California Rebounds Sharply in 2014 Feature Film Production

California Tax Credits Film Incentive
Chuck Kerr

Amid rising optimism about California’s status as a production center, producers returned to California last year in a big way as the state became the top site for major feature films with 22 of the top 106 projects, according to a new Film L.A. study.

The number of California-made projects — 18 live action and four animated — jumped 47% from 15 in 2013. California was far and away the top shooting state for features, leading New York with 13, the U.K. and Canada with 12 each, Georgia with 10 and Louisiana with five as the Bayou State saw production plunge from its leading number of 18 in 2013.

It was the second year in which non-profit agency FilmL.A., which works to improve location shooting details for producers, has issued the report and it came five weeks before California’s sweetened tax incentive program goes into effect for the next five years. FilmL.A. said the 22 projects filmed in California in 2014 brought an estimated $1.11 billion in total production spending to the state, followed by $762 million in the U.K., $520 million in New York and $475 million in Canada.

California legislators approved more than tripling the size of the tax credits last August following extensive lobbying by the industry focused on the issue of job retention. Backing by lawmakers and Gov. Jerry Brown has helped fuel optimism that California can put the brakes on the industry’s flight to incentive-rich locations elsewhere.

The report noted that the lion’s share of feature production spending in California came from six films — $590 million from the four animated titles (“Big Hero Six,” “How to Train Your Dragon 2,” “Penguins of Madagascar,” “Mr. Peabody and Sherman”), $177 million for “Captain America: Winter Soldier” and $166 million for “Interstellar.”

“This report once again highlights the economic impact of the entertainment industry,” said Los Angeles Mayor Eric Garcetti. “Hollywood is the bedrock of our middle class in L.A., and our new tax credit and the productions it will bring back to California will support tens of thousands of jobs and billions of dollars of economic activity. It’s not just about the people and businesses the entertainment industry directly employs, but the businesses they support in their neighborhoods.”

Among the 18 live-action features included in the study, eight were shot in the state thanks to the California Film and Television Tax Credit Program and generated $241 million in local production spending.

Of the eight, Clint Eastwood’s “Jersey Boys” was the top spender with $58.6 million, followed by “Horrible Bosses 2” with $57.3 million, Eastwood’s “American Sniper” with $54 million and Mark Wahlberg’s “The Gambler” with $31 million. “Earth to Echo” spent $12.3 million, followed by “The Purge: Anarchy” with $10.6 million, “Paranormal Activity: The Marked Ones” with $9 million and “Ouija” with $7.9 million.

California’s current incentive program, enacted in 2009 and about to expire, is significantly smaller than many others with a $100 million annual limit on total tax credits, with feature film projects with budgets of more than $75 million not eligible. Selections were made by lottery each June.

The new program launches July 1 with $330 million in tax credits available annually with projects selected based on a jobs creation ratio. FilmL.A. President Paul Audley said the expansion will mean more projects being shot in California.

“The report underscores how essential it is that California compete for this business,” Audley said. “The value of the California Film and Television Tax Credit is already evident. And, with the program set to more than triple in value this summer, we look forward to seeing more bigger-budget projects return.”

The program expansion, enacted last year by California lawmakers, covers five years and $1.65 million in tax credits. The legislation established the allocation to each category: 40% will go to new TV dramas, movies of the week, miniseries, and recurring TV series; 35% will got to features; 20% will go to relocating TV series; and 5% will go to independent features.

The credit is set at 20% of production costs with an additional 5% “uplift” if producers shoot outside the Los Angeles zone, commit to music scoring or music track recording in state or to do visual effects in California. The study showed that California-based VFX houses captured the majority of work for just seven of the 24 big-budget live-action films and that less than one half of the 106 films surveyed performed musical scoring in California.

The 22-page study also showed that government funding outside California is a formidable lure with “substantial uncapped film incentive programs” in Louisiana, Georgia, the U.K., British Columbia, Ontario and Quebec. “The Hobbit: The Battle of the Five Armies” was the top recipient in that measure with $41 million from the New Zealand government, followed by “The Edge of Tomorrow” with $31.3 million from the U.K., “Dawn of the Planet of the Apes” with $26.4 million from Louisiana and “Maleficent” with $22.3 million from the U.K.

“The top filming locations outside California are recognized production centers with modest to robust film industry infrastructure and talent,” the report said. “That said, the concentration of industry infrastructure and industry talent still places California far ahead of its rivals.”

Those factors were reasons why California was the only location able to attract non-incentivized productions. “Indeed, while California hosted 15 such productions (4 animated and 11 live-action), none of the top five competing locations outside the state hosted even a single surveyed film without offering a generous subsidy,” the report said.

The report also notes California remains well below the production levels of the peak year of 1997, when  64% of the top 25 movies at the box office were filmed in California. Runaway production has hit hard in the intervening period and that figure was 16% last year.

 

 

 

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  1. jc says:

    1.Canada is the one being raped by hollywood. canadian politicians should have realized a long time ago that it will be cheaper to create your own industry they are the fools for giving 60 tax break to vfx work.

