Vancouver Film Studios looks to old-school Hollywood for new business model

VFS the only studio in North America to launch its own production development company

Exterior of Vancouver Film Studios at 3500 Cornett Road in East Vancouver | Photo: Rob Kruyt

Ask a film buff to reflect on what Hollywood was like 90 years ago and he or she might recount Warner Bros.’ gangster films or 20th Century Fox’s musicals.

But Sacha McLean’s instinct is to reflect on how studios were once completely vertically integrated: writers would churn out scripts on the lot, which would in turn be produced on the stages the studios owned.

The vice-chairman of the McLean Group, which owns Vancouver Film Studios (VFS), says a return to that older model whereby studios produce content filmed on their stages could help mitigate risks during down cycles.

So this month VFS launched its own production company to be chaired by McLean: 50° North Productions.

“The industry is very vibrant and busy right now, but as recently as two years ago that wasn’t the case when the dollar was at par,” McLean told Business in Vancouver.

It’s not a business model employed by other studios in Vancouver. In fact, it’s one that’s been abandoned by the major studios in Hollywood, too.

McLean said the studio’s plan to “hop the fence” and develop original content came about five years ago as VFS sought more control over the kinds of projects hitting its stages.

Two years ago, it began discussions with Los Angeles-based production house EveryWhere Studios about creating such a partnership.

“It very quickly became evident to us we needed really strong partners who brought to the equation really, really strong relationships,” McLean said.

Despite EveryWhere’s American footprint, he said, all the content 50° North produces will be Canadian.

Liz Shorten, managing vice-president of the Canadian Media Producers Association’s B.C. branch (CMPA-BC), said VFS’ business model is unique in North America.

“They’re being incredibly smart because they’re adding one more diverse revenue stream or diverse business line to what is already a very diverse [parent company],” she said.

In addition to VFS and 50° North, the McLean Group owns Pacific Backlot Services, one of B.C.’s largest lighting companies.

Meanwhile, within Metro Vancouver there are nine purpose-built studios and five studios that have been converted from another type of building such as a warehouse, according to Creative BC. Another seven studios are littered throughout the province, bringing the Crown agency’s estimate to 21 studios in B.C.

The CMPA-BC lists 75 production companies as members of its association; however, not all B.C.-based production companies are part of the CMPA-BC.

Shorten and McLean both said they’re not aware of any of these 21 studios having their own production company as well.

Shorten added that while production services and content development are complementary, the business models are different.

“They’ll be owning their own content, they’ll be retaining their rights to that content and they’ll be able to sell that into the international marketplace,” she said.

Despite the advent of digital streaming services like Netflix (Nasdaq:NFLX), Hulu and Shomi – all of which are seeking more content to compete with TV networks and film studios – Shorten said the big challenge for domestic production companies is that the Canadian marketplace is becoming more consolidated. Furthermore, streaming services like Netflix would prefer to own the content outright instead of licensing content, she said.

At present, just four main buyers exist in Canada: Bell Media (TSX:BCE), Rogers Communications (TSX:RCI.B), the CBC and Corus Entertainment (TSX:CJR.B), which recently acquired Shaw Media.

“The Canadian market isn’t big enough to be self-sustaining, especially in the digital world,” McLean said, adding that all of 50° North’s productions will be aimed at broad appeal across North America and the globe.

On June 15, 50° North received its first green light for a project and will produce 10 episodes of the family dramedy Date My Dad for the U.S.-based UP cable network.

McLean said the new production company will likely produce four TV shows between now and spring, and he isn’t ruling out developing motion pictures as well.

“Gone are the days of worrying about office space and … whether you could afford stages. We basically package it all together.”