Picture Association of America, Inc. (MPAA).

Despite the slight dip in revenue, movie theatres continue to draw more people than all amusement parks and major sports venues combined in North America. More than two-thirds of Americans and Canadians – 68 percent, or 229.7 million people – went to the cinema at least once in 2014, the MPAA noted. Frequent moviegoers – those go to the cinema at least once a month – continue to drive the movie industry, accounting for 51 percent of all tickets sold in the United States and Canada.

Even though more Americans and Canadians went to the movies in 2014, the typical moviegoer bought 5.5 tickets over the course of 2014, down from 5.9 tickets in 2013. The MPAA reported the number of tickets sold declined by 6 percent to 1.27 billion in 2014. The average ticket price in North America increased by 4 cents – or less than 1 percent – in 2014, which is lower than the rate of inflation.

Meanwhile, the future of the movie industry is looking bright in the Great White North. Film analysts forecast 2015 will be a blockbuster year for the Canadian film industry because of a slightly weaker Canadian dollar, along with competitive tax credits and rebates.

A March 2015 report from the Canadian Media Production Association (CMPA) states film and television production in Canada continued to see growth for a third straight year, after reaching $5.86 billion in 2013-2014—increasing by 2.1 percent.

The report, Profile 2014: Economic Report on the Screen-based Media Production Industry in Canada, also details that the country’s foreign location and service (FLS) sector has also recorded its fastest-growing rate – increasing $86 million, or 4.9 percent since 2012-2013. FLS productions include big-budget films like the latest incarnation of the Superman franchise Man of Steel, the Total Recall remake in 2012, and science fiction mindbender Interstellar starring 2013 Oscar winner Matthew McConaughey.

American Film Industry

The United States is the world leader in film entertainment. The country will continue to dominate the global film industry in revenue and employment opportunities through 2018, stated Big Four auditor PwC.

According to a June 2014 report from the New York State Department of Labour, California has had the most film jobs, or 138,000, of any U.S. state in 2013. New York State ranked second with slightly less than 56,000. Texas (19,000), Florida (11,000), and Illinois (8,000) rounded out the top five states.

The heart of the global entertainment industry is located in Hollywood, Southern California, where motion picture production companies from the East Coast relocated to in the early 20th century.

The Golden Age of Hollywood lasted from around 1927 to the 1950s, as the Big Five studios – Fox, MGM, Paramount, RKO and Warner Bros. – all had controlling stakes in their own theatre chains, ensuring their films would be distributed throughout the United States.

Worldwide film audiences often think of California as the home of the film industry, but that is now a historical perception. Ever since 2000, a majority of feature films produced by U.S. companies have been filmed throughout the globe rather than in the Golden State.

One theory behind this trend is that filming in California is too expensive. Entertainment analysts say locations like British Columbia or Ontario cost less because of tax incentives.

However, Vans Stevenson, senior vice president for government affairs at MPAA, noted in January 2014 California is less expensive to film than most of its competitors on a level playing field free of government incentives, according to 2013 study by FilmL.A. Research.

The number of production jobs in California decreased by about 4,500 between 2005 and 2012, stated Kevin Klowden, director and managing economist at the Milken Institute’s California Centre. He explained California should have added 7,900 jobs during that time — thus, the state lost about 12,400 positions during this seven-year period.

No major motion pictures are in production in the Los Angeles area as of May 2015.

New York City has always attracted aspiring film actors, directors and producers since the beginning of the 20th century. The film industry remains an important contributor to New York City’s economy, providing jobs, attracting investment and tourism to the area.

New York's entertainment sector is the fastest growing in the United States over the last decade, according to a report by the Milken Institute. Between 2004 and 2012, New York saw its entertainment sector expand by 10,675 jobs — a 25 percent increase, despite an economic downturn during this time.

A majority of the film industry’s 38,000 jobs in the New York City metropolitan area as of 2013 are in motion picture and video production – from filming commercials, shooting full-length feature films to producing cartoons, the New York State Department of Labour noted. A motion picture industry professional based in New York City could command an average annual salary of $102,303 as of 2013.

“The Empire State is home to the best talent, crews, locations and other resources needed to support productions and post-production of any and all sizes,” New York Gov. Andrew Cuomo said in a news release. “We will continue to help the hard-working men and women in those jobs achieve the next big hit.”

Entertainment industry experts say New York's tax incentives are the reason why the film industry is flourishing in the Big Apple. New York State began offering tax credits to support the film and television industry in 2004, which has since brought over $7 billion in spending to the state.

