Saving Hollywood North

B.C. film industry | BCBusiness
The crew of Continuum sets up to shoot an action sequence on the roof at the Rogers Sugar plant in Vancouver.

Ubiquitous bumper stickers and posters proclaim that B.C.’s film industry needs saving. But is the solution as simple as a hike in tax credits, or does the industry need an entirely new call to action?

With the red-and-white maple leaf flag hoisted from a palatial building and a Jaguar sporting personalized ‘CAN’ licence plates at its steps, Canada’s stamp on London’s Grosvenor Square is obvious on this day.

Macdonald House is, after all, the London Mayfair neighbourhood setting for the High Commission of Canada in the U.K.—home not only to Gordon Campbell, the former B.C. premier-turned-high commissioner, but a temporary abode to many Canadians doing official business in the country.

Behind its wrought-iron gates this spring morning, however, it’s become the hunting ground for about 300 film-industry movers and shakers from both sides of the pond. Their mission? To court each other over four days of scheduled ‘dates,’ panels and the odd salmon lunch to create Canada/U.K. productions.

There’s already a hearty appetite for these partnerships. Since 2008 there have been more than 85 co-productions with budgets totalling $430 million, from last year’s TV series like Titanic and Primeval: New World, to the recently aired Rogue, starring world-famous Mission: Impossible II actress Thandie Newton. Teaming up with the U.K., as the forum’s messaging goes, boosts an average budget of $4.3 million for Canadian feature films to $8.6 million.

But as tempting as this financial boost to a budget is for producers, the added impetus for today’s event is one klieg-lit game-changer: the lure of Britain’s inaugural filming tax credit introduced in April this year. For the 14 attending B.C. companies such as Omnifilm Entertainment Ltd., Sepia Films and Brightlight Pictures Inc., this British optimism, however, feels like an acute antidote to the well-documented troubles the industry faces over its own long-standing tax incentive in the province.

Indeed, few in B.C. will have missed how this tax-credit issue received star billing by the newly formed Save B.C. Film campaigners, a group shocked by its sector’s omission in the Liberals’ B.C. Jobs Plan prior to the May provincial election. These film industry workers point to the tax-credit math for a recent pendulum swing to Ontario: since 2009, heading to the eastern province yields foreign (mainly U.S.) companies a quarter off in tax credits on “all spend,” or most of the entire production bill. A year later in 2010, B.C. announced that in terms of tax incentives for production costs it would slice off 33 per cent—but on labour only, which usually accounts for around half of a budget. It’s a percentage that has steadily increased in B.C. since the province first introduced credits in 1998, but it has only ever been hitched to the cost of the workforce, a format that Ontario mirrored until the 2009 shift to “all spend.” So despite B.C.’s advantages for its main client, Los Angeles (short flights, same time zone, milder weather), it’s Ontario that’s winning in the year ending March 31, 2012, scooping up nearly 8,000 additional jobs and an injection of $450 million into the industry compared with 2010-2011, according to the Canadian Media Production Association (CMPA).

Wayne Bennett, Save B.C. Film
spokesperson, has lobbied hard for a hike
in tax credits to “a competitive level,” which
he believes is the only thing that will save
Hollywood North.

Lobbying for an industry that is pegged at $1.216 billion by the B.C. Film Commission (BCFC), Save B.C. Film’s rallies drew thousands before May’s election. It produced a 30,000-signature petition and highlighted statistics that were not pretty: around 3,500 jobs were lost in the province in the same 2011-2012 period, bringing the number of jobs lost in the industry to 36,000. In terms of dollar volume, $134 million was reportedly lost over the same year, according to the CMPA.

Despite B.C. scoring some handsome coups in recent years, including the Once Upon a Time and Arrow TV series and the films Superman: Man of Steel, Godzilla, Elysium (starring Matt Damon, it is local director Neill Blomkamp’s $100-million follow-up to District 9) and the forthcoming George Clooney science-fiction movie Tomorrowland, the consensus is that this year will be filled more with cheaper-to-produce pilots rather than major TV runs and features. It’s no secret that Vancouver recently lost filming The Wolverine to Australia, for example, and businesses such as North Shore Studios Ltd. and Vancouver Film Studios Ltd.—part of the province’s million square feet of studio space—openly talk about a lack of bookings and a loss of market share.

