OSM Snapshot 2013 - Nordicity (2013-11-06)

Snapshot 2013 The Manitoba Media Production Industry Economic Impact Study Final Report

October 2013

Developed by:

Nordicity

Snapshot 2013: Executive Summary Page 2 of 89

ACKNOWLEGEMENTS

Snapshot 2013 is led by On Screen Manitoba in close collaboration with its valued industry partners, and prepared by Nordicity.

On Screen Manitoba and Nordicity would like to acknowledge all of the industry members, associations, guilds, unions, agencies, funders, broadcasters and government stakeholders who supported the research process, and to the Manitoba Bureau of Statistics for the economic impact modelling of the Manitoba economy. We would also like to express our gratitude to the following supporters of the project:

Report prepared by Nordicity Group Ltd.

Peter Lyman, Senior Partner

Dustin Chodorowicz, Partner

Kristian Roberts, Senior Manager

Stephen Hignell, Senior Analyst

Nordicity is a powerful analytical engine with expertise in strategy and business, evaluation and economics, policy and regulation for the arts, cultural and creative industries. Because of Nordicity’s international presence, it has become widely recognized for its ability to translate developments and best practices between markets for the private, public and third sectors.

www.nordicity.com

Table of Contents

Executive Summary 1

1. Introduction 11

2. Media Production Volume (2008-09 to 2012-13) 13 2.1 Overview of the State of the Canadian Media Production Industry 13 2.2 Media Production Volume in Manitoba 16

2.2.1 Overall production volume 16 2.2.2 Segments of Manitoba’s media production industry 17 2.2.3 Key production trends 22

2.3 Production by Genre 25 2.4 Types of Production 27 2.5 Animation, Visual Effects and Digital Media 30 2.6 Production Financing and Incentives 30 2.7 Inward Investment (Export Value) 33

3. Comparison with Peer Provinces 35 3.1 Case Study: Saskatchewan 37

4. Industry Profile 40 4.1 Company Characteristics 40 4.2 Revenue and Income 44 4.3 Expenditures 46 4.4 Production Company Employment, Human Capital, and Workforce 48

4.4.1 Production company employment 48 4.4.2 Workforce characteristics 48 4.4.3 Other human capital indicators 50

4.5 Training Resources 52 4.6 Supporting Organizations 53

5. Economic Impact Assessment and Fiscal Benefits 60 5.1 GDP Impact 60 5.2 Employment Impact 62

Snapshot 2013: Final Report

5.3 GDP and Employment Impact Changes from 2008 63 5.4 Intensity Ratios 65 5.5 Fiscal Benefits 66

6. Industrial and Social Benefits of Media Production 71 6.1 Industrial Effects 71

6.1.1 Effects on other creative industries 71 6.1.2 Other spillover effects 73

6.2 Cultural and Social Benefits 73 7. A Way Forward 76

7.1 Growth Prospects and Opportunities 76 7.1.1 Growth opportunity: IP ownership 76 7.1.2 Growth opportunity: digital media for film and TV 77

7.2 Getting There: Growth Factors and Barriers 78 7.3 Conclusions 80

Appendix A. References and Data Sources 81

Appendix B. Methodology 82 B.1 Data Sources and Secondary Research 82 B.2 Online Survey 82 B.3 Focus Groups and Stakeholder Interviews 83 B.4 Economic Impact Analysis 83

Appendix C. Contributors 84

Snapshot 2013: Final Report 1 of 85

Executive Summary About Snapshot 2013

On Screen Manitoba commissioned Snapshot 2013 to profile the Manitoba media production industry, determine its economic and social impact, and identify trends and opportunities for the industry’s continued growth.

Snapshot 2013 is the third economic impact analysis undertaken by On Screen Manitoba since 2003. In consideration of the evolution of the industry and the impact of digital technology, Snapshot continues to evolve and includes expanded definitions of the media production industry where crossovers exist with cross-platform media production. For Snapshot 2013, Nordicity analyzed primary and secondary data from a variety of sources including a literature review, an online survey, a series of individual interviews, and an industry focus group.

The full report comprises seven sections, including (i) an overview of media production in Manitoba, (ii) a comparison of media production with other peer provinces, (iii) an industry profile of Manitoba, (iv) an economic impact assessment, (v) a benefit-cost analysis, (vi) a socioeconomic impact assessment, and (vii) opportunities for the industry.

In this Executive Summary, Nordicity presents three key themes that emerged from the research:

1. The importance and growth of intellectual property (IP) ownership in Manitoba;

2. The rise of a digital media cluster in Manitoba; and,

3. The significant return on investment that the media production industry provides to Manitoba.

Following a discussion of these key trends, Nordicity explores how it is likely to evolve into economic and commercial opportunities — and the barriers that may stand in the way of these opportunities being seized. Finally, the Executive Summary concludes with a table summarizing key data points from Snapshot 2013.


Key Terms

§ Broadcaster in-house production: Productions produced by a Manitoba-based broadcaster;

§ Canadian production: A term to encompass domestic productions, co-productions, and broadcaster in-house productions;

§ Co-production: Productions where the IP rights are partly owned by a Manitoba-based production company and partly owned by a production company based outside of Manitoba;

§ Co-venture: Co-productions whereby a Canadian producer will jointly produce a work with a producer from another country outside the purview of an official co-production treaty. Whereas a treaty co-production is recognized as national content in all party countries, a co-venture is not necessarily assured such recognition, or may only obtain it for one of the partner countries;

§ Domestic production: Productions for which one or more Manitoba-based production companies own the intellectual property (IP) rights;

§ Foreign location service (FLS) production: Productions where the IP rights are exclusively owned by a company based outside of Manitoba, but are filmed in Manitoba;

§ Full-Time Equivalent (FTE) jobs: A standardized employment measure of jobs, based on a standard work-week (in this case, 37.5 hours per work-week);

§ Intellectual Property (IP): Creations of the mind for which exclusive legal rights are recognized, including inventions, literary and artistic works, and symbols, names, images, and designs used in commerce;

§ Other non-tax credit production: Productions that do not access the Manitoba Film and Video Production Tax Credit, either due to ineligibility or by choice;

§ Theatrical production: Feature-length drama and documentary productions.


Intellectual Property Ownership in Manitoba

In the media production business there are several types of production (as illustrated by the “Key Terms” box above). While all types of production accrue various benefits to the industry — and thus to the province — those where the Manitoba-based production companies retain control over their intellectual property (IP) rights (i.e., domestic production and co-production) are particularly important. The retention of IP (the creations of the mind for which exclusive rights are recognised for use in commerce) in media production includes both domestic and co-productions where production companies retain a portion of the copyright and may expect to receive revenues from sales of the production, merchandizing and proprietary software over the long term. There are three principal reasons why retaining IP control is beneficial:

1. All domestic production and some co-productions originate in Manitoba, and are thus important in expressing the province’s unique perspective;

2. This type of production enables Manitoba-based production companies to have more control over the decisions made with respect to production cost, marketing, and distribution;

3. When a Manitoba-based production company owns the IP rights to a project it can license and/or re-sell that content, thereby generating additional revenue (and thus income tax for the Province).

Manitoba media production companies control more IP rights today than ever before, a trend that presents new and significant opportunities for economic sustainability and industry growth. Indeed, Manitoba’s media production industry accounted for $542.3 million of total production volume over the last five years (counting all types of production), or an average of $108.6 million per year.

More than half of this production volume (56% or $303.7 million) involved projects where Manitoba companies had a level of

Five-year share of total volume of production, by segment, 2008-09 to 2012-13

FLS 15%

Co-production

42% Domestic

14%

Non-tax credit

9%

Broadcaster in-house

20%

Total = $542.3 million

Number of projects by type

Domestic 64%

Co-production

18%

FLS 18%

Total = 336 projects


ownership of the IP. Furthermore, (as Figure 1 illustrates) co-productions formed the largest share of production in Manitoba (42%), accounting for $227.8 million of production since 2008-09. Over the same period, domestic production accounted for a further 14%, or $75.9 million of production volume.

While domestic production levels have remained relatively stable since the last edition of Snapshot, co-productions have increased remarkably, with co-production production volume growing by 31% from the production volume observed between 2003-04 and 2007-08 (from $157.5 million to $227.8 million).

Over the last five years, not only has the volume of production shifted towards projects for which Manitoba-based production companies retain the IP rights, but the same trend is also observed when looking to the number of projects produced. In fact, since 2008-09, the media production industry has produced 336 projects over the last five years, an average of 67 per year. Of those projects, 64% (or 43 per year) were domestic production and another 18% (or 12 per year) were co-productions. While the number of domestic productions has remained relatively steady in the five years following the last edition of Snapshot, the number of co-productions has doubled (from an average of 6 per year between 2003-04 and 2007-08). Accordingly, co-productions make up a larger share of Manitoba’s overall production volume, and there are more of them.

As such, media production companies operating in Manitoba are increasingly in control of their own IP rights. They are also positioned to reap the cultural and economic benefit of that ownership, and the increased business acumen that comes with multi-jurisdiction co-production deals. Accordingly, these production companies must continue to search for opportunities to sell IP rights to broadcasters and distributors across the world, as well as explore new potential partners for their next co-productions deals.

Manitoba Interactive Digital Media Tax Credit (MIDMTC) The MIDMTC is a refundable corporate income tax credit for companies that develop and produce interactive digital media projects in Manitoba.

The tax credit is equal to 40% of the remuneration paid to Manitobans on eligible projects to a maximum of $500,000 per project.

In Budget 2013, adjustments were made to the MIDMTC:

§ companies may claim up to $100,000 in eligible marketing and distribution expenses that are directly attributable to an eligible project;

§ financial support from the Canada Media Fund that is recoupable or repayable will not be treated as “government assistance”;

§ an eligible product that is developed under contract for an arm’s-length purchaser does not need to demonstrate the product will be resold or licensed by that arm’s-length purchaser; and

§ a broader interpretation of the sale requirement will provide the province with added flexibility in determining which types of commercialization projects will be eligible.


The Rise of a Digital Media Cluster

As the global film and TV production industry evolves, it is increasingly making use of digital technologies including for post-production delivery, marketing, and product distribution — along with interactive media, visual effects services and various types of animation. Over the last two years, Manitoba’s production industry has developed major animation and visual effects capabilities. Opus VFX, a division of Buffalo Gal Pictures has put together an experienced Manitoba team with credits ranging from large Hollywood productions (e.g., Avatar, Superman Returns and X-Men) to smaller independent productions (e.g., Storm of the Century, The Big Empty). Buffalo Gal Pictures has also established a commercial animation studio and completed its first feature animation with a second project set to begin — 45 positions were created over a six-month period.

In addition to this new animation and visual effects capacity, Manitoba is well-poised to take advantage of the digital media extensions to TV programming, as mandated by the Canada Media Fund’s (CMF) Convergent Stream. This “convergent digital media” (e.g., mobile apps, websites, etc.) is being created by several Manitoba-based firms including DACAPO Productions, Tactica Interactive, and Complex Games. In this way, the film and TV portion of the media production industry in Manitoba is directly stimulating activity in Manitoba’s digital media industry. This opportunity is further strengthened by recent changes to Manitoba’s Interactive Digital Media Tax Credit.

Be it through an expanded ability to offer visual effects and animation services or through the proven ability to create convergent content, the growth of a digital media cluster of activity in Winnipeg — with film and TV production at its centre — presents an important opportunity for Manitoba to continue the growth of its media production industry. Furthermore, media production companies in Manitoba have already started to seize this opportunity. Indeed, media production companies in Manitoba generated 13% of gross revenue in 2012 from the development and/or sale of digital media products, up from less than 1% in the last edition of Snapshot. For this trend to continue, however, Manitoba-based companies must have access to clients and partners — and must have the business wherewithal to create advantageous deals when they do so.

A Significant Return on Investment

As illustrated above, the media production industry in Manitoba increasingly owns its Intellectual Property and is helping to stimulate the emergence of a robust digital media cluster in the province. Through these activities — and others — the industry provides a significant return on investment to the province. It does so in two principal ways:

1. The industry contributes to the provincial economy; and,

2. The industry furthers several provincial policy goals.

Production Companies in Manitoba Media production companies form a critical component of the industry in Manitoba. In 2012, production companies generated an estimated $34.5 million of revenue for their companies. In the same year, these firms spent more than 58% of their expenses on labour costs, representing approximately 462 full-time equivalents (FTEs). The average salary of media production company employees in 2012 was $56,000 (per year).


Economic Contributions

The media production industry in Manitoba had a total GDP impact of $357 million over the last five years, with an annual contribution of $71.4 million. Over the same period, the industry attracted some $291 million (or an average of $58.2 million annually) in production financing from outside of the province. These productions resulted in an estimated 6,333 Full-Time Equivalent (FTEs) jobs worth of employment between 2008-09 and 2012-13, with an average annual employment of 1,267 jobs (FTEs) per year.1

This economic activity has resulted in an estimated $134.7 million in combined tax revenue (to federal, provincial and local governments) over the last five years, or $26.9 million in combined tax revenue per year.

As the following chart illustrates, the combination of the Manitoba Film and Video Production Tax Credit and Manitoba Film and Music Equity Program has resulted in $86.0 million in provincial outlays between 2008-09 and 2012-13, at an average of $17.2 million of provincial support per year. Over the same period, the media production industry has been responsible for $71.8 million in tax revenue for governments in Manitoba. Of that amount, $57.2 million was remitted to the Province (through a combination of other direct2 and indirect taxes3), with a further $14.6 million remitted to local governments in Manitoba.

1 The economic impact, employment, and tax revenue figures presented in this section were developed by the Manitoba Bureau of Statistics. 2 Other Direct Taxes includes Retail Sales Tax, Gasoline Tax, Tobacco Tax, Environmental Protection Tax, Lottery Transfers and Crown Corporation Revenue. 3 Indirect Taxes includes Insurance Corporation Tax, Land Transfer Tax, Corporation Capital Tax, Motive Fuel Tax and the Health and Education Levy.

-75.0

-14.2

-11.0 17.7

2.7 28.9

8.0 14.6

-100

-80

-60

-40

-20

0

20

40

MFVPTC MFM Equity Taxes from Individuals

Taxes from Corporations

Other Direct Taxes

Indirect Taxes Local Taxes Net Spending

$M

Provincial outlays = $86.0 M Tax revenue in Manitoba = $71.8 M

Net provincial spending = $14.2 M

Provincial Outlays, Tax Revenue and Net Provincial Spending


In light of this activity the net provincial spending on the media production industry totalled $14.2 million, at an average of $2.8 million over the last five years. In other words, the Province recouped an average of 84% of its outlays between 2008-09 and 2012-13 (or $0.84 for every dollar invested in Manitoba’s media production industry).

Public Policy Contributions

In addition to the economic contributions of the media production industry, several public policy aims are advanced.

For example, the industry helps to empower a wide variety of Manitoban voices. In 2012, survey results indicated that 23% of production companies were at least partly owned by Aboriginal and/or Métis persons, with another 14% of production company survey respondents identified as members of another visible minority group. The result is that Manitoba — also home to APTN, Canada’s national Aboriginal broadcaster — has strengthened its position as a national centre for Aboriginal media production and entrepreneurship.

Nearly half (48%) of production company owners in 2012 are women, making media production one of the most gender representative industries in Manitoba — and in Canada.

Manitoba is also a key centre for Francophone production in Canada outside of Quebec. Francophone producers working exclusively in French account for an estimated 3% of Manitoba production companies, but 16% of overall production. They were responsible for roughly 70.5 hours of original production between January 2011 and August 2013 alone. From 1995 to 2011, Les Productions Rivard completed 75 productions representing more than 600 hours of original programming. Rivard invested an estimated $50 million locally in job creation, artist fees, accommodation services, and other industry suppliers, thereby representing a highly productive segment of the industry.

The media production industry has significant impacts on other creative industries in Manitoba and is a major catalyst for the wider arts, music, festivals and new media endeavours. Some examples include the CBC’s

Saskatchewan Case Study The government of Saskatchewan eliminated the province’s Film Employment Tax Credit (FETC), resulting in a nearly universal retraction of the province’s media production industry, and an emigration of businesses and crew to other provinces in Canada. In 2010 before the tax credit was in question, the Saskatchewan Media Production Industry Association (SMPIA) had over 440 members, which plummeted to 68 by June 2013.

In addition, the Directors Guild of Canada permanently closed its Saskatchewan office and the IATSE local had withdrawn its Saskatchewan representative.

Over the last 14 years, on an annual basis, the Government of Saskatchewan invested $7.8 million in the FETC, which generated $44.5 million in annual economic activity, 851 jobs and $6.5 million in tax revenue obtained by government for a net annual cost of $1.3 million according to an impact assessment prepared for SaskFilm and the Saskatchewan Chamber of Commerce in 2012.


Winnipeg Comedy Festival, which is broadcast annually and produced by Manitoba production company Frantic Films and the annual Festival du Voyageur variety show produced by Manitoba production company Les Productions Rivard. The music industry in Manitoba is a regular supplier to and collaborator with film and television businesses in Manitoba, and other arts and performance organizations in Manitoba such as the Royal Winnipeg Ballet regularly work together with media production companies. In addition, many IATSE members and production crew regularly cross sectors

by working in both screen and stage productions.

By helping to reflect the viewpoints and perspective of Aboriginal people, Métis, visible minorities, women, and Francophones outside of Quebec — all historically marginalized groups — the media production industry represents a key policy tool and a major driving force behind Manitoba’s creative industries, as well as an important economic contributor.

A Way Forward

As shown above, the media production industry in Manitoba is increasingly in control of its intellectual property rights, is at the centre of a developing digital media cluster, and provides significant economic and policy returns to the Province. The future for the media production industry, it seems, is a bright one.

