Canadian Film Industry

In the Canadian Film industry there are numerous major players, some of which are supported by the Canadian and Provincial governments and others are independent companies. In this paper, we will take a look at the structures in which these firms function as well as their roles within it. The government of Canada has a strong support and purpose for the film industry and we will take a closer look at some of the motivators for these actions and how they seek to do so. The objectives of the government, politicians and bureaucrats involved and how this came to be a strategic industry will also be examined. The performance of each of these players will present burdens and benefits to the policy community and the industrial policy for the Canadian film industry itself. For the purposes of this paper we will define the Canadian film industry as, the filmmaking industry in Canada. Canada is home to several film studios centres, primarily located in its three largest cities: Vancouver, Toronto, and Montreal. Most of these industries and communities tend to be regional and niche in nature, therefore a typical film in Canada is made through a complex array of government funding and incentives and from distributors. We may include television as apart of film productions definition but broadcast will not be included because of the variety different types of distribution, coverage and funding it adds to the topic at hand. The Government of Canada has set up film advisory boards, started major corporations and spent billions of dollars in support of this industry, in this paper we seek to answer the question, why? (Government of Canada, 2010) There are a few different hypothesis, but as we will see it is a more complex of a situation than meets the eye. The political and economic motivators for attracting film and television production activities are to capture economic multiplier effects, which are believed to exceed the cost of foregone tax income by a factor of two or three. (Davis, 2009) Other positive views include the large employment that the industry provides for Canadians, for foreign outsourced productions 31,650 jobs were created in one year, with an average employment income of $36,000. (Canadian Government, 2010) Another main factor is the indigenous productions are on the rise Canadian content accounted for 13. % of total revenues, up from 4. 9% in 2005. (Government of Canada, 2008) This shows that the main objectives, as stated by the Canadian Government themselves, are to foster the quality and diversity of Canadian film by restructuring support programs to reward ongoing performance and by encouraging an increase in average production budgets. (Government of Canada, 2010) These are only some of the reasons why this has become a strategic industry. Close substitutes including, sporting events, concerts all affect the consumers consumption of movies. The recession is said to have had a positive affect on the consumers desire to go out to the movies, this could be based on the relatively low financial commitment of a movie versus the price of a ticket to a concert or sporting event. Of interest is the issue of the 2010 Olympics, were staged in Vancouver, one of the Canadian hot spots for film making especially co-productions with Hollywood. Revenues dipped more than 22 percent based on the fact that not many producers wanted to shoot during the Winter games. Oddly though, due to the recession production numbers were able to increase. Post Media News, 2011) Some of the main keys to success of the industry are, in fact, the support from the government, the ability of the industry to produce a decent profit margin and to create jobs for Canadians. Also, indigenous film making is on the rise mainly due to the support and the active goal making that the government had put into motion. Distribution and marketing of these films need growth, there are some festivals and award shows that are strategic variability to the marketing of films such as, Toronto film festival, Genie awards Victoria film festival. Even though there are two firms that recently switched their focus entirely to distribution, Alliance Atlantis and Lions Gate Entertainment no longer produces films at all. Distribution continues to be a problem for Canadian filmmakers, though this established network of film festivals provides important marketing and audience exposure for Canadian films. In addition, international co-productions are increasingly important for Canadian producers and smaller films are often funded by arts councils (at all levels of government) and film collectives. Another recent but very real burden for the Canadian film industry is the ack of attention and funds paid to it in the 2010 budget. Some have argued that the government has not made necessary budget allocation for the industry to continue its growth, especially for indigenous projects. (Government of Canada , 2010) Structure: The top four firms in the Canadian film industry will be the main focus, as they play the largest role in Canada, although there are many arts councils and film collectives especially at the provincial level. The four firms are the National Film Board of Canada, Telefilm Canada, the Canadian Television Fund, and the Canada Council for the Arts. These companies accounted for about 73% of total national revenues, up from 71% in 2005. (Government of Canada, 2008) The National Film Board of Canada and the Canada Council for the Arts are both agents of the federal crown. Notable is the recent closure of the Canadian Television Fund in March 2010. In addition, Telefilm is an agent of the federal crown and is the main distributor of Canada Media Fund, which has now taken over some of the projects and duties of the CTF. These crown corporations report to Parliament through the Minister of Canadian Heritage. (Government of Canada, 2010). Some other forms of support are incentives that these companies disseminate or create; Canadian Audio-Visual Certification Office (CAVCO), Canadian Film or Video Production Tax Credit (CPTC), Film or Video Production Services Tax Credit (PSTC), Film or Video Production Services Tax Credit (PSTC), Canadian Film or Video Production