SCREEN SECTOR STRATEGY 2015
Screen sector strategy Executive summary
The screen sector is a key part of the Wellington economy and contributes significantly to the region’s brand value. Grow Wellington works with the sector to create a screen-friendly operating environment, and to attract production, complementary businesses, investment and talent to the region. It also focuses on helping build the scale of the sector and developing the capability of businesses to enable continued growth. This strategy outlines the state of the screen sector in Wellington, opportunities for growth and the activities and approach of Grow Wellington, one of the agencies in the Wellington Regional Economic Development Agency (WREDA).
This strategy focuses on issues specific to our region including improving production capability, infrastructure capacity and market connections. Our vision is for Wellington to become a global leader in film and television content creation and an internationally renowned production hub. Long term growth will come from focusing on attracting and developing long running, mid-tier projects whilst maintaining the pipeline of top tier projects in the short to medium term. Our strategy focuses on three key areas: • Deriving value from market connections
A number of national industry bodies have complementary strategies in place to improve screen industry performance.
• Fostering IP and value creation • Optimising workforce, infrastructure and industry collaboration.
VISION Wellington is a global leader in film and television content creation and an internationally renowned production hub
MARKET CONNECTION Market led growth
COMMERCIALISATION Foster IP and value creation
SCALE AND CAPACITY Optimise infrastructure
Connect with and attract market opportunities
Champion new generation business and investment models
Target growth in mid-market segment
Develop regional reputation and brand value
Develop pathways for internationally viable TV
Foster sustainable workforce and infrastructure
Foster accessibility through Film Wellington services
Develop skills and capability to deliver growth
Foster strong industry partnerships 2
The screen sector in Wellington Wellington The screen sector is a key part of the region’s landscape, intersecting with other sectors including technology, tourism, education and creative industries. In recognition of the growth potential and impact that the sector has on other industries, as well as stimulating FDI and growing careers and business, the New Zealand government introduced the NZSPG (New Zealand Screen Production Grant). The Wellington screen sector generated $712 million in 2014, predominantly driven by feature films.
Rest of New Zealand
Key bodies based in Wellington working to further grow the sector nationally include the New Zealand Film Commission, Screen Producers New Zealand (SPADA) and New Zealand Trade and Enterprise. Grow Wellington works in partnership with all of these agencies to focus our activities and deliver aligned outcomes.
Source: Statistics New Zealand Screen Industry Survey 2013/14
Germany 21%
The influence of The Hobbit on tourism Between 12 and 21% of holidaymakers from the UK, US and Germany in 2013 stated The Hobbit was a consideration in their visit to New Zealand. UK 12%
Source: MBIE International Visitor Survey 2013
USA 19%
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The value chain NOW
FINANCE
PREPRODUCTION
PRODUCTION
POSTPRODUCTION
SALES
DISTRIBUTION
PROMOTION AND ADVERTISING/VOD
$
FUTURE
FEE FOR SERVICE
IDEATION
$
$
$ FUTURE
IP CREATION
NOW
$
$ $
$
$
In 2014, we undertook research to identify the areas of strength and scale in Wellington’s screen industry value chain, to highlight core competencies and pursue activities where we have a competitive advantage. The majority of industry activity in Wellington is in pre-production, production and post-production. The industry is highly geared toward a fee-for-service orientation which limits the industry’s ability to optimise the full value from productions. The value chain highlights where there are opportunities for growth particularly in concept development (ideation) and building intellectual
property from the beginning of the production process. Not only is the New Zealand domestic screen sector largely reliant on public funding sources, there is also a gap in New Zealand companies’ ability to identify and engage with global finance sources and secure investment. Traditionally, international sales and distribution relationships have been held by national bodies. To maximise global sales opportunities, it is important for production companies to understand the sales and distribution process so they have the ability to negotiate more effective deals. There is an opportunity to help producers access key off shore markets and develop relationships that are both financial and creative.
