Mainstay support services shop 20th Century Props in North Hollywood, Calif., is slated to close its doors next month, a victim of the significant decrease in film production in the Golden State.
The end of 20th Century, which opened in 1984, sends a message that those of us just barely into the 21st Century must take heed of–great success can be undermined by taking business for granted, a sin that California is arguably guilty of. Once the undisputed bastion of filmmaking, Los Angeles has seen significant declines in recent years in feature and commercial production, as well as many TV program genres. Clearly a major factor behind this has been a year-plus of industry labor unrest starting with the writers’ strike and the lengthy stalemate, recently resolved, over a film/TV agreement for actors.
But another prime reason for the drop-off in filming biz has been California not staying in step with other states and countries that have put economic incentive programs in place to lure lensing, California has been without any such program for years, a drought that is seemingly on the verge of ending with a tax credit initiative that recently gained legislative approval (SHOOT, 3/20) and is slated to take effect next month. If indeed this incentive program takes hold, it will offer savings to qualifying feature film and TV projects (but not to commercials). Yet at press time California was in the throes of a budget deficit threatening to shut down many programs, if not parts of state government. So, while likely, it remains to be seen if the tax credit will get fully implemented as planned.
Even if it does, the reform will come too late to save 20th Century Props, not to mention other businesses that were undone by a precipitous drop in filming in California.
20th Century lost one of its biggest customers when the sitcom Ugly Betty moved from Los Angeles to New York. Ugly Betty saw beauty in N.Y. State’s Film Production Tax Credit program which translates into major savings for the show’s producers.
Indeed incentives have revitalized New York production spanning short and long-form. The state has significant incentives not only for features and TV, but also for commercials.
The value of the incentives in stimulating the New York economy was enough to preserve funding for the program even in the face of a strapped state budget. Just a couple of months ago, the New York legislature passed a new state budget in which Governor David Paterson allocated $350 million to fund a one-year extension for N.Y. State’s Film Production Tax Credit Program covering feature films and television.
Given an estimated budget gap of some $16.2 billion facing New York, many in the film community were concerned that the new state budget would not contain funding to continue the successful film/TV incentives program. But the powers that be in Albany came through with enough of an allocation to keep intact what amounts to a 30 to 35 percent refundable tax credit on qualified expenses related to filming in New York State. The separate state program covering incentives for filming of commercials and ad content remains firmly intact.
New York City is also stepping up to the plate on the theatrical feature/TV program incentives front. Legislation was introduced in Albany late last month for funding to extend the city’s tax credit–which is in addition to the state credit–that began in 2005. Currently the city is proposing an additional four percent tax credit (down from its original five percent), targeting it more to gain new feature/TV business. Film and TV productions would quality for the credit if they do 75 percent of their work in NYC and shoot for at least one day at a top production facility there.
The moves by New York State and City to maintain incentives during hard economic, budget-challenged times reflect a view that was prevalent at the Association of Film Commissioners International’s Locations Trade Show in Santa Monica earlier this year–namely that the film, TV and commercialmaking communities have come to view film commissioners as far more than troubleshooters and sources of helpful information and coordination. Indeed the industry is starting to regard film commissioners and film commissions as financial partners given the varied incentives offered in assorted states and countries. This has been spawned by a troubled economy in which tax credits and other financial incentives have become key to stretching budgets and making certain productions more feasible than they would be otherwise.
By being competitive in this incentive-laden playing field, New York is building business and infrastructure. Reflecting the latter is a growing visual effects community, with a movement afoot to form a Visual Effects Society (VES) Northeast section spanning artisans and professionals in New York, New Jersey, Pennsylvania, Massachusetts and Connecticut (SHOOT, 2/20).
SHOOT canvassed a cross-section of execs and artisans from the commercial production and post communities–all with New York-headquartered companies–to get feedback to the following survey query:
What is the state of the business and infrastructure in New York? How has the economy impacted advertising industry-related work? And how is your company adapting to the situation. What has been the nature of the ad industry-related business you have been involved with this year? Traditional commercials? National TV campaigns? Regional spots? Longer forms of advertiser-sponsored content? Is the mix of work you’ve attracted in 2009 different in nature from ’08? Also feel free to cite some recent significant projects.
