Sunday, April 12, 2015

Tax Credits, Exchange Rates and Thin Ice

(Updated Below)
Canadian Animation Resources has good coverage of Nova Scotia's decision to reduce it's tax credits for film and TV production (1, 2, 3).

It's going to be a painful disruption for many people.  Undoubtedly, some studios will close, and some will shift work to another location.  Those lucky enough to be offered jobs elsewhere will have to uproot their lives and relocate to another province.  I'm sorry for everyone who will be affected by this.

This is an ongoing problem in Canada and I've seen it in multiple industries over multiple decades.  Too many companies base their existence on some kind of government protection (such as content quotas, tax rebates and before free trade, import duties) or on the exchange rate, as the Canadian dollar is generally worth less than the American.

The problem with this approach is that it adds more variables to the