mpaa economic impact report 2007
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This document is a 2007 MPAA report detailing the findings of an economic impact study of the motion picture and television industry on the United States.TRANSCRIPT
The Economic Impact of the Motion Picture & Televis ion Product ion Industry on the United States
2006 ReportWith contributions from:
Edward Jay Epstein, Author of The Big Picture, The New Logic of Money and Power in Hollywood
Eve Troeh, Reporter for National Public Radio
Harold Vogel Author of Entertainment Industry Economics, A Guide for Financial Analysis
A Message from Dan Glickman............................................ 2
Introduction....................................................................... 3
Report highlights................................................................ 5
Creating high quality jobs.................................................... 6
Developing small businesses and entrepreneurship................ 7
Generating tax revenues...................................................... 9
Competing successfully around the world............................ 10
Production around the country........................................... 11
Making an impact in states............................................... 13
Letters from governors...................................................... 16
Investing in infrastructure and community development....... 19
Promoting tourism............................................................ 21
Providing leadership in the digital age................................ 22
Surveying the future, addressing challenges........................ 23
Endnotes.......................... 24
Methodology..................... 25
Acknowledgements............ 26
Above: XXX: State of the Union, courtesy Columbia Pictures; photo by Zade Rosenthal Cover, front and back: Courtesy Columbia Pictures, DreamWorks LLC, Lionsgate Films, New Line Productions,
Paramount Pictures, Twentieth Century Fox, Universal Pictures, Warner Bros. Entertainment.
Table of Contents
On behalf of the Motion Picture Association of America and our six
member studios, I am pleased to present the industry’s first nation-
wide economic impact report.
The report underscores that an industry known for its creative
product is also an economic engine responsible for bringing billions
of dollars and hundreds of thousands of jobs to communities across
America. We can all recount the “unforgettable” moments from our
favorite movies, scenes that make us laugh, cry, cheer, wonder, and
believe. Less well known is the enormous and ongoing impact of
our industry on the American economy.
Over 1.3 million Americans are employed as a result of the
motion picture and television production industry.
On-location production creates jobs and generates tax revenues
in cities and towns all across the United States, contributing
an estimated $200,000 a day into the coffers of the localities
where they film.
The American motion picture industry also carries a positive
balance of trade around the world and a $9.5 billion trade
surplus.
For decades, the motion picture and television production industry
has been a cornerstone in keeping the American economy strong
and growing. Today, we are bringing that same leadership and vi-
sion into the digital age, with significant investments and advances
in in-theater digital technology and new delivery platforms being
developed each day. We are committed to keeping our industry at
the forefront of the worldwide entertainment market and to ensuring
that our contribution to the U.S. economy continues to grow.
Thank you for reading this report. I believe you will find it is an
interesting, informative and entertaining look at an important Ameri-
can enterprise – the motion picture industry. See you at the movies.
Sincerely,
A Message from Dan Glickman
PAGE 2
“The American motion picture and television production industry has grown
into a vibrant artistic and economic force worldwide. It would have been
difficult to predict at the birth of the American motion picture industry that it
would mature into the significant source of economic growth and employment
covered in this report. From its founding at the beginning of the 20th Century
by European immigrants showing talking pictures in arcades, nickelodeons,
and small exhibition halls, the industry has evolved into a vast complex of
businesses producing a visual culture now experienced by most of the world.
The continued evolution and growth of the industry is not an accident, but the
result of a willingness to change. The movies, television, and Hollywood evoke
images of glitz, glamour, and the red carpet. That image fails to capture the
challenging creative process of putting a story onto film, and the business of
show business. To survive as businesses over the years, the industry has con-
sistently reinvented itself. By the time talking pictures were introduced in the
late 1920s, about two-thirds of the population went to neighborhood movie
theaters every week. By the end of the 1940s, the advent of home television
drew away a large part of the 90 million Americans who went to the movies in
an average week. By the late 1980s, even though the population had nearly
doubled, annual ticket sales had fallen from 4.6 billion in 1948 to 1 billion.
In the best tradition of show business, the industry has followed its audi-
ence and worked to redefine the business. The studios not only licensed their
Purpose of the Report
The creative output of the American
motion picture and television production
industry is widely recognized around the
world, yet its contribution to the nation’s
economy is seldom recognized. This re-
port, prepared by the MPAA using data
from studios, networks, payroll compa-
nies, guilds and government statistics,
illuminates the industry’s impact on the
national economy. While the numbers
presented in this report are impres-
sive, it must be kept in mind that they
are a conservative snapshot of a global
industry. Due to the breadth and com-
plexity of the American motion picture
and television production industry, this
report does not fully quantify the impact
of its activities upon all the individuals,
businesses, and governmental entities
that benefit from those activities. The
total economic impact is likely much
greater, and more far-reaching, than this
report reveals.
Introductionby Edward Jay Epstein, author of The Big Picture: The New Logic of Money and Power in Hollywood
movie libraries to television, they produced original programming for the broad-
cast networks and for television stations around the world. After VCRs became
commonplace in the American home in the 1980s, they created a huge rental
market for videos. In the 1990s, with the arrival of the digital revolution, the
studios followed their audience into the home with DVDs and video-on-de-
mand and other digital delivery platforms.
