Saturday, June 21, 2008

Our Neighbor's House: TX

A nice review of how Texas' "Moving Image Industry Incentive Program" is working for our neighbors from the online magazine SHOOT. SHOOT covers production pretty much across the board, but its main topic appears to be the kind of production and post houses that serve movie-making and advertising equally.

This article makes a few points about how Texas continues to build its commercial work as part of a diversified portfolio. There's also mention of how their targeting of the game industry is working for them too.
Incentives And Infrastructure Are Deep In The Heart of Lone Star State
June 20, 2008, A SHOOT Staff Report --- While the Texas Moving Image Industry Incentive Program was signed into law by Gov. Rick Perry in September 2007, it wasn't until March of this year that the full rules for that measure were adopted. At press time, there were 120 total applications filed--primarily by production companies--for the five percent cash back incentive on expenditures in Texas. Bob Hudgins, director of the Texas Film Commission, estimates that the first checks will go out this month.
Until they do, he can only speak in broad-stroke terms about the impact of the grant-based incentives. Suffice it to say that commercials represent the lion's share of those applications, according to Hudgins. To date there have been 89 applications relative to spots shot in Texas, all but one filed by production houses. The applicants have been a mix of commercial production houses in Texas and from out of state. The one spot application not from a production company came from an advertising agency.
Hudgins projected that thus far the incentives payout will be just over $1 million on some $20 million spent in Texas on commercials.
In order to qualify for the program, a commercial or package of commercials must spend at least $100,000 on Texas talent and resources. Hudgins noted that the average thus far of the spot applications is at about $200,000 per project or package. (The minimum threshold must be met by a single commercial or package of commercials. The incentives measure does not recognize the cumulative total of a production company's projects shot in Texas over the course of a year.)
Another requirement per commercial or package of commercials is that at least 80 percent of production days must be completed in Texas. And a minimum of 70 percent of the total number of paid crew, cast and extras combined must be Texas residents.
The same prerequisites also apply to theatrical features and TV programs, except that for these two categories, the minimum in-state spending must be $1 million (for episodic TV series, that's $1 million per season).
Furthermore, projects that complete at least 25 percent of their total production days in underused areas may receive an additional 1.25 percent of total in-state spending. That extra 1.25 percent (making for a total 6.25 percent incentive) applies to spending throughout Texas, not just in the underused areas. The so-called underused areas are defined as any part of Texas other than the metropolitan areas of Dallas and Austin.

Hudgins thinks the incentives program will attain "more traction once we start to write checks." And he envisions the most traction happening in the spotmaking community.
"On the film and TV side, New Mexico and Louisiana are ahead of us in terms of incentives that are five times what we offer," said Hudgins. "But we don't face the same level of competition for commercials."
Hudgins noted that commercials are perhaps the most attractive kind of filming for Texas. "The commercial industry keeps more businesses viable, keeps more people working in the state than any other [filmmaking] sector," he observed. "Commercials have a lot of resources, tap into a lot resources and thus create resources within the state. Commercials do the most when it comes to building infrastructure. And infrastructure is essential to being competitive for all kinds of filming business."

Game face
Hudgins noted that video games also represent a burgeoning business sector for Texas, which is ranked as the country's third largest game development state. He reported that there have been 14 applications relative to video games thus far in the incentives program, representing in-state expenditures of some $17 million.
This activity, Hudgins continued, has generated 180 jobs in Texas. "And these are full-time, longer-term jobs--not the temporary employment normally associated with filming," he affirmed. "We have companies here such as Reel FX that have diversified significantly into video games. This projects as being a huge growth area for us."

Janis Burklund, director of the Dallas Film Commission, observed that a lot of production companies are waiting for incentive checks to be issued.
"I think the attitude has been to wait and see, and once the process is working, more companies will apply," she said. "Companies don't want to go through all the work until they know everything is running smoothly. Once those initial checks are cut and the process is figured out, we'll see an increase of applications. More people will avail themselves of the incentives."
While she views the incentives as a major plus, Burklund noted that discerning feature, TV and spot producers should analyze their bottom line when it comes to competing incentives in different states and for that matter countries. Texas and Dallas/Fort Worth are very cost effective, she said, in terms of variety of locations and infrastructure ranging from crew talent to production houses to animation studios, post and audio facilities, film labs and so on.
"In a lot of ways, we're cheaper already," affirmed Burklund. "You don't have to bring much in, all the resources are already here. Panavision has a major operation here [in Irving, Tex.], for instance. And you have to remember there's no state income tax. Lots of incentive programs in other states give back their state income tax. We don't have that tax to begin with. Dallas/Ft. Worth is two cities for the price of one, and represents the fourth largest metropolitan region in the U.S.--and the fastest growing. Commercials, TV and features are shot here consistently. And there's a healthy Latin market here as we're drawing both English and Spanish-language work."
On the spotmaking front, Burklund cited such Texas production houses as Sugar Film Production, Directorz and Stone Core Films. The latter, she noted, does a heavy volume of work for Hasbro, which is perhaps the largest commercialmaking client that comes into the state.
In terms of diverse filmmaking disciplines, Burklund related that animation studios Janimation and Reel FX in Dallas are active in TV, features, direct to video, commercials and video games.
Out-of-state production houses and agencies are also being drawn to the Lone Star State--in some cases due to not only longstanding locations normally associated with Texas but also new sites that are emerging, and which will continue to surface in the coming years as assorted buildings and attractions are in development.
Relatively new, for example is AT&T's Victory Plaza, a venue with large mobile screens that float alongside the sides of buildings. Victory Plaza is also a gateway to the American Airlines Center, a sports complex which is home to the NBA's Dallas Mavericks and the NHL's Dallas Stars.
There's also a new Arts District and slated for completion in '09 is the Dallas Center for the Performing Arts, a multi-venue center for music, opera, theatre and dance.
Indeed future locations are already eliciting interest from the filmmaking industry and scouts. Burklund related that a commercial production house saw a rendering of the Calatrava Bridge which is being constructed across the southern sector of downtown Dallas and asked when it would be available for filming. This breathtaking span is being eyed by car shooters and figures to further boost an already robust automotive commercial lensing business in Texas.
Projecting further down the construction timeline, Dallas plans for 2011 to mark the debut of Woodall Rodgers Park, a 5.2 acre urban park uniting uptown, downtown and the Dallas Arts District. The $70 million project is being compared to such projects as Centennial Olympic Park in Atlanta, Yerba Buena Park in San Francisco and Bryant Park in New York. The Woodall Rodgers Park will include an acoustical performance stage with lawn seating for up to 3,300, a dog park, a children's garden with a playground and discovery area, and a 25-foot high glass water sculpture.
And looking at the calendar in 2011, consider that by then the Dallas Cowboys new stadium in Arlington (midway between Dallas and Fort Worth) will be completed. That stadium will be host that year to an event that looms large in the advertising industry--the Super Bowl.
As for the sports complex that the Arlington facility will replace, the Cowboys current stadium in Irving, Burklund is already contemplating the filmmaking implications. Plans call for that Irving stadium to be imploded, an eye-popping event which could make a nice fit for the right lensing project be it a feature, TV program or commercial.
Looking further down the timeline, another prospective attractive filming site includes the $2.4 billion expansion of the Dallas Area Rapid Transit (DART) system, scheduled for completion in 2013. Ninety miles of light-rail lines will be added to the system, doubling its reach.