Growth forecast (12-24 months)

Indeed, as the above figure shows, roughly 88% of the firms surveyed indicated that they predicted a period of growth over the next 1-2 years. This growth is likely to originate from the increased exploitation of IP rights, along with the opportunities arising from the growth of a digital media (i.e., animation, visual effects) cluster in Winnipeg. In addition, the Manitoba Film and Video Production Tax Credit (MFVPTC), Manitoba Interactive Digital Media Tax Credit (MIDMTC) and other provincial production incentives will continue to stimulate significant levels of production in the Province. For example, Manitoba Film & Music’s Production Equity Program will be increasingly

8% 4% 12% 36% 40%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

15-24% Contraction No change 0-9% Growth 10-24% Growth >25% Growth

Return on Investment The Province’s financing contribution of $86 million in the MFVPTC and MFM Equity Program attracted additional financing of $300 million. In other words, each dollar of the Province’s contribution to the financing of film and television production attracted an additional $3.48 in financing from other sources.


important as one of the key tools used alongside the tax credits. Alongside Manitoba’s assets of creative talent, crews and locations, this equity program will help close financing for both domestic and co-productions.

However, this growth will not come without addressing some key challenges. As the following chart illustrates, there are a number of factors that may limit the potential of the media production industry in Manitoba.

Top 6 factors limiting growth (on a scale of 1-5)

Most of these issues circle around a common theme: Manitoba’s relative geographic isolation. Companies note the limited access to buyers, the lack of access to key foreign markets, and a relative shortage of capital. All of these issues limit the opportunities cited above. If a company owns its IP and wishes to generate more through co-production, but cannot locate buyers, or access markets in which those buyers are active, it cannot reap the benefit of that ownership or develop additional IP. Similarly, both domestic production and co-production (the sources of that IP) rely on the supply of appropriately skilled labour. Finally, rights exploitation is sales, marketing and relationship driven, and typically requires a different skill set than production. Accordingly, initiatives such as On Screen Manitoba’s ACCESS Project are integrally important in helping the media production industry benefit from owning more IP rights and acquiring additional IP through co-productions.

Furthermore, as the media production industry looks to expand into emerging digital media opportunities, it will confront many of the same issues. Given the global nature of digital media, Manitoba digital media companies must access customers and business partners from around the world (to offer visual effects and/or animation services) and across Canada (to partner on CMF projects). At the same time, they must build a globally competitive industry that, by accessing international markets, can attract high-quality talent to Manitoba.

Finally, by addressing the issues standing in the way of Manitoba’s media production industry seizing the opportunities posed by IP ownership and digital media, the industry will have all the greater economic and public policy impacts. If more IP is owned by Manitobans, the production companies will accrue revenues and continue to attract larger projects to the province, which will result in greater tax revenue. Meanwhile, digital media projects, whether linear or interactive, tend to be driven by labour costs, and contribute to a positive fiscal. At the same time, by controlling more of their projects, production companies (already owned by a diverse group) will increasingly be able to tell Manitoba stories to the world.

2.84

2.84

2.88

2.96

3.04

3.08

1 2 3 4 5

International competition

Access to foreign markets

Affordable capital

Management, marketing & sales expertise

Supply of skilled labour

Access to buyers


Key Data Points

The following table presents several key data points drawn from Snapshot 2013:

Data Point Five-Year Total (2008-09 to 2012-13)

Annualized Average

Total Production Volume $542.3 million $108.6 million

Number of Projects 336 projects 67 projects

GDP Impact $357 million $71.4 million

Employment Impact 6,333 FTEs 1,267 FTEs

Investment Attracted to Manitoba $291 million $58.2 million

Combined Tax Revenue $134.7 million $26.9 million

Provincial Support Contribution $86.0 million $17.2 million


1. Introduction Manitoba has a long and celebrated history steeped in film and media production, and was home to the first Canadian filmmaker, James Freer, who in 1897 made a film entitled Ten Years in Manitoba. The world has changed immeasurably since that first film and the media production industry — in Manitoba and beyond — has changed along with it. From the iconic IMAX production of Heartland in 1987 to high-budget productions like Shall We Dance in 2004, The Assassination of Jesse James by the Coward Robert Ford in 2007 and to internationally syndicated TV shows like Frantic Films’ Pitchin’ In to smaller independent success stories like Indie Game: The Movie and My Winnipeg, Manitobans continue to produce high-quality audio-visual content.

Snapshot 2013 provides a review of Manitoba’s media production industry, its structure and output, and its various contributions to the province’s economy, cultural life, and social wellbeing. In so doing, Snapshot 2013 brings together data from a number of sources into a single, concise reference document telling the story of media production in Manitoba. This report also provides an assessment of the benefits that the media production industry provides (both economic and otherwise) measured against the costs incurred by the Province. Finally, Snapshot 2013 compares the development of Manitoba’s media production industry to that of similarly sized Canadian provinces.


Key Terms

§ Broadcaster in-house production: Productions produced by a Manitoba-based broadcaster;

§ Canadian production: A term to encompass domestic productions, co-productions, and broadcaster in-house productions;

§ Co-production: Productions where the IP rights are partly owned by a Manitoba-based production company and partly owned by a production company based outside of Manitoba;

§ Co-venture: Co-productions whereby a Canadian producer will jointly produce a work with a producer from another country outside the purview of an official co-production treaty. Whereas a treaty co-production is recognized as national content in all party countries, a co-venture is not necessarily assured such recognition, or may only obtain it for one of the partner countries;

§ Domestic production: Productions for which one or more Manitoba-based production companies own the intellectual property (IP) rights;

§ Foreign location service (FLS) production: Productions where the IP rights are exclusively owned by a company based outside of Manitoba, but are filmed in Manitoba;

§ Full-Time Equivalent (FTE) jobs: A standardized employment measure of jobs, based on a standard work-week (in this case, 37.5 hours per work-week);

§ Intellectual Property (IP): Creations of the mind for which exclusive legal rights are recognized, including inventions, literary and artistic works, and symbols, names, images, and designs used in commerce;

§ Other non-tax credit production: Productions that do not access the Manitoba Film and Video Production Tax Credit, either due to ineligibility or by choice;

§ Theatrical production: Feature-length drama and documentary productions.


2. Media Production Volume (2008-09 to 2012-13) This section provides a review of media production in Manitoba over the last five years. In so doing, the section outlines the overall state of the industry, provides insight on key trends, and describes production levels along a number of key indicators (e.g., type of production, genre, etc.).

2.1 Overview of the State of the Canadian Media Production Industry In the face of technological upheaval and increased global competition, Canada’s media production industry has continued to grow in recent years — and Manitoba has been part of that growth story. The total volume of film and television production in Canada reached an all-time high of $5.9 billion during the 2011-12 fiscal year (April 1, 2011 to March 31, 2012). Today, Canada’s media production industry generates direct employment for 52,100 full-time equivalents (FTEs) and supports a total of 132,500 FTEs through its spin-off impacts.

Foreign location and service production (FLS) has played an important role in the long-term growth of Canada’s media production industry over the last 15 to 20 years. However, in recent years the media production industry in Canada has experienced lower levels of FLS production due to the steadily rising value of the Canadian dollar, and competition from American states and other countries. On a real-dollar basis, FLS production in 2011-12 was 27% off from its 2002-03 peak.4 Manitoba has also experienced a diminution of FLS production levels. In fact, the drop in the portion of FLS production has been even greater for the province. As this report shows, the volume of FLS production in Manitoba between 2008-09 and 2012-13 is about one-quarter the level experienced in the previous five-year period.

Canada’s skilled and experienced crews have allowed it to remain competitive in the global FLS market. However, as computer animation and visual effects (VFX) comprise ever-increasing shares of Hollywood feature films and, to a lesser extent, television series, Canada’s and ultimately Manitoba’s position in this market will depend on its ability to stay at the forefront of these technologies. In the future, tax credits alone may not be enough to attract Hollywood’s FLS spend. Financial incentives will have to be accompanied by a strong VFX and digital media cluster populated by skilled workers and digital media entrepreneurs. Canada’s largest production centres have posted increasing levels of computer animation and VFX production in recent years;5 Manitoba’s media production industry is poised to join this growth story.

4 Canadian Media Production Association (CMPA), Department of Canadian Heritage, Association des producteurs de films et de télévision du Québec, Profile 2012: An Economic Report on the Screen-based Production Industry in Canada, February 2013, p. 76. 5 MPA-Canada, CMPA, The Economic Contribution of the Film and Television Sector in Canada, July 2013, pp. 60-66.

Media Production in Canada The volume of film and TV production in Canada hit an all-time high of $5.9 billion in the 2011/12 fiscal year, directly supporting 52,100 FTEs.


Types of Production

With the drop in the volume of FLS production in Canada, Canadian media production has moved to the forefront as a source of growth. Canadian film and television production has always been the largest segment of the industry, but in recent years it has experienced unprecedented growth and success. After hovering around the $2.4 to $2.5 billion level for most of the last decade, the volume of film and television jumped to $3.0 billion in 2011/12. This breakout growth was driven by the production of an increasing number of television drama series and the continued expansion of lifestyle series production. Manitoba’s production community contributed on both of these fronts; examples include Buffalo Gal Pictures’ Cashing In, Les Productions Rivard’s Destination Nord’ouest and Farpoint Films’ recently produced Illegal Eaters.

Canadian television series have been gaining in popularity among Canadian and international audiences. For the first time, seven of the top 10 Canadian television series surpassed the 1 million mark in terms of average audience per minute aired audience during the 2012 broadcast year.6 Many of those highly rated Canadian television drama series as well as numerous lifestyle series have been recording brisk international sales.7 Many Manitoba-produced series were among these international sales; examples include Buffalo Gal Pictures’ Less than Kind and Frantic Film’s Pitchin’ In.

Canada’s much smaller theatrical production segment has also contributed to the overall growth in domestic production over the past five years. In 2011-12, the volume of Canadian theatrical production reached a 10-year high of $381 million. While the growth in this segment has been somewhat uneven, what is clear is that the industry is experiencing an increase in average budgets and attracting more foreign financing.

Co-productions — international treaty, interprovincial, and American co-ventures — represent a proven route through which Canadian producers can access broader sources of financing, talent, and sales. Canada’s official treaty international co-production activity is about half the level it was when it peaked in 2000; however, Canadian producers have not stopped actively seeking international partners for projects, particularly feature films. This growth has been mirrored in Manitoba, where co-production and co-ventures have increased substantially in the past two years; examples include Eaglevision’s Jack; Frantic Films’ Don Cherry biopics; Buffalo Gal Pictures’ Deserted Cities and Original Pictures’ Midnight Sun.

Policy Developments

The media production industry in Canada does not operate in a policy vacuum. Financial incentives and government regulations play an important role in mitigating the market failures8 that often characterize the cultural sector and in promoting policy objectives (e.g., the telling of Canadian stories).

6 CMPA et al., p. 36. 7 Ibid. 8 A market failure is defined by Investopedia as “an economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers does not equate to the quantity supplied by suppliers. This is a direct result of a lack of certain economically ideal factors, which prevents equilibrium.”


Federal and provincial governments are under increasing fiscal pressures as an aging population draws ever more heavily on the social and healthcare system. These fiscal pressures mean that all cultural and economic development programs — including those that support film and television — are under increased scrutiny.

Saskatchewan has withdrawn its film and television tax credit. New Brunswick and Prince Edward Island have significantly curtailed the use of such incentives in recent years while Alberta has historically offered only limited financial support for film and television projects. Other provinces are continually reviewing the economic and fiscal merits of the film and television support programs. As such, there is an imperative for clear understanding of the economic benefits of film and television productions and the fiscal implications that arise from these economic benefits. The following study addresses this imperative.

Addressing the Market Failure

While all industries face challenges in raising sufficient financing, the cultural sector faces an even greater challenge because of demand uncertainty. Unlike most industries, the demand for most cultural products is unknown until they have been produced. For example, the popularity and revenue potential of a film is unknown until it is released into theatres. While producers can audience-test a film before it is released — and thereby avoid or curtail expenditures on marketing and distribution — they cannot recover the upfront investment in the content creation.

This demand uncertainty heightens the investment risk in the cultural sector and thereby makes it even more difficult to raise financing. Media companies have responded to this heightened investment risk through vertical and horizontal integration. Horizontal integration, in particular, allows media companies to achieve scale and reduce their financial exposure to any single title. Media companies also try to mitigate demand uncertainty by producing sequels or signing previously successful performers or directors. However, there is no proven formula for success.

For a relatively small country such as Canada, it is difficult for production companies to achieve a level of scale, and therefore, the challenges posed by demand uncertainty are heightened even further. This becomes an even greater issue when the policy objectives are taken into account. In this case, the market on its own fails to deliver the level of media production commensurate with Canadian broadcasting policy designed to “encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values, and artistic creativity…”

Policies, regulations, and financial incentives at both the federal and provincial levels, thereby, not only help address the general market failure in the cultural sector, including the media production industry, but also help close the gap between the strictly market-driven outcomes in media production and the desired policy outcomes.

Source: 1Broadcasting Act 1991, section 3(d)(ii)


2.2 Media Production Volume in Manitoba Perhaps the simplest measurement of media production in a jurisdiction is production volume, or the cumulative total budgets of productions filmed in a given period. In the following sub-sections, production volume in Manitoba is depicted on an annual basis over the five-year period from 2008-09 to 2012-13. Because an individual production can have a significant impact on production volume in a given year, five-year figures present a better sense of the overall performance of a media production industry. Additional year-over-year trends using data form the past 16 years are also discussed.

2.2.1 Overall production volume $542.3 million in total production volume over the last five years. Between 2008-09 and 2012-13, the volume (sum of total budgets) of Manitoba’s media production totalled $542.3 million. Over the last 16 years, the Manitoba production volume totalled $1.6 billion. Following the global economic crisis in 2008-09 when Manitoba volume reached a 10-year low of $74.0 million, volume quickly rebounded, nearly doubling to $125.0 million the next year and $129.9 million in 2012-13.9

Figure 1 – Total volume of production* in Manitoba, 2008-09 to 2012-13

Sources: Nordicity tabulations based on data from MFM, CRTC, CMPA, and APTN *Includes estimates for broadcaster in-house production in Manitoba

9 The rebound of production volume in 2009-10 can be attributed in part to the Government of Manitoba’s one-time Jump Start Equity Investment Fund. The investment enabled the Manitoba production industry to maintain production levels and employment by securing timely and important projects for the Province’s businesses, and to help position Manitoba’s competitiveness nationally for the rebound in global production activity.

74.0

125.0 117.7

95.7

129.9

0

20

40

60

80

100

120

140

2008/09 2009/10 2010/11 2011/12 2012/13

$ m

illio

ns

Total: $542.3M


2.2.2 Segments of Manitoba’s media production industry Manitoba has a highly diversified media production industry, comprised of five principal production segments:

§ Domestic production in which a Manitoba producer controls the copyright;

§ Co-production in which a Manitoba producer shares the copyright with a non-Manitoba producer — be it foreign or Canadian (including co-ventures with the US);

§ Foreign location and service (FLS) production in which the copyright is held by a producer outside of Manitoba;

§ Broadcaster in-house production in which a broadcaster controls the copyright (and which are not eligible for the MFVPTC);

§ Other non-tax credit production, which includes television programs and films that are produced without tax credit support, and therefore, not included in the statistics provided by MFM.10 This segment also includes television commercial production, which is also not eligible for the tax credit.

Five-Year Production Levels

To gauge the performance of these production segments, it is instructive to examine how they each performed between 2008-09 and 2012-13. To that end, the distribution of Manitoba’s $542.3 million of production over the last five years is depicted in Figure 2.

Figure 2 – Five-year share of total volume of production, by segment, 2008-09 to 2012-13 ($ millions)

Sources: Manitoba Film & Music and Nordicity estimates based on data from CRTC, CMPA, and APTN

10 On a national basis, film and television production made without tax credits is equivalent to approximately 15% of television production. The application of this national ratio to the Manitoba market implies that other non-tax credit production was an estimated $7.6 million in 2012-13 and $36.3 million between 2008-09 and 2012-13.

FLS 15%

Co-production 42% Domestic

14%

Non-tax credit 9%

Broadcaster in-house

20%

Total = $542.3 million


From Figure 2, the following observations can be made:

§ Domestic production is an integral part of Manitoba’s production. Over the last five years it totalled $77.7 million. This is similar to the total production volume for the previous five years. Domestic production accounted for 15% of Manitoba’s production volume over each of the last two five-year periods.

§ Co-productions formed the largest segment of the Manitoba production industry over the last five years, accounting for nearly one-half of Manitoba’s production volume ($226.9 million). Co-productions now represent the single largest production segment, in the province. Levels of co-production doubled over the last five-years from $157.5 million.

§ Broadcaster in-house production accounted for one-fifth of production volume ($108.7 million). With an increase of 22% from the previous five-year period (in which it totalled $89.4 million), broadcaster in-house production volume is now on par with FLS production.

§ FLS production was overtaken by co-production and broadcaster in-house production in the five-year period between 2008-09 and 2012-13, accounting for 15% of Manitoba production volume. In fact, due in part to competition from other Canadian provinces (see Section 3), FLS production ($81.2 million) dropped to one-quarter of the rate in the previous five-year period ($327.9 million).

§ Other non-tax credit production was an estimated $10.7 million in 2012-13 and totalled $47.7 million during the five-year period. As a share of the total volume of production in Manitoba between 2008-09 and 2012-13, non-tax credit production accounted for 9%.

Year-Over-Year Trends

While the five-year view provides a good overview of media production in Manitoba by segment, it masks some year-over-year trends. Accordingly, it is also instructive to examine the portion of Manitoba’s annual production volume broken down by segment. To that end,

Figure 3 illustrates the total production volume in each of the last five years and the portion contributed by each production segment. Figure 4 goes on to illustrate the percentage of the production volume contributed by the various production segments in each of the past five years

Co-production Volume The Province’s co-production activity between 2008-09 and 2012-13 is up by some 50% over the previous five-year period. Co-productions now represent the single largest segment of film and television production in the Province, contributing $226.9 million to the five-year production volume.


