New Zealand: under the mountain
That’s how much pressure small screen industries are under this year and New Zealand is no exception… but a number of reviews and Peter Jackson’s touch are reason enough to be optimistic about the future. Miguel Gonzalez reports.
The global recession has been unkind to small domestic markets and, according to Penelope Borland, chief executive of the Screen Production and Development Association, the NZ industry is “particularly vulnerable”, especially the television sector.
“Since there are no local content quotas, the networks rely on dropping commercial revenues,” she explained.
“Illustrating the delicate ecosystem that we work in, [Government broadcast funding agency] NZ On Air has agreed to one-year, limited special terms for negotiation of broadcasting license fees for certain genres, including drama and documentary, to keep production levels up and viewers able to see new local programming.”
Private investment is more limited than ever, coinciding with a contraction of the international equity and presales market and changes to international tax arrangements in Europe which have impacted on the ability to finance.
NZ producers are becoming more innovative by working their international networks more effectively and broadening their slates, even moving into new formats. Co-productions are an increasing way of getting films up, particularly after the introduction of Screen Production Incentive Fund (SPIF), with a number of projects in development such as the UK/NZ drama Tracker (produced by Trevor Haysom); production attraction office Film NZ has noted an increase in enquiries, even from countries that NZ does not have official agreements with.
One year after the introduction of SPIF, producers are, according to Borland, “very positive”, but although it’s still too early to determine its success, due to the industry’s long production cycle which means that only a few projects have gone through the SPIF process, it will undergo its first review in 2010.
It is clear, however, that SPIF was introduced at a difficult time for producers to find the remaining 60 percent of their budget. Financing is drying up and, just like in Australia, cashflowing a project is a daunting task.
“There is currently one financing company in NZ that cashflows SPIF projects, and it’s not cheap,” said Borland.
An extra difficulty is a recent tax amendment in the International Tax Bill, which removes the one year write off for investment in films with SPIF funding. According to Borland, this limits SPIF’s potential to attract private finance into projects, and SPADA has lobbied for this change to be examined as part of the scheduled 2010 SPIF review, “or hopefully before”.
Another issue that will be examined is the reduction in television thresholds, currently standing at $1 million total and no less than $800,000 per commercial hour for single episode programs or $500,000 per commercial hour for a series. Some producers have also complained about the impossibility to combine SPIF with NZ On Air funding for TV drama, and a number of practitioners told Encore that even the threshold for feature films ($4 million) is too high.
TOPP HITS
This has been the year of dancing, yodelling lesbian twin sisters Lynda and Jools Topp. Leanne Pooley’s documentary The Topp Twins: Untouchable Girls has made $1.8 million at the box office, a splendid result for its distributor Rialto. The film will be released in Australia on November 19.
Less spectacular have been the results for other releases such as Dean Spanley (Paramount, $406,292), Rain of the Children (Rialto, $352,785), Apron Strings (Rialto, $251,032), Show of Hands (Rialto, $97,883) and Rubbings from a Live Man (Arkles, $9,252).
The immediate future looks promising, both domestically and internationally for the three NZ films that made their debut at the recent Toronto Film Festival: The Topp Twins, which took the People’s Choice Award for documentary; Niki Caro’s France/NZ co-pro The Vintner’s Luck (Hoyts); and Jonathan King’s follow-up to Black Sheep, the big screen adaptation of Maurice Gee’s 1979 classic story Under the Mountain, featuring creature FX from Weta Workshop. It’s scheduled for release by Disney in December, with high expectations based on the popularity of the source material and the talent involved.
Films in post-production and scheduled for a 2010 release include The Volcano (dir. Taika Waititi, dist. Transmission), Home by Christmas (dir. Gaylene Preston, dist. Metropolis), Matariki (dir. Michael Bennett, dist. Arkles), After the Waterfall (dir. Simone Horrocks, dist. Rialto) and Predicament (dir. Jason Stutter, dist. Rialto).