Throughout it all movies have continued to be a driving force in the new equa-
tion. The global movie culture continues to be shaped by Hollywood’s movies,
stars and technology. By transcending the bounds of national tongues, and
being more accessible than newspapers, books, and other print media in many
parts of the world, it has provided a near universal way of looking at the way
people relate to society.”
PAGE 4
Left: Coach Carter, courtesy Paramount Pictures Above top: The Chronicles of Narnia, courtesy Disney/Walden; photo by Phil BrayAbove bottom: Madagascar, courtesy DreamWorks Animation SKGRight: Four Brothers, courtesy Paramount Pictures; photo by George Kraychyk
The creation of motion pictures and television programs
is one of the nation’s most vital and valuable resources.
In 2005, the motion picture and television industry generated:
. over 1.3 million American jobs;
. an average salary of $73,000 for direct employees;
. $30.24 billion in wages to workers in America;
. $30.20 billion in
revenue to U.S. vendors
and suppliers;
. $60.4 billion in
output to the U.S. economy;
. $10 billion in income and sales taxes; and
. $9.5 billion in trade surplus.
Report highlights
Above: The Island, courtesy DreamWorks Pictures and Warner Bros. Pictures; photo by Merrick MortonRight: King Kong, courtesy Universal Pictures
Another 231,000 were freelance workers, including actors, directors, writers, and techni-
cal or craft specialists. While freelance employees account for more than half of the
industry’s workforce, it’s important to note that freelance is not synonymous with “part-
time” as many work full time.
The industry produces high quality and high paying jobs. The average salary of those directly
employed in the industry was $73,000 in 2005--nearly 80 percent higher than the average
salary nationwide.1 It is worth noting that the calculation of both the payroll and the average
salary figures excludes salaries paid to highly compensated talent.
The industry also generates what labor analysts call “indirect” jobs through companies such as
movie theaters, themed retailers and restaurants, video rental stores, and tourist attractions.
Nearly 1 million people were employed in such jobs.
Creating high quality jobs
With a payroll of over $30 billion, the motion picture and television industry is a major pri-
vate-sector employer. In 2005, the total number of U.S. residents employed by the motion
picture, commercial and television production industry was over 1.3 million.
Over 180,000 people were directly employed as studio, independent production com-
pany, or core industry supplier staff. Core industry suppliers include film labs, special
effects and digital studios, location services, prop and wardrobe houses, research ser-
vices and film stock houses, video duplicating services and stage rental facilities among
others.
PAGE 6
Direct payments for goods and
services to vendors by the industry
added $30 billion to the nation’s
economy in 2005. These pay-
ments not only go to specialized
businesses that exclusively serve
the entertainment industry, such as
wardrobe companies and camera
equipment firms, but also to gen-
eral suppliers serving a number of
other industries, such as caterers,
lumberyards, apparel retailers and
florists.
One of the most unique characteris-
tics of the motion picture and televi-
sion related industry is its decentral-
ized nature. More than 160,000
firms around the country were
involved in the industry in 2005 -
from production to distribution, and
working for independents as well
as major studios. Approximately
85 percent of these firms employ
fewer than 10 people.2 In essence,
the motion picture and television
production industry is largely entre-
preneurial and dominated by small
businesses and individuals.
Additionally, independent produc-
tion companies produce an increas-
ing percentage of feature films and
television programs. 65 percent
of the films released in the U.S.
in 2005 were produced by inde-
pendents, up from 43 percent in
1995.3
The graphic at the right illustrates
the vast array of individuals vital to
bringing a motion picture or televi-
sion program to fruition.
Few industries in the world are as
large and yet depend so heavily on
an economically diverse work force
based on regional networks collabo-
rating on projects.
Entertainment Industry: Share of Total U.S. Firms by EmployeesTotal U.S. Firms = 164,736
36%
36%
12%
9%1%1% 3%
2%
1
2 to 4
5 to 9
10 to 24
25 to 49
50 to 99
100 to 249
250 to 499
500 to 999
1,000 to 2,499
2,500 to 4,999
5,000 or above
unknown
Less than 1%
Right: The Hitchhiker’s Guide to the Galaxy, courtesy Touchstone Pictures
Developing small businesses and entrepreneurship
What goes in... What comes next...
PAGE 8
Illustrating the Production Workflow
Communities throughout the U.S. and in other countries zealously promote entertainment
development because the industry attracts capital and earns revenues that create local
jobs and generate tax revenues critical for public needs.
In 2005, just two types of taxes paid by the motion picture and television production in-
dustry - taxes paid by industry workers and sales taxes on goods and services - generated
approximately $10 billion in public revenues in the United States.
Generating tax revenues
Total tax revenues included $3.1 billion in income taxes at the fed-
eral level and $1.5 billion in income taxes at the state level, along
with $4.7 billion in additional unemployment, Medicare and Social
Security taxes.