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The global market The United States (specifically Los Angeles), the UK and Australia are key markets for Wellington’s screen activities. Like other regions, Wellington has existing relationships with US studios who continue to bring work into New Zealand and Wellington. An opportunity exists to create scale by supporting producers to create their own intellectual property and further attract mid-tier international projects, particularly in long-form television. Wellington is well placed to deliver on this given our pool of talented writers and producers, our world-class facilities and our stunning locations.
The US continues to be a key market for Wellington, particularly given the strong connections Miramar has into Hollywood. In addition, whilst there is no official co-production treaty, the incentives are competitive and there have been a number of examples where the 5% Uplift has been achieved in Wellington. The UK has and continues to be a key co-production partner and there are a number of opportunities across film and television. Despite the considerable distance, our cultures are aligned, and Wellington can deliver quality stories/product to complement the UK offering.
The NZSPG – administered by the NZFC – encourages medium to large budget productions, both domestic and international, to film in New Zealand. International productions are eligible for a cash grant of 20% of Qualifying New Zealand Production Expenditure (QNZPE) with a 5% Uplift available for a smaller number of productions that can demonstrate significant economic benefits to New Zealand. New Zealand productions are eligible for a cash grant of 40% of QNZPE. New Zealand productions must have significant New Zealand content or be official coproductions.
Given its proximity, Australia offers untapped opportunities, in addition to New Zealand’s emerging talent (actors, writers and directors) we also bring to the table an open labour market which makes doing business easier. There are other markets that we should look to partner with in the future to maximise the scope of co-production agreements already in place, however core focus will remain on the US, UK and Australia.
Co-production agreements and key markets Germany
Ireland
UK
Canada
Denmark Poland
France Spain Italy Republic of Korea China Chinese Taipei
USA
Israel India Singapore
Brazil South Africa
Australia
Agreements currently in negotiation
Key markets
Co-production agreements
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The Wellington region Strengths
Weaknesses/threats
Wellington has world-class facilities for both film and television, as well as a diverse range of locations that are easily accessible throughout the region.
New Zealand incentives for local productions have high cultural content thresholds that create barriers to creating commercially viable content for international markets.
Wellington is one of the most cost-effective filming locations in the world and is one of the easiest places to do business within the New Zealand screen industry.
New Zealand (and Wellington) is not competitive with some countries due to factors such as time zone, relative distance to key markets, seasonality, and location options for filming.
Wellington has access to a diverse and highly experienced talent pool. The region boasts one of the top five visual effects (VFX) houses in the world working predominantly on large scale projects.
Our geographic location means that for productions originating in New Zealand, access to international finance, sales and distribution channels can be challenging.
Wellington is home to some of the world’s top talent, including internationally recognised film directors. Wellington based businesses are recognised as leaders in developing cutting edge technology applied in the industry. Our government and financial incentives make us internationally competitive and attractive to international production companies. New Zealand’s co-production agreements offer strong incentives to collaborate internationally on productions across television and film.
There is the possibility that competing markets increase their incentives, meaning New Zealand and Wellington are no longer internationally competitive for some projects. While we have high calibre talent, there is a limited pool of talent in specific roles such as writing, directing and producing to support growth in the industry and to fully leverage co-production agreements and content creation. There is also a limited pool of experienced talent in other areas such as production accountants, location scouts, production designers and line producers. The project based nature of the industry means it is often challenging to retain key talent and crew, pay for research and development and to bridge the gap between production and non-production periods. The Wellington industry is highly geared towards feefor-service projects which means the full value of a production is not retained in the region. Wellington’s reputation and focus on delivering large budget feature films creates large peaks and troughs in economic contribution as well as unsustainable capacity challenges. There is a lack of accurate industry data particularly in areas such as crew numbers, gross domestic product, export earnings and spill-over economic benefits.
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Wellington focus Opportunities
Screen projects – market segmentation
Top-tier – $30m + Large budget feature films for example Pete’s Dragon, Krampus, Light Between Oceans, Lord of the Rings & The Hobbit trilogies, Avatar trilogy Mid-tier – $1m - $29m Large budget television commercials, television series such as Game of Thrones, and films such as What we do in the Shadows, Girl vs Boy and War News
Where we are now
Our goal
We have identified numerous areas where we can focus to support growth in the screen industry.