Figure 3 – Total production volume by segment

Sources: Manitoba Film & Music and Nordicity estimates based on data from CRTC and APTN.

Figure 4 –- Share of total production volume by segment

5.5 25.4 18.0

7.0 25.2 22.4

56.0 53.1

42.2

53.3

19.7

14.8 14.1

13.7

15.5

18.6

18.2 22.3

24.4

25.2

7.8

10.5 10.2

8.5

10.7

74.0

124.9 117.7

95.8

129.9

0

25

50

75

100

125

150

2008/09 2009/10 2010/11 2011/12 2012/13

$ m

illio

ns

FLS Co-production Domestic Broadcaster in-house Non-tax credit


Sources: Manitoba Film & Music and Nordicity estimates based on data from CRTC and APTN

From

Figure 3 and Figure 4, the following observations can be made:

§ Domestic production volume has remained steady despite the economic downturn, reaching $19.7 million in 2008-09 before stabilizing with an overall five-year average of $15.6 million.

§ Co-production more than doubled in the first year from 2008-09 to 2009-10 and remained consistently above $40 million per year following the economic downturn in 2008-09.

§ Broadcaster in-house production volume maintained a steady level of $18.6 million during the economic downturn. Down 3% from $19.1 million in 2007-08, broadcaster in-house production climbed 35% to $25.2 million in 2012-13. The average broadcaster in-house volume over the last five-year period increased 21% from $17.9 million (2003-04 to 2007-08) to $21.7 million (2008-09 to 2012-13).

§ FLS production rebounded from a low of $5.5 million during the economic downturn (2008-09), reaching a five-year high of $25.4 million in the following year (2009-10). With the exception of 2011-12, FLS production has since remained above the $18 million mark.

§ Other non-tax credit production has been relatively stable between 2008-09 and 2012-13, fluctuating between $7.8 million and $10.5 million.

Production Budgets

7% 20% 15% 7%

19%

30%

45% 45%

44%

41%

27%

12% 12%

14% 12%

25% 15% 19% 25% 19%

11% 8% 9% 9% 8%

0%

20%

40%

60%

80%

100%

2008/09 2009/10 2010/11 2011/12 2012/13

Shar

e of

tota

l vol

ume

FLS Co-production Domestic Broadcaster in-house Non-tax credit


As production volume is a function of the budgets of a broad variety of production, it is informative to examine the average production budget size (for those segments where data is available). To that end, Figure 5 illustrates the average production budget size for domestic, FLS, and co-productions in 2012/13.

Figure 5 – Average production budget by production segment (2012-13)

Source: Nordicity survey data

According to Nordicity survey data (illustrated above), the average production budget for domestic productions ($1.2 million) is significantly lower than FLS production ($3.7 million) or co-productions ($2.1 million). While FLS productions tend to have largest average budgets, co-productions have average budgets that are significantly (42%) higher than domestic production. As such, by moving towards co-productions, Manitoba-based producers have the opportunity to work on larger budget projects for which they control at least a portion of the intellectual property rights.

Number of Projects

While production volume is a very useful indicator of the economic activity incurred by the various production segments, it does not show how many projects were needed to achieve that volume. In the period between 2008-09 and 2012-13, the media production industry in Manitoba produced an estimated 336 projects, or an average of 67.2 projects per year. 64% of these projects were domestic productions.

Figure 6 – Number of projects by segment*

3.7

2.1

1.2

$-

$1

$2

$3

$4

FLS productions Co-productions (incl. co-ventures)

Domestic Manitoba productions

Mill

ions


Sources: Manitoba Film & Music and Nordicity estimates * Excludes broadcaster in-house production and non-tax credit production

As the above chart illustrates, the number of projects created each year has remained relatively constant over the past five years. While domestic productions have accounted for roughly 60% of the projects produced each year, co-productions have risen from 16% of projects in 2008-09 to 25% of project in 2012-13.

2.2.3 Key production trends From the preceding sub-section, two key trends can be observed:

1. The portion of production volume for which a Manitoba-based producer owns at least a part of the intellectual property (including both domestic production and co-production) has grown;

2. The level of FLS production has decreased over the last five years.

The remainder of this sub-section will expand upon these two trends.

The Growth of IP Ownership

As the preceding sub-sections have illustrated, domestic production (in terms of both production volume and number of projects) has remained stable over the last five years. Over the same period, however, Manitoba’s production community has been particularly active in leveraging co-productions. The province’s co-production activity between 2008-09 and 2012-13 is up by some 50% over the previous five-year period, and now represents the single largest segment of film and television production in the province. Over the past five years, Manitoba producers have been involved in numerous co-productions with producers from other provinces and co-ventures with the U.S.; they were also involved in four international treaty co-productions.

As a backdrop to the increase in co-production activity in Canada as a whole, there has also been a wave of corporate development. Across Canada, the film and television production industry is shifting

15 18 10 7 9

11 10 13 12

16

43 45 43 44

40

0

10

20

30

40

50

60

70

80

2008/09 2009/10 2010/11 2011/12 2012/13

Num

ber o

f pro

ject

s

FLS Co-production Domestic

69 73 66 63 65


from one comprised of small independent production companies – often with three or fewer owners – to one with an increasing number of integrated production companies (also known as super-indies). These integrated production companies — including eOne and DHX Media — not only fund production, but acquire smaller production companies, build rights libraries, develop distribution arms, and invest in the development of digital capabilities.

Manitoba is playing a part in this wave of corporate development. Companies such as Frantic Films, Buffalo Gal, DACAPO, Merit Motion Pictures, and Original Pictures have been pursuing strategies of horizontal integration (i.e., mergers, acquisitions and alliances) and vertical integration (i.e., extensions into distribution and multi-platform strategies). The degree to which Manitoba-based producers have been able to create projects for which they own the underlying intellectual property (IP) has increased over the last five years, as indicated by the growth of domestic production levels. By owning more of their own IP, production companies are able to better control the production process, and are able to obtain a greater share of any profits generated by their properties. Without IP ownership, production companies largely rely on producer fees to generate revenue. Section 4.2 provides more detail on how production companies in Manitoba generated revenue in 2012.

By controlling its own IP, the media production industry in Manitoba becomes less exposed to economic fluctuations outside of their control. For example, FLS production levels have been historically influenced by the relative value of the Canadian dollar (against the U.S. dollar). Furthermore, the industry is less affected by changes in the production landscapes in other jurisdictions (e.g., Toronto and Los Angeles). As a result of the more stable production levels, increased IP ownership can also lead to a more stable workforce and a more stable, sustainable industry overall.

That said, owning IP does not benefit a company’s bottom line if it cannot exploit that IP (e.g., by distributing a film or television program or the software related to an animation or visual effects project). As such, the positive effects of IP ownership are, in large part, tied to the ability of firms to find buyers for that IP. Programs and services that support such activities (e.g., the Market Access Funds administered by On Screen Manitoba) contribute directly to the ability of production companies to reap the benefits of this important trend.


Finally, if IP is effectively exploited, it can have significant, positive fiscal effects by attracting funds to Manitoba (which are then taxed and spent in province).

The Decline of FLS Production

While in Snapshot 2009, FLS production accounted for 48% of the five-year production volume (between 2003-04 and 2007-08), it accounted for only 15% of production in the most recent five-year period. Total FLS production volume over the last five years was represented by projects of varying budgets, with a five-year high of 15 projects in 2008-09 accounting for a low of $5.5 million in volume.11 At the end of the five-year period, production volume had jumped to $25.2 million for a

11 FLS production over the last five years generally represents very low-budget productions such as direct-to-DVD, movie of the week (MOW), or portions of full productions that were shot in Manitoba.

Impact of Manitoba’s Shift Towards Retention of IP Ownership The last two years have seen a dramatic shift in the nature of DACAPO Productions’ business. From 2008 to 2012 all of our production business was service work and we were able to bring audio production work on several animated series to Manitoba.

Over the last two years, the availability of production service work on animation at feasible cost points has diminished to the point where our company would not be sustainable if we relied exclusively on service work. As a result, we have undertaken steps to invest in ownership of IP with international partners, and finance a portion of production ourselves in return for a share of the IP’s future earnings. In 2012-2013 I expect that self-financed IP projects will account for about two-thirds of our production business with service work falling from 100% to about one-third of all our production activity.

We are currently completing two productions in which we are partnering as an international producer. Santa’s Apprentice: The Magic Snowflake will be, to my knowledge, the first animated feature produced in Manitoba with a theatrical release, and Lanfeust Quest (a 26-episode animated adventure series) will begin broadcasting in France this fall.

Ownership in IP has therefore provided us with new opportunities and sustained our business activity, but it has also increased the financial risk we bear. Financing our share of production has been challenging and the uncertain timing and level of the long-term revenue stream the properties will generate provide another stress to our operations. The Manitoba tax credit has therefore played a critical role in allowing us to fund these investments in IP, and while we receive no immediate production revenue on these projects, I am hopeful that the long-term IP related revenue stream we bring to Manitoba will exceed the revenue that pure service work might have brought us.

Clinton Skibitzky, DACAPO Productions


total of only nine productions. These higher budget projects are more typical of the FLS segment. The primary advantage of FLS production is the higher budgets, which lead to higher employment opportunities for Manitoba crew. Expertise acquired through employment on larger budget productions then leads to the availability of a highly skilled workforce for domestic and co-productions.

Unlike domestic production and some co-productions, FLS production volume expands and contracts largely based on factors outside of the media production industry’s control. Historically, the value of the Canadian dollar has been a determining factor — along with competition from other FLS jurisdictions with similar incentives for FLS production (e.g., British Columbia, Quebec, Nova Scotia, etc.). However, as Figure 7 shows, there does not appear to have been a strong correlation between the value of the Canadian dollar and FLS levels in recent years.

Figure 7 – FLS production vs. Canadian dollar

Sources: Manitoba Film & Music and Bank of Canada

As the Canadian dollar has not been a significant factor in the decline of FLS production volume in Manitoba over the last five years, one might conclude that productions may have been attracted by the incentive regimes present in other Canadian provinces (as illustrated in Section 3). In fact, an all-spend tax credit was introduced in Manitoba in 2010 to ensure the province remained competitive other jurisdictions. However, it should be noted that location decisions are typically made with more than economics in mind. For example, if a production requires an oceanic setting, the producers will favour a location with a suitable coastline, whereas others (e.g., many science fiction projects) may not need any location shooting. As such, it is likely that some part of the decreased level of FLS production in Manitoba is simply a function of the locations required by specific productions.

2.3 Production by Genre Producers in Manitoba made 98 fiction programs and films worth $265 million and 174 documentaries worth $89 million over the past five years. Both fiction and documentary genres are important pillars of Manitoba’s media production industry, together accounting for 89% of total

5.5

25.4 18.0

7.0

25.2

93.8 87.6

97.1 101.1 100.0

50

60

70

80

90

100

110

0

5

10

15

20

25

30

2008/09 2009/10 2010/11 2011/12 2012/13

US

cent

s per

C$

$ m

illio

ns

Volume of FLS production (left scale) US$ per C$ (right scale)


production volume between 2008-09 and 2012-13. The breakdown by genre of productions are presented in Figure 8 (production volume) and Figure 9 (number of projects).

Figure 8 – Volume of independent media production*, by genre

Sources: Manitoba Film & Music * Excludes broadcaster in-house segment and non-tax credit production ** Includes children’s, variety and performing arts, magazine and education/informational programming

Figure 9 – Number of independent media productions*, by genre

Sources: Manitoba Film & Music * Excludes broadcaster in-house segment and non- tax credit production ** Includes children’s, variety and performing arts, magazine and education/informational programming

24.1

73.9 52.6 45.1

69.3 15.9

18.7

23.5

10.0

10.6

7.6

3.8

9.1

7.7

14.1

0

20

40

60

80

100

120

2008/09 2009/10 2010/11 2011/12 2012/13

$ m

illio

ns

Fiction Documentary Other genres**

47.6

96.4

85.2

62.8

94.0

23 24

17 16 18

30

38 35

38

33

16

11 14

9

14

0

10

20

30

40

50

2008/09 2009/10 2010/11 2011/12 2012/13

Num

ber o

f pro

ject

s

Fiction Documentary Other genres**


From the above two charts, the following observations can be made:

§ Fiction production is the main driver of the production industry in Manitoba, accounting for 69% of volume in the latest five-year period, down from 85% in Snapshot 2009. The 2008-09 economic downturn was felt most severely by the fiction genre, which experienced a five-year low of $24.1 million, less than half the five-year average of $53 million, before rebounding to $73.9 million the following year.

§ Documentary production is the second-largest genre on a dollar-volume basis, and the largest in terms of the total number of projects. Documentary production proved resilient during the economic downturn, down only 14% from $18.5 million in 2007-08 to $15.9 million in 2008-09. The 174 documentaries produced between 2008-09 and 2012-13 commanded a production volume average of $15.7 million per year, up 15% from $13.7 million in Snapshot 2009.

2.4 Types of Production The media production industry in Manitoba produces in all formats. This sub-section expands on the portion of the industry’s production volume that is derived from feature films, TV series, other TV projects (e.g., mini-series, MOWs, etc.), and web series. The sub-section goes on to describe the languages in which those projects are produced.

Figure 10, illustrates how these types of production have contributed to the total production volume over the last five years.

Figure 11 goes on to depict the number of each type of project created in each of the last five years

Figure 10 – Volume of independent media production*, by type

Sources: Manitoba Film & Music * Excludes broadcaster in-house segment and non- tax credit production ** Includes mini-series, television movies, and single-episode programming

9.3

39.8 31.1 19.6

43.0 25.6

38.0 45.9

24.6

29.8

12.7

18.4 7.9

18.1

21.1 0.1

0.4

0

20

40

60

80

100

120

2008/09 2009/10 2010/11 2011/12 2012/13

$ m

illio

ns

Feature "lm TV Series Other TV** Web Series

47.6

96.2 85

62.7

93.9


Figure 11 – Number of independent media productions*, by type

Sources: Manitoba Film & Music * Excludes broadcaster in-house segment and non- tax credit production ** Includes mini-series, television movies and single-episode programming

From the preceding two charts, the following observations can be made:

§ Feature film production volume has grown by more than four times between 2008-09 and 2012-13, averaging $28.6 million per year. Production budgets for feature films in this period grew significantly; while the number of feature film productions decreased from 16 in 2008-09 to 9 in 2012-12, production volume increased from $9.3 million to $43 million.

§ TV series production volume has fluctuated from a high of $45.9 million in 2010-11 to a low of $24.6 million in 2011-12, averaging $32.8 million per year. The number of TV series productions including both unscripted series such as Pour un soir seulement and scripted drama such as Todd and the Book of Pure Evil, however, has remained more stable with an average of 22 per year, fluctuating between a high of 24 in 2012-13 and a low of 17 in 2011-12.

§ Other TV production volume (which includes Mini-Series, MOWs, One-offs and Pilots) has nearly doubled from $12.7 million in 2008-09 to a high of $21.1 million in 2012-13, averaging $15.6 million per year. The Other TV type has produced the highest number of productions of all types over the last five-year period, averaging 29 productions per year.

§ Web Series are a new type of production tracked by MFM since the publication of Snapshot 2009, with a production volume of $500,000 for three projects over the last five-year period. The level of web series production in Manitoba, such as Frantic Films’ Verdict, is expected to grow steadily over the next few years, according to industry consultations and sector trends.

16 16

8 12

9

23 22 23

17

24 28

30 29 32

28

0 0 1 2 0

0

5

10

15

20

25

30

35

2008/09 2009/10 2010/11 2011/12 2012/13

Num

ber o

f pro

ject

s

Feature "lm TV Series Other TV** Web Series


Turning to the language of production, as the following chart indicates, the majority of productions undertaken in Manitoba were made in English.

Figure 12 – Languages of productions (2012)


English only 52%

French only 16%

Both English and French

10%

Three or more languages

10%

Both English and Aboriginal languages

8%

Both English and any other language (not

French or Aboriginal) 4%

Film activity in the City of Winnipeg The City of Winnipeg is a major supporter of the film and television production industry in Manitoba. The City of Winnipeg’s Film Office responds to over a thousand queries per year, of which each request is reviewed by the Film and Special Events committee. In 2012, representing a typical year, the City of Winnipeg provided the following services for FLS and domestic film productions:

§ 12 feature length or MOW – 108 use of street permits granted, 6 City of Winnipeg building locations, 14 City of Winnipeg park bookings, 37 requests for Winnipeg Police Service Intermittent Traffic Control, 27 road closures, various use of sidewalk, snow removal and street cleaning requests.

§ 2 Television series – 17 use of street permits granted, 2 City of Winnipeg building locations, 5 City of Winnipeg park bookings, 9 requests for Winnipeg Police Service Intermittent Traffic Control, 4 road closures, various use of sidewalk, snow removal, and street cleaning requests.

§ 6 Commercials – 6 use of street permits granted, 1 snow removal request, 3 requests for Winnipeg Police Service Intermittent Traffic Control.

§ 41 Independent media productions – 19 use of street permits granted, 6 park bookings, 7 road closures and various use of sidewalk, snow removal and street cleaning requests.

Source: City of Winnipeg


2.5 Animation, Visual Effects and Digital Media Since 2008, the animation, visual effects, and production services component of Manitoba’s media production environment has also undergone several key changes:

§ Opus VFX, a division of Buffalo Gal Pictures has put together an experienced Manitoba team with credits ranging from large Hollywood productions (e.g., Avatar, Superman Returns, X-Men, etc.) to smaller independent productions (e.g., Storm of the Century, The Big Empty);

§ Buffalo Gal Pictures has also established a commercial animation studio and completed its first feature animation with a second project set to begin — 45 positions were created over a six-month period in 2012.