Other taxes paid, but that could not be quantified for this study,
include corporate income taxes, property taxes and business license
taxes. Also not included are tax revenues generated by indirect
employment.
Above top: Aeon Flux, courtesy Paramount Pictures; Above bottom: Chicken Little, courtesy Disney EnterprisesRight top: Four Brothers, courtesy Paramount Pictures; photo by George Kraychyk
Right middle: Bewitched, courtesy Columbia Pictures; photo by: John BramleyRight bottom: Interpreter, courtesy Universal Pictures
Competing successfully around the world
We live in the age of a global economy in
which trade and technology are bringing the
world closer together. The American motion
picture industry plays a pivotal role in expand-
ing the U.S. economy through the arts, the
latest technology, and international trade. In
2005, the enduring entertainment value and
appeal of US films around the world earned
$10.4 billion in audiovisual exports, a 20 per-
cent increase since 2000. Moreover, the US
motion picture industry is one of the few in-
dustries that consistently generates a positive
balance of trade. In 2005, that surplus was
$9.5 billion, a total larger than the combined
positive trade balance for telecommunications
and computer and information services, and
was 12 percent of the entire US private-sector
service trade surplus.4
The American motion picture industry has not
achieved these remarkable successes in the
export market without overcoming great obsta-
cles, some of which still hobble the industry’s
ability to grow. The two principal challenges
are piracy and market barriers. Piracy outside
of the United States sapped $4.8 billion from
the American industry in 2005. Stopping
those losses will depend on first, improving
intellectual property laws in many countries
and second, ensuring that those laws are fully
enforced.5
In addition, in some key markets, the mer-
chants of pirated products have the markets to
themselves; the legitimate motion picture in-
dustry is denied fair access to the market due
to quotas and other forms of discriminatory
government policies. Future export growth de-
pends on worldwide audiences having the free-
dom to decide for themselves which movies to
attend, without being hampered by intrusive
government policies and market barriers.
The positive balance of trade the motion
picture industry generates is an important
aspect of maintaining the economic stability
and competitiveness of the nation. The export
of audiovisual services is a reliable engine of
employment growth, generating jobs that on
average pay 13 to 18 percent more than the
median wage.6
PAGE 10
365
Top production states7 in 2005
CaliforniaNew York
NevadaArizona
North CarolinaMontana
New JerseyLouisiana
New MexicoIllinois
10
97
237
8
1
Motion picture and television production growth produces dramatic benefits
for the U.S. economy and its residents, benefits that are spread throughout the
country.
With 699 feature films produced in 2005, nearly all of the 50 states had full
or partial feature film production activity during 2005 - plus television program
and other production activity, which is also spread around various states.
Production aroundthe country
1
Right: Lost, courtesy ABC, Inc; photo by Bob D’amico Extreme right: The Fog, courtesy Columbia Pictures;
photo by Rob McEwan
All numbers were provided by the state film commissions. There is some variation in inclusion definitions based on each commission’s methodology. In California, of-ficial data is not recorded by the film commission. Estimate is conservatively based
on published production reports and location permits.
16
281
22
23
15
3
1
2
5
221
11
5
2
4
36
5
64
12
6
15
13
16
182
2
2
PAGE 12
23
19244415
4
15
19
Making an impact in states
30 states have found motion picture
and television production to be so
beneficial to their economies that
they have enacted specific incen-
tives to increase production in their
states. What follows are summaries
from various states on how produc-
tion activity benefits their residents.
Arizona’s film com-
mission found that during 2003 (the
most recent year for which data is
available), $21.9 million in wages
was earned by Arizona residents from
612 direct and 1,092 indirect indus-
try jobs. The film industry generated
more than $107 million in direct
economic activity with an additional
$94.1 million of indirect activity. The
state believes that these numbers
have risen substantially since 2003,
particularly with the enactment of
an incentives program in January of
2006.9
California, the
heart of the American motion picture
and television industry, was one of
the primary locations for 365 produc-
tions in 2005. In terms of economic
activity, the industry generated a total
of $42.2 billion, split almost equally
between payroll expenditures and
payments to vendors. Approximately
266,000 people were directly em-
ployed in the motion picture and tele-
vision industry in California, with an
average salary of $80,600. Including
indirect employment, the number of
people working in California as a result
of the industry totals over 500,000.10
Connecticut is a popular production locale for film-
makers both because of its proximity
to New York City and because of the
state’s new production incentive pro-
gram. In addition to 8,000 film jobs
and 18,000 support jobs, the film in-
dustry generated $2.5 billion in gross
state product, including $1.2 billion in
personal income, in 2005.11
Illinois in 2005 benefited
from expenditures totalling $100 mil-
lion in production dollars from feature
films alone. A new tax credit, which
went into effect in May 2006, is ex-
pected to grow that amount.12
Oscar-winning film Walk the Line shot over 45 days in Memphis and
Nashville in 2004. Producers spent about $10 million in Tennessee,
creating a total economic impact of $18 million to $20 million.8
Montana expe-
rienced $53 million in production
related spending in the past 6 years,
resulting in an $81.4 million impact
on its economy, plus 930 full time
equivalent jobs in the film industry
and 444 jobs indirectly. The film
industry also generated $4.3 million
dollars of tax revenue for Montana.13
Nevada continues to
benefit from various television and
film productions set in locales ranging
from the bright lights of Las Vegas to
the remote ghost town of Rhyolite, fol-
lowing in the path of such classics as
The Godfather Part II, Rain Man, and
Casino, which all filmed in part in Ne-
vada. The Nevada Film Office found
that in 2005 film and TV production
contributed $102.5 million into the
state’s economy in 2005, with actors,
directors and crew personnel showing
up for 3,210 workdays.14
New Jersey has benefited from its proximity to the
production hub of New York City, re-
sulting in a film economy of $83 mil-
lion as of 2004 (up from an estimated
$61 million in 1999). This growth
was spurred in part by legislation
awarding a tax credit to filmmakers, as
well as state-sponsored incentives.15
New Mexico
is seeing major benefits from financial
incentives initiated in 2003 to draw
filmmakers to the Land of Enchant-
ment. The state has taken in about
$260 million in expenditures by
production companies since that time.
