The COVID-19 outbreak led to operation shutdowns and significant setbacks in Australia’s Motion Picture and Video Production industry. However, the industry has experienced an unexpected boost thanks to an influx of big-budgeted Hollywood projects moving production to film in Australia. While this development is welcome, this seemingly picture-perfect scene might have a negative impact on the local industry in the long run.
Industry Performance
Industry revenue has fluctuated considerably in recent years, with sharp contractions occurring after strong growth every other year. This trend can be mostly attributed to the project-based nature of film productions. The nationwide lockdowns attributable to the COVID-19 pandemic put another damper on industry activity, with filming and movie sets shut down for months. Major player NEP-GTV Holdco Pty Ltd reported a revenue decrease of 28.23% in 2019-2020. Overall, revenue for the Motion Picture and Video Production industry is expected to increase at an annualised 0.1% over the five years through 2020-21, to $2.6 billion.
Saved by Hollywood
The Motion Picture and Video Production industry has become lively again. The successful handling of the spread of COVID-19 by the Australian Government has led several high-profile Hollywood productions to flock to Australia to take advantage of the relative COVID-19 free environment. Marvel’s Thor: Love and Thunder has just finished filming in Sydney with Australia’s own Chris Hemsworth. Tom Hanks came back to resume shooting for Warner Brother's Elvis biopic in the Gold Coast. Industry revenue is anticipated to rise by 11.3% in 2020-21 to account for the increase in foreign film productions. Employment is also expected to rise by 5.3% in the current year.
Relaxed restrictions are not the only consideration that has attracted Hollywood producers to Australia. The Australian Federal Government has also introduced several incentives to promote film production in Australia, including a 16.5% tax rebate for foreign productions and a 13.5% location incentive from the $400 million Location Incentive Fund. In April, the government also extended its $50 million Temporary Interruption Fund for a further six months to 31 December 2021.
Another piece of positive news for the industry is the notable increase in media consumption during the COVID-19 pandemic. According to a Nielsen study, Australians spent 52% more time reading news online in March 2020 compared with the same period in 2019. Both Australia’s metro and regional areas watched more TV throughout the month of March 2020, growing at the rate of 22.2% and 23.4% respectively. This shift in consumer behaviour has already been reflected in The Walt Disney Company’s 2020 result, in which the company reported a 271.9% increase in its Production and Film revenue. This trend is expected to continue for the foreseeable future and may lead to an increased demand for film productions as consumers’ appetite for content grows.
Impact on local industry
The cost of this industry boom is the erosion of local film production business.
- Despite the anticipated rise in industry revenue, the number of enterprises within the industry is expected to decline by 2.5% in the current year.
- Hollywood productions come at a high cost. Local productions are already at a disadvantage when it comes to attracting talent with their limited resources and reputation.
- The Australian Government’s multiple incentives allow for Hollywood productions that are budgeted for over $100 million to save even more and increases their bargaining power over smaller local counterparts.
Hollywood might be able to offer the most advanced technology and best experience on set but it can also create tension between local employees. The most notable case would be the dispute between Warner Bros. Pictures and local film workers during the filming of The Hobbit. Supporters have praised the economic benefits and tourism opportunities the film brought to the country. Opposers have claimed the government had sided with Hollywood at the expense of local workers by reducing the power of unions.
To revive the local industry and force media giants to produce more original Australian content, the Australian Federal Government has proposed a content quota that requires streaming services to host a certain percentage of local content on their websites. However, Netflix, Amazon and Stan have all made public appeals to the government to withhold this decision, arguing that they have already committed to promoting local content and any regulatory interventions when the sector is constantly changing may negatively affect Australian viewing and the evolution of business models that cater to Australian consumer demand.
IBISWorld reports mentioned in this release:
Motion Picture and Video Production industry in Australia