At the same time, changes to the funding environment (such as the Canada Media Fund’s requirement for rich interactive content as part of their Convergent Stream)12 has stimulated demand in Manitoba for interactive media content connected to traditional linear content (or “convergent content”). Tactica, for example, has been quite active in working with producers to create companion interactive products.

Interactive media producers such as Tactica and Complex Games operating in tandem with the film and television sector have bolstered their long-term business models and revenue streams. Companies such as DACAPO Productions and Les Productions Rivard that have produced linear content are also exploring opportunities to produce or provide services for interactive or convergent content. Regardless of whether they are producing in-house or contracting the services of another company, all Manitoba producers of linear content work within a digital, multi-screen, multi-format media landscape.

2.6 Production Financing and Incentives Manitoba’s incentives for film and television production offer excellent leverage of private investment. In fact, private investment was the largest single source of financing for Manitoba production.

At the core of the Province’s support for film and television production is the Manitoba Film and Video Production Tax Credit (MFVPTC). Through the tax credit, the Province provided $75 million in financing to film and television production between 2008-09 and 2012-13. MFM also made equity investments totalling $11 million over the five-year period. In 2010, the MFVPTC was expanded to include an “all-spend” provision that provides the option to claim a 30% tax credit on all eligible local expenditures (or to use the existing labour-based tax credit).13 It is too soon to gauge the effects of this change to the MFVPTC.

12 For more on this funding stream, see more here: http://www.cmf-fmc.ca/funding-programs/convergent-stream/?setLocale=1 13 The MFVPTC’s 30% “all-spend” provision is suitable for large productions with budgets over $10 million. The average production budget in Manitoba has dropped below $10 million over the last five-year period, while interviewees suggested an increase in production budgets in 2013.


Along with the MVFPTC, Manitoba also offers an interactive digital media tax credit (see above) that helps to stimulate activity in Manitoba’s burgeoning convergent and interactive media production sectors.

All told, the Province’s financing contribution of $86 million to the MVFPTC and Equity program attracted additional financing of $300 million. In other words, each dollar of the Province’s contribution to the financing of film and television production attracted an additional $3.48 in financing from other sources.

Out of the total production financing of $385.9 million between 2008-09 and 2012-13, private investment — including distributor advances and foreign studio investments, but excluding broadcaster pre-sales — was the single largest amount, accounting for 30%, or $116 million. Private investment was followed by the Canada Media Fund (CMF) financing, which accounted for 15%, or $59.3 million. The CMF is a public-private partnership. In 2012-13, 62% of the CMF’s revenue came from private-sector sources (i.e., cable and satellite companies); the other 38% came from the federal government.

Broadcasters are another key source of financing. While some broadcasters may produce their content in-house, Canadian broadcasters tend to commission higher budget productions from independent producers. Indeed, Canadian private broadcasters contributed 13% of total financing for Manitoba’s film and television production, or $49.2 million; while CBC and other Canadian public broadcasters accounted for 5% or $18.1 million.

Recent changes to the CRTC independent production expenditure requirements now allow broadcasters with multiple licences (i.e., more than one TV channel) to pool their spending requirement — thereby enabling them to spend more on fewer productions. Moreover, as a recent Nordicity study showed, broadcasters may not be spending as much in Manitoba as might seem proportional. There is also a sense that broadcasters in the future may produce interactive media content in-house because of efficiencies and opportunities arising from ownership of the integrated content property.

Tax credits from other Canadian governments were another important source of financing. Federal tax

Manitoba Interactive Digital Media Tax Credit (MIDMTC) The MIDMTC is a refundable corporate income tax credit for companies that develop and produce interactive digital media projects in Manitoba.

The tax credit is equal to 40% of the remuneration paid to Manitobans on eligible projects to a maximum of $500,000 per project.

In Budget 2013, adjustments were made to the MIDMTC:

§ companies may claim up to $100,000 in eligible marketing and distribution expenses that are directly attributable to an eligible project;

§ financial support from the Canada Media Fund that is recoupable or repayable will not be treated as “government assistance;”

§ an eligible product that is developed under contract for an arm’s-length purchaser does not need to demonstrate the product will be resold or licensed by that arm’s-length purchaser; and

§ a broader interpretation of the sale requirement will provide the province with added flexibility in determining which types of commercialization projects will be eligible.


credits accounted for 7% of total financing or $25.9 million; other provincial tax credits (i.e., for interprovincial co-productions) accounted for 5% or $17.9 million. Financing from Telefilm Canada and other governments and agencies outside of Manitoba combined for $11 million ($8.7 million + $2.3 million) or approximately 2% of total financing.

Foreign broadcasters financing of Canadian production (i.e., domestic, co-productions, and Canadian FLS productions) totalled $2.4 million between 2008-09 and 2012-13, or 1% of total financing.

Figure 13 – Sources of financing for Manitoba film and television production, 2008-09 to 2012-13 ($ millions) *

Sources: Manitoba Film & Music * Excludes broadcaster in-house segment and non- tax credit production

In terms of development support, the following two figures show that while the projects in development are as likely to be self-financed as they are to be externally financed, externally financed projects are significantly more likely to be greenlit. This points to the importance of sustaining and increasing development support for Manitoba productions.

Figure 14 –Number of projects in development (2008-12)

Figure 15 – Number of projects “greenlit” (2008-12)

1%

1%

2%

3%

5%

5%

7%

13%

15%

19%

30%

Other public (provincial and local)

Foreign broadcasters

Tele"lm Canada and other federal

MFM equity

Other prov tax credits

CBC and other public broadcasters

Federal tax credit

Canadian private broadcasters

Canada Media Fund

Manitoba Film and Video Production Tax Credit

Private investment

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35

Total !nancing*: $385.9M

51% 49%

Self-"nanced Externally "nanced

42% 58%

Self-"nanced Externally "nanced


2.7 Inward Investment (Export Value) The majority of financing for — or investment in — films and television programs produced in Manitoba, comes from outside the province. When producers use this financing to purchase Manitoba labour and services, it generates the equivalent of export earnings or inward investment for the province. Between 2008-09 and 2012-13, $294 million of financing for Manitoba film and television production originated from outside the province. Of this amount, Nordicity estimates that $195.2 million originated from other provinces in Canada (i.e., “Interprovincial financing”), 14 while $98.9 million originated from outside Canada (i.e., “international financing”).

The 26% of financing originating from international sources is by and large private financing. Out of the 50% of financing that comes from elsewhere in Canada, it is interesting to note that approximately one-third comes from the CMF, one-third from private sector sources and approximately one-third from public sector sources (including CBC/Radio-Canada).

Figure 16 – Inward financing of Manitoba film and television production, 2008-09 to 2012-13 ($ millions) *

Sources: Manitoba Film & Music * Excludes broadcaster in-house segment and non- tax credit production ** Includes a pro-rata allocation of certain national and federal financing (i.e. Canadian broadcaster financing, federal tax credits, CMF, Telefilm Canada and other federal public financing. This pro rata allocation was based on Manitoba’s share of national GDP.

14 In calculating inter-provincial export value, Nordicity adjusted the amounts of financing from Canada’s national broadcasters and the federal tax credits for film and television production, in order to remove an amount attributable to the Manitoba economy’s contribution to the national broadcasting market and the federal government’s revenue. These adjustments were based on Manitoba’s share of national GDP to adjust the financing amounts from Canadian broadcasters and the federal tax credit.

International "nancing

26%

Interprovincial "nancing

50%

Manitoba "nancing**

24%

Total !nancing*: $385.9M

Investment Attraction From 2008-09 to 2012-13, the media production industry attracted $294 million of financing to Manitoba, with $98.9 million of that amount originating from outside of Canada.


Manitoba Productions Raise the Province’s Profile Over the last four years, a number of Manitoba-produced projects have received wide-ranging critical success and have screened in a variety of venues and formats throughout the world. For example, Guy Maddin’s release of My Winnipeg in 2008 has received international acclaim, and has since resulted in touring exhibitions and screenings around the world. Maddin has gone on to serve on the jury of the prestigious Berlin Film Festival, Berlinale, in 2011.

Following this success, a major exhibition of over 250 works by 70 artists entitled “My Winnipeg” opened at La Maison Rouge gallery in Paris. The exhibit attracted roughly 300 people per day and garnered praise from French media outlets including Le Monde, which proclaimed “in the cold and boredom, the Canadian city of Winnipeg generates very good artists.”

The French artist Herve Di Rosa who was instrumental in bringing the exhibition to Paris, recalled that upon learning of “a collective of Winnipeg-based artists at the Royal Art Lodge” and that Winnipeg was home to Guy Maddin, “I was immediately interested,” and the “quality and uniqueness of the artists… convinced them” to feature My Winnipeg in Paris.

Likewise, BlinkWorks Media’s film Indie Game: The Movie has generated significant international interest since its premiere at the Sundance Film Festival in 2012 where it won the World Cinema Documentary Editing Award. The two filmmakers, James Swirsky and Lisanne Pajot, led two successful crowdfunding campaigns resulting in one of the first feature-length documentaries to be financed on the crowdfunding platform Kickstarter.

Additionally, Passionflower, by Shelagh Carter, is a micro-budget film enjoying audience success at many festivals including the Audience Choice award at the Anchorage International Film Festival (2012).


3. Comparison with Peer Provinces This section compares the media production industry in Manitoba with media production industries in similarly-sized Canadian provinces — particularly with respect to public support regimes and production levels.

As a place for producers to do business, Manitoba remains competitive in comparison to its peer provinces — Nova Scotia, Saskatchewan,15 and Alberta. However, there are a couple of areas where the province needs to catch up in order to improve its competitiveness.

Manitoba’s tax credit is on par with that of Nova Scotia. The Manitoba Film and Video Production Tax Credit’s (MFVPTC) base rate (45%) is five percentage points lower than the rate in Nova Scotia (50%); however, including all bonus incentives, the MFVPTV’s maximum rate is 65%. This matches the maximum rate available in Nova Scotia, though Nova Scotia does not offer the option of a 30% tax credit for all eligible expenditures.

The MFVPTC is unique and quite innovative in relation to its peers’ offerings. Manitoba producers and out-of-province producers who enter into a co-production with a Manitoba producer receive a 5% bonus (Manitoba Producer Bonus). There are also bonuses for filming outside of Winnipeg (5%) and for frequent-filming (i.e., three films in a two-year period) (10%). Producers can combine all of these incentives for a total tax credit rate as high as 65%.

Manitoba also leads its peer provinces in terms of other non-tax-credit incentives. It offers equity investment, development support, travel assistance and marketing support. No other peer province offers all of these additional incentives. Manitoba is also the headquarters for a national specialty TV service, something only Alberta can match.

Manitoba could potentially improve its competitiveness with more soundstage space. It currently has 15,000 sq. ft. of soundstage space. This is more than Nova Scotia, with 12,000 sq. ft., but less than either Saskatchewan or Alberta.


Figure 17 – Comparison of tax credits, other financial support programs, and infrastructure in peer provinces

Manitoba Nova Scotia Saskatchewan Alberta Base rate for tax credit or production-rebate

45% of eligible labour —or— 30% of eligible Manitoba expenditures

50% of eligible labour —or— 25% of eligible production costs

None 25% to 30% of eligible production spend* (equivalent to labour-based tax credit of 45% to 55%)

Additional tax credit incentives 5% rural bonus 10% frequent filming bonus 5% bonus for MB producer

10% rural bonus (eligible labour) —or— 5% rural bonus (eligible production costs) 5% frequent filming bonus (eligible labour)

None None

Maximum tax credit rate 65% of eligible labour —or— 30% of eligible Manitoba expenditures

65% of eligible labour None ~25% to 42% of labour*

Deeming of out-of-province labour ü Equity investment program ü ü ü Development-loan program ü ü ü ü Travel assistance ü ü ü ü Marketing support ü ü Training / professional develop support ü ü ü

Film school / Training institute ü ü Specialty or pay television service headquarters ü ü

Provincial educational broadcaster ü Soundstage capacity

15,000 sq. ft. 12,000 sq. ft. 35,000 sq. ft. 26,000 sq. ft.

Source: Nordicity research based on information from Playback and film commission web sites.


Manitoba’s competitive incentives and infrastructure combined with its well-established production community help make it one of the leaders among Canada’s secondary production centres. Ontario, Quebec and British Columbia are Canada’s three leading production centres and among the largest centres for film and television production. Excluding these three provinces, Manitoba consistently ranks just behind Nova Scotia in terms of production output. On a population-adjusted basis (i.e., production per 1,000 inhabitants) was second to Nova Scotia and ahead of Canada’s five remaining provinces in terms of domestic, FLS and total production.

Figure 18 – Ranking of provinces by population-adjusted production volume activity by province, 2008-09 to 2011-12 ($ per 1,000 inhabitants)*

Province Domestic production**

Province FLS production

Province Total production

1 Nova Scotia 277 Nova Scotia 186 Nova Scotia 463

2 Manitoba 252 Manitoba 44 Manitoba 296

3 Newfoundland and Labrador

216 New Brunswick 13 Newfoundland and Labrador

216

4 Saskatchewan 198 Saskatchewan 9 Saskatchewan 207

5 Alberta 141 Alberta 8 Alberta 149

6 New Brunswick 71 Newfoundland and Labrador

0 New Brunswick 84

7 Prince Edward Island 23 Prince Edward Island

0 Prince Edward Island

23

Source: Nordicity analysis based on data from MFM, CRTC, APTN and CMPA. * Excludes Ontario, Quebec and British Columbia; data exclude 2012/13, since data were not available for provinces other than Manitoba, at the time of writing. ** Includes indigenous production and co-production

3.1 Case Study: Saskatchewan Major restructuring of Saskatchewan’s creative industries have had a dramatic effect on the province’s sub-sectors, not least of all the film and television production industry resulting in the near elimination of the entire industry. In 2013, the government of Saskatchewan restructured its creative industries support by forming the provincial body, Creative Saskatchewan.16 This new organization amalgamated SaskFilm functions with sector support for digital media, visual arts, crafts, writing and publishing, music theatre and dance. The most drastic part of this restructuring was the Government of Saskatchewan’s elimination of the Saskatchewan Film Employment Tax Credit. This decision

16 The development of Creative Saskatchewan was based on the model adopted by other provinces, including the Ontario Media Development Corporation, Creative BC, and Creative Nova Scotia.


immediately resulted in a nearly universal retraction of the province’s film and television industry, and an emigration of businesses and crew to other provinces in Canada.

The development of these industries took over two decades of private and public investment and capacity building, but the elimination of the sector’s key support mechanism (i.e., the refundable tax credit) single-handedly reversed the long-standing tradition of film and television production in Saskatchewan. According to research undertaken by Annelise Larson in December 2012, at least 78 industry professionals had left the Saskatchewan media production industry directly as a result of the loss of the FETC. 17 Presenting what was seen as an ultimatum, industry members were faced with the choice of either relocating from Saskatchewan to continue working in their profession or leaving the media production industry altogether to continue living and supporting themselves financially in Saskatchewan.

In a survey conducted by Annelise Larson in June 2012 following the announcement of the elimination of the tax credit, 45% of the 198 industry respondents had “plan(ned) to leave the province entirely.” 18 The impact was felt immediately by the industry. Of those who planned to leave the province, 35% were planning to leave within three months, with 29% looking at B.C. as an alternative location, 24% for Ontario, 14% for Manitoba, 12% for Alberta, and 9% for the United States.19 Of those who planned to stay in the province, 85% “anticipated a career change or significant change to their business model.” 20

Before the June 30th, 2012 cut-off for applications for the tax credit, Vanessa Bonk, Executive Director of SMPIA noted an exceptional uptake in applications exceeding $300 million demonstrating a continued high demand. In 2010 before the tax credit was in question, SMPIA had over 440 members, which plummeted to 68 by the June 2013 AGM.21 Five months prior to the tax credit cancellation announcement in October 2011, SMPIA membership had already dropped to 209 as a result of

17 Saskatchewan Media Industry Survey – What Comes Next for You? Veria Search Media Marketing, June 2012 18 Ibid. 19 Ibid. 20 Ibid. 21 Interview with Vanessa Bonk, Executive Director, SMPIA. 25 June 2013.

I was a 'late bloomer' in the industry, and became involved in film/TV during 'Corner Gas'. I was so happy that I didn't have to leave Saskatchewan to pursue work in the industry, I jumped in with both feet. I've acted, been a background performer, a security guard, production asst., set dresser, and grip. I fell in love with the industry, and the variety of jobs it offered to me, and as such have learned, and grown in my own life a great deal. I don't want to stop working in film/TV, and my intent is to seek out those jobs I love, wherever they may be. I'm disappointed, to say the least, in what has happened here in my home province, and no longer feel I have anything left here for me without being able to work in the field of my choice.

Saskatchewan Industry Member


industry uncertainty around the future of the tax credit. 22 Of SMPIA’s 14 board members, one-half had left Saskatchewan by June 2013, including all five-producer board members. 23 In addition, the Directors Guild of Canada had closed its Saskatchewan office while the IATSE local had withdrawn its Saskatchewan representative. 24

The deadline for final claim submissions for the tax credit is December 31, 2014. The devastating effect of the loss of the tax credit was felt during government consultations even before the tax credit was cut, as any industry relies on a stable business environment and supportive government. While the dramatic decrease in production was realized immediately, a low level of production activity continued to wind down as the completion of contracts were fulfilled.

Over the last 14 years, the Government of Saskatchewan invested $108.8 million in the Film Employment Tax Credit (FETC), generating $632.4 million in economic activity according to an impact assessment prepared for SaskFilm and the Saskatchewan Chamber of Commerce in 2012.25 On an annual basis, the government invested $7.8 million in the FETC, which generated annually $44.5 million in economic activity, 851 jobs and $6.5 million in tax revenue obtained by government for a net annual cost of $1.3 million. 2627

22 Ibid. 23 Ibid. 24 Ibid. 25 Derek Murray Consulting & Associates, Impact of the Film Employment Tax Credit (FETC) on the Film and Video Industry of Saskatchewan. July 2012. 26 Ibid. 27 The impact assessment does not intend to capture tax revenue associated with broadcaster in-house production, corporate taxes paid by parent companies related to FETC productions, productions undertaken by educational institutions and productions undertaken through the granting systems through organizations such as the Saskatchewan Arts Board or Saskatchewan Filmpool.