The Governor’s office estimates the
state has benefited to the financial
tune of about $780 million in total,
once the economic impact generated
by the money as it passes through a
variety of hands in the local economy
is calculated.16
New York City
in 2006 hosted the highest number
of film, television, commercial and
music video shoots in its history. In
2005, there were just over 31,500
“shoot days,” but the number jumped
10 percent to over 34,700 in 2006.
Independent productions accounted
for 90 percent of the 250 feature films
shot in New York City in 2005. There
was a $1.5 billion economic benefit
in 2005 from the “Made in N.Y.”
incentive program, which has created
thousands of new jobs by bringing
$2.4 billion in business to New York
over the past two years.17
North Carolina’s
production incentives drove spend-
ing on features, television programs,
commercials and other productions
to $300 million in 2005. The recent
hit film Talladega Nights: The Legend
of Ricky Bobby was filmed in North
Carolina.18
Pennsylvania
has seen its share of film productions
lured by state incentives, and the state
quantified the resulting economic im-
pact to the state in 2005 at $249 mil-
lion. Recent productions choosing to
film in Pennsylvania include Invincible
and the 2006 CineVegas honoree The
4th Dimension.19
Utah finds that film produc-
tions have become an enormous eco-
nomic development opportunity. The
state’s Motion Picture Incentive Fund
helped bring several productions to the
state, including World’s Fastest Indian
and High School Musical, which will
see its sequel shot in Utah as well.20
Using the Two Dollar Policy, by Marian Rees, Independent film producer, whose
company has produced 37 films on location.
“To demonstrate the positive impact of filming on the local community, during one
production I decided all per diems would be paid to the crew in two dollar bills,
which, when spent on the cleaners, laundry, restaurants, grocery stores, and other
shops would be tangible evidence of the money ending in local merchants’ hands. In
meeting with business leaders I gave them a picture of the positive financial impact
our production would make, but the ‘persuaders’ were the two dollar bills that seemed
to float through the town, soon to become collectors’ items. Our two dollar policy be-
came a part of our philosophy for every future film. That, and always leave a location
the same if not better than when we arrive.”
PAGE 14Left: Walk the Line, courtesy Twentieth Century FoxAbove: Monk, courtesy NBC Universal Photography Department
by Eve Troeh, independent radio producer filing regularly for
NPR, Weekend America and others.
“Film and television production is expected to contribute
more than $400 million to Louisiana’s economy in 2007.
The industry has boomed since the state passed tax credits
five years ago, and has come back stronger than ever since
Hurricane Katrina.
Production helps Louisiana retain and attract creative human
capital. On the set of the $150 million Paramount feature
The Curious Case of Benjamin Button in New Orleans, a
local church choir sings as background talent. Locals in
jobs from lighting to craft services talk excitedly about their
careers.
Some, like actor Lance Nicholls, have even moved back to
their home state. “I was living in Los Angeles for about 24
years, but to be able to come back and have opportunities in
features, it’s perfect.”
Malcom Petal is CEO of the local studio Lift Films, which
employs up to 500 people, and pays wages that start at
$20 an hour. He says production builds Louisiana’s middle
class. “There’s a job for every trade: carpenters, electricians
and hairdressers. Every business in town gets used: the
hotels, dry cleaners and car rental services.”
Petal, who used to be a lawyer for oil and gas companies,
also points out that film is a non-polluting industry.
A new set of tax credits encourages entrepreneurs like Petal
to build soundstages, post-production houses and film
schools to make Louisiana’s film industry even more self-
sustaining.”