Brother Number One, directed by Annie Goldson, is currently in production, and projects such as Ian Sharp’s Tracker, Brendan Donovan’s Hopes & Dreams, Paul Murphy’s Pierre and Rosainne Laing’s Banana in a Nutshell are all scheduled to start shooting soon.
NOT A TWO DOLLAR SHOP
New Zealand’s landscapes and post-production infrastructure have made it a major destination for overseas productions seeking a favourable exchange rate and financial incentives. The obvious highlights are James Cameron’s Avatar and Peter Jackson’s The Lovely Bones, which were completed this year. Another feature shot in NZ was the Korean co-production The Warriors Way, with Kate Bosworth and Geoffrey Rush, as well as the Disney telemovie Skyrunners. NZ remained a television production destination with the first series of ABC’s The Legend of the Seeker and Starz Media’s Spartacus: Blood and Sand, and the seventh and final series of Power Rangers RPM. The Bachelor, Jack Osborne: Celebrity Adrenaline Junkie and the Australian The Biggest Loser also shot episodes in the country.
Although The Hobbit was expected to commence production this year, it won’t be until 2010 when NZ will once again become Middle Earth for the two-part adaptation of Tolkien’s work, produced by Peter Jackson and helmed by Guillermo del Toro. In television, The Legend of the Seeker will return for a second series.
Even Film New Zealand’s acting CEO Sue Thompson will admit that international production is always lumpy, influenced by elements outside anyone’s control. “Given the lead time in decision-making, our international production servicing may not yet have experienced the impact of the financial crisis,” she said.
Thompson adds that the 17 percent increase in gross screen production and 79 percent increase in gross revenues from overseas published by Statistics NZ illustrate the country’s capability to meet growth in the future. But how can growth occur when there’s more and more international competition from other countries to attract projects to their shores?
According to Thompson, NZ’s proposition has always been based on high value, efficiency and innovation.
“We have never sold New Zealand as the two dollar shop of the South Pacific and we are not about to start. Being a cheap location is too fragile an offering.
“Our exit surveys tell us that the incentives work well and compare favourably with those available elsewhere, or even better.”
The country’s challenge is of a different nature: perception, about the ability to handle multiple major productions. NZ needs more soundstages to avoid the loss of potential activity to countries with a bigger infrastructure capacity.
A new CEO will be appointed in the coming months, to lead Film NZ’s new strategic direction, which will consolidate the organisation with the marketing and promotion related activity previously delivered by Trade and Enterprise’s Investment New Zealand.
TRAIL-BLAZING TECHNOLOGIES
If there’s a road that’s always busy in New Zealand, it’s Park Road Post. The company completed work on a slate of international and domestic films including The Lovely Bones, District 9, Red Cliff, Knowing, The Vintner’s Luck, Under the Mountain, The Topp Twins, Separation City and Home by Christmas.
While the company’s workload is healthy, recently appointed general manager Cameron Harland knows that no part of the industry is immune to the flow effects of the financial crisis.
“We have seen fewer films being slated,” he admitted. “But we have always been a boutique facility; we’ve never relied on the volumes of work like the bigger players.”
That’s why even if things look quieter in the coming months, they can focus more energy on getting local shorts through the facility, as well as use any downtime to work on restoration projects.
One of the major elements of Peter Jackson’s legacy is that the NZ industry, and particularly the companies with which he’s directly involved, is seen as cost-effective and innovative. That’s certainly a lot to constantly live up to, but Harland believes Park Road’s “comparatively small” size and one-stop-shop nature gives the company an ideal position to trail-blaze new technologies.
“We were posting RED 4K footage more than two years ago, before the camera hit the market! We’ve been refining those workflows ever since… and our latest venture is stereoscopic 3D; we’ve developed both polarised and shutter solutions to post any project.”
A couple of years after the introduction of the PDV, Park Road has found that the incentive level is “appropriate” and the interest in accessing the rebate, genuine, although offshore producers sometimes complain about the difficulty in getting to the minimum spend level.
