Economic Development and the Austin Film Industry
by Jeff Nightbyrd
The film Industry provides unequalled opportunity for good paying jobs for Austin. Hollywood films, Independents, commercials, digital features, and related activity show a strong growth pattern. But as this memo will show, Austin has not taken full advantage of this opportunity. Nor has City Government enacted policies that insure growth will continue. Austin is in danger of losing business to more proactive areas in New Mexico, Louisiana and Canada.
A few Statistics:
- Since 2000, Austin has captured between 50% and 70% of all the feature film making in Texas.
- Approximately $180 million dollars worth of production has come to our metro area in the first 3 months of this year.
- A standard industry calculation is that between 50% and 60% of a productions budget is spent locally.
- For the years 2000 through the first 3 months of 2003 production figures for Austin are: 2000 - $294.5 million, 2001 - $277.3 million, 2002 -134.5 million and 2003 - $180 million, yielding a total of $886.3 million production dollars in a little over three years. In addition money spent on commercials could be calculated ranging from $10 to $50 million per year. For a conservative estimate of $50 million over three years. In addition, there are more than 100 independent films made locally aimed at cable television, DVDs /VHS distribution and festival entries per year. These might account for a budget of $3-$6 million per year - all spent locally.
- From these figures we can see that film (broadly defined) production budgets have accounted for almost one billion dollars in barely over three years with something like $500 million spent locally. Given a normal economic multiplier effect of 5x to 6x and we can see that the entertainment industry (not counting Video Games) has moved two to three billion dollars through out local economy.
- (I should note that these figures do not include the Video Game Industry, which is sizable in the Austin Metro area. Video games employ writers, voice talent, designers, occasionally actors as well as computer programmers. Nationally, video game sales exceed ticket revenues from movie theaters! )
- Film production dwarfs revenue from music in our metro area. Revenue figures for the music industry count income in clubs where music is played which is basically re-circulating money already existing in our economy. Austin derives some outside income from music tourism from around the state and events like the SXSW Music Festival. But there is no sizable money flowing into Austin from the National Music industry.
- The film Industry provides professional, high wage, environmentally friendly jobs. To quote from The Texas Film Commission white paper: "On location film production is a low impact, non-polluting industry which brings a great deal of money to its host communities, while using very few public supported services such as schools, health care etc. And (films) economic benefits reach far beyond the people that are hired directly by the production company. Filmmakers working on location depend on a wide array of services including hotels, restaurants, grocery stores, gas stations, rental car agencies, fabric stores, dry cleaners, office supplies stores, furniture rental companies, health clubs, pager/cellular phone suppliers, limousine services, lumberyards, film processing labs, local utility companies, and many others."
Much of the film business has left Los Angeles for two reasons: 1) In Right To Work states and Canada the production costs are cheaper; and 2) The equipment involved in film is increasing portable making it easier to shoot on locations. Traditional sound stages are no longer critical to many types of productions.
Austin is an international center for digital film production. We originally gained recognition through the efforts of Producer/Director Robert Rodriquez (El Mariachi, Spy Kids.) Now at any one time there are multiple digital features in production aiming to sell to Cable Television and DVD/VHS distribution. Austin is unique for the opportunistic marriage between the postproduction, digital editing and effects specialists from the computer industry and the screen writing/acting and directing talents of the creative community. In 2002 approximately 8 local independent digital features were sold. Another 30-40 productions of all types gained acceptance at various film festivals. Digital Production promises a strong growth curve and significant revenues in the future. It should be encouraged.
The changing technology and changing composition of the U.S. and international markets has created unparralled opportunities for Hispanic actors. My agency, Acclaim Talent, has perhaps the largest Hispanic Division in the Southwest. An 80 million dollar feature like the Alamo is shot here because of Hispanic talent! Otherwise it would have shot in Canada for cost savings reasons. Increasingly Acclaim receives calls from major Hollywood studios for Hispanic and Spanish speaking actors to compete for principal roles in national productions like the role Of Jennifer Lopez' 12 year old, cross-ethnic, daughter in a feature with Robert Redford. Many national commercials are shot in Austin in the Spanish language for the Hispanic and Mexican markets. Film production provides new high paying jobs for Hispanics and for other ethnic groups as productions increasingly mirror the multi-cultural composition of America.
Though Austin has emerged as the dominant location for film production in Texas, it's future growth is not guaranteed. Although dominant in this State, our revenue reflects a miniscule portion of a multi billion-dollar film industry. Productions can easily switch to other locations that offer more incentives.
Canada has emerged has the chief production center for low cost filmmaking. Vancouver and Toronto are new centers with Vancouver garnering approximately 50 times more production volume than Austin. Canada offers sales tax and other tax rebates, production investments, and of course the favorable exchange rates in Canadian dollars. A production can normally save 15% or more shooting in Canada. On a typical forty million dollar film budget that is a saving of at least 6 million dollars.
Canada offers direct investment in approved production companies via a National bond fund. To qualify for savings in Canada a production must employ Canadian talent with Producers, Lead Actors etc. counting on a point system. This guarantees that films produce jobs for Canadians. The Canadian incentive program is a roaring success. It created an international film industry in Vancouver where none existed before.
Recently Louisiana and New Mexico under the encouragement of actress and resident Shirley MacClaine, have passed state laws much more favorable to film production than Texas. New Mexico's law is very similar to Canada's and includes tax rebates and investment money from bonds for productions using New Mexico talent. Ron Howard, the producer of the Alamo, is currently directing a western, "The Missing", in New Mexico. This should have been a Texas project but his production saved money by shooting in New Mexico.