Spotlight: Louisiana
PAGE 16Left: XXX: State of the Union, courtesy Columbia Pictures; photo by Zade Rosenthal
Letters from Governors
PAGE 18
“ A $25 million expansion and renova-
tion of the Queens, New York site of the Mu-
seum of the Moving Image began in February
2005 to include new galleries, an outdoor
theater, an educational center, and a new col-
lection storage facility.21
“ The Jacob Burns Film Center in
Pleasantville, New York broke ground in Janu-
ary 2007 on a $12 million 25,000 square-
foot media and education center, scheduled
to open in 2008.22
“ LIFT Productions plans to build a
$100 million 320,000 square-foot, nine
block long film studio in New Orleans,
Louisiana that will include soundstages and
post-production facilities as well as vocational
facilities to train film industry workers such
as hairdressers, electricians, costume design-
ers, set builders, and camera operators.23
“ Director George Lucas pledged $175
million to the University of Southern Califor-
nia’s film school, in Los Angeles, California,
in 2006 to build a 137,000 square-foot com-
plex in an effort to meld the film industry’s
story-telling skills with digital technologies.24
“ Silvercup Studios, the largest
independent television and film production
complex in the Northeast, is adding a 3rd
location in New York in the form of 2.2 mil-
lion square-foot of space for $1 billion. The
complex will include a 500-ft.-high com-
mercial tower, two residential towers, eight
soundstages, a catering facility for up to
8,000 people, and 100,000 sq. ft. of cul-
tural space.25
“ Metro Productions built a $1 mil-
lion 10,000 square-foot production facility in
Richmond, Virginia. The facility includes a
fully-equipped 40-by-40 soundstage, a green
Investing in infrastructureand community development
In addition to direct
entertainment pro-
duction payrolls and
expenditures, the in-
dustry actively invests
in infrastructure and
facilities that have
a positive effect on
community develop-
ment and real estate
markets. Here are a
few samples of such
capital projects.
room, three editing suites,
an audio suite and a graph-
ics suite that includes 3-D
capabilities.26
“ A 1.7 million square-
foot movie studio constructed
during 2005 has been part
of a redevelopment project in
Downey, California. The proj-
ect has converted 80-acres
of a 160-acre aerospace
manufacturing facility into
Downey Studios, with more
than 300,000 square-feet of
shooting space, ceilings as
high as 62 feet, and a foot-
ball field sized water tank. 27
“ In June 2006,
Lionsgate Entertainment
announced plans to build a
$15 million film studio in Rio
Rancho, New Mexico.28
“ WorkshopLive
opened a new recording and
video production studio in
Pittsfield, Massachusetts in
June 2005, utilizing contrac-
tors and construction firms
from Berkshire County and
other parts of Massachu-
setts.29
“ Stone Five Studios
broke ground in Provo, Utah
in June 2005 on a new
42,000 square-foot facility
to include two fully-equipped
film and TV and soundstages,
a recording studio, and sev-
eral video editing suites.30
“ In December 2005,
Screen Gems Studios of
Wilmington, North Carolina
announced plans to build a
larger soundstage to attract
bigger budget projects. The
studio also consulted on a
project in North Stoning-
ton, Connecticut that would
include an entertainment
complex.31
Filmmaker George Lucas
completed construction on the
$350 million, 23-acre Letterman
Digital Arts Center in the Presidio
of San Francisco, California in
2005. The campus integrates
three Lucas units: Industrial
Light + Magic (visual effects),
LucasArts (videogames), and
Lucasfilm Ltd., the corporate par-
ent. Beyond its state-of-the-art
technical features, the campus
sets a new standard for sustain-
able development by, among
other things, recycling 80% of
the building materials from the
site’s demolished Letterman Hos-
pital, restoring 17 acres to open
park space for public use, and
utilizing features that increase
energy and water efficiency by
more than 30%.32
Spotlight: Letterman Digital Arts Center
PAGE 20Above: © Lucasfilm Ltd. & TM. photo by Tina Mills.Left: The Longest Yard, courtesy Paramount Pictures
Motion picture and television production also has a
beneficial impact on tourism - another vital engine
of economic growth. Entertainment-related attrac-
tions and film industry landmarks are well known
as promoting tourism in Hollywood. Not as well
known is the important role films play in promot-
ing areas for tourism all around the country. In the
Annals of Tourism Research, researchers concluded
that, on average, a location featured in a success-
ful film could expect to see visitors increase by an
average of 54 percent over the next four years.
Promoting Tourism
by Martine White
County Film Commissioner
Santa Barbara Conference & Visitors
Bureau and Film Commission
“The film Sideways was inspired by
experiences in the wine country in
Santa Barbara County, California. The
Santa Barbara County Film Com-
mission began working with Director
Alexander Payne and the Sideways
team during pre-production, familiar-
izing and connecting them with the
local community, who embraced the
Sideways crew while they made their
home in Santa Barbara County and
the Santa Ynez Valley for 47 days of
shooting and four months of pre-pro-
duction in 2003.
The Commission decided to use Side-
ways to launch a movie tourism niche
marketing campaign, working with
the film producer and a local artist
to create a Sideways tour map based
on the locations featured in the film.
