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June 19, 2017

June 16th News Report from your Los Angeles Representative

Happy Friday everyone,

I spent last weekend at Produced By, the Producers Guild of America conference held annually in LA. I always look forward to it providing a useful general overview of industry trends and issues and the level of executive talent on the discussion panels is always outstanding.

This year did not disappoint. During a weekend that included talks with Oprah Winfrey, Ava Duvernay and Jordan Peele, the buzziest session was still the one in which comedian Jerry Seinfeld interviewed Netflix Chief Content Officer Ted Sarandos.

It was fascinating to hear Sarandos talk about how working in an Arizona video rental store, and wondering why Woody Allen movies never paid for themselves, informed his early understanding of trade radius. As he explained it, trade radius is simply a measure of "how far you will go to get business done" and Netflix's original content, he explained, is based on the idea that expanded trade radius allows content to be easily accessible to audiences across huge areas, which allows support for smaller, more interesting films.

The very recent announcements from Netlfix that it will cancel two of its original series was also a topic of discussion. As detailed in Variety below, while the streaming giant's refusal to release audience numbers frustrates industry watchers and has led to a can-do-no-wrong mystique, Netflix's decision to start swinging its ax is an indication that it is not impervious to at least some of the pressures felt by its linear competitors. Sarandos said as much in the Seinfeld interview last weekend, telling us that he spends a fair bit of time trying to determine which shows are worth the money. He also confirmed that Netflix is currently working on 40 original movies.

An audience member during the panel asked Ted Sarandos his thoughts on Virtual Reality and I was surprised to hear he wasn't terribly bullish on it. Joking that his lack of interest in it was the one thing that made him feel old, Sarandos said he had yet to see VR technology influence narrative and that he felt like the currently technology involved - headsets - was isolating for audiences.

Over the course of the conference I did make time to attend a session dedicated to VR and panelists there were decidedly more enthusiastic. It was acknowledged, however, that the sector is currently experiencing a bit of a sophomore slump, after the recent hype and expectations that were created by the first round of venture capital funding.

Here are a few of the key ideas that came out of the Virtual Reality panel:

  • the emergence of VR marks the end of an era of mobile computing and the beginning of an era of immersive computing 
  • asking what you will use VR for in the future is like asking what you use your smart phone for now 
  • it is investment made by industries other than entertainment - real estate, medicine, education - that will push VR technology forward 
  • the first big wave will not be VR in our homes, but location-based VR experiences - set-ups at malls, amusement parks or special events where audiences will pay a one-time fee for a one-time immersive VR experience

The latter idea was buttressed this week by news that Bay Area-based virtual reality (VR) startup Nomadic has raised a $6 million round of seed funding. As detailed in Variety below, Nomadic is focused on location-based VR, and aims to launch VR centers in malls and theaters. The company is focusing on modular sets to make it easy to quickly switch out experiences — much in the same way a theater may replace movies every couple of weeks.

In news this week not related to the Produced By conference, FilmL.A., the official film office for the city and county of Los Angeles, is launching a new pilot program called the Digital Makers Initiative, which will reduce the costs of film permits for small and digital-first productions. As reported in the L.A. Times below, the program is intended to encourage digital productions in Los Angeles.

In another move to keep more industry work in Los Angeles Deadline reported this week that a new bill has been introduced that would significantly raise the tax credit for music scoring. As detailed below, currently there is a 5% tax credit for music scoring and music track recording for films shot in California, but the new bill would grant a credit equal to 30% of qualified expenditures relating to postproduction music scoring or recording of a film shot outside of North America that employs 35 or more musicians, and if at least 75% of the postproduction music or scoring occurs within California.

Finally this week, Canadian cinema giant Imax Corp. is laying off 100 employees, or 14% of its workforce. As detailed in the L.A. Times below, the layoffs are part of a move to improve profitability and a broader plan to reduce costs by $20 million annually at a time when Imax's stock price is sagging.

Warmest regards,

Kelly Graham-Scherer
Los Angeles Representative
Toronto/ Ontario Film Office

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