Nothing short of a hike in tax credits to a “competitive level,” according to Save B.C. Film spokesperson Wayne Bennett, will save a region formerly known as Hollywood North. Add into the mix the recent return of the non-refundable PST against refundable HST, and the industry faces even further cost differentials from Ontario, which benefits from an HST rebate. Raising the credit is, however, not something on the table with the Liberals: while the provincial government has made overtures to its counterparts in Ontario to harmonize its incentives with B.C., it believes tax credits being offered in other areas are unsustainable, according to a report by the CBC.

Obviously the industry has faced other hurdles during its 30-year history: the CMPA calculated that a writers’ strike, for example, apocalyptically crunched employment to 24,900 in 2004-2005 from 42,500 the year before. Then there’s the high Canadian dollar and the shift in the types of movies being made, with increasing use of visual effects (VFX) within live-action such as Iron Man and The Avengers.

Along with a significant uptick in that sector with a proliferation of VFX studios landing in B.C. (more on that later), there’s little doubt that this current push to hook up with Britain—and Asia (another trade mission was led to the Hong Kong International Film & TV Market this March)—is designed to shore up B.C. against being freighted with only one main market: overseas’ film companies. For, as it stands, around 80 per cent of all production in the province involves this foreign “service” work.

While this is widely regarded as the “cornerstone” of B.C.’s business, Liz Shorten, managing vice-president for operations and member services at the CMPA’s B.C. branch, which represents more than 75 companies, also believes that boosting other parts of the sector such as indigenous production and co-production would make the industry less exposed. “We have to not count on one thing, but have many suppliers so that we’re not so vulnerable,” she tells me over the din of hardcore networking and under the watchful eye of a photograph of Her Majesty at the Canada/U.K. conference. “We’ve got to diversify just to keep in the game.”

After 15 years working in B.C., she’s convinced that increasing this independent work would further help B.C. by giving the sector a better share of the “back end” or the royalties, rather than just doing service, overseas work. “The client would own the intellectual property, the widget, and can go out and sell it in the marketplace and then bring that revenue back to B.C.,” Shorten explains.

It’s a drive that appears to be working, according to the latest BCFC report. It records that independent production in the province spiked 55 per cent to $324.2 million in 2012. Shooting such shows as Arctic Air helped to offset a nine per cent drop to $891.7 million in foreign feature film work in the province. Overall, total production rose 2.3 per cent—not exactly accelerating fast, but it’s certainly an industry that’s come a long way from the nascent ’70s when it was worth just $12 million, and one that’s evolved into a world-renowned byword for filming chops and infrastructure.

Listing why Canada, including B.C., comes quickly into the frame as a likely co-production partner is effortless for Nigel Stafford-Clark, the BAFTA-award-winning British producer. “Language, shared culture, work ethic, great post facilities and personnel—including in the increasingly essential visual-effects field—combined with generous credits. What’s not to like?” says the keynote speaker at the forum, citing the “valuable” role that Canada (albeit Ontario) played in the success of his Titanic, a U.K./Hungary/Canada production that went on to sell to some 160 countries.

There may be an ocean in between, but he feels that’s less problematic as long as the film is shot on one continent and post-production completed on the other. “Canada has enormous experience of co-production, which is helpful when you’re still finding your feet,” comments Stafford-Clark, whose company, Deep Indigo, is based in London. “There’s a very strong future for Anglo-Canadian co-production.”

The point isn’t lost on Robert Wong. The vice-president for tax credits and development at B.C. Film + Media has been involved with incentives since their 1998 inception, but insists there’s much more to landing a deal. “People are understanding what there is to offer in B.C.—not just in terms of incentives, but talent and quality of work that is being done,” he says. “Tax credits are great, but that’s never going to hold somebody if the quality doesn’t hold up.”