Tax Credit (CPTC), Canada Arts Presentation Fund (formerly Arts Presentation Canada), Canada Arts Presentation Fund (formerly Arts Presentation Canada), Canada Cultural Investment Fund (formerly Canadian Arts and Heritage Sustainability Program) and Audiovisual Coproduction. This is only a small representation of programs and incentives that are offered by the federal government, most often each province has it’s own incentives, scholarships and funds for regional talent. These opportunities are there to encourage Canadian filmmakers so that Canadian content is available and accessible to Canadians by reflecting Canada's rich linguistic, ethno-cultural diversity. Filmmakers, employees, and pretty much any one on the Canadian film labour force would be considered interest groups. They have been fighting for years for the benefits and labour relations that some other industries have had for 50 years. The film industry has had a long history with issues within the industrial labour relations. There have been many fair policies created in protection of the productions crews, now the industry is seeking policies and opportunities affecting the accumulation of capabilities and the level of the production firm. As previously stated the distribution of indigenous films is limited in Canada and this poses one of its biggest challenges. The customers (moviegoers) need to be informed about the release dates and when and where they can see such films. Reviews need to readily be available, with the strong financial backing the that Hollywood has to market and distribute films, Canadian films must have a stronger presence in the industry in the form of television, internet and print advertisements. Indigenous production capabilities benefit directly for providing services to Hollywood, while indigenous business and creative capabilities are much less likely to benefit. (Davis, 2009) By broadening the Canadian knowledge base, by helping in the production of blockbusters, it not only inspires us to make blockbusters but we can learn from the mistakes of our southern neighbours. Not only that, but the American celebrities increase the fascination with the film culture and get movie goers excited about going to see films. Business and creative capabilities pay be limited by this co-production relationship, in that the policies and tax incentives in place encourage the American film industry to take advantage of these opportunities but have sometimes nearing quadruple the budget as a Canadian film. This quintessential competitiveness is said to be undermined by the tax incentives and interferes with international trade agreements. If this is so, this also undermines the co-production relationship Canadians have with the American industry. It seems to be a give and take relationship, where they provide us with jobs and knowhow, where we offer up business capabilities. As for the creative capabilities of Canadians in film, this is something that cannot be undermined. It is possible to get sucked into the hype of Hollywood and become all too focused on making that next blockbuster, but many of Canadian filmmakers know that their product represent a Canadian perspective and are proud of that. So this dichotomy of benefit versus burden, does have a large opportunity to become balanced, if we can accept the balance of exchange of know-how and business value. Behaviour: The markets strategies of government, firms, cooperative and independent, interest groups determines the significance of the non market actions to the firms involved in the Canadian film industry. The non-market strategies: of government, firms, cooperative and independent, interest groups shapes the business opportunities and co-productions possibilities in the marketplace. (Baron, 2010) First we will begin with the market strategies that are applied by the different parties involved in the film industry. The labour force (crews) in the production industry had a hard time getting respect on a policy level. The collective bargaining was nearly non-existent. Now that policies have been set in place to protect workers on set and in production there is more of a focus on policies on the level of the firms themselves. What rights do the firms posses? How can they counter any milestones that may occur? How do we help them become more competitive with the American markets? The answers are funding for distribution. The two companies who are currently focusing on distribution, are underfunded and it seems they lack the knowledge base to promote a film from start to finish. With all the media avenues today, marketing a film needs to touch on television, internet and print promotions, but without reliable financial commitment from the Canadian government we can hardly support our Canadian productions. For non-market strategies, we can see clear evidence that the top four firms do in fact work together, largely based on the fact that they are all government funded and owned, subsidiaries of the crown. Some arguments are made that service production is said to risk inhibiting development by deflecting of eclipsing indigenous production or by absorbing resources that might otherwise devoted to it. (Davis, 2009) Many of the firms have the same goal because they share similar beginnings. Independent production firms lack a team ethic with the bigger crown firms. An underlying policy assumption of promoting and independent production is that an increasingly capable domestic production should get some degree of economic viability through the conquest of international markets. Observations: The reason there is a lack of perspective in the industry is because all the firms have a different focus but with many of the same goals and funding. We can see that in the past 50 years the industry has overcome many market issues, but does need to ban together and demand some support for distribution. If no one will see the films that reflect our culture and perspective, what is the point? This is the main problem with the film industry today, as well as the disconnect with independently run firms. Filmmakers need a voice and should be more involved in non-market strategies.

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