Not far down the road, sister company and VFX powerhouse Weta Digital declined to comment on incentives and policies, perhaps because they were busy with their work on their first foray into feature animation, Steven Spielberg’s The Adventures of Tintin: The Secret of the Unicorn, and getting ready for The Hobbit.
Weta’s core team of more than 600 artists was also busy this year, with James Cameron’s Avatar for Twentieth Century Fox, The Lovely Bones and District 9. The highly-anticipated Avatar pushed Weta to new levels of CGI detail and complexity for environments and animated characters.
“A series of technological advances, from capture to rendering, will resonate with audiences worldwide,” anticipated Weta spokesperson Judy Alley. “We want to chase reality in all of its forms; being able to properly and efficiently simulate how materials look, behave and interact is still an open challenge.”
Aware that future productions will bring increasingly complex technical challenges, the company recently established a new research and development facility, spanning technologies such as rendering, simulation, animation and virtual cinematography. They were awarded a grant from the Foundation of Research Science and Technology for this purpose. R&D is part of their plan to retain a competitive edge, while maintaining their financial competitiveness.
REVIEWING THE NZFC
Things have changed at the NZFC this year. Following the departure of CEO Ruth Harley and the selection of her replacement, former PolyGram Filmed Entertainment senior vice president/Universal Pictures president of acquisitions/Scarlet Pictures executive producer, Australian Graeme Mason.
A new board was also appointed: Patsy Reddy (chair), Charles Finny, Rhiannon Evans and Witi Ihimaera, representing a broad range of business experience.
Another big change took place when head of sales and marketing Kathleen Drumm decided to leave New Zealand to join Harley in Sydney as Screen Australia’s head of marketing and industry development.
Last year’s triumph of the new National Government meant that its election campaign promise to review the New Zealand Film Commission became a reality. Minister for Arts, Culture and Heritage Christopher Finlayson, appointed NZ industry superstar Peter Jackson to lead a review of the NZFC “to ensure it is best able to serve the needs of the local industry and community”.
Jackson has been openly critical of the NZFC throughout his career, but he was considered “uniquely qualified” to lead the review due to his critical and commercial success, from low-budget to Hollywood blockbusters, and as the entrepreneur behind Park Road Post, Weta and Stone Street Studios. Many of the industry players consulted by Encore doubt that Peter Jackson may have an interest in leading the NZFC eventually, or developing a political career at the Ministry – everyone agrees he’s too busy and successful for that, at least for now – but they have no questions about his credentials, as a creative and talented producer/director/entrepreneur who can identify ways to improve the film commission’s effectiveness.
AFTRS head of screen business David Court was appointed to work with Jackson to examine the NZFC’s legislation and the constitution, function, powers and financial provisions it provides. According to a spokesperson at the NZ Ministry for Culture, Court was recommended by NZ industry sources. It was considered valuable to involve an external reviewer who could bring an international experience and perspective, and although reviewers from countries such as the UK, it was ultimately decided that an Australian should do the job due to the closer relationship and similarities between our screen industries. At press time, Court was wrapping up the review and unable to comment, but he told Encore that “Peter Jackson’s appointment speaks for itself and, in my case, they were looking for someone with a good understanding of the industry who was unconflicted.”
Graeme Mason welcomes the review, and is hopeful that it will be as broad as possible, overarching and about big ideas, and not confined to the nitty gritty of operations. Even without this official review, he was already looking at NZFC’s internal practices: development, sales, marketing, industry support. Further changes will come as a result.
Industry consultant Tim Thorpe believes the NZFC needs to prioritise sector growth development, and not necessarily filmmaking.
“Funding production is only one of the things they should be concerned about. The actual production is a means to an end.
“I don’t think they should be expecting recoupment, grants should be grants. The Government doesn’t expect money back from sports or science, so why should they expect it from the screen industry?”
Mason admits there was a full gamut of comments submitted for the review, some of them coincide with Thorpe’s opinion while others oppose it. But what matters at this point in time, is knowing and understanding what the NZFC is doing now and how it’s doing it, and what would happen if they stopped.