Returning from the London conference, we meet at Wong’s offices in Kitsilano. Outside, abundant scaffolding acts as a metaphor for the restructuring going on inside: B.C. Film + Media and the BCFC were rolled into one organization, Creative B.C., in April. Now looking after the development and growth including funding of film and television, digital media and gaming sectors, as well as book, magazine and music publishing, it is tasked with creating a five-year strategic plan.

While aspects are still being ironed out, Wong’s belief that Creative B.C. will offer “a more holistic approach” is welcome news for Shorten. She hopes for a central policy shop with good communications with industry and government. “All we know is that everything is changing all the time and if we don’t have a strategy, we’re just reacting all the time.” Part of that “ecosystem,” she continues, using the conference’s word du jour, is to continue to find Canada’s content consumed on the global stage; tip the balance more toward independent work and that “will help us to control our own destiny.”

Vancouver producer Rob Merilees clutches to the control word, too. If more companies could continue to create their own content here, they could build and control business, employ more people and curb the number of film-industry people reportedly fleeing B.C. to work in other parts of Canada and rest of the world where it is deemed cheaper to produce films, suggests the president of Foundation Features Inc., which produced Hard Core Logo 2 and the award-winning Revolution, the follow-up to Rob Stewart’s Sharkwater documentary.

However, in terms of domestic commissions, he also points out that since the global economic melee, most of the main network executives have centralized in Toronto with no offices in B.C. “I would love to not be such a gypsy,” says Merilees, who recently headed to Toronto for work. (As it was, the 17-year veteran of the industry was able to convince the decision makers to allow him to return to B.C. to film the TV series Motive, despite the added expense.) He’d happily shoot all productions in Vancouver, but knows that “if you can get more bang for your buck somewhere else, then normally you have to do that.”

As well as the drive for U.K. and Asia as well as independent work, what’s also clearly emerging fast in B.C. is VFX. Undoubtedly boosted by the introduction of 2003’s B.C. Digital Animation or Visual Effects (DAVE) credit (combined with the basic tax incentive, it offers films with an animation and visual effects element 17.5 per cent off labour costs), there are nods to the province’s work on such hits as the Oscar-winning Life of Pi, Prometheus and Cloud Atlas.

From the founding of Image Engine in 1995 and Nerd Corps Entertainment Inc. in 2002 and the arrival of Zoic Studios BC Inc. and Motion Picture Co. in the last decade, more than a dozen visual-effects and animation studios, including Pixar Canada Inc., Rhythm & Hues Studios Ltd. and Industrial Light & Magic LLC have landed here in the past two years. The number employed in the sector, estimated by the Vancouver Economic Commission (VEC), the City of Vancouver’s development agency, tripled to 3,000 in that period.

“I know one company here needing 200 additional people right now and another needing 80,” enthuses the VEC’s creative digital-media specialist Nancy Mott. After some two decades working in VFX, including at Vancouver’s Rainmaker Entertainment Inc. and The Embassy Visual Effects Inc., she is now involved in encouraging new companies to come to the city. “VFX and animation is currently the only part of the film-and-television industry in Vancouver that is really growing,” she says. “So, for the business of show business today, it’s all about developing and refining digital artistry and tech-engineering skills.”

In other words, grips and electricians may not be employed, but such folk as artists and colourists are, as the industry morphs from physical to digital production—all fuelled by schools in Vancouver dispensing hundreds of students yearly. From Lost Boys Studios and Capilano University to VanArts and Vancouver Film School, which notably doesn’t just admit one set of students a year, but has six intakes (and therefore six graduating classes annually), it’s all part of what Wong brands as B.C.’s “world-class production centre, a whole ecosystem, from cradle to grave.”

And perhaps, if the province continues to pull off both the desired increase in independent work and VFX as well as enough of a tax-credit sweetener, there may even be boom times again for the B.C. industry. It’s something Merilees predicts in the ever-changing “cyclical” sector, although he concludes simply, “It’s a large machine to keep going.”