Michael Lin lores
Michael Lin
Senior Associate, Regional Economics Research
Human Capital and Regional Economics
Michael Cheng-Yi Lin is a senior associate at the Milken Institute. His current research focuses on human capital as well as community, urban, and regional planning and development.
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Nurturing a Film and TV Industry Cluster: More Than Just Incentives

By: Michael Lin
August 06, 2015

There has been heated debate surrounding film incentive programs. Are they cost-effective? How long do the jobs they create last? What are their concrete effects on industry development? The Milken Institute has found that when a region is working to expand its entertainment and media activity, focusing solely on incentives is inadequate and may mask other factors that contribute to a thriving film industry. Our most recent study, “Strategies for Growing the Pittsburgh Media Cluster,” shows that building state-of-the-art infrastructure and developing a deep pool of skilled local talent are the keys to the long-term success of an area’s entertainment and media industry.

Atlanta, Toronto, and Wellington, New Zealand, exemplify the importance of long-term planning that builds on incentives and includes investment in infrastructure and training. These cities provide generous, sustained incentives to attract movie and TV productions. Their commitment to incentives reduces uncertainty for production companies. In addition, these cities have established up-to-date infrastructure, such as multiple soundstages, and offer a variety of production and post-production services. Their capacity to house and support projects of varying sizes year-round not only brings stable production activity, it also retains and attracts skilled movie and TV workers and providers of auxiliary services, such as catering and transportation. Incentives must be joined by infrastructure and talent to establish full-fledged film and TV clusters. Once a strong film cluster emerges, it can create permanent jobs and generate positive ripple effects on a local economy.

Approximately 40 states in the U.S. offer film incentives, but they’ve had varying degrees of success in building clusters. Some states, including Louisiana, North Carolina, and Texas, have reduced their incentives or plan to do so, while others, such as California and New York, are committed to keeping incentives funded. North Carolina did not renew its tax incentives when the program expired in 2014. Although it did provide a stopgap program for the first half of this year, it lost a range of productions, including TV, movies, and commercials. Pennsylvania is another state that strived to make its film tax credit program sustainable. Since 2010, it has invested $60 million annually to nurture its industry. Within Pennsylvania, Pittsburgh has begun developing a strong media cluster. Auspiciously, Pittsburgh is leaning on its abundant skilled workforce to build ties between the local film industry and the town’s booming technology sector. However, the success of Pittsburgh’s effort, we believe, will hinge largely on the state government’s support of tax credits.

Not every place should join the incentive game to vie for movie and TV productions, and there is no one-size-fits-all strategy for designing and implementing an incentive program. Incentives are just one piece that can help create success. Developing a media and technology cluster requires a locale to simultaneously develop infrastructure, build and retain its workforce, and offer producers appealing, reliable incentives.