The map, which has been re-printed
three times due to demand, highlights
18 locations from the film. To date,
120,000 maps have been distributed
and over 65,000 people have down-
loaded it from santabarbaraCA.com.
When the Golden Globe® and Oscar®
nominations sparked even greater
interest in the film, the hotels in the
Santa Ynez Valley and businesses fea-
tured in “Sideways, The Map” reported
business was booming, as consumers
and Sideways fans began flocking to
the wine country. Tasting room traffic
was on the rise at Santa Barbara’s
60+ tasting venues and demand for
Santa Barbara County wines skyrock-
eted nationally. Overall, we forecast
an impact of 15 percent on tourism
revenue to the county over the next
four years.”
Spotlight: Sideways and Santa Barbara
Above: Sideways, courtesy Fox Searchlight Right: Star Wars: Episode III - Revenge of the Sith, courtesy Twentieth Century Fox
The American motion picture industry
is a world leader in developing and
deploying new technologies. The
industry’s demand for new media,
special effects, and enhanced sound
and visual quality, has resulted in
innovations that enhance the viewing
experience and advance the progress
of science and the public interest. In
recognition of these advancements the
major film studios have been awarded
over 1,000 patents in a variety of
fields both expected and unexpected.
The range of ideas and their lasting
impact is impressive. Whether it is
synchronizing music and dialogue on
film, marrying the concept of 3D and
color film, introducing surround sound,
developing the DVD, or developing
and implementing the first commercial
monorail, the industry has continued
to press the boundaries of what is
feasible.
In addition to enhancing the enjoy-
ment of filmed entertainment, the
industry’s inventions serve the public
good. For example, rather than en-
force their film restoration patents, the
industry has freely shared that tech-
nology to enable restoration of many
old, fragile filmed works from the early
20th Century. Industry members are
also developing technologies to protect
the environment, such as through
implementation of a low emission
launch system for firework displays.
The industry is also leading the way in
providing filmed entertainment to con-
sumers whenever and wherever they
want it. Through digital cinema, next
generation DVD formats, and digital
rights management technologies the
industry is facilitating new business
models that will create more choices
for consumers while also discouraging
digital theft. Already the industry is
delivering content through digital cin-
ema, high definition DVDs, streaming
on demand, download to own, peer-
to-peer technology, social networking
sites, and mobile devices.
Providing leadership in the digital age
PAGE 20PAGE 22
Will the economic contributions of the
industry continue to increase? The answer
is “yes.” Forecasters predict the demand for
motion picture and television products will
continue to grow, as the methods for deliv-
ering them to the consumer evolve. Ana-
lyst Harold Vogel states, “[t]echnological
development has been the driving force
behind the growth of the entertainment in-
dustries. Development of technology leads
indirectly to an increase in leisure time
availability and leads directly to qualita-
tive improvements and cost reductions in
manufacturing and distribution.”33
New distribution capabilities boost demand
for entertainment products, and the enter-
tainment industries overall are expected
to continue to grow at faster than average
rates.34 Legal and diplomatic measures
opening foreign markets, as well as increas-
ing modern theater construction overseas
will spur further demand.
At the same time, however, there are
serious challenges ahead to domestic and
overseas success, including piracy, the risk
of filmed entertainment market saturation,
global macroeconomic trends, and poten-
tial fragmentation brought about by local
content, targeted development subsidies,
and protectionist policies pursued by cer-
tain foreign countries and states.
Within the U.S., many factors will help
determine whether entertainment produc-
tion continues to expand. One of the most
important is the political and regulatory
climate. Practical, cost-effective measures
to enhance industry operations, includ-
ing federal production tax incentives, will
increase the probability of entertainment
industry growth and hence the growth of
the U.S. economy.
Surveying the future,addressing challenges
by Harold L. Vogel, Author of Entertain-
ment Industry Economics, 7th ed. forth-
coming May 2007. New York: Cambridge
University Press.
“The introductions of television, home
video, cable, direct broadcast satellites,
and DVDs have all had an historically
important and ultimately beneficial impact
on the economic landscape in which
filmed entertainment is produced and dis-
tributed. But digital/Internet technology is
already proving to be much more profound
and disruptive than any of these earlier
innovations. Traditional business models
and strategies are becoming increasingly
ineffective and are now in the process of
unusually rapid adjustment and transi-
tion. Whenever this happens, the market
demand shifts dramatically toward those
who possess new types of knowledge and
skills and displaces those who do not.
Newspaper headlines typically do not
present the whole story of the dynamism
of expanding opportunities that the new
technologies quietly originate a few new
jobs at a time. If history is any guide,
transition into the new age of digital
filmed entertainment will ultimately have
an enormous positive effect on the in-
dustry and on the overall economy of the
United States.”
Changing, growing
1. Bureau of Labor Statistics.
2. LEK Analysis, Dun & Bradstreet Marketplace Database.
3. MPAA Worldwide Market Research.
4. The U.S. Department of Commerce, Bureau of Economic Analysis,
Survey of Current Business, Oct. 2006. Audiovisual services definition: the
affiliated and unaffiliated transactions between US and foreign residents
of film and television tape rentals, which covers the rights to display,
reproduce, and distribute US motion pictures and television programming
abroad.