4. Industry Profile The following section presents a statistical profile of the Manitoba media production industry, which is based on data from an industry survey as well as other secondary sources. The section begins with a profile of company characteristics, followed by an examination of the industry’s revenue and income, expenditures, and workforce. The section concludes with a discussion of the training resources and support organizations available to Manitoba’s media production industry.

4.1 Company Characteristics The context in which Manitoba producers are working has not changed significantly over the past five years. For the most part, Manitoba continues to be primarily an industry led by Canadian production leveraging investment in the form of tax credits. As a result of the Government of Manitoba’s consistent support for the industry, and through production incentives, training and business development support, the industry has remained stable, enabling companies to grow and develop.

Manitoba production companies have recently created new alliances and joint ventures. Some examples of this type of corporate activity include:

§ Original Pictures in Manitoba combined with Saskatchewan-based Partners in Motion (and others) to form a national company, Shift Media Group, with offices in Winnipeg, Toronto and Langley, B.C. (largely as a consequence of the restructuring of the Saskatchewan Film, TV and Digital Tax Credit);

§ Frantic Branded content was sold to the post-production side of MidCanada Production Services (MidCan) and resulted in a new company, FRANK Digital;

§ Buffalo Gal Pictures joined forces with Toronto-based Entremedia Films to form an alliance as the Buffalo Media Group.

These trends occurred in the context of a shift in the orientation of key production companies:

§ DACAPO grew from service provision to investing in production and IP ownership;

§ Les Productions Rivard is considering expanding its current Francophone-only production slate to include English productions;

§ Tactica, an interactive media company, has been servicing film and TV production, while maintaining a strong grounding in new media.

Manitoba producers provide financing and development support along with production support.

§ Original Pictures financed the CBC Kids production What’s Your News? and co-financed Midnight Sun (which shot in Northern Manitoba, Nunavut, and Sault Ste. Marie) and the SyFy and Global TV production Tasmanian Devils (which shot in B.C.).

Productions shot in Manitoba generate industry exposure and stimulate further production activity for Manitoba businesses.

§ Original Pictures produced Wrong Turn 4 for Fox, which topped the VOD charts, and subsequently Fox returned to Original Pictures in Manitoba to produce Joyride 3 with the same writer-director, Declan O’Brien.


Manitoba Intellectual Assets in High Demand Manitoba’s expertise is a real export, as Manitoba producers and production workers are in demand across Canada. Importantly, any crew members (that are residents of Manitoba) sent outside of Manitoba for one of these productions still pay Manitoba taxes. Typically it is documentary production that requires Manitoba crew to travel outside the province.

§ Producer Kim Todd, from Original Pictures was hired as a producer for Fargo, a 10-episode series shot in Alberta. Produced by MGM for F/X, the series is an adaptation created for television by Noah Hawley (Bones, The Unusuals) with Joel and Ethan Cohen, who wrote and directed the 1996 movie, Fargo, as executive producers.

§ Director Norma Bailey has over 40 director credits and has worked on numerous projects outside of Manitoba for Canadian and US broadcast that have also sold in Europe. Her credits on TV series include The Adventures of Shirley Holmes, Cashing In, and Cracked.

§ Production company Buffalo Gal Pictures is recognized for its work with emerging creators. It produced All the Wrong Reasons starring Cory Monteith in Halifax, Nova Scotia with emerging director Gia Milani.

§ Writer-Director Pascal Boutroy is the writer/researcher for season seven of crime series Dark Waters/Eaux troubles, produced by Vancouver-based Red Letter Films in English for OWN and in French for Canal D.

§ Frantic Films is a leading Canadian production company headquartered in Manitoba, and regularly produces major productions across the country such as Todd And The Book Of Pure Evil and The Don Cherry Story shot in Manitoba, and Til Debt Do Us Part and Pitchin’ In shot in Ontario.


The Manitoba media production industry is professional and business-savvy, with a majority of Manitoba production companies having incorporated. The majority of production company survey respondents represented private corporations (70%), while just under a quarter were private sole proprietorships (24%) and only 6% were private partnerships.

Figure 19 – Organizational structure

Source: Nordicity analysis

Manitoba’s production industry comprises a diversity of businesses ranging from stable long-standing firms to new start-ups. While almost half of the companies surveyed have over 12 years of experience (46%), Manitoba has seen a sizeable number of new production businesses emerging with less than three years of operation (12%). Nearly one-third of production companies (31%) have been in operation for six or fewer years. Meanwhile, 42% of production companies surveyed have been operating between 3-11 years.

Figure 20 – Age of companies


Private - Corporation

70%

Private - Partnership 6%

Private - Sole Proprietorship

24%

Startup phase (less than 1 year)

3% 1 - 2 years

9%

3 - 6 years 18%

7 - 11 years 24%

12 - 20 years 28%

More than 20 years 18%


Production companies operating in Manitoba are Manitoba-owned. The majority of production company survey respondents (91%) reported that they are Manitoba-controlled (i.e., controlled by Manitoba residents). Only 9% of responding companies reported that they were controlled by residents outside of Manitoba. And of this 9%, all were controlled by residents of other Canadian provinces and thereby were “Canadian-controlled.” Of all the production companies surveyed, eight had further operations outside of Manitoba, including four in Toronto, Ontario, two in Regina, Saskatchewan, one in Vancouver, British Columbia, and one international operation in London, United Kingdom.

Figure 21 – Company control


Manitoba production companies are predominantly led by one or two entrepreneurial owners. Approximately one-half of the production companies surveyed have just one owner (52%). Approximately one-quarter of companies have two owners (26%), followed by just over one-fifth of companies with three or more owners (22%).

Figure 22 – Number of company owners


Canadian-controlled 9%

Manitoba-controlled

91%

1 Owner - 52% 2 Owners -

26%

3 Owners - 6%

4+ Owners - 16%


4.2 Revenue and Income Manitoba’s production companies earned $34.5 million in revenue in 2012, largely from content licensing, production fees, and the development and sale of interactive media. Manitoba’s 60 production companies earned an estimated $34.5 million in revenue in 2012, a significant increase from the $10 million reported in 2007. This significant increase in revenue was in large part due to the industry’s growing revenue from the licensing of content.

Manitoba production company revenue is diversified, flowing from nine main sources. Manitoba Intellectual Property has generated the most substantial portion of company revenue, with 32% of revenue coming from the licensing of content (i.e., the resale of content for which a Manitoba-based producer owns the intellectual property rights). Production fees accounted for just under one-fifth of company revenue (19%). The development and sale of interactive media generated 13% of company revenue followed by commercial production and ‘other sources,’ accounting for 9% each.

Post-production work accounted for only 5% of company revenue, which may be attributed to Prime Focus’s decision to withdraw its Frantic Films VFX operation from the province. However, production and animation industry consultations reveal an expectation for increased post-production revenue with the establishment and growth of Opus VFX since 2010. Service production fees and fees from other services each accounted for 4% of revenue, as did tax credit and public funding that is not part of the financing of a film or television project. Revenue from Video-On-Demand, advertising and streaming services were virtually non-existent.

Figure 23 – Revenue sources, companies (2012)


0% 1% 1%

4% 4%

4% 5%

9% 9%

13% 19%

32%

0% 5% 10% 15% 20% 25% 30% 35%

Online and/or mobile streaming services Advertising and/or sponsorship

TV Video-On-Demand / pay-per-view services Tax credit/public funding not for project !nancing

Fees from other services Service production fees

Post-production work Other sources

Commercial production Development/sale of interactive media

Production fees Licensing of content

Production Company Revenue Manitoba’s production companies earned $34.5 million in revenue in 2012, largely from content licensing, production fees, and the development and sale of interactive media.


This distribution of revenue is quite different from Snapshot 2009 where 65% of production company revenue was derived from producer fees. 2012 data indicates a much more diversified revenue base. That 32% of revenue in 2012 was generated by licensing content, also provides evidence that Manitoba-based production companies are having some success exploiting their IP. The reduction in producers’ fees is also a function of the reduced role that FLS production plays in Manitoba.

On a per company basis, the media production industry generated an average of $270,000 in revenue in 2012. While 10.2% of companies generated up to $150,000 in annual revenue, the majority of companies (80.5%) achieved revenue of between $200,000 and $499,999. A further 2.6% of companies generated between $500,000 and $749,999 and 6.6% of companies earned over $1 million in revenue.

Figure 24 – Revenue by range, companies (2012)


The most notable difference between company revenues in Snapshot 2009 and Snapshot 2013 is the significantly greater number of companies operating with more than $1 million in annual revenue. While there was only one such company in 2008, there are five in 2012. As such, it seems that production companies are, generally speaking, more successful at generating revenue.

In 2012, Manitoba production companies generated $5.7 million of revenue from export activities (e.g., licensing products outside of Canada), accounting for one-sixth (or 17%) of total company revenue. Conversely, domestic revenue was $28.5 million in 2012, accounting for 83% of the total $34.2 million in company revenue.

Figure 25 - Export and domestic revenue, companies (2012)


0.4%

9.9%

43.9%

36.6%

2.6%

4.8%

1.8%

0% 10% 20% 30% 40% 50%

$1 to $49,999

$50,000 to $149,999

$200,000 to $249,999

$250,000 to $499,999

$500,000 to $749,999

$1M to $2.99M

$14M to $15.99M

17%

83%

Export Revenues ($5.7M)

Domestic Revenues ($28.5M)


4.3 Expenditures Manitoba production companies’ greatest expenditure output is job creation. The majority of company expenditures go towards employee labour costs (46%). The next major company expenditure is for another form of labour, freelancer fees (12%), followed closely by the catch-all category, ‘other’ (10%). After legal/accounting fees (7%) and rent (4%), 11 of the remaining company expenditures account for less than 3% of total company expenditures each.

Figure 26 – Company expenditures (2012)


1% 1% 1% 2% 2% 2% 2% 2% 3% 3% 3%

4% 7%

10% 12%

46%

0% 10% 20% 30% 40% 50%

Internal marketing material Other services from non-employees

Office supplies Computer and office equipment

Recorded media Banking and insurance

Advertising service fees Production Equipment

Utilities and telecom Hotels and restaurants

Transportation Rent (studio, office space)

Legal/accounting fees Other

Freelancer fees Employee labour


Manitoba production companies’ greatest expenditure output is job creation. Filmmakers, distinct from production companies, are individuals who typically take a larger role in a production often undertaking producing, writing, and directing roles. Like production companies, filmmakers also contribute the majority of their expenditures on job creation, with 47% towards hiring freelance workers. The next major filmmaker expenditure is for production equipment (15%), followed by employee labour (7%), and rent and transportation (5% each).

Production companies have generally invested in owning production equipment and as a result can reduce their long-term expenditures, while filmmakers tend to spend a much higher portion of their expenditures on equipment. Each of the remaining 12 filmmaker expenditures account for less than 3% of total filmmaker expenditures.

Figure 27 – Filmmaker expenditures (2012)


1% 1% 1% 1% 2% 2% 2% 2% 2% 2% 3% 3%

5% 5%

7% 15%

47%

0% 10% 20% 30% 40% 50%

Advertising service fees Other services from non-employees

Legal/accounting fees Union dues

Internal marketing material Banking and insurance Hotels and restaurants

Recorded media Utilities and telecom

Office supplies Computer and office equipment

Other Transportation

Rent Employee labour

Production Equipment Freelancer fees


4.4 Production Company Employment, Human Capital, and Workforce This sub-section present the employment in production companies and provides an overview of media production workforce in Manitoba.

4.4.1 Production company employment Production companies in Manitoba directly employed 462 Manitobans in their corporate operations on a full- or part-time basis, up significantly from 200 in 2007.28 The average production company in Manitoba creates 9 FTEs, including 6 full-time employees, 7 part-time employees, 7 contract and freelance workers, and 6 interns and volunteers. The average hours worked by Manitoba media production company employees is 44 hours per week for full-time employees, and 18 hours per week for part-time employees.

As Figure 28 shows, the majority of production company workers (82%) earn between $30,000 and $80,000, at an annual average wage of approximately $56,000.

Figure 28 – Distribution of salaries


4.4.2 Workforce characteristics The following two charts (Figures 29 and 30) illustrate the satisfaction and availability of key element of the media production labour pool in Manitoba.29

28 This number (462), which represents the direct employment at production companies as reported in the survey, should be distinguished from the total employment impact figure given in section 4.2. That figure (1,267) represents the employment impact as derived from the total labour expenditure and average salary data. 29 Scores are assigned a value between 2 (most satisfied/available) and -2 (least satisfied/available).

2% 20% 13% 43% 6% 10% 4% 2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

$0-$19,999 $30,000 - $39,999 $40,000 - $49,999 $50,000 - $59,999

$60,000 - $69,999 $70,000 - $79,999 $80,000 - $149,999 More than $200,000


Figure 29 – Satisfaction with production labour in Manitoba


Figure 30 – Availability of production labour in Manitoba


0.17 0.26

0.52 0.60

0.73 0.76

0.88 0.91 0.95 1.00 1.05 1.05 1.10 1.14 1.19

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Writers Actors

Post-production professionals Producers

Production sound labour Art directors

Directors/DOPs Overall crew

Construction labour Set decorators/dressers

Production designers Costume designers

Grip labour Production lighting labour

Electrical labour

0.09 0.14 0.14

0.32 0.35 0.38

0.45 0.48

0.63 0.63 0.65 0.65 0.68 0.70 0.74

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Writers Post-production professionals

Production sound labour Actors

Directors/DOPs Art directors

Producers Overall crew

Production designers Set decorators/dressers

Grip labour Production lighting labour

Costume designers Electrical labour

Construction labour


As demonstrated in the charts above, no category has an aggregate score that is less than zero (neutral). Figure 29 indicates that respondents are most satisfied with technical labour and design (electrical, lighting, grip, costume and production design) and least satisfied with creative labour (actors, writers). Figure 30 presents a similar picture. Technical labour (electrical, lighting, grip) seems to be more readily available to companies than creative labour (actors, writers).

4.4.3 Other human capital indicators While production companies and overall production provide very good indicators as to the employment footprint of an industry, they do not indicate much detail as to the growth of particular aspects of the industry. For that reason, one can look to ACTRA, the Directors Guild of Canada, and IATSE to provide some added contextual data.

ACTRA Manitoba

In 2012, ACTRA Manitoba had 207 members with a total income of $1.1 million, up from 143 members earning over $865,000 in 2008.30

Figure 31 – ACTRA Manitoba five-year membership statistics, to 2012

Source: ACTRA Manitoba

30 ACTRA Manitoba, Member Income Stats 2012.

2008 2009 2010 2011 2012 Income $865,292 $565,348 $783,910 $1,234,413 $1,145,989

# of Performers 143 125 153 190 207

0

50

100

150

200

250

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

# of

Per

form

ers

Thou

sand

s


Directors Guild of Canada – Manitoba

The Directors Guild of Canada has seen a steady rebound in activity for its members since the 2008 economic downturn, with income climbing to $2.7 million for its 274 members in 2012, up from $1.8 million for its 158 members in 2009.

Figure 32 – DGC Manitoba five-year membership statistics, to 2012

Source: DGC Manitoba

IATSE 856

IATSE 856 had 281 members as of March 2013. Annual membership income rose from $5.7 million in 2008 to a five-year high of $8.6 million in 2012, representing an annual average of $7 million in income per year.

Figure 33 – IATSE 856 annual income statistics (2012)

Source: IATSE 856

2008 2009 2010 2011 2012 Income $3,182,108 $1,806,261 $2,287,802 $1,882,622 $2,736,543

Crew Count 209 158 209 187 274

0

50

100

150

200

250

300

0

1

2

3

4

Crew

Cou

nt

Mill

ions

($)

5.7 5.4

8.1 7.4

8.6

-

2

4

6

8

10

2008 2009 2010 2011 2012

Mill

ions

($)


From these three sources, it can be concluded that while there may have been a dip in the availability of talent in from 2008 to 2009, there are more actors, directors, and technical crew available in 2012 than in 2008.

4.5 Training Resources While there are several avenues for media production training in Manitoba, this sub-section highlights some key resources.

Film Training Manitoba

Film Training Manitoba (FTM) is the crew-training organization for Manitoba’s film industry and is a key component in Manitoba’s production industry. FTM is an industry-driven organization, and works in close collaboration with the unions, guilds, and associations to deliver timely training, and works with Manitoba post-secondary institutions to raise the awareness about the potential employment opportunities in the industry.

FTM provides online courses, including basic courses for membership to IATSE Local 856 & Local 669, ACTRA Manitoba and the Directors Guild of Canada – Manitoba District Council. FTM delivers workshops, work experience programs, which include wage-subsidized work placements and internships, crew mentorship programs and skills-upgrading schemes. In addition, FTM provides industry funding to crew for courses and travel.

In 2011, FTM trained 567 people and delivered 35 in-class workshops.31 Participants included 235 crew members, 224 actors, 70 producers and independent filmmakers, and 38 directors and writers.32

FTM was able to place 57 work experience trainees, of which 45 trainees either found employment or upgraded their job position as a result of participating in the work experience program.33

National Screen Institute

The National Screen Institute – Canada (NSI) was incorporated April 7, 1986 in Edmonton. In 1998 with strong support from the Province of Manitoba and the local screen industry, NSI opened a Winnipeg office and in 2001 consolidated its operations in Winnipeg.

NSI is an important part of the Manitoba screen industry, as it delivers training in Manitoba attracting students and industry professionals from across Canada. NSI also engages local screen professionals to share their experience with their students, and is committed to providing a centre of excellence for training Aboriginal content creators. NSI develops film and television projects, some of which get made in Manitoba.