    2. Television production in los angeles is already rebounding 1 hour dramas were up in 2014 compared to 2013 and that was before the new tax incentive there is close to 200 million set aside for television productions. My prediction is that television shows especially 1 hour dramas will be or at all time highs within 2 years.

    3. Feature film production has been hit the most by lucrative tax breaks offered by other states and countries. This area will be the hardest to get back.

    4. Commercial production in los Angeles is at an all time high going up every single quarter spurred on by new digital media.

    5. The new tax credit regulation specificaly states that 75percent of all productions or 75percent of the total budget must spent in California. That means that some vfx will return to some degree back to california.

    • hockey sucks... says:

      @JC

      1. Canada is being raped by hollywood. Hollywood has pitted provence for provence using subsidized productions to a “race to the bottom”. UK is being raped…..and whats worse is the US government is giving away tax payer money…too…giving states money to compete with foreign nation subsidies.

      The State subsidies is giving away free tax payer money to the roving big 6 Hollywood studios. Often times producers commit fraudulent behavior…..in Lousiana….Tax money has caused embezzlement….in Detroit…..and in Forida….in the case of DIgital Domaine…and John Texture defrauding Florida by at least $20 Million.

      Subsidies are fake bloated economic numbers that only create bubbles in the economy….when the subsidies disappear so does the producers…and the jobs……

      Subsidies in ANY state are useless economically and are waste of tax money. Tarriff protection is the only true answer for California film industry.

      2. California TV production is a drop in the bucket compared to the 6 figure VFX jobs…that left california……Vancouver alone spends $500 million a year…..California subsidies dont come close…
      look at the number TV production subsidies is nothing

      3. Feature film production has left California……and so has post production and VFX for film production…..like 3,000 VFX workers are now migrant workers …..Big 6 Hollywood studios…did this on purpose…to disrupt unions……disrupt currencies……and circumvent OT and labor laws….

      4. Anyone toting economic numbers concerning commercial production in LA is not looking at the big picture. COmmercial numbers is NOTHING compared to the VFX budgets of tent pole summer blockbusters…..it is almost laughable to throw out comerical production numbers…..especially to someone like myself….(a former california vfx film worker forced to leave Los Angeles for a Canadian subsidized city)…….

      5. again the $100 million that Garcetti subsidiy money is too late…not enough….and the only thing that will truly effect change and bring back economic numbers…….is Tariff protection….NOT giving tax payer money away……..to make the FIlm producers more money….workers loose ……..

      Google Fraud and Bankruptcy of Digital Domaine……Los Angeles is a smouldering hole of lost production

  2. jc says:

    Dude u do know that all of the major studios are here in california with no intentions moving to canada are any where else. And u talk about goverment hand outs canadas goverment is giving hand to Hollywood. Did u not read the report. The moment those tax credits disappear in canada so will Hollywood. Keep that in mind. Canada was the one who started this mess in 1997 know your history.

    • hockey sucks... says:

      Dude..i do know my history. I have slow watched everything leave LA for over 10 years. I have also marched and protested the subsidies at several academy awards.

      I also never said Hollywood is leaving California. The big six studios can collect money from London….SIngapore….New Zealand…..Canada…..Austrailia…..and farm out productions all over the world. They can play country subsidy against country….Canadian province against Canadian province…..or US State against US state.

      Its corporate welfare…..and basically giving tax payer money to already rich studios…..

      you might want to watch this video……i

  3. hockey sucks... says:

    All of VFX has left California…you want to talk money……film production subsidies are a drop in the bucket compared to the jobs in VFX ..and nothing compare to the subsidies for VFX……..most of so called “Tax Incentives” are nothing more than Corporate Wellfare……GOvernments giving free money to the big studios…….on the backs of migrant film workers…..

    Who ever is left in LA……still able to make your mortgage?…hope the best…Most VFX workers have quit the business or moved to Vancouver. Articles like this makes me laugh….

  4. jc says:

    Where’s all the haters at now? Espescialy the people who keep saying louisana is 1 in moive production. Sorry to break the news to u its not anymore. Ha ha ha.

    • hockey sucks... says:

      Off coarse production rose because its been zero jobs since 2013!!!!! I been up in Canada now for 2 stinking years now I am migrant film worker……TOO LITTLE TO LATE Garcetti. If the Union or Garcetti or anyone got behind the ADAPT lawsuit for tariff protection……for US workers…..$2 BILLION would be stuck in the States…..

      • Jeremiah Clements says:

        If it was too little to late then why did productions rise? Look dude what you dont understand(and what this article pointed out) is that these states and other countries must rely on tax incentives to lure Hollywood productions. There are over dozens of movies and tv shows in California that are being made without tax credits. U cant say that for these other states and countries. Now that california new film and tv tax credit is about to kick in these numbers are going to up even further

      • hockey sucks... says:

        To answer your question……Canadian Subsidies blows away every state’s Corporate hand outs….. combined….Now Star Wars is all England……and Vancouver…

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