Here is a sampling of the responses we received:
Bob Cagliero,
managing director,
Manic
New York’s ad production market always seems to find a way to remain above water in tough times–SAG strikes, 9/11 and now a recession. All these events had impact, but this economy seems to have hit our business harder than past bad times. In past bad economies, it seems advertisers saw merit in continuing or even increasing their efforts. Currently, many advertisers have rolled back their plans a bit, but there is still work out there. Certain product categories suffer more than others. One area Manic is fortunate to collaborate in is high-end fashion/beauty work and that, as opposed to let’s say automotive, has been an active area. That work has run the gamut from national and international spots to long form work for varying media outlets. The design and visual effects industry seems to continue to spearhead more and more commercial production efforts and has certainly become an integral part in all phases. We are involved in dialogue at earlier stages with production companies and clients, and that has increased the need for leaders in the visual effects and design field. This collaboration has brought increased creative thinking and problem solving early into the process, which also presents budget-smart production.
Maria Gallagher,
executive producer,
Maximum Entertainment Films, LLC
It has been a tumultuous year for everyone in the business. We’ve all had to work a lot harder for the work that’s out there. The competition is high for both agencies and production. At agencies there have been a lot of layoffs so the people that are left have to take up the slack. For production, companies are being asked to do a lot more for the money. That said, the up side is that there is an openness to different ways of getting a brand out there–exploring new media, experiential approaches and integrated platforms. We’ve definitely seen an up tick in work that is non-traditional. This is exciting to us, being the type of work we imagined our company to be doing when we started. Jim’s (Maximum producer Czarnecki) background is documentary, TV, and independent film, and mine is agency so we love projects that we can work on collaboratively and can see through from start to finish. This year VICE did a series of webisodes shot all over the world for a soon to be launched Vodka. Currently we’re working on a short film project with McCann.
Jim Golden,
executive producer/co-president,
Rascal Films, Ltd.
It’s no secret that the advertising business has been hit hard by the changes in the national and global economy. It’s also no secret that the changes in technology and the time-honored methods used by advertisers to reach their audiences are also in flux, resulting in fewer jobs going to bid. As an economic bellwether industry, the first place a national advertiser can go to put millions into the bottom line is to cut back on the volume of commercials they produce and scale back a media buy.
At Rascal Films, our primary business is making television commercials for national and international clients. In recent months, we’ve produced tourism campaigns for Caribbean Islands, several packaged-goods adverts for global manufacturers, luxury car commercials, spots for international hotel chains, energy companies and others. The one thing these projects had in common was a strong desire to save as much money on the project at hand without sacrificing one smidgen of quality. That’s the drummer we all march to: more for less!
At Rascal Films, partner Pete Christy and I often say to each other–and any one else who cares to hear us–that we haven’t done budgets in years. We do prices. The client has 1x-dollars to produce a campaign, we’re told when a project rears its head. We can heft the scripts, put our finger in the air imagine what our budget might have been if this were another decade and say we would need 1.25x-dollars to do the job. But 1x is the “price” and nobody is really looking for a “budget” from us. They want their price and there are scores of our esteemed colleagues and competitors who will find a way, if we can’t. Our solution? Often it’s leave the country to chase currencies and lower labor rates. I would guess that about half of our jobs are shot out offshore.
Yes, we’ve seen more of the non-traditional projects. So-called virals, short web films, etc…the reality is those dollars are even tighter and the competition for those scripts is just as fierce as their higher-yielding traditional commercial brethren.
It’s a crazy business. But, it’s still more fun than a real job.
Tony Harding,
founder/executive producer,
THEM
I have a deep concern for the health of the TV commercial industry in New York. I do hear from vendors and compatriots every day that there is much less work out there, and budgets have come down significantly. Maybe there will be a “weeding out,” maybe that’s a good thing, but we are talking about real families, real people here. Certain categories of crew and vendors have been able to pick up the slack with opportunities in episodic TV.