Thorpe also recommends a reconfirmation of the NZFC as a developer of creative content, not a cultural funding agency, and the sale or joint management of its sales agency NZ Film with the private sector.
SPADA feels that there is a danger when the future focus of the NZFC is oversimplified as a ‘cultural vs. commercial’ discussion, when the first priority should be a stronger focus on NZ audiences with culturally specific stories rather than international, as these have proven to be a success in the local market.
Borland points out that the NZFC – which administers SPIF – is finding that a majority of films are reaching a qualifying budget of over $4.5 million. Thorpe has heard stories of people who have considered inflating their budgets to reach the threshold.
“I would be concerned. I’ve heard of people looking at ‘innovative ways’ to get the 40 percent component as opposed to the 20 percent for TV,” he told Encore.
The introduction of this incentive placed pressure on NZFC’s funding as $4.6 million that used to sit with them and Film Fund II were diverted into SPIF. Mason admits the budgetary pressures, which include a recent $0.5 million cut, but no matter the amount, the brief is still the same: to make New Zealand films for New Zealanders.
“The commission has always been open to doing different things,” assured mason. “We have to assess pure culture vs. the money it costs, the building of an industry vs. creativity, and balance up all those elements.”
ESCALATOR APPROACH
One of the NZFC’s priorities is the encouragement of low-budget film production, for producers working under SPIF’s $4 million bracket.
“We want to have an ‘escalator’ approach. I want to find ways to help train or grow talented storytellers working with a home computer, and help them be seen,” said Graeme Mason.
Borland added that SPADA welcomed the NZFC’s move on recoupment for films under $3 million, with the producer now receiving 40 percent of the NZFC recoupment from first dollar.
Having recently “bankrupted himself” producing the $250,000 drama The Map Reader (starring Rebecca Gibney) only a 10 percent post-production grant from the NZFC, John Davies, managing director of Arkles Entertainment, a distribution company with offices in Auckland and Melbourne, is an advocate for realignment of investment to develop more low-budget films.
“It’s about training new talent, giving them a chance to learn in a relatively real environment and producing something that may become a cult piece of viewing and offer some TV/DVD opportunities,” he said.
At the same time, it’s essential that “distributors of last resort”, as he calls himself, as well as independent art house cinemas, are given support to stay alive, as they offer independent filmmakers a chance to find an audience, small as it may be.
“We need to find ways to encourage independent exhibitors to screen local products, perhaps by helping them keep rents affordable for screening more smaller products,” he suggested.
PLATINUM SUPPORT
More New Zealanders are watching more local TV productions than ever, and that makes John Barnett very happy. The head of South Pacific Pictures, creators of the successful Outrageous Fortune, Go Girls and long-running soap Shortland Street, knows that although they’ve licensed the Go Girls and Fortune formats to US network ABC (and the latter to the BBC too), others are struggling to stay alive.
“The networks are going through a tough time. Budgets have fallen enormously for projects that are 100 percent locally commissioned. It’s cheaper to buy foreign programming than it is to make it local. There’s NZ On Air, but no quota, so there’s no guarantee as the networks don’t have to play the stuff, and it costs them more, and without NZ On Air as an investor, it’s an expensive exercise.
“They have lobbied for more funding, but there are only four million people here and the government has a lot of other high priorities… This is not a country that could have afforded a quota, or it would be a very low one because of budget limitations. That was traded off in 1989, when NZ On Air was set up as a form of support for the local industry.”
NHNZ (I Survived…, Megastructures, Man Made Marvels) MD Michael Stedman agrees with the seriousness of the situation for the smaller players. Although the documentary production company receives no government funding and has focused on international markets for years, he is aware that those focused on production for domestic audiences have to balance budgets and deal with a very small market, while facing “ever-changing demands” of the state broadcaster TVNZ.
“That makes it very difficult for production companies to develop a five-year plan or beyond.”
That’s why producers need to look overseas if they want to grow, as NHNZ has done by solidifying relationships with partners in Japan, China, Singapore and, recently, Korea, where research organisation ETRI is currently developing VFX software for them. Their international sales for 2008/09 were higher than budgeted figures, which indicates that there is still a strong demand for good productions.