5. MPAA/LEK Piracy Loss Estimates Report 2005.
6. Business Roundtable, Trade Resource Center, Trade and Jobs: Why
Trade and Investment Liberalization Creates More and Better Paying Jobs.
7. State film commissions. There is some variation in inclusion definitions
based on each commission’s methodology. In California, official data is
not recorded by the film commission. Estimate is conservatively based on
published production reports and location permits.
8. Chattanooga Times and Free Press, “State Film Incentives Await Ap-
proval,” Chattanooga, TN, 11/18/06 .
9. Phoenix Business Journal, “Filmmaker expands Hollywood studio to
Phoenix,” Laura Newpoff, Phoenix, Arizona, 05/01/06. Arizona Department
of Commerce, “Analysis of the Film & Video Industry in Arizona,” Phoenix,
AZ, 12/2004.
10. MPAA Worldwide Market Research.
11. Variety, “Global Shooting Guide: United States,” Josh Marks,
11/05/06. Connecticut Center for Economic Analysis, University of Con-
necticut, “The Economic Impact of Arts, Film, History, and Tourism in
Connecticut,” 2006.
12. Variety, “Global Shooting Guide: United States,” Josh Marks, 11/5/06.
13. “The Big Sky on The Big Screen Act: A Film Industry Incentive,” by
the Montana Film Office, Park Helena, MT, 4/20/05.
14. Las Vegas Review-Journal, “Pretty as the Pictures,” Chris Jones, Las
Vegas, NV, 1/28/06.
15. Herald News, “A ‘Sopranos’ effect; Area film, TV productions are a
growth industry,” Ed Beeson, Passaic County, NJ, 11/18/05. New Jersey
Motion Picture and Television Commission, “The 20-Per-Cent Solution,”
www.njfilm.org, 1/16/06.
16. The Santa Fe New Mexican, “Hollywood on the Rio Grande,” Robert
Nott, 12/1/06.
17. Variety, “Global Shooting Guide: United States,” Josh Marks, 11/5/06.
New York Post, “N.Y. turns into Cinema City”, Hasani Gittens, New York,
NY, 1/19/07.
18. Variety, “Global Shooting Guide: United States,” Josh Marks, 11/5/06.
19. Ibid.
20. Deseret Morning News, “State wants to increase movie incentive fund,”
Brice Wallace, Salt Lake City, UT, 01/11/07.
21. Associated Press Online, “Museum of the Moving Image to expand,”
New York, NY, 01/11/05.
22. The New York Times, “Art house to get a campus,” New York, NY,
01/14/07.
23. The Times-Picayune, “Film producers not scared off, Katrina hasn’t
hurt state’s movie business,” New Orleans, LA, 10/12/06.
24. LosAngelesBusiness.com, “Lucas to give USC $175M,” Los Angeles,
CA, 09/20/06.
25. New York Construction, “Details unveiled for studio project,” New York,
NY, 07/01/06.
26. Richmond Times-Dispatch, “Video firm Metro Productions moving to
new facility,” Richmond, VA, 11/08/06.
27. California Construction Link, “Back from the dead in Downey”, July 1,
2005. Los Angeles Times, “Hangars are Hollywood’s next big thing,” Los
Angeles, CA, 09/10/06.
28. Albuquerque Journal, “Council Approves Lionsgate Package,” Albu-
querque, NM, 06/15/06.
29. BusinessWire, “WorkshopLive opens Pittsfield recording and video
studio facility,” Pittsfield, MA, 06/10/05.
30. Daily Variety, “Utah breaks ground on new facility,” 07/07/05.
31. Star News, “FILM CLIPS / Planners of studio complexes study Wilm-
ington,” Wilmington, NC, 12/29/05.
32. Lucasfilm, Ltd. A New Vision for the Digital Arts.
33. Entertainment Industry Economics, by Harold L. Vogel, pg. 469. New
York: Cambridge Press, 6th Ed.
34. Ibid.
Endnotes
PAGE 24
Left top: White Noise, courtesy Universal PicturesLeft middle: The Constant Gardener, courtesy Focus Features; photo by Jaap BuitendijkLeft bottom: Munich, courtesy Universal PicturesAbove: The Office, courtesy of NBC Universal Photography Department
The Motion Picture Association of America (MPAA) de-
veloped its report on The Economic Impact of the Motion
Picture and Television Production Industry using a number of
data sources, including Bureau of Labor statistics, Interna-
tional Trade Administration reports, and various other propri-
etary and publicly-available data. The following companies
participated in an annual survey:
o Studios and Networks: The Walt Disney Company,
Metro-Goldwyn-Mayer Inc., Paramount Pictures, Sony
Pictures Entertainment, Twentieth Century Fox Film Corp.,
Universal Studios, Warner Bros., Dreamworks, NBC Inc.,
ABC Inc., CBS Broadcasting Inc.
o Payroll Companies: Cast & Crew Entertainment Ser-
vices, Entertainment Partners
o Unions and Guild/Producer-Union Health Plans:
Directors Guild of America, Motion Picture Industry Health
Plan, Screen Actors Guild, Writers Guild of America
These participants supply employment, payroll, vendor
expenditure and tax information to enable the Association to
build a comprehensive picture of the size, scope, and future
of the industry. The expenditure and payroll data is provided
by zip code, allowing for the measurement of the economic
impact of the industry on a county, city, and community
basis. The major guilds and unions, as well as their health
plans, and the Bureau of Labor Statistics provide additional
information on industry employment.