31 2012 Annual Report. Film Training Manitoba 32 Ibid. 33 Ibid.


Since 2003 NSI has been developing and designing programs for Aboriginal content creators. Over 80% of NSI’s Aboriginal alumni are working in the industry or enrolled in post-secondary education in media (2010-11 figures).

4.6 Supporting Organizations This sub-section highlights a number of the support organizations that help make Manitoba’s media production industry a vibrant cultural and economic contributor.

Manitoba Film & Music

Manitoba Film & Music (MFM) is the provincial film and music agency supporting the screen-based industries through program delivery, administration, marketing and industry support. MFM administers the Manitoba Film & Video Production Tax Credit and the Manitoba Film Equity Program. As the provincial film commission, MFM also attracts inward investment and FLS productions to Manitoba through national and international marketing initiatives and providing extensive locations services.

Over the last five years, MFM provided support for 336 media productions, with total financing budgets of $385.9 million. This support is in the form of both MFM equity investments and the administration of the Manitoba Film & Video Production Tax Credit. In the financing of these projects, private investment was the largest

Economic impact of NSI’s day-to-day operation (fiscal 2011-12) In January 2012, NSI looked at three television series over the previous six years that were originally developed through NSI and went on to be independently produced: Less Than Kind, Cashing In, and Todd & The Book of Pure Evil. They were all shot in Manitoba and with information from the producers of these shows, NSI contends that:

§ The combined budgets (with no multipliers added to numbers) were $57.2 million;*

§ Over 2,700 jobs were created through these productions;* and

§ For every dollar spent on NSI, about 4.9 production dollars are contributed to the Manitoba economy.*

The final season of Less Than Kind will be airing later this year, so NSI can add an additional $6.2 million and 187 jobs in Manitoba.

* These figures are supplied by the NSI and have not been verified by Nordicity or OSM.

Manitoba Film & Music Support Over the last five years, MFM invested in 336 media productions, with production budgets totalling $385.9 million. Source: Manitoba Film & Music


source totaling $116.0 million, accounting for 30% of financing in MFM projects. The Government of Manitoba was the second most significant source of financing, investing $75 million in the form of Manitoba Film & Video Production Tax Credits (MFVPTC). MFM’s film equity program is the eight-largest source of financing, investing $11 million, accounting for 3% of financing.

Among the most prolific and competitive film commissions in Canada, MFM ensures Manitoba’s film and music industries flourish through providing:

§ Tax Credit Administration: MFM is responsible for administering the Manitoba Film & Video Production Tax Credit (MFVPTC). The Government of Manitoba has committed to renewing the tax credit, extending it to 2016 and enhancing it to include accommodation costs. Productions can receive up to 65% of eligible Manitoba labour costs with the Cost-of-Salaries Tax Credit or 30% of all eligible Manitoba expenditures with the Cost-of-Production Tax Credit.

§ Production Equity Program Delivery: MFM administers the Feature Film Production Fund to support production financing of fully developed feature film projects through equity investments. MFM also administers the Television and Web-Based Production Fund to support the production of television and web-based projects. The Television and Web-Based Production Fund includes a dedicated stream to assist producers of web-based, linear content to create products for the digital marketplace.

§ Marketing and Locations Services: MFM plays a leading role in promoting Manitoba as a world-class destination for media production. This is done through promoting Manitoba at national and international markets, and through providing full locations services for the Manitoba production industry which include: photo database access, script breakdown, location scouting, and liaising with government, businesses, local Unions, Guilds and Associations, as well as key infrastructure contacts. MFM also provides interested parties with a comprehensive "Filming in Manitoba" information package that includes a detailed guide with sample budgets and a handbook focused on locations and production incentives published bi-annually with On Screen Manitoba.

§ Development Loan Administration: MFM administers the Pitch Readiness Program for Multi-Episode Productions, the Feature Film Development Fund, and the Television and Web-Based Development Fund. These programs support various stages of development through recoupable loans.

§ Grants Administration: MFM administers the Grant Program for Emerging Talent and Micro-Budget Production. This program is designed to support two streams of micro-budget productions: entry-level filmmakers who have received production funding awards through a competitive, juried process from a recognized industry organization; and producers of factual or scripted programming for projects with micro-budgets that do not exceed $100,000 and who have secured a cash license or distribution advance from a third-party broadcaster/distributor. MFM also administers the Feature Film Marketing Fund, a non-recoupable grant designed to assist applicants with the promotion and marketing of feature film projects at time of theatrical release, festivals and markets to either enhance the promotion and marketing of the release theatrically and/or to attract the attention of distributors/sales agents to support the increase in commercial interest in the project.


§ Industry Support: MFM is a major supporter of media production industry organizations in Manitoba, including: the National Screen Institute (NSI-Canada), the Winnipeg Film Group (WFG), On Screen Manitoba (OSM) and various festival and industry development events throughout the year.

On Screen Manitoba

On Screen Manitoba (OSM) is a vibrant non-profit, member-driven professional association that leads, builds and represents Manitoba’s media production industry. Members include both individuals (producers, writers, directors and other industry professionals) and organizations (production companies, labour groups, distributors, broadcasters, service suppliers, training bodies and exhibitors) representing some 1,500 media production industry professionals. OSM members are recognized for their world-class creative and technical talent. They work in all genres (documentary, fiction, animation) and formats (television, theatrical, interactive, mobile and online) in English, French and Aboriginal languages. OSM supports the industry through:

§ Communication of industry trends, analysis and market opportunities on the OSM web site, in the weekly newsletter, over social media and through special member-only updates.

§ Distribution of member news and achievements on the OSM web site, in the weekly newsletter, over social media, in the on-line Manitoba Media Production Industry Directory, in the MFM-OSM joint Production Guide publication and through other joint marketing initiatives at national and international markets.

§ Participation in national consultations through the CRTC, national funding agencies, and national associations regarding Canadian cultural, creative industries, digital media and communications policy. OSM advocates for the importance of regionally-based media production including French language production outside of Québec and the ongoing development of the Aboriginal production community.

§ Industry representation and advocacy with all three levels of government and the public to enhance understanding of the economic, cultural and social benefits of the industry through analysis of the Manitoba media production industry and communication of its challenges and successes. This includes managing a public awareness web site entitled Get On Set Manitoba / On Tourne Manitoba!

§ Industry promotion at national and international markets and other initiatives to drive business and market development. On an ongoing basis this includes administering Market Access Funds provided by MFM. These funds offset travel and registration costs to participate in festivals, markets and professional development. From 2009 through 2013, OSM managed the ACCESS Project, an industry development and market access project jointly funded by the Manitoba media production industry, and the federal and provincial governments.

Winnipeg Film Group (WFG)

The Winnipeg Film Group is a charitable, artist-run education, production, exhibition and distribution centre committed to promoting the art of cinema. The WFG supports “independent” cinema


production where the works are “director-driven,” with the director maintaining editorial control and copyright.

From July 2012 to June 2013, WFG has assisted approximately 250 independent productions “in progress” through a variety of sources. Over 90% of these productions are short films, many of which could take more than a year to be completed and released into the marketplace. Approximately 60 short films are completed each year with the intention of a market release and the WFG accepts approximately 35 works into distribution annually.

Manitoba Arts Council (MAC)

The Manitoba Arts Council supports the wider arts and cultural industries, and invests in both artists and organizations. MAC’s contributions to individuals in the film sector have decreased steadily over the last five years from $249.1k in 2008-09 to $172.7k in 2012-13, averaging $193.8 thousand per year. In addition, MAC supports media arts organizations including Winnipeg Film Group and Video Pool (a non-profit artist-run centre dedicated to independent video, audio, and computer integrated multimedia production, located in Winnipeg).

Figure 34 – Manitoba Arts Council film programs for individuals (2008-2013)

Source: Manitoba Arts Council

249.1

197.1 172.5 177.4 172.7

$-

$50

$100

$150

$200

$250

$300

2008-09 2009-10 2010-11 2011-12 2012-13

Thou

sand

s


Film Festivals and Exhibitions in Manitoba

Manitoba is home to a number of film festivals that celebrate Manitoba and international talent. Festivals and exhibitions in Manitoba largely reflect the province’s diverse community, and the provision of public film exhibitions evolves over time in line with the province’s inhabitants.

Local festivals and exhibitions are a cornerstone of any media production industry, providing a platform for new and emerging industry members to gain important skills and experience required to develop a career. Local exhibitions are also important for the attraction and retention of young professionals and new entrants to the sector, providing a touch-point for individuals to see the opportunities available to them in Manitoba’s creative industries. Moreover, local film festivals and exhibitions provide a unique opportunity for Manitobans to tell Manitoba stories, celebrating local culture, and enriching a greater sense of Manitoba identity and belonging.

Significant festivals in Manitoba include:

§ Cinémental – Western Canada’s oldest festival of French-language films.

§ Festival des jeunes vidéastes (FJV) – A non-profit organization that provides video production workshops to French-immersion and French-language students in grades 8 through 12 interested in creating their own video to enter in the FJV annual competition.

§ Freeze Frame – A non-profit organization providing enriching cinematic and multimedia experiences that educate, inspire, and empower over 10,000 children and youth per year.

§ Gimli Film Festival – A showcase of new films from Canada’s most promising directors along with a selection of features, documentaries, and shorts from around the world.

§ Gimme Some Truth – A four-day documentary forum that includes panel discussions, master lectures, workshops and special screenings – all intended to provide filmmakers and audiences alike the opportunity to discuss creative, ethical and technical issues related to the documentary form.

§ Reel Pride – A celebration of queer media arts and contributor to community vitality by programming materials that focus on issues of importance to Winnipeg’s queer community.

§ Winnipeg Aboriginal Film Festival – The third-largest festival in North America dedicated to showcasing the best new Aboriginal film and video from across Canada, the U.S. and around the world.

§ Winnipeg Jewish Film Festival – A festival focusing on Jewish identity, history, and culture.

§ Winnipeg Underground Film Festival – An experimental and underground film and video festival.

§ WNDX: Festival of Moving Image – A festival exhibiting the most innovative and ground-breaking work by Canadian filmmakers and video artists, with a special focus on the work of Manitoba and prairie artists.


Winnipeg Arts Council (WAC)

The Winnipeg Arts Council is an independent arm’s-length agency responsible for determining funding to arts and cultural organizations and artists within Winnipeg. WAC invests in the film industry in three main ways: through supporting an organization’s operations, an organization’s projects, and for individuals operating in the film sector. Over the last five years, WAC made 31 awards to film organizations for their operations, 27 awards to organizations for their film projects, and 38 individuals for their film/video/media projects. WAC supports an average of $20,000 for just over 7 individual film funding recipients per year.

Figure 35 – Winnipeg Arts Council film programs for individuals (2008-2013)

Source: Winnipeg Arts Council

29

17

27

19 20

$-

$5

$10

$15

$20

$25

$30

$35

2008 2009 2010 2011 2012

Thou

sand

s


Gimli Film Festival Founded in 2001, the Gimli Film Festival has grown to attract consistent audiences. In 2013, attendance reached almost 5,000, an increase of 25% over the last five years from 4,000 in 2009.

The festival showcases over 100 features, documentaries, and shorts from Manitoba and around the world, across four indoor venues and the Rogers Cinema Under the Stars, a 35-foot outdoor screen on the beach, with free admission. The festival provides the industry with a conference component and short film awards.

Short Film Awards

Over $30,000 of prize money was awarded to filmmakers in 2013. MTS provides major industry support through its $20,000 competitive prize, called the MTS Stories from Home Pitch! A partnership between Gimli Film Festival, On Screen Manitoba and MTS, the competition provides participants with the opportunity to pitch their project to a panel of industry professionals in a real-life environment to secure the production deal with MTS Stories From Home, an MTS Video-on Demand collection of new, original, and local programming. Other prizes included the RBC Emerging Film Competition for $10,000 and mentorship, and the $1,000 audience choice awards for Best Manitoba Short Film and the Best Canadian Short Film each.

Out of the 11 or 12 festivals around the world I’ve attended, the connections I’ve made in Gimli have been most beneficial to my career.

– Sean Cisterna, Director, 30 Ghosts


5. Economic Impact Assessment and Fiscal Benefits Manitoba’s media production industry is a significant contributor to the province’s economy. This section outlines the two most common measures of an industry’s economic impact: its impact on Gross Domestic Product (GDP) and its ability to stimulate employment (usually measured in full-time equivalents [FTEs]). The section also compares the media production industry to other Manitoba industries — and to the results of Snapshot 2009.

5.1 GDP Impact Estimates based on data collected by Nordicity and analyzed by the Manitoba Bureau of Statistics (MBS) indicate that media production in Manitoba generated $357 million in five-year cumulative GDP for the Manitoba economy between 2008-09 and 2012-13, or approximately $71.4 million per year. As illustrated in Section 2.2.1, total direct expenditures on productions in the five-year period were $542.3 million, with $345.5 million (63%) identified as direct Manitoba expenditures.

As Figure 36 (below) indicates, the majority (88%) of this GDP impact is derived from Canadian production activity. Indeed, this Canadian production (domestic, co-production, non- tax credit, and broadcaster in-house) accounted for $316.4 million in GDP between 2008-09 and 2012-13. FLS production accounted for $40.7 million over the same period.

Figure 36 – GDP impact over five years from 2008-09 to 2012-13 ($M)

Category

Canadian FLS Total Annualized Total Direct Expenditure 461.1 81.2 542.3 108.5 Direct Expenditure in Manitoba 307.9 37.5 345.5 69.1 Labour Income 265.9 34.7 300.6 60.1 GDP Impact 316.4 40.7 357.1 71.4 Sources: MBS and Nordicity estimates Note: Totals may not sum due to rounding.

Key Economic Figures Over the last five years, the media production industry contributed $357 million of GDP to the Manitoba economy and led to the creation of 1,267 FTEs of employment on an annual basis.


Labour income is a measure of the salaries and wages paid to Manitobans as a result of media production activity. As Figure 37 below indicates, the majority of income earned by Manitobans from the media production industry was derived from employment directly on media production projects (and from production companies).

Figure 37 – Labour income over five years from 2008-09 to 2012-13 ($M)

Sources: MBS and Nordicity estimates

Similarly, Figure 38 shows that (over the past five years) the media production industry accounted for $212.2 million in direct GDP impact, and a further $144.9 million in spin-off GDP impact. Direct GDP refers to the economic footprint of productions (and production companies) themselves, whereas spin-off impacts accrue from the spending that media production (and production companies) make in other sectors of Manitoba’s economic (and from the downstream effects of that spending).

Figure 38 – GDP impact over five years from 2008-09 to 2012-13 ($M)


212.2

300.6

88.4

0

50

100

150

200

250

300

Direct labour income Spin-off labour income

$M

Total household

income:

212.2

357.1

144.9

0

50

100

150

200

250

300

350

400

Direct impact Spin-off impact

$M

Total GDP impact:


5.2 Employment Impact As Figure 39 shows, over the last five years, Canadian (domestic) production has created 88% of the FTEs generated by the media production industry in Manitoba. Furthermore, domestic production led to the creation of 1,118 FTEs on an annual basis (708 direct FTEs and 410 spin-off FTEs).34 Conversely, FLS production led to the creation of 148 FTEs on an annual basis (98 direct FTEs and 50 spin-off FTEs).

Figure 39 – Employment impact over five years from 2008-09 to 2012-13 (Per $1M)

Category

Canadian FLS Total Annualized Direct FTEs in media production 3,542 489 4,031 806 Spin-off FTEs 2,051 251 2,302 460 Total FTEs 5,593 740 6,333 1,267 Sources: MBS and Nordicity estimates Note: Totals may not sum due to rounding

As illustrated in Figure 40, the production industry led to the creation of 806 direct full-time equivalent positions (FTEs) and 460 spin-off FTEs throughout the Manitoba economy per year – for a total of an estimated 1,267 FTEs.

Figure 40 – Annual employment impact

Sources: MBS and Nordicity estimates. Total may not add up due to rounding.

34 “Spin-off FTEs” account for employment in other industries that is created by media production industry activity. For example, when productions rent hotel rooms, they help to stimulate employment in the hospitality industry.

806

460

0

200

400

600

800

1,000

1,200

Direct FTEs Spin-off FTEs

FTEs

Total annual FTEs: 1,267


5.3 GDP and Employment Impact Changes from 2008 The following table outlines how the GDP impact, labour income, and employment impact of Manitoba’s media production industry have changed since the last Snapshot was published (in 2009), when measured on an annualized basis.

Figure 41 – Economic impact change (2008-2012) ($M)

Category

2008 2012 Change CAGR Annualized GDP impact 73.0 71.4 -2.2% -0.6% Annualized labour income impact 62.0 60.1 -3.0% -0.8% Annualized employment impact 1,654 1,267 -23.4% -6.4% Sources: MBS and Nordicity estimates Note: Totals may not sum due to rounding

While GDP annual contributions made by the media production industry may have declined slightly over the past four years, that conclusion masks some important growth. Indeed, as Figure 42 shows, annual GDP contributions from Canadian production grew by 25%. Thus, the last four years have seen the strengthening of the Canadian production segment of the media production industry in Manitoba.

Figure 42 – Changes in annualized GDP contribution by type of production (2008 to 2012)


The employment impact decreased to a greater degree than either GDP or labour income. However, when this change is examined in more detail, it become clear that the reduction in employment mirrors the decline in FLS production, as illustrated by Figure 433 (below).

49.5

23.5

63.3

8.1

0

10

20

30

40

50

60

70

Canadian FLS

2008 2012

Canadian Production Growth Over the last four years, the annualized GDP contribution of Canadian production (domestic, co-productions and broadcaster in-house) has increased by 25%.


Figure 43 – Changes in annualized employment (2008-2012) (FTEs)


As such, while there was almost no change in the annual employment impact of Canadian productions, FLS production experienced a much more significant contraction (72%).

