Domestic productions in B.C. shrink amid TV boom

Canadian producers seek new partnerships as Netflix cuts into local resources

A Netflix science-fiction TV series filming in downtown Vancouver | Chung Chow

Is there such a thing as too much business for show business?

The B.C. film industry generated $2.6 billion in production money spent in the province during the 2016-17 fiscal year. It’s an industry record, according to Creative BC, the provincial agency that promotes the province’s film and TV sector.

B.C. crews are working non-stop. And converting old warehouses into studio space has become a cottage industry for some.

But Creative BC’s tax administration data reveals this is coming at a cost to smaller, independent producers specializing in quintessentially Canadian content.

As big TV and film productions like Deadpool and A Series of Unfortunate Events set up shop in Vancouver, domestic productions in the last fiscal year sank to 12% from 18% of production activity year-over-year.

“We have on the one hand an unprecedented level of production taking place in this country, especially in B.C. … especially on the service side,” Reynolds Mastin, president and CEO of the Canadian Media Producers Association, told a gathering of industry insiders at the November 9 Mediacon Summit in Vancouver.

On the other hand, domestic TV producers are being pressed to find a financier to offset growing production budgets or lock down a U.S. network to broadcast the show before a traditional Canadian broadcaster will commit, according to Mastin.

He said this has resulted in a reduction in the number of domestic TV shows commissioned by Canadian broadcasters.

“We have a little less money to work with but we’re still making investments,” Susan Makela, director of strategic planning for Bell Media Inc.’s independent production team, told the panel following Mastin’s remarks.

Streaming services like Netflix (Nasdaq:NFLX) have been fragmenting audiences, which is eating away at the revenue streams of traditional broadcasters, Makela said.

She said that while growing budgets of TV shows have had the added benefit of drawing more international attention to Canadian shows, they have also reduced the amount of money available for separate projects.

“As shows get more expensive, it’s just not going to work where Bell Media takes on more risk without seeing any benefit from that,” she said, adding that foreign co-productions are becoming more enticing for broadcasters.

Meanwhile, the Canadian Media Fund (CMF) relies on a percentage of revenues from traditional broadcasters to help fund Canadian content like Vikings, Orphan Black and Kim’s Convenience.

As streaming services like Netflix eat away at the revenues of traditional broadcasters, the CMF will have to find ways to fill in those funding gaps.

“I don’t know mathematically how we can support as many projects as we have in the past with [less money],” Nathalie Clermont, the CMF’s director of program management, told the Mediacon audience.

Federal Heritage Minister Mélanie Joly announced in September that Ottawa’s new Creative Canada framework will require a $500 million investment from Netflix to create a new production company to invest “in original production in Canada” over five years.

Mastin, who was briefed by the government on the deal, said there has been a lot of misunderstanding about the Netflix deal.

“It is not something that was a substitute or intended to be a substitute for regulating Netflix or for taxing Netflix,” he said.

“[Ottawa is saying] if you want to operate in this country and you want to hire people directly as a company, you have to make certain commitments to Canada. And those commitments were $100 million a year for the next five years, plus $25 million for talent development – emerging talent development – with a particular focus on francophone Quebec.”

Canada serves as one of Netflix’s biggest markets for audiences and one of its largest production centres, according to Creative BC vice-president Robert Wong.

“They have a vested interest in being established here in Canada as a production entity,” he said at Mediacon, adding that it’s possible the Netflix Canada production house would be an incorporated company and a taxable entity in this country, but without any sort of bricks-and-mortar presence.

And Mastin said it’s likely Netflix will continue to co-produce projects in Canada, “but there are no guarantees.”

Meanwhile, producers are concerned the “lion’s share of the money might end up in in-house production rather than through independent producers and working with broadcasters,” he said.

The domestic industry needs to “double down, triple down, quadruple down on development” of new content and provide creative teams enough time to properly develop before cameras roll, according to Mastin.