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Observer at Large: 2007 in Review

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By Kathleen Milnes
I’m a data junkie. I spend a lot of my time with facts – facts about dollars spent, people employed, students educated, places impacted. So for my year in review, I’m sticking to the facts about public policy, technology’s impacts and workforce development in the entertainment industries (well… with just a smidge of analysis).
I’ve identified four major trends in 2007: 1) the expanding and often enhanced pool of production incentives; 2) the global nature of content creation; 3) the explosion of new outlets for content; and 4) efforts to retain, grow, or often steal an artistically and technologically savvy workforce. I’m covering three in this column and write about workforce issues in the next issue.

Incentives
Continuing an accelerating trend, new incentives were enacted or existing ones were enhanced across the U.S. and the globe. There are only five states that have no incentives – California being one of them. New production incentives were passed in legislatures in Texas, Michigan, Wyoming and Wisconsin, to name a few. Massachusetts, Pennsylvania, Mississippi and Florida sweetened their offers to keep up. Washington State is a good example of new programs to grow local production by providing direct grants in addition to production tax incentives.
Why? Because they work! The granddaddy of this trend in the U.S. is the state of Louisiana, which now ranks third in the number of films produced.
A recent study showed that employment in Louisiana’s film industry has grown 23 percent per year since 2001, the highest growth rate in the nation. The Louisiana industry supported 5,437 jobs in 2003. By 2005, an additional 13,445 jobs were created. Wages have increased more than 31 percent each year. In 2003, film spending added $7.4 million to the state economy in the form of wages, profits, sales taxes, etc. In 2007, this rose to nearly $342 million.
In New Mexico, the financial impact of film production in the state has risen from $44.4 million in 2003 to an estimated $479.7 million for 2007. The number of days film employees work rose from 28,120 in 2003 to 173,376. And the number of IATSE members of has risen from 70 a few years ago to 1,300. Sound stages have sprouted in Albuquerque and Sony Pictures Imageworks has announced plans to expand there as well.
This scene is being played out across the world as the demand for content grows and the competition between countries, regions and states becomes more intense. And in all of these locations, the development of sound stages, equipment rental facilities and postproduction houses grows in direct response.

Global Content Creation
Since film was invented, countries around the world have created their own films primarily for their own audiences. In many countries, filmmaking is supported by public dollars because it is viewed as a cultural product.
Over the last year, partnerships between U.S. studios and production companies have sprung up in China and India. A few examples: Warner China, the first Chinese-American film company, established in 2004, is now distributing original film content produced specifically for a Chinese audience via mobile phones. Sony Pictures Entertainment has created or invested in over 40 international networks in more than 130 countries reaching more than 300 million viewers worldwide, including specialized channels showing Japanese animation. In 2007, this initiative, called ANIMAX, expanded into Central Europe and is now broadcast in Hungary, Romania, the Czech Republic and Slovakia. ANIMAX Germany launched in June 2007.

New Outlets for Content
According to my latest count, there are at least 50 original series broadcasting webisodes on the Internet. More than 85 percent of U.S. households are connected to the Internet via broadband, according to Nielsen, while more than 30 percent of web users view live streaming video (such as webisodes or streaming episodes of television series) and 20 percent watch saved video files (i.e., content downloaded from iTunes or other consumer sites). And these numbers will only increase as technology continues to evolve.
In June 2007, Nielsen released a progress report on its efforts to capture the audience for all of these platforms called A2/M2 for Anytime Anywhere Media Measurement. While audience numbers for these new platforms are not yet available, there is some interesting research to date. For example, 19 percent of households have at least one personal video device. The largest penetration is for portable DVD players (10 percent of households) and video enabled cell phones (5 percent of households). However, playing video on a personal device has not yet become an ingrained habit. Even among PVD owners, about two-thirds responded that it had been more than a week since they watched something on their portable player. Only four percent of households own a video-enabled iPod or MP3 player.

Workforce Development
In the next issue I’ll update you on trends in workforce development around the globe. Governments, schools and industry are teaming up to expand the pool of talent to feed our ever-growing media-centric world. Taking a page from Nielsen, maybe we should call this A3 entertainment – anytime, anywhere, on any device. But the issue for you, dear reader, is who makes it, and where?

Written by Kathleen Milnes

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