For the purposes of the report:
Direct employment refers to individuals employed through
production activities. It includes both regular full-time and
freelance employees paid by the studios, networks, inde-
pendent production companies and commercial produc-
ers directly, and indirectly through payroll companies. A
freelance employee is an individual who worked on a daily,
weekly or project basis. Freelance employees include actors,
directors, writers, camera operators, grips and other produc-
tion personnel.
Indirect employment refers to individuals employed by
the industry through movie theaters, themed retailers and
restaurants, video rental stores and tourist attractions. Ad-
ditional individuals are accounted for through a wide cross-
section of employers such as florists, apparel and accessory
retailers, automobile dealers, restaurants, caterers, dry
cleaners and thousands of other vendors who supplied the
production community.
The information collected includes all motion picture,
television, and commercial production functions, drawing a
comprehensive picture of the industry’s economic impact.
The survey was previously conducted in 1998 and 2003,
focusing on California. 2005 is the first year the survey has
been conducted focusing on the entertainment industry’s
economic impact on the entire country.
The Bureau of Labor Statistics no longer publishes employ-
ment data based on the U.S. Standard Industry Classifica-
tion (SIC) codes for individual states. Therefore, for the
purpose of this study, the North American Industry Clas-
sification System (NAICS) had to be converted to SIC codes
using a combination of the 1997 Economic Census: Bridge
Between SIC and NAICS and the 1997 NAICS and 1987
SIC Correspondence Tables.
Since the category 7819 of “Allied Services to the Motion
Picture Production” was reallocated under NAICS into a
number of different industry classifications, correspondence
tables were used in an effort to capture comprehensive
employment figures. The same correspondence tables have
been used in both the 2003 and 2005 reports.
Methodology
Left: The Legend of Zorro, courtesy Columbia Pictures and Spyglass Entertainment; photo by Andrew CooperAbove: The Wedding Date, courtesy Universal Pictures PAGE 26
AcknowledgementsThis Economic Impact Report was compiled under the
leadership of the Motion Picture Association of America with
the assistance of many important groups and individuals.
First thanks go to the participants in the study, listed below.
Individuals at each of these companies worked tirelessly
to provide the MPAA with the survey data. Without their
assistance, the report would not have been completed. The
participants include:
The Walt Disney Company
Metro-Goldwyn-Mayer Inc.
Paramount Pictures
Sony Pictures Entertainment, Inc.
Twentieth Century Fox Film Corp.
Universal Studios, Inc.
Warner Bros.
ABC Inc.
CBS Broadcasting Inc.
Spelling Entertainment Group Inc.
Entertainment Partners
Cast & Crew
L.E.K. Consulting, L.L.C. provided invaluable assistance and
guidance in reviewing the MPAA survey data.
We would also like to thank the following for their contribu-
tions:
Edward Jay Epstein, Author of The Big Picture, The New
Logic of Money and Power in Hollywood
Ryan Ratcliff
Marian Rees, Independent Film Producer
Eve Troeh, Reporter for National Public Radio
Hal Vogel, Author of Entertainment Industry Economics, A
Guide for Financial Analysis
Martine White, County Film Commissioner, Santa Barbara
Conference & Visitors Bureau
The Academy of Motion Picture Arts & Sciences Library
AFTRA Health & Retirement Funds
The Alliance of Motion Picture and Television Producers and
its president, J. Nicholas Counter who provided additional
guidance.
Directors Guild of America - Producer Pension and Health
Plans
Motion Picture Industry Pension & Health Plans
Screen Actors Guild - Producers Pension and Health Plan
Special thanks to California Governor Arnold Schwarzeneg-
ger, Illinois Governor Rod R. Blagojevich, Louisiana Gover-
nor Kathleen Babineaux Blanco, Montana Governor Brian
Schweitzer, New Mexico Governor Bill Richardson, New
York Governor Eliot Spitzer, New York City Mayor Michael R.
Bloomberg, Pennsylvania Governor Ed Rendell, and South
Carolina Governor Mark Sanford
This publication includes images from CorelDRAW™ 8
which are protected by copyright laws of the US, Canada
and elsewhere. Used under license.
Published & designed by MPAA Strategic Planning & Research, January 2007
Copyright © 2007, Motion Picture Association of America (MPAA)
All data, copy and images are subject to copyright and may not be reproduced, transmitted or
made available without permission from the MPAA or the copyright holder. All rights reserved.
MPAA15503 Ventura Boulevard
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