Taken together, Figures 42 and 43 clearly illustrate that any apparent decline in the economic or employment impact of the media production industry in Manitoba is a function of a decreased level of FLS production. While FLS production is an important component of the industry in Manitoba it is particularly subject to factors outside of the control of Manitoba-based producers (as elaborated upon in Section 2.2.2). In the face of this decreased level of FLS production, Canadian productions have maintained their annualized employment impact, while making significant gains in GDP impact — and increased IP ownership for MB companies.

1,122

532

1,118

148

0

200

400

600

800

1000

1200

Canadian FLS

2008 2012


5.4 Intensity Ratios It is often difficult to compare economic impact figures. To make it easier, one can reduce the impacts to so-called ‘intensity ratios,’ which indicate the labour impact, GDP impact, and employment impact per dollar (or per million dollars) of media production.

To that end, the following is true of Manitoba’s media production industry:

§ For every one dollar of total media production volume in Manitoba, $0.66 is added to Manitoba’s Gross Domestic Product;

§ For every one dollar of total media production volume, Manitobans earn $0.55 in labour income;

§ For every million dollars of total media production volume, 11.7 FTEs are created.

To put these figures into some perspective, it is instructive to compare them to benchmarks from other prominent Manitoba industries. To that end, the following three charts show that the media production industry is competitive with some of Manitoba’s most influential industries.35

Figure 44 – GDP (at market prices) contribution per $1 of expenditure


35 The industries were chosen to match the industries that contribute most to Manitoba’s economy.

1.09 0.97

0.82 0.72 0.71 0.69 0.49

0 0.2 0.4 0.6 0.8

1 1.2

Finance, Insurance and

Real Estate

Mining Construction Wood Product Manufacturing

Agriculture (Crops)

Media Production

Agricultural Manufacturing


Figure 45 – Labour income per $1 of expenditure


Figure 46 – Employment (FTEs) per $1 million of expenditure


Media production, while not leading in any one measure, is competitive. In part, the media production industry lags due to the influence of FLS productions which rely to a large degree on the purchase of goods and services from outside of Manitoba — and also tend to employ more non-Manitobans (because a smaller portion of the work in completed in Manitoba). However, as the balance of production in Manitoba swings towards domestic production and co-productions (which spend more in province and employ more Manitobans), the media production industry is likely to move up these rankings.

5.5 Fiscal Benefits In addition to contributing to the provincial economy through GDP and employment, the media production industry also generates substantial tax revenue. Between 2008-09 and 2012-13, the media production industry has generated an estimated $134.7 million in combined tax revenue (to federal,

0.58 0.58 0.56 0.55

0.42

0.29 0.22

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7

Construction Mining Finance, Insurance and

Real Estate

Media Production

Wood Product Manufacturing

Agriculture (Crops)


16.1 15.4 13.0 12.7 11.7

10.2

6.0

0

5

10

15

20

Construction Finance, Insurance and

Real Estate

Mining Wood Product Manufacturing

Media Production

Agriculture (Crops)



provincial and local36 governments) over the last five years, or $26.9 million in combined tax revenue per year. The tax revenue generated was distributed across the three levels of government as follows:

§ Government of Manitoba revenue totalling $57.2 million

§ City of Winnipeg (and other municipalities) revenue totalling $14.6 million

§ Government of Canada revenue totalling $62.9 million

Over the same period, the Manitoba government invested $75.0 million in labour tax credits and $11.0 million in equity investments in media production, for a total investment of $86.0 million. As such, the net cost of the Manitoba Film and Video Production Tax Credit to the Province of Manitoba was $14.2 million over the five-year period, or $2.8 million per year Put another way, the Province of Manitoba recovered 84% of its investment – or 84 cents of every dollar of investment it made — in the media industry over the last five years (through tax credits and equity investments). The recovery of the investment of the provincial investment in the media production industry is illustrated in the following chart.

Figure 47 - Provincial Outlays, Tax Revenue and Net Provincial Spending

36 Local (i.e., municipal) governments are, in effect, agencies of the provincial government, and deliver services for which provincial governments in Canada have constitutional authority.

-75.0

-14.2

-11.0 17.7

2.7 28.9

8.0 14.6

-100

-80

-60

-40

-20

0

20

40

MFVPTC MFM Equity Taxes from Individuals

Taxes from Corporations

Other Direct Taxes

Indirect Taxes Local Taxes Net Spending

$M

Provincial outlays = $86.0 M Tax revenue in Manitoba = $71.8 M

Net provincial spending = $14.2 M


The Province’s total investment of $86.0 million directly contributed to more than $386.1 million of production budgets.

Figure 48 – Cost-benefit analysis of media production in Manitoba ($1M)

Category

Canadian FLS Total Annual

Provincial

Individuals 15.6 2.1 17.7 3.5 Corporations 2.4 0.3 2.7 0.5 Other Direct Taxes 25.7 3.2 28.9 5.8 Indirect Taxes 7.1 0.9 8.0 1.6 Total 50.7 6.5 57.2 11.4

Local Local Taxes 13.0 1.6 14.6 2.9 Federal Federal Taxes 55.6 7.3 62.9 12.6 Total 119.3 15.4 134.7 26.9 Sources: MBS and Nordicity estimates Note: Totals may not sum due to rounding

Figure 49 – Provincial spending on media production in Manitoba (2011-2012) ($M)

Organization 2008-09 2009-10 2010-11 2011-12 2012-13 5-Year Total

Provincial government revenue*

-- -- -- -- -- 57.2

Local government revenue

14.6

Total tax revenue accrued by governments in Manitoba

71.8

Manitoba Film and Video Production Tax Credit

10.0 16.7 15.5 12.9 19.9 75.0

Manitoba Film & Music Equity

1.3 3.0 2.3 1.8 2.6 11.0

Total provincial government outlays

11.3 19.7 17.8 14.7 22.5 86.0

Net fiscal benefit to Province of Manitoba

-- -- -- -- -- (14.2)

Annualized net fiscal benefit

-- -- -- -- -- (2.84)

Sources: Nordicity calculations based on data from Manitoba Film & Music and MBS Note: Totals may not sum due to rounding. *The estimate of the provincial government revenue are from the MBS Tax Revenue Impact Assessment Model. Provincial government revenue includes provincial income taxes (personal and corporate), other direct taxes and indirect taxes (e.g., provincial sales taxes).


A strict contemporaneous comparison of the Province’s outlays (tax credits and equity investments) and the incremental tax revenue collected by governments in Manitoba does point to an annual fiscal deficit of $2.8 million; however, it is important to keep in mind that there are other economic and socio-economic benefits that are not easily quantified or captured in this calculation.

The fiscal impact calculations presented above represent economic activity within a single five-year period. The time constraint placed on the analysis, however, fails to capture benefits that occur beyond this five-year period. Indeed, in many respects the tax credit and equity investments should be viewed as “investments” in the creation of IP, which has the potential to yield income for Manitoba production companies, residents, and governments for many years into the future. As these production companies are retaining control over more of their IP, the potential longer-term returns to the Province will only increase.

In fact, the results of the survey indicate that Manitoba’s production companies are earning significant revenue from the licensing of the IP, which they created with the support of tax credits and MFM equity investments in previous years. As noted in Section 3, Manitoba production companies earned an estimate $11 million from the licensing of previously produced content (i.e., distribution). The total amount of content licensing revenue earned in any single year is, of course, associated with content produced over a number of years; however, as Manitoba production companies build up their content libraries, the annual yield of any given vintage film and television content may approach the level recorded in 2012.

Content licensing revenue typically originates from the licensing of content or formats to foreign broadcasters, so it represents an inflow of income to the province. And while the fiscal implications of this content licensing revenue is difficult to ascertain in a precise manner, it is useful to keep in mind that the Canadian film and video distribution industry earns an operating profit margin of approximately 20%.37

As noted earlier in this section, a vibrant film and television production industry provides an anchor for the entire media production ecosystem. In some respects, the economic benefits from the industry “spillover“ to industries that reside outside of the film and television production value chain, and therefore, are not captured by an analysis of indirect and induced economic impacts. Tourism is a classic example of an industry which benefits from film and television production, but necessarily falls outside the parameters of a conventional analysis of indirect and induced economic impacts; as a result of the government revenue that comes with tourism is also not captured in the analysis.

Manitoba’s film and television production — supported by the tax credit and MFM equity investment program — has also positioned the province and Winnipeg, in particular, as a regional and national 37 Statistics Canada, “Film and video distribution,” catalogue no. 87F0010X.

Key Economic Figures $294 million in out-of-province investment was generated in Manitoba between 2008-09 and 2012-13.


hub for Canada’s broadcasting and media training sectors. As host to the headquarters of APTN and the National Screen Institute, the province captures additional economic benefits not directly captured in this analysis.38

As noted in Section 2.7, the media production industry attracts out-of-province investment to Manitoba. In the five years between 2008-09 and 2012-13, an estimated $294 million in out-of-province investment was generated in Manitoba, including over $98 million of international financing.

38 The economic impact analysis did capture that value of APTN in-house broadcaster production, but excluded the economic and fiscal contribution of its corporate overhead.


6. Industrial and Social Benefits of Media Production The media production industry in Manitoba contributes significant social and economic benefits to the province and for Manitobans. This section outlines those various beneficial effects that the media production industry has on other industries and on the community at large.

6.1 Industrial Effects Media production provides Manitobans with a voice locally and nationally, and generates significant social and intangible benefits beyond contribution to GDP, jobs, and fiscal revenue.

6.1.1 Effects on other creative industries The media production industry has significant impacts on other creative industries in Manitoba and is a major catalyst for the wider arts, music, festivals and new media sectors.

For each film and television production, a whole ecosystem of economic and social activity may be supported, like the CBC’s annual Winnipeg Comedy Festival for example, aired on radio and television. The festival is produced by the acclaimed local Winnipeg production company, Frantic Films, for a nominal budget each year, which is leveraged by the wider creative community in a plethora of ways that are not immediately apparent. In order to produce the event, Frantic Films employs a number of core staff, production crew, interns, and volunteers. The festival spends money on marketing and advertising, which generates economic activity for businesses. Each year the festival hires the facilities of a cherished local theatre once in danger of closing and employs theatre staff throughout the production, including stage and technical crew, administrative, and front-of-house staff. For new, emerging and established talent in Manitoba, the festival provides a platform to showcase their work, develop professionally, and uncover new opportunities in their careers. In addition, the festival is important for bolstering local pride and identity, and telling Manitoba stories to Manitobans and Canadians.

Les Productions Rivard has a similar effect with its annual variety television productions of the Festival du Voyageur, also engaging Francophone, Métis and Aboriginal artists. Aboriginal-owned production company Eagle Vision has had a similar effect with its ongoing production of the annual Aboriginal People’s Choice Music Awards.

Performing Arts

Media production is indeed a major contributor to and driver of Manitoba’s wider creative industries, including advertising, arts, music, new media, and communications. Many artists and arts professionals find gainful employment and benefit from skills and professional development in the film and television production. Due to the general higher income level in media production these positions often enable such artists to pursue other artistic and creative endeavours. Indeed, Manitoba’s media producers can launch other industries into the national and international limelight, as the Royal Winnipeg Ballet experienced with the three-part feature documentary Ballet Girls produced by Manitoba companies Merit Motion Pictures and vonnie VON HELMOLT film.

The CBC’s Winnipeg Comedy Festival owes its existence to the broadcaster. Without the TV component it wouldn’t exist.”

– Jamie Brown, Frantic Films


Music

Media production has a close correlation to Manitoba’s music industry, where growth in either sector has a highly positive effect on the other. Several prominent companies in Manitoba effectively straddle the media production and music industry, such as DACAPO Productions and Precursor Productions, servicing and creating new Manitoba content for both industries. Indeed, many filmmakers and artists work across these two industries, such as Media RendezVous collaboration with Balanced Records on a documentary called NOSIS.

The symbiotic relationship between Manitoba’s media production and music industries can be characterized by an emerging partnership between major Francophone production company Les Productions Rivard and national music management company Paquin Entertainment. Together, these two industry leaders are collaborating on cross-platform projects entailing other cultural sectors including dance, on a production about the Royal Winnipeg Ballet.

In 2010, Manitoba production company Farpoint Films produced the film We’re the Weakerthans, We’re from Winnipeg, following the iconic Manitoba artists on their epic cross-country tour reaching Canada’s three coasts. The MTS On Demand Production was directed by Winnipeg filmmaker and artist Caelum Vatnsdal for an estimated $300,000 in 2009, with the potential for ongoing IP revenue through its distribution on iTunes, Amazon, and The Movie Network. The film premiered at Winnipeg’s Icelandic cultural festival, Núna (now), in 2010, resulting in one of the most well-attended events in the festival’s history, according to organizers.

Winnipeg television series have a strong impact on Manitoba’s music artists and music businesses, providing immediate and downstream revenue through film and television licensing deals and international exposure. Local productions such as Less Than Kind, produced by Buffalo Gal Pictures, have provided licensing opportunities to Manitoba musicians including the Weakerthans, Imaginary Cities, Pushing Daisies, and Grand Analog, while Original Pictures’ television series Falcon Beach provided licensing opportunities for Paper Moon and Mia Kulba.

New Media

The new media industry in Manitoba is intimately linked to the film and television sector. A number of growing companies successfully straddle the two industries while others are forming strategic partnerships and collaborations. Tactica Interactive actively services both the new media and film and television industries. New media company Complex Games secured a production deal with Global TV in 2013, marking the company’s first foray into the broadcast market without a film and television production partner. The company’s founder, Noah Decter-Jackson, has a background in film production where he developed his media skills. For companies such as these in Manitoba, the Manitoba Film and Video ProductionTax Credit and the industry ecosystem sustained by it underpin such initiatives.

Financing from CMF and the Bell Fund along with general market trends further stimulate this cross-media production. As this trend continues, film and television production will increasingly require ancillary new media properties, while new media productions will increasingly require ancillary film and television properties, driving further growth in both sectors.


6.1.2 Other spillover effects Film and television production provides important spillover effects and knowledge transfer to the benefit of other industries. Manitoba’s creative industries are extraordinarily collaborative, with professionals regularly working in film and television productions and other sectors such as music, new media, ICT, advertising, photography, art, theatre, and events, for example. The highly collaborative and international nature of many screen productions also results in an influx of new skills and best practices to the province from professionals outside of Manitoba and even Canada. With a high degree of reciprocity, knowledge and skills from the film and television industry quickly become absorbed by other creative sectors and can extend to other knowledge-based industries. These informal networks advance human capital and new business opportunities for Manitobans through knowledge spillovers.

The media production industry provides Manitobans with flexible, reliable, and well-paid employment, enabling career advancement in other fields. For many artists, writers, actors, and even seasonal workers in other industries, the film and television production industry in Manitoba provides a viable form of employment. Not only does the industry enable flexible workers to be self-sustaining and less reliant upon government support, it also affords them an environment that is professionally fulfilling and creatively enriching.

A strong and cutting-edge media production sector benefits Manitoba businesses as a whole through globally competitive advertising, marketing, and communication of Manitoba business, culture and history. In an increasingly globalized economy, national and international recognition, and branding is becoming progressively important for all jurisdictions, including Manitoba. Demonstrating Manitoba’s unique culture and identity is not only important for the province’s soft power, but also for highlighting its unique selling points and competitive advantages.

The creative industries are also major drivers for business cluster effects. A thriving creative cluster, as with major national sports franchises such as the Winnipeg Jets and Winnipeg Blue Bombers, are staples for any large North American centre positioning itself as a place to live and conduct business. Not only does the film and television industry play a leading role in Manitoba’s creative cluster, but it also makes Manitoba a more desirable market in which to attract companies and inward investment. It also bolsters Manitoba’s efforts to attract and retain skilled labour and young professionals to the province of Manitoba.

6.2 Cultural and Social Benefits Film and television production provides a voice for Manitobans, representing the province’s rich population of diverse cultures and languages. Through sharing and learning about Manitoba’s rich collective experience, inhabitants benefit from an increased sense of belonging and pride of place. As Canada (and much of the world) is concerned with maintaining distinct cultures in the face of strong American (and other) influences, Manitoba too must ensure it retains its own distinct prairie voice in the face of Canadian media dominance from major centres such as Toronto, Montreal, and Vancouver.


Aboriginal Production

Manitoba’s media production industry is a national centre for Aboriginal and Métis entrepreneurship. Indeed, 23% of production company survey respondents indicated that they have Aboriginal (16%) or Métis (7%) ownership. This ownership rate exceed Manitoba’s provincial proportion of Aboriginal (10%) and Métis (6.7%) citizens.39 As such, production companies in Manitoba are disproportionally Aboriginally owned (to a moderate degree).

Another 14% of production company survey respondents identified as members of a visible minority group other than Aboriginal and Métis. Prominent Aboriginal and Métis production companies include Eagle Vision, Kistikan Pictures, Media RendezVous, and High Definition Pictures.

Figure 50 – Cultural diversity in company ownership


Gender Representation

Manitoba’s media production industry is a major national success story for gender equality and for the status of women in leadership roles. Of Manitoba’s most active production companies, many are run and owned by women entrepreneurs, including Buffalo Gal Pictures, Original Pictures, Eagle Vision, julijette productions, and Merit Motion Pictures. Indeed, 48% of production companies surveyed were owned by women (see Figure 51 below). Analogously, a number of Manitoba’s most celebrated filmmakers are women, including Norma Bailey (Director), Danishka Esterhazy (Filmmaker), Shelagh Carter (Filmmaker), and vonnie VON HELMOLT (Filmmaker).

In fact, women were in roles of leadership for many of the development organizations along the industry value chain, including Manitoba Film & Music, On Screen Manitoba, Winnipeg Film Group, and Film Training Manitoba. Throughout these companies and organizations, many of the management and senior staff are women, which illustrates that media production in Manitoba is a truly gender-supportive industry.