Austin has a good movie production infrastructure in place making it easy to shoot here. But people are even more mobile than equipment. Production crews, actors, and the film service industry can relocate to Albuquerque or New Orleans without great difficulty. Our current advantage could be short lived.
The Need for An Austin Film Commission
In economic development terms and generation of quality jobs, film probably yields the most payback for the smallest investment of any industry. Austin needs a film office that aggressively markets our city for the full range of the production including film, digital features, commercials and commercial print. A small investment in marketing Austin would produce a large result both in over-all economic development and in good paying jobs.
Most major cities in the US have a film office including Dallas, Houston and San Antonio. Austin has a film person connected to the Convention and Visitors Bureau who help with permits and locations but lacks sufficient resources for other tasks. The services provided by Austin are wholly inadequate to entice film making here. From discussions with producers the consensus is that the existing department lacks the necessary understanding of how the business of production operates. For instance there is no coordination with the hotel - motel and restaurant industries for discounts for film productions. Nor is there any list of services that can be discounted. One producer told me, "I wanted to bring a production here but I couldn't get the most basic information - like a simple list - of discounts that were available. For a Production company saving 10% to 15 % means a lot. Austin wasn't prepared to help like the other cities I approached."
In addition Austin needs a film officer to attend industry trade shows and market the advantages of shooting here. Trade shows typically attract many City Film Commissions pushing the advantages of their metro area. Those advantages must start with economics. But Austin is never represented at important industry events.
The Texas Film Commission must maintain neutrality and fairly represent every city in the State. The TFC is known for giving good service but emphasizes the variety of locations and services available in Texas. It doesn't compete by making cost savings arguments beyond that this is a Right to Work State. To win a much greater share of the economic pie Austin needs savvy marketing and it own representatives.
For 2003 total production in Austin will amount to more than $250 million dollars with more than half spent locally. Given a normal multiplier effect we can expect projects including Hollywood films, Indies, television programs, commercials, digital productions and print advertising to add between $600 and $850 million dollars to our metro economy this year!
With proper economic incentives and promotion, Austin's goal should be to double this years production. We should aim to attract $500 million dollars worth of production within 5 years. This ambitious sounding goal is quite realizable. It would mean adding approximately 5 Hollywood features and 3 TV series to the current production level we will see this year.
What is Needed
To compete and not lose business, the first step is to create a separate Austin Film office perhaps under the Mayor (As the Texas Film Commission is in the Governor's Office). The first step of the Austin Film Officer would be to reach out to every business group that would benefit from more film production like hotels, motels, restaurants, rental equipment etc. and create a "Friends of Film" business community that got business and gave discounts. The Film Office would need to have an ongoing educational effort to business on the important economic impact of film production. The Film office would need to assemble and maintain an up to date CD or web list of discounts that are available to Production Companies.
The second step would be to create an Austin Film website stressing economic savings available here (compared to Los Angeles) and to push the multi cultural aspects of our city. (In the production world there is virtually no demand for Cowboys and nostalgia; there is a great demand for high tech and multi cultural urban professionals similar to other great cities in America.)
One prejudice that inhibits some producers on the two Coasts is that Texas is very Anglo. This requires education. Our Hispanic roots are a huge advantage! Available African American talent and Asian talent is also imperative in national marketing and international movies distribution. We also need to stress the special skills widely available here because of our universities. For instance, in the past year Acclaim has booked talent in Sign language, French, German, Hindi, Cantonese, and Russian in addition to English and Spanish. Acclaim has 6 actors fluent in Cantonese. Top end production people are interested in coming to a sophisticated City in every respect.
In short the Austin Film Commission pitch is that Austin is a fun, sophisticated, helpful, very smart and very multi ethnic city that has more bookstores per capita than any city in America.
The third step would be to create an on line location directory on the web site of the wide variety and inexpensive locations - high tech and music to sports facilities and water - that are available here.
The forth step is to create marketing material - probably on DVD and CD - about Austin's advantages for distribution to major Productions Companies and Advertising Agencies nationally.
The 5th step is to get a live human to answer the Film Office information line until at least 8 PM at night (6 PM LA time) There is nothing more effective with creative people than the helpful human touch in the world of digital voice devices. There are literally hundreds of students looking for internships in the movie business in our city. They should be utilized.
On the Longer run city officials need to educate themselves to the kinds of laws passed in New Mexico and lobby the legislature to pass similar laws. Here is an interesting link to the New Mexico incentives: http://www.edd.state.nm.us/FILM/hotfilmnews.htm .
Thought should also be given to the current music channel. The Austin music channel has not created revenue nor is it being watched on cable system here or throughout the world. Basically, as already expressed, Austin music is delightful, but the money is in film. This clearly should be a Film and Music Channel giving the hundreds of area filmmakers an opportunity for their work to be shown. A TV channel in fact could feature a TV festival with the audience voting for the best films in each category. As mentioned earlier there are a great many interns eager to get a chance in the film business. A film and music channel would feature interviews shows with Directors, Actors and Cinematographers, behind the scenes How-To looks at productions, and other useful information. The point would be to promote Austin as a dynamic Film center. And the vision should be to distribute the best Austin film programming to cable system nationwide.
Film offers tremendous economic benefits to our city but has largely been ignored as important economic phenomena. With the proper political will and minimal investment, Austin can emerge as a major film center bringing with it the creative people and jobs that will make this an even more desirable and prosperous place to live.
Memo by Jeffrey Nightbyrd, director of Acclaim Talent, the largest talent Agency in the region. Nightbyrd has worked on Hollywood films in Los Angeles and owned a Television Broadcast Company traded on the Denver Stock Market. www.acclaimtalent.com. Most statistics gathered from Texas Film Commission studies.