In 2012, Gov. Cuomo signed legislation that raised the postproduction credit from 10 percent to 30 percent in the New York City area. He also endorsed expanding the state’s $420 million a year incentive program in 2013, which will be in place until 2019.

“The governor’s policies make this great state a more affordable and attractive location, opening the door for even greater economic investment and job creation for New Yorkers,” Walt Disney Co. chairman and CEO Bob Iger said in a statement.

Films shooting in New York City in the first half of 2015 include action adventure Teenage Mutant Ninja Turtles 2: Half Shell and drama Money Monster, with director Jodie Foster and Hollywood A-list stars George Clooney and Julia Roberts.

Canadian Film Industry

The Canadian film industry – mostly centered in British Columbia, Ontario and Quebec – has been labeled Hollywood North since the late 1970s.

Vancouver is the backdrop of many blockbusters and independent cinema productions – as its mild climate, geographic proximity to Hollywood and shared time zone with the West Coast makes it an attractive hub north of the border. B.C. accounts for about 60 percent of all foreign location film productions in Canada. Major studios located in Vancouver include Lions Gate Studios, Thunderbird Studios, Vancouver Film Studios and The Bridge Studios.

Peter Leitch, president of North Shore Studios, said the film industry in Vancouver is operating at near capacity with up to 40 projects filming throughout the city during the first half of 2015, including the upcoming action movie Deadpool starring Canadian actor Ryan Reynolds.

Film is a CAD$1.2 billion industry in B.C. The business currently employs around 25,000 professionals throughout the province, according to the B.C. government.

“The creative industries represent a remarkable opportunity for British Columbia to participate in a rapidly growing, technologically sophisticated, knowledge based industry,” Richard Brownsey, president of Creative B.C. said in a news release. “We have in B.C. a strong foundation in all of the creative industries – film, television, interactive digital media, book and magazine publishing and music. Much has been accomplished in this sector and British Columbia is recognized internationally as a significant content production centre.”

Toronto is also an appealing setting for filmmakers, as its towering skyscrapers and multicultural neighbourhoods could portray fictional metropolises or pass for Chicago and New York. The Toronto Film Television and Digital Media Office (TFTDMO) issues flexible permits to film on Toronto’s streets, properties and parks.

Ontario’s film industry – centered in the Greater Toronto Area – contributed $1.15 billion to the provincial economy in 2013, stated the Ontario Media Development Corp. (OMDC).

Feature productions filming in Toronto during spring 2015 include The Suicide Squad, a popcorn flick starring Will Smith and Jared Leto, while the sequel to indie film romantic comedy My Big Fat Greek Wedding will be shot in Toronto’s Danforth neighbourhood, one of the largest Greektowns in North America.

Zaib Shaikh, film commissioner and director of entertainment industries for the City of Toronto, told Canadian media in November 2014 he wants to make Toronto a “global media playground,” drawing upon its strengths as a diverse and vibrant city.

The Toronto International Film Festival (TIFF) has put the city on the map in world cinema circles. Hollywood glamour takes over the streets of Toronto for two weeks every September, as TIFF attracts cinephiles, celebrity stargazers and Tinseltown royalty.

Quebec is the centre of Canada’s French-language film sector. Its two largest cities – Montreal and Quebec City – have both urban and pastoral landscapes that can impersonate settings either in North America or in Europe. Quebec generated nearly $1.4 billion for the province in 2011, noted Nordicity, a consulting firm that specializes in media studies.

The cold weather did not deter Shut In, a thriller starring Naomi Watts, from shooting in Quebec during the winter months in 2015.  X-Men Apocalypse, a superhero film part of the popular X-Men series, is scheduled to film in Montreal during spring 2015.

Looking Ahead

The U.S. film and entertainment industry will continue to flourish in the coming years, PwC stated. Revenue will increase from $31.8 billion in 2014 to a forecasted $39.2 billion in 2018.

The film industry in Canada should see a comparatively modest compound annual growth rate of 2.2 percent from 2013 to 2017, PwC explained. PwC analysts say the Canadian market will grow through 2018, driven by significant growth in digital video streaming, along with a steady increase in box office receipts.

Even though more movie aficionados will stream video at home, they will still go to the cinema. Ticket prices are projected to rise to an average $9.80 in 2018, compared with $8.90 in 2013, PwC noted.

U.S. studios will continue to release action blockbusters, sequels and reboots. New movies in the Star Wars franchise, along with D.C. and Marvel comic superhero blockbusters, are scheduled for release through 2020.