We are seeing the principles of supply and demand at work more so than ever before for 2009. We have found the number of boards significantly reduced in 2009. It continues to come in waves, the reasons unclear.
We have been finding ourselves bidding against very good companies, in many cases for budget challenged boards offering poor creative. We have been relying more so than ever before on repeat business, with advertising agencies and clients who know they can trust us to give them the most bang for the buck.
We continue to see a lot of work for the Internet, and have been getting more involved in digital projects where we work in design and project management for the creation of microsites and other web work, which we see as a growth area. We have also continued to pitch TV projects, and pitching clients direct with “one-off” concepts, identifying areas that they may be missing in terms of a demographic, or potential growth area. We look at every TV idea through the lens of how we might turn it into a branded programming opportunity.
We have traditionally worked for many smaller agencies throughout the U.S., and continue that trend.
We always do our best to help out our agency friends with creative solutions to creative and fiscal challenges. PSAs go a long way on that route. We recently produced two 30-second spots in New York and L.A. for Leo Burnett Chicago for the World Wildlife Fund for their “Huge Turn Off” initiative. We still can’t believe how little we produced these for, but thanks to the generous support of our director Jim Tozzi, and contributions from our production staff, vendors and DP, Fortunato Procopio, we made some great spots. Vince Geraghty at Leo Burnett has been a huge fan of ours, and we always give him 200 percent. As such, an important relationship continues to build.
Our plan is remain creative and nimble, and seek to build opportunities for ourselves while continuing to service our clients.
Dominic Pandolfino,
CEO,
Nice Shoes
There is no doubt that the economy has made a significant change in our business model.
What’s happening in the industry reminds me of Woody Allen’s monologue in Annie Hall where he tells the joke about two elderly women at a Catskill mountain resort, and one of them says, “Boy, the food at this place is really terrible.”
The other one says, “Yeah, I know; and such small portions.” Well that’s the ad business today, not much good work and smaller budgets.
Nice Shoes has been able to weather this economic storm by blending and mixing its sister companies to bundle jobs.
This not only provides the client with a much more creative product but it also allows us to be able to better control the final cost.
Recently, Nice Shoes took on a large project for a drug company that involved Nola Pictures as well as Freestyle Collective and Nice Shoes. It was one of the largest projects that we have ever been involved with and it was received with acclaim.
Ethel Rubinstein,
CEO,
BlueRock Editorial
2009 has been a year of new terrain providing the opportunity to regroup, rethink and expand our palette. Everyone wants more for their money, especially advertisers. In addition to traditional television spots, agency creatives are also handling web, interactive and print. We’ve been preparing for advertising to go super nova for a while and have assembled the top creative teams under one roof to handle advertising’s expanding stage. This year has brought BlueRock, Spontaneous, Blast and Ballistic a richer more robust blend with just a hint of warm nuttiness. We’re still doing great commercials at BlueRock but now we have cross-platforming to play with too. From BlueRock’s webisodes for FedEx to Spontaneous designing the largest video digital billboard in Times Square for Colgate to a book for U2 in collaboration with Catherine Owens, our creative teams are bringing their artistic visions to all new mediums. Our editors, artists and designers have greater creative challenges which are leading to greater creative rewards– every day they get to play explorer and shape the industry. Everyone at BlueRock, Spontaneous, Blast and Ballistic loves what they do and this is an exciting time to do it.
Johnnie Semerad,
creative director,
SEMERAD, New York
For whatever reason, it seems to be that specialization is out. In the past, people would hire the best director, the best editor, the best effects guy, the best music, and so on. Different guys did the print, TV, web, sales video, etc. Now we’re asked to cover a lot more ground. On a recent Pristiq job that we did, the TV commercial drove the creative, but we worked the TV, print and web content.
From the client point of view this makes a lot of sense.
Not only does the creative have a continuity but money is saved by not repeating work.
