The stakes are high. DTV is expected to emerge as a multibillion dollar industry in the U.S., and in its early stage, companies are vying for some lucrative new opportunities. To the north, Canada has not announced a digital television (DTV) broadcast mandate. Yet the seeds of an effort to attract HDTV production and post are planted.
Part of the push is coming from companies that service ad agencies. Most that spoke with SHOOT aim to grab work outside of the Canadian border, primarily from the U.S. Some are also eyeing opportunities in Europe. Later, when DTV standards in the States are sorted out, Canadian broadcasters are expected to adopt the same standards and thus grow the demand for HD services for long-form projects as well as advertising.
One of the most significant quandaries facing any post/effects house aiming to get into the HD medium is how to remain profitable while making substantial investments in the new technology. Stateside, broadcasters are expected to spend nearly $16 billion to revamp their technical operations to accommodate new digital standards. While no blanket estimates are available for the U.S. postproduction industry, consider that an HD-capable telecine system alone currently runs between $1 million and $2 million. The high cost of admission coupled with the uncertainly of the payoff is keeping many U.S. houses waiting to play the HDTV game. When they do, the next issue is what to charge their clients.
Canadian companies believe they will benefit from their country’s favorable exchange rate. But also significant are some startling business incentives offered by Canada’s federal and provincial governments.
However before the numbers come into play, some creative decisions must be green-lighted. A testament to Montreal’s draw on both fronts, longtime L.A.-based commercial and long-form director Pierre de Lespinois’s Crest Entertainment and other investors selected the city to create Jules Verne Studios, the production site of HDTV series The Secret Adventures of Jules Verne. The site encompasses a 106,000 square foot production complex with four soundstages, a greenscreen stage and a HD effects/ post unit called Digital Ice Storm (formerly Voodoo HD).
Jules Verne is a Canada-U.K. treaty co-production of Montreal Filmline International and Talisman Crest Films. De Lespinois is directing some of the 22 one-hour episodes being produced. Later, he aims to bring additional work-including commercials-to the complex.
De Lespinois says the team searched around the world for an appropriate production site. Montreal, he relates, was the ideal choice in terms of diverse locations as well as crew and cost considerations. "The talent pool across the board from wardrobe to art direction to camera crew to visual effects was an unusually strong base" assesses the director.
This is not surprising. Canada has long been breeding top creative talent. It boasts some of the most prestigious schools for digital artists, including the famed Sheridan College just outside Toronto in Oakville, Ontario. Production hubs such as Montreal, Toronto and Vancouver hold many opportunities for talent in all disciplines.
Some of these talents that have made a name for themselves in the U.S. include DGA-nominated commercial director Steve Chase (of bicoastal Reactor Films) and spot director Steve "Spaz" Williams (Complete Pandemonium, San Francisco), who is an Academy Award nominated visual effects supervisor. Frequently Canadian talent migrates South to seek opportunities in California and New York. But many others remain in the North.
That’s when cost benefits come into play. Quebec province, whose largest city is Montreal, has a variety of incentive programs designed to increase employment opportunities and fuel industry growth.
For example, Quebec province invites companies that settle in a Montreal district identified as Cite du Multimedia to enjoy certain tax advantages. Production, post and effects boutique Voodoo Arts recently made the move, and as a result is entitled to receive a refundable tax credit of 60% for wages incurred no later that June 15; and 40% for wages incurred from June 16 to Dec. 31, 2008.
While the benefit to a resident is obvious, one insider requesting anonymity argued that this does not necessarily create jobs. The source said that the tax credits allow these companies to hire talent from other Montreal facilities by offering a higher salary.
Government incentives go beyond wages. Voodoo Arts president Ric Ostiguy says his company has been identified as an information technology development center. This classification, he explains, offers participants a 40% tax credit on all qualifying equipment purchases. "It helps us finance our growth without having to get over capitalized," Ostiguy comments.
Ostiguy acknowledges this benefit "because of the very high cost of operation. … You always need the new toys. It’s a way to encourage Montreal companies to keep up. … developing tools and people to work on high profile [projects]."
