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Screen Industry Survey confirms revenue drop

Those who spent much of last year wondering where the dollars were can now see, courtesy of Statistics NZ. The headline number of the 2013 Screen Industry Survey (SIS) is a 4% drop in overall revenue, which disguises the depths of the losses in certain industry sectors and locations.

The numbers relate to the 2013 financial year. In many ways, the worst of the 2013 story has yet to be told – although even in these figures there’s a discernible whiff of demise in the Auckland air.

Auckland did continue to benefit from the bulk of the industry’s $3.1 billion total revenue, scoring a little over $2 billion – basically two of every three dollars earned.

However, there’s a big but, one of even larger than “lardo” proportions. Over half the revenue the survey addresses has nothing to do with producing content. It was in that sector of the industry where most people were affected last year.

Here’s the breakdown by sector of the industry:

3,290

Sector Revenue ($000)
2012 2013
Production 1,081 799
Post-production 572 693
TV Broadcast 1,317 1,378
Film & Video Distribution 157 138
Film Exhibition 162 171
TOTAL 3,148

Take away the $1.535 billion of TV Broadcast and Film & Video Distribution income. Most of that accrues to Auckland, technically speaking, but it’s made up Sky subscriptions, advertising spend on all but regional channels and distributors’ earnings from imported film and TV titles.

Whether it’s up or down, it doesn’t much affect the amount of local production. As near as makes no difference, it’s also half of that $3.1 billion. Throw in the spend on exhibition – your tickets and candy bar purchases – and over $1.7 billion of that $3.1 billion total has gone … almost regardless of whether any local films or TV shows are made.

25% and I still haven't met Scarlett Johansson? WTF is going on, Stephen?

25% incentive and my kids still haven’t met Scarlett Johansson? WTF is going on, Steven?

Now it looks a lot different to a 4% drop. The $799 million of revenue from production in 2013 was a 26% drop – or $281 million – against 2012 numbers. In anybody’s book, that’s a massive loss – of hours worked, of equipment rented out, of money flowing through and around the industry in many ways.

To be fair to Wellington, in 2013 it lost a far higher percentage of production revenue (down almost 40%) against 2012 numbers than Auckland (down 22%). However, much of the Wellington loss relates to The Hobbit. It was less noticeable because so many people imported for the production left the country.

Post-production revenue rose in both centres, but wasn’t distributed as it had been in previous years. In Auckland DigiPost closed its doors.

Aucklanders are hoping, naturally enough, that the government’s late-in-the-day U-turn on incentives will deliver increased activity this year, although there’s limited evidence of it to date.

Points South have benefitted with ongoing work from The Hobbit, the promise of Avatar sequels and the arrival of Slow West and Z For Zachariah aka Beer Today, Gone Tomorrow.

Auckland had nothing to say about the figures, apparently unable to find a positive spin to apply to the data. Wellington, by contrast, was bullish in its response. Grow Wellington’s Gerard Quinn noted the drop in production spend (although 2013 revenue was still up on 2011’s) and claimed, “Wellington’s high end international television capability is poised to re-emerge and evolve along with transmedia and gaming. New platforms will open up new audiences and new markets.”

One good news story from the screen sector still isn’t being told as part of the SIS. The strong growth area of game development is not included as part of the SIS. Over the same period covered by the SIS, the game development community saw its revenue grow 86% year on year to $36.3 million dollars.

The total is small compared with the numbers in other aspects of screen activity, but the number and the news is nonetheless very positive. Also, it matches aspects of policy government has been arguing should form a bigger part of the screen industry as a whole.

Before the U-turn which saw production incentives rise, government rhetoric had increasingly focused on the importance of creating and owning IP and growing export earnings.

For game developers, that stuff is like breathing. Of the $36.3 million of revenue game development generated last year, over 86% or $31.4 million came from exports of smartphone and online games. Of those exports the majority was from games to which NZ developers had created and retained the IP.

Ironically, despite government’s wish to see more of the screen industry earn money in such ways, there’s no way to measure such activity from the data gathered for the SIS.

For a better comparison between game development as a part of the screen industry, one should also include the retail side of the business, the $133 million of physical sales (eg boxed games) and an c$162 million of digital sales, according to the Interactive Games & Entertainment Association (IGEA). Just shy of $300 million spent on playing games is a far higher amount than what NZ spends on going to the cinema.

The SIS is available for download from Stats NZ.

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