Market Connection • Attract more overseas productions that leverage New Zealand’s co-production agreements and international mid-tier productions. • Strengthen our regional reputation and brand value to help differentiate our offering. Wellington is a collaborative, innovative environment and has world-class facilities. Our locations and incentive structure make us globally competitive. The industry has seen exponential advancement in technology solutions and New Zealand is recognised as a world leader.
Commercialisation • Champion new generation business and investment models that provide a more robust platform for getting productions off the ground and potentially reduce the level of dependency on government funding. A recent example is the partnership between ITV and Wellington’s Pukeko Pictures for the production of Thunderbirds are Go! • Create pathways to develop internationally viable content that can be made available across a variety
Lower-tier – $1k - $1m Television commercials, short films, music videos, web based series, digital content, low budget television and film
of platforms/devices and channels to market. Long-form TV is growing in popularity with many shows gaining a ‘cult’ following. • Develop skills and capability to ensure that industry can leverage the entire value chain either through collaboration or specialisation. Ideally Wellington companies will be capable of delivering on (or collaborating to deliver on) all aspects of a project (including ideation/IP development and sales and distribution) which potentially means greater economic return.
Sector Scale • Research and target mid-market opportunities, particularly around long form TV content, which will provide ongoing employment and stability for the sector. • Educate a workforce and develop infrastructure to ensure that we can meet growth in the production pipeline. • Collaborate with industry bodies to maximise growth of the sector. • Develop a writer’s programme to upskill Wellington talent.
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How Grow Wellington can help Grow Wellington’s programme of work in the screen sector is focused on three key areas.
MARKET CONNECTION Market led growth Promote the screen sector incentives and the benefits of filming in Wellington in our key markets. Leverage our international networks to actively drive awareness of Wellington with key producers/studios.
COMMERCIALISATION Foster IP and value creation Encourage clustering models across specific niches, for example Visual FX and post-production companies, in an effort to pool resources to target larger offshore opportunities. Work with industry investors to increase understanding about the benefits of investing in Wellington screen companies and potential opportunities. For example developing an investment prospectus. Support and partner with existing (or develop new) programmes to nurture local writing, directing and producing talent. E.g. SPADA (Screen Producers New Zealand) Masterclass series and Screen Writing programme. Support individual businesses to refine their commercial orientation through access to our network of commercial expertise.
SCALE AND CAPACITY Optimise infrastructure Facilitate strong partnerships between business and industry bodies. Continue to support the delivery of events, connecting with world-leading thinkers and developing capability of industry professionals. E.g. AnimfxNZ conference for visual effects, animation and game development professionals. Internships for aspiring location and production managers. Support industry to develop a framework to better measure sector growth and outputs. Encourage businesses to leverage co-production agreements to increase production opportunities in Wellington and New Zealand.
FILM OFFICE On behalf of the region’s councils, Grow Wellington operates Wellington’s film office. Screen Wellington: • hosts international production companies and familiarisation tours in the region • provides location advice • connects filmmakers to services • issues film permits on behalf of councils The film office also works to maintain the region’s film-friendly reputation. 8
Get in touch
For sector development and business growth enquiries
For film office enquiries
Meredith Elley Screen Sector Development Manager
Katie Frost Screen Wellington Manager
Phone +64 4 382 0084 Mobile +64 27 899 6456 Email meredith.elley@growwellington.co.nz
Phone +64 4 382 0066 Mobile +64 21 575 595 Email katie.frost@ScreenWellington.com
Level 5, 50 Manners Street, Wellington 6011 PO Box 10-347, Wellington 6143, New Zealand Disclaimer: The information in this document and any attachments does not constitute professional advice and we are not liable if you act on it. Please seek independent advice before acting on any such information. The information is correct to our knowledge at the time of publishing, December 2015.