But Ostiguy is methodical in his approach, and has no immediate intentions to upgrade his computer-based digital effects and animation unit to accommodate the HD formats. He is waiting for customer demand as well as more clarity to some of the still unresolved technical issues. "It’s coming," he says of HDTV. "We like to be among the first, but we don’t want to be the first to make a mistake."
Another resident of Cite du Multimedia is Behaviour Studio, which announced plans to gear up with DTV capabilities at the end of ’98. Behaviour’s GM Francois Garcia echoes Ostiguy’s cautious approach to HDTV. Garcia reports that he’s receiving inquiries about HD production for long-form projects, but not yet from ad agencies.
The company already runs resolution independent software programs such as Fire, Inferno, Softimage|3D and Maya. Like Ostiguy, Behaviour’s Garcia says he is waiting for formats and other technical issues to be sorted out before investing in HD equipment.
Jules Verne Studios, of course, has already taken the plunge into the HD arena, and de Lespinois confirms that the shop is taking advantage of various provincial tax incentives to help offset the cost. "I don’t know how I could have beat this offer anywhere in the world," de Lespinois says. "I think we’ve enhanced our investment quite well here. [If production were in the U.S.], we could not have afforded it. We were able to put the money in the product."
Of course, efficient production choices also came into play. Among them was the decision to shoot HD video rather than film, significantly reducing production costs while allowing the team to lens more material (see p. 4).
Proximity to key software developers is also a plus. Montreal is the home of such leading software companies as Avid subsidiary Softimage and Autodesk subsidiary Discreet, and these suppliers too stand to benefit from the HD transition. The government supports their efforts as well. Quebec-based companies, for instance, can qualify for a 40% tax refund on all technology purchased and staff hired for R&D.
Ontario
In Toronto, the leading production center in Ontario, commercial effects and postproduction facilities are slowly gearing up to accommodate HDTV work, and some expect to have at least one HDTV production under their belt by year’s end.
TOYBOX, a Toronto-based commercial/visual effects unit of Command Post and Transfer, which also operates TOYBOX West, Vancouver, has already worked with high resolution material to create effects shots for feature films including Lost In Space and Bride of Chuckie. The company has a Domino, three Infernos, Fire and a Spirit Datacine. It can accommodate Panasonic’s D-5 HD and Sony’s HDCAM formats.
Steve Robinson, a founding partner of Command Post and VP of operations at TOYBOX, reports that he has been receiving weekly inquiries about HDTV production, although that level of interest has not yet extended to the agency side. He cites the same reason frequently heard in the States. That is, more program producers will be the first to make the transition, as their work requires shelf life. The shelf life of a commercial is much shorter.
Norm Stangl, president of Spin Productions, the post/effects house headquartered in Toronto with an office in Atlanta, has the same line of reasoning. So his biggest dilemma is determining the best time to enter the HD race. Stangl says he is waiting for the U.S. to resolve some of its standards issues, and expects Canadian broadcasters to then begin to announce similar adoption plans.
Spin is poised to make the jump. It has Inferno and Fire, both of which can be upgraded to include HD capabilities. Stangl says he expects to make some HD technology purchases shortly after NAB, and hopes to have a HD job under Spin’s belt by the end of ’99.
Sylvain Taillon, partner/executive producer of Toronto-based Topix/Mad Dog Digital, also sees HD gaining momentum and expects to begin receiving requests for HD production within the year. Topix/Mad Dog’s main source of revenue is commercial work from both Canada and the U.S., and Taillon predicts that cinema spots shot on film and transferred to HD for post may be how advertising makes its entry into this new market.
"We are waiting for announcements and getting ready to bring a portion of our facility to HD within the year," he says. The company already works with Inferno and various other computer-based production systems. More purchases may not be far behind.
Like Quebec, Ontario is taking aim at the industry with tax credits for film and TV productions, although these credits do not apply to advertising. Qualifying Canadian and foreign-controlled production companies receive an 11% credit rate on labor expenditures for film and TV production; and a 20% credit rate on labor expenditures for computer animation and special effects.
The Canadian government offers similar credits, including an additional 11% tax credit on Canadian labor expenditures for qualifying productions.