SHOOT surveyed a cross-section of the Texas community for its take on the potential effect of the state incentives as well as a rundown of recent activity. A question was posed and a request made.
The question, request and a sampling of the industry feedback we received follow:

1) What impact has the state's production incentives program had on the commercialmaking business and industry infrastructure in Texas?

2) Provide a brief overview of the advertising-related work your company has been involved in most recently (you can cite significant projects): National TV campaigns, regional spots, broadband video/mobile content, sponsored web films, etc.

Jeremy Besser,
executive producer,
Directorz, Dallas.

In terms of activity, director Jeff Bednarz shot the national campaigns for Conoco Philips, EDS, Michelob Beer, and Colonial Life.
He also wrapped egional spots for Blue Cross Blue Shield of Alabama, Whataburger and the Mayo Clinic of Jacksonville.
David Wild has shot for national campaigns for Shell Gasoline and Nick Jr. Parents Connect as well as the regional campaigns for Baylor Hospital and Food Lion Supermarkets.
Tom Ryan continues to shoot the food for Denny's national TV, as well as Taco Cabana, Joes Crab Shack, Publix Supermarkets, Taco Bueno, Chic Fil A, Zaxby's and Captain D's.
Stewart Cohen has shot for Sylvan Learning Center and Publix.

David S. Friedman,
partner, Dallas Audio Post Group, Dallas.
Board member and North Texas regional representative for the Texas Motion Picture Alliance.

1. Overall, the Texas Moving Image Incentive Program generated $143,096,143 in new production (spanning such areas as features, TV, commercials, games) within Texas and is making $7 million of incentive payments as of 6/3/08. Of 120 applications, 89 are commercials and the remainder is split between feature films, TV programs, and video games. A key difference is that Texas offers a grant-based program in which incentive payments are in the form of cash instead of less favorable tax-based programs such as the Michigan program that anticipates $183 million in production and $73 million in refundable tax credits. The impact is the creation of hundreds of new jobs that fuel the Texas economy.

2. Dallas Audio Post Group's recent advertising-related work includes projects such as Sony, radio spots and globally deployed in-store media displays; Pepsi, web site audio; Schlotzsky's, TV spot; Plant Tan, TV and radio spots; Arby's, web site audio; Pharma, TV spots; and Freddie Mac, TV and radio spots.
Services include sound design, original music, voice recording, editing, stereo and 5.1 surround mixing.

Jason Needleman, senior VP/general manager, Radium, Dallas (company also maintains studios in Santa Monica and San Francisco)

1. I think it is still a little too early to say how big of an impact this program has made on commercial production in Texas. The rebates have definitely had a positive financial impact for production here, but as far as attracting outside production into Texas, we wish for a greater impact.
One way to increase the impact is to promote awareness of the rebate to the appropriate clients to make them aware of the available funds.

2. Radium has been involved in high end visual FX, animation and design projects, including national and regional campaigns such as Nextel, Zaxby's, Nationwide, Lowe's, Home Depot and Coors.
We have also been involved in major campaigns, including Target's "Global Bazaar" launch as well as the recent launch of Steven Spielberg's first game for EA, "Boom Blox."

Elaine Sibert,
executive producer, Stone Core Films, Dallas

1. The tax incentives program is truly in its infancy.
They began accepting applications during the summer of 2007 and will hopefully begin making disbursements very soon.
There has been a great deal of excitement that commercials were included in the incentives package. We were the first company to submit an application and are looking forward to our first check.

2. During the first half of 2008, Stone Core Films has worked with The Richards Group, Uproar, Doner and HBO as well as a number of other advertising agencies.
We have produced more than thirty commercials during this time period. The majority of this work has been airing on a national level. And many of these projects were multi-commercial campaigns.
We are gearing up for another busy month in June, with 10 projects already on the books [as SHOOT went to press].

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