Stedman advises producers to “start the long and complex journey of understanding and navigating the maze that is the international market”.
“NZ is a tiny domestic market and, as such, has a very low glass ceiling.”
NHNZ recently received a special commendation at the American Chamber of Commerce, as one of the seven finalist companies whose exports to the US exceed $5 million per year. Other than natural pride on the company’s own achievements, Stedman believes it is further proof of the “immense” value of the screen industry in New Zealand, although “the Government is aware given the enormous success of The Lord of the Rings and other top rating feature films, but it is less aware of the country’s growing international television production industry”.
Jane Wrightson, CEO of NZ On Air, believes its model must be doing something right, having survived two decades across different governments, a changed – and changing – media landscape and the loss of the old public broadcasting fee. Their mandate is not industry support, but the aim is to be responsive. With operating costs currently under four percent of its revenue, it’s not just Wrightson saying that the maximum possible amount of funding gets to content creators. South Pacific’s John agrees.
“I don’t think NZ on air could do anything better. The model is almost flawless. All the money that it gets is put on screen; it doesn’t fund anything if there’s no broadcaster attached and as a consequence, there is no wastage.
“Of course we’d like the broadcasters to show more local stuff, but there are limits for the number of hours they can make.”
Wrightson believes that a large, dedicated pool of contestable public funding tells broadcasters that money will be available for the right projects, and is “a most excellent hedge against hard times”. While it may not be an Olympicsized pool, it is deep enough to allow an investment in over 800 hours of programming per year across drama, comedy, documentary, children’s and other genres,. NZ On Air’s current main focus is on TV drama series (such as the successful Outrageous Fortune and Go Girls, and the newThe Cult by Great Southern Film and Television and GRST’s This Is Not My Life) and projects for TV One’s Sunday drama, as well as one-off projects such as Until Proven Innocent, Life’s a Riot and Piece of My Heart. TV3’s Friday comedy nights have proven a success for The Jaquie Brown Diaries and 7 Days. Children’s programming found international opportunities in Wa$ted and Missing Pieces.
The agency has never funded news, but the creation this year of the $15.1 million Platinum Fund for projects that fail to secure broadcaster support because of the expense or the risk means that different formats and approaches to current affairs programs Q&A (TV One) and The Nation (TV3) will now receive their support. High-end drama, docos and current affairs are Platinum priorities.
NZ On Air recently commissioned a report, prepared by Paul Norris and Brian Pauling, entitled The Digital Future and Public Broadcasting. Wrightson admits she had a “cheerfully robust debate” with the authors, who said that the range of programs available to NZ audiences can’t be favourably compared to Australia, Canada or the UK.
“They think the main flaw for NZ is its lack of a mainstream public broadcaster like the ABC, particularly one that might screen a wider range of foreign content,” she explained. “Since NZ has never, had a mainstream noncommercial TV broadcaster, there’s not much point in hankering for it now. I take that position because of the remarkable fragmentation of audiences and platforms that I have seen in my professional lifetime.
THE AUSTRALIAN CONTROVERSY
A recurring issue that comes under fire in the media on a regular basis is the fact that New Zealand productions are counted towards our broadcasters’ Australian content quota.
According to Thorpe, the countries will be drawn closer together, not further apart. Barland adds that SPADA can’t see the point of revisiting the issue.
“If New Zealand had local content quotas, it would also be available to Australians. The Closer Economics Relations trade agreement favours Australia, with NZ watching over 1000 hours of Australian drama and soaps in 2007.
“We are hosting the president of SPAA, Anthony I. Ginnane, at the SPADA Conference, to discuss why we don’t do more together, and how we could do it.”
At this year’s conference, Get Ahead, Ginane will be joined by speakers such as Sara Geater (Talkback Thames), who will discuss recent changes in the UK and life from a broadcaster’s and independent producer’s perspective. Coproductions will be analysed by Ginnane, German director Andreas Dresen and UK producer Gareth Wiley. ■