39 Statistics Canada, Canada’s National Household Survey, 2011.

16%

7%

14%

0%

5%

10%

15%

20%

% of owners Aboriginal % of owners Metis % of owners Members of a Visible Minority Group (other than

Aboriginal & Metis)


Figure 51 – Company ownership gender


French-Language Representation

Manitoba is an essential centre for French media production outside of Quebec. Several production companies offer full-services in the French language, forming a vital component of Canada’s Francophone outside-of-Quebec production. Francophone production in Manitoba is decidedly efficient and effective, generating high levels of output for its size. With Francophone producers accounting for an estimated 3% of Manitoba production companies, they accounted for roughly 70.5 hours of original production between January 2011 and August 2013, thereby representing a highly productive production segment.

The Francophone element of the production industry not only puts Manitoba on the map for Francophone media across the country, it provides a voice, centre, and leadership for Francophone communities across Western Canada. The industry also provides Manitoba a unique export opportunity for expanded markets into Quebec, France, and Francophone-speaking jurisdictions across the world.

The media production industry in Manitoba is a hotbed for attracting out-of-province and international talent and entrepreneurship. Nearly half of the production companies surveyed were owned by people born outside of Manitoba, with 36% coming from other parts of Canada and 9% coming from outside of Canada. While Manitoba provides a welcoming environment to newcomers, it also breeds domestic entrepreneurship with a sizeable portion of production companies (55%) owned by Manitoba-born individuals.

Figure 52 – Company owner demographics (by place of origin)


Male 52%

Female 48%

Outside of Manitoba

36%

Outside of Canada 9%

In Manitoba 55%


7. A Way Forward This final section focuses on the future development of the media production industry in Manitoba. In doing so, it illustrates those areas where growth is most likely to occur, and points out the factors that will contribute to that growth. It also identifies the barriers that currently limit the degree to which Manitoba’s media production industry will be able to succeed.

7.1 Growth Prospects and Opportunities As Figure 53 shows, the high-level prospects for media production companies in Manitoba look to be quite rosy.

Figure 53 – Growth forecast (12-24 months)


Indeed, roughly 88% of the firms surveyed indicated that they predicted a period of growth over the next 1-2 years. Furthermore, interviews reveal that Manitoba-based producers and filmmakers find the province to be a very good location for a number of reasons. The long heritage of arts and culture provides a strong basis for Manitoba’s creative industries, combined with government’s commitment, and recognition of its social and economic importance.

More specifically, there are two areas of growth that emerge from the research conducted:

1. The continued growth of intellectual property (IP) ownership; and

2. The emergence of a digital media cluster.

7.1.1 Growth opportunity: IP ownership As illustrated in Section 2.2, the media production industry in Manitoba owns more of the intellectual property on which it works than it has in the past. By owning the IP — typically in domestic production and co-productions — Manitoba-based production companies are able to reap a number of benefits:

1. All domestic production and some co-productions originate in Manitoba, and so are important in expressing the provinces unique viewpoint;

8% 4% 12% 36% 40%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

15-24% Contraction No change 0-9% Growth 10-24% Growth >25% Growth


2. This type of production enables Manitoba-based production companies to have more control over the decisions made with respect to production cost, marketing, and distribution;

3. When a Manitoba-based production company owns the IP rights to a project it can license and/or re-sell that content thereby generating additional revenue (and thus tax income for the Province).

Evidence presented in Section 4.2 suggests that media production companies in Manitoba are already diversifying their revenue sources towards licensing revenue. While in Snapshot 2009, 65% of production company revenue was derived from producer fees, they now only account for 19% of production company revenue. As such, production companies are increasingly looking to activities other than production to generate funds.

At the same time, licensing revenue is now the largest single source of production company revenue, accounting for 32% of production company revenue in 2012. This finding, supported by anecdotal evidence, suggests that Manitoba-based media production companies are increasingly able to exploit the rights they have to their own intellectual property.

If production companies can sustain the growth of co-productions (illustrated in Section 2.2.2), it is reasonable to expect that the portion of production company revenue generated from licensing will also increase.

7.1.2 Growth opportunity: digital media for film and TV At the same time as it has begun to own more IP, the media production industry in Manitoba has dramatically increased its capacity in the digital media production. With the growth of Opus VFX and Buffalo Gal Pictures’ commercial animation studio, Manitoba is well-poised to provide digital media services to all manner of production activities in Manitoba and beyond, as well as the sale or licence proprietary post-production software around the world.

The media production industry in Manitoba is also well-positioned to take advantage of the need for digital media extensions to Canadian television programming — as has been mandated by the Canada Media Fund’s Convergent Stream. This “convergent digital media” can take the form of a website, mobile app, or game and is already being produced by such Manitoba-based companies as Tactica Interactive and Complex Games.

In some ways this digital media opportunity is linked to the preceding IP ownership growth prospect. As Manitoba-based production companies are increasingly in control of the production costs, marketing, and distribution strategies, they are more likely to work with other Manitoba-based companies to undertake post-production (e.g., visual effects) and/or to produce the digital media extensions to their work.


7.2 Getting There: Growth Factors and Barriers Capitalizing on these opportunities will, of course, not be easy. This sub-section illustrates the factors that will contribute this growth, and the barriers that will have to be overcome.

For production companies and filmmakers to succeed, several factors will be required. As Figure 54 shows, increased private investment in both projects and companies, along with an increased level of co-productions, seem to be the most pressing needs.

Figure 54 – Top 6 factors needed to stimulate growth (on a scale from -2 [very unnecessary] to +2 [very necessary])


This finding is supported by interviewees who indicated that, unless one has a strong personal track record with an individual banker, it can be quite difficult to raise capital in Manitoba. This challenge may result in Manitoba production having to rely on third-party investors, which limits their ability to retain control over their intellectual property rights — potentially blunting a promising avenue for growth.

A stable and collaborative approach to public policy has tremendous effect on the success of any industry in terms of production, exports, and investment. As evidenced by Manitoba’s media production industry, transparency and effective administration of the Manitoba Film and Video Production Tax Credit, the Equity Program and the ACCESS Project have been integral to the sector’s growth.

In addition, Manitoba offers a high standard of living, with producers and filmmakers noting the low cost of doing business and family life as key factors for basing themselves in the province.

Manitoba has an impressive offering of locations, which according to industry members, remains very strong. Productions have been well-managed over the years and there appears to be little risk of “location burn-out” as experienced by other production centres such as Vancouver and Toronto.

When asked what factors currently limit their growth, respondent firms indicated that access to buyers, the supply of skilled labour, and the local management, marketing, and sales expertise are the largest obstacles (Figure 55).

1.21

1.28

1.30

1.42

1.42

1.50

-2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0

Technological changes

New types of production

Improved logistics

More domestic coproductions

More private investment in companies

More private investment in projects


Figure 55 – Top 6 factors limiting company growth (on a scale of 1 [not at all limiting] to 5 [very limiting]


Interestingly, while affordable capital may be the top needs to stimulate growth, the lack of such capital is only the fourth-highest barrier to growth. Notably, the need to access buyers reflects Manitoba’s relatively isolated geographic situation. Companies often have to travel far to reach, for instance, TV broadcasters in Toronto, or film producers in Los Angeles. Even attending key market events (such as the Toronto International Film Festival) can be prohibitively expensive for Manitoba companies. This finding also directly indicates the need for Manitoba-based production companies to receive support (e.g., via the ACCESS to Markets and ACCESS to Festivals programs).

Furthermore, Manitoba’s varied seasons provide locations for a wide variety of productions, but the weather during winter months can be a major challenge to attracting productions year-round. Both attracting service or co-producers to Manitoba during the winter, and generating domestic production during these colder months has proven difficult.

In terms of the skills needed to move the industry forward (i.e., the needed skilled labour), Figure 30 in Section 4.2 indicates that writers and post-production professionals are the

2.84

2.84

2.88

2.96

3.04

3.08

1 1.5 2 2.5 3 3.5 4 4.5 5

International competition

Access to foreign markets

Affordable capital

Management, marketing & sales expertise

Supply of skilled labour

Access to buyers

The $1,000 Coffee Meeting Face-to-face meetings are important for any business in any industry. For the media production industry in Manitoba, a significant amount of business activity such as sales and production occurs with people outside of Manitoba. In order to develop and maintain these business relationships so vital to the sector, producers must regularly meet with their buyers and suppliers outside of Manitoba — some producers have said once per month.

For example, for a Manitoba documentary producer to meet with commissioning contacts at one of Canada’s national broadcasters, they typically invest in a return flight to Toronto (approximately $600), hotel accommodations ($200), food ($100) and transport ($100).

Of course Manitoba producers are resourceful and regularly leverage these expenditures with other projects or business development initiatives to make the most of their time and money. However, these expenses are major factors facing Manitoba production companies that are not felt as deeply for competitors in other major centres such as Toronto, Montreal, and Vancouver.


hardest media production workers to locate in the province. When asked about the production skills, respondents indicated that both improved artistic & creative and production & pipeline management skills were needed (Figure 56).

Figure 56 – Production skills most needed (weighted score)


7.3 Conclusions The future seems a bright one for the media production industry in Manitoba. The media production industry is pushing ahead: owning more of its own intellectual property (largely by creating more opportunities for high-value co-productions), and expanding its digital media capacity. Though the industry has a significant economic (and cultural/social) impact on the province, these opportunities will only make that impact more sizeable.

Opportunities in Manitoba (and beyond) can, however, be seized only if production companies — and their productions — have access to the right skilled people, the right markets, and the right amount of financing. Indeed, while there are many indicators that this growth is already occurring — including corporate revenue sources and the growth of domestic productions (and co-productions) — it is somewhat precarious. As an example, for ownership of IP to result in a more stable industry, firms must have access to buyers; for co-productions to work, the financing situation in Manitoba (i.e., the tax credit) must remain stable and predictable — and the productions must be staffed by appropriately skilled labour.

As such, though there are truly exciting opportunities for Manitoba’s media production industry, support from industry associations (like OSM), from training institutions, and from provincial and federal governments remains a critical piece of the puzzle.

3

28

35

36

Other

Technical production

Production management & pipeline

Artistic & creative


Appendix A. References and Data Sources ACI Manitoba. “Arts and Cultural Industries of Manitoba Cultural Statistics Session Summary”, prepared by Probe Research. 2012.

Canadian Media Production Association (CMPA), Department of Canadian Heritage, Association des producteurs de films et de télévision du Québec, “Profile 2012: An Economic Report on the Screen-based Production Industry in Canada,” prepared by Nordicity. 2013.

Film Training Manitoba. 2012 Annual Report.

Manitoba Film & Music. 2011-12 Annual Reports.

MPA–Canada. “The Economic Contribution of the Film and Television Sector in Canada,” prepared by Nordicity. 2013.

O’Neil, Peter. “My Winnipeg exhibit has Paris critics buzzing.” National Post (08 July 2011)

OSM, AMPIA and SMPIA. “Analysis of Regional, Francophone and Aboriginal Production in the Prairie Provinces”, prepared by Nordicity. 2012.

OSM. “CRTC 2012-379 Licence Intervention re CBC”, prepared by Nicole Matiation. October 2012.

OSM. “CRTC 2013-106 Licence Intervention re Astral/BCE”, prepared by Nicole Matiation. April 2013.

OSM. “CRTC 2013-19 Licence Intervention re CBC”, prepared by Nicole Matiation. February 2013.

OSM. “CRTC 2013-19 Licence Intervention re CBC”, prepared by Nicole Matiation. April 2013.

SaskFilm, Saskatchewan Chamber of Commerce, “Impact of the Film Employment Tax Credit (FETC) on the Film and Video Industry of Saskatchewan”, prepared by Derek Murray Consulting & Associates. 2012.

Statistics Canada, “Canada’s National Household Survey,” 2011.

Statistics Canada, “Film and video distribution,” catalogue no. 87F0010X.

Veria Search Media Marketing. “Saskatchewan Media Industry Survey – What Comes Next for You?”. 2012.


Appendix B. Methodology Nordicity deployed a combination of both primary and secondary research methods to collect the data and information required, including a literature review, online survey, focus group, and stakeholder interviews.

B.1 Data Sources and Secondary Research The quantitative indicators for Snapshot 2013 were collected from a variety of secondary sources, including:

§ Manitoba Film & Music provided key statistics on production activity and financing in Manitoba.

§ The Canadian Media Production Association (CMPA), the Association of Provincial Funding Agencies (APFA), Canadian Audio-Visual Certification Office (CAVCO), Telefilm Canada, the Canadian Radio-television and Telecommunications Commission (CRTC) and the Canada Media Fund (CMF) also provided certain production industry statistics for Snapshot 2013.

§ Statistics Canada provided employment and demographic data.

B.2 Online Survey Both qualitative and quantitative indicators for Snapshot 2013 were collected from an online survey for production companies and filmmakers. The survey is hosted on the Canadian-based fluidsurveys.com and was administered by Nordicity and strongly promoted by On Screen Manitoba. The survey was open in spring April 2013 and was supported by individual email and telephone follow-ups. The survey response rate was very strong and provided a good representation of the overall production within Manitoba.

A total of 71 surveys were collected and deemed to be reliable and analyzed, representing nearly all of the total volume of Manitoba film and television production. The survey responses comprised 38 production companies (of 60 potential respondents) and 33 filmmakers (of roughly 75 potential respondents). As such, the combined margin of error is (at most) +/- 6.7% (9 times of 10).

The production industry in Manitoba is comprised of both a sizeable number of production companies and individual filmmakers. Just over one-half of survey respondents represented production companies (54%) while just less than one-half represented individual filmmakers (46%). In many cases, individual filmmakers operate as micro-enterprises, their income and expenditures associated with media productions.


Figure 57 – Survey Respondent Type


B.3 Focus Groups and Stakeholder Interviews For qualitative indicators, Nordicity hosted a focus group roundtable and a series of key informant interviews. The focus group occurred in Winnipeg in December 2012 and hosted discussions with key industry members. Throughout the project, Nordicity conducted 13 consultation interviews with industry stakeholders.

B.4 Economic Impact Analysis A key component of Snapshot is the economic impact analysis and the benefit-cost analysis associated with it. For the economic impact analysis, Nordicity collected various data from MFM, CRTC, CMPA and the survey, which measured the direct economic impact of film and television production in Manitoba. Nordicity supplied these direct-economic-impact data to the Manitoba Bureau of Statistics (MBS), which then used its reputable input-output model of Manitoba’s economy to prepare estimates of the indirect and induced economic impacts of the film and television production industry on the Manitoba economy.

On the basis of economic-impact estimates generated by MBS, Nordicity was able to construct estimates of the total economic impact of film and television production in the province, which included the direct impact and spin-off impacts.

Nordicity also used the estimates of the total economic impact of film and television production activity in the province to prepare a benefit-cost analysis, which compared the tax revenue earned by the governments in Manitoba to the total financial outlays made by the Province to support the industry between 2008-09 and 2012-13.

Filmmaker (33) 46%

Production Company (38)

54%


Appendix C. Contributors Nordicity wishes to thank the following contributors to the research for their valuable support.

Organization Individuals

ACI Manitoba Thom Sparling (Executive Director)

ACTRA Manitoba Rob Macklin

Cinémental Marc-François Tremblay (President)

City of Winnipeg Film Office Kenny Boyce (Manager), Kevin Uddenberg (Liaison)

Directors Guild of Canada –

Manitoba District Council (DGC)

Scott McLaren

Film Training Manitoba (FTM) Neila Benson (Executive Director)

Focus Group Nicole Matiation, (OSM), Louis Paquin (Les Productions Rivard), Joanne Levy

(Scorpio Productions and Buffalo Gal Media Group), Clinton Skibitzky

(DACAPO Productions)

IATSE 856 Rob Rowan

Manitoba Arts Council (MAC) Marian Butler (Program Consultant)

Manitoba Bureau of Statistics (MBS) Wilf Falk (Chief Statistician), Don Grant (Economic Impacts and Modeling

Analyst)

Manitoba Film & Music Carole Vivier (CEO), Kevin Gabriel (Manager, Finance and Operations),

Sebastien Nasse (Senior Analyst Film, Television & Tax Credits)

National Screen Institute – (NSI) John Gill (CEO), Chris Vajcner (Communications & Revenue Development)

On Screen Manitoba (OSM) Nicole Matiation (Executive Director) and Access Project staff: Laurence

Veron, Joy Loewen, Michael Kluthe, Eric Rae.

OSM Economic Impact Analysis

Committee

Clinton Skibitsky (Chair), Neila Benson, Kenny Boyce, Patrick Clément, Bill

Coulter, Cheryl Grewar, Rob Kennedy, Denise Lécuyer, Joanne Levy, Rob

Macklin, Virginia McKee, Scott McLaren, Sebastien Nasse, Rob Rowan, Michel

Simard, Ed Suzuki, Kevin Uddenberg

Saskatchewan Media Production

Industry Association (SMPIA)

Vanessa Bonk (Executive Director), Annelise Larson (Board Member)

Video Pool Melentie Pandilovski (Executive Director), Jennifer Smith (Distribution

Coordinator), Rick Fisher (Technical Coordinator)

Winnipeg Arts Council (WAC) Tamara Rae Biebirch

Winnipeg Film Group (WFG) Cecilia Araneda (Executive Director)

Yukon Film & Sound Nova Alberts (Film and Sound Commissioner)

Nordicity Group Ltd. Nordicity (www.nordicity.com) is a leading international consulting firm providing private and public sector clients with solutions for Strategy and Business, Economic Analysis and Evaluation, Policy and Regulation across the arts, cultural, creative, technology, and innovation sectors.

For more information, contact [email protected]

Report by Nordicity. NGL13-10-31

Date post:	10-Apr-2017
Category:	Documents
Upload:	stephen-hignell
View:	91 times
Download:	0 times

OSM Snapshot 2013 - Nordicity (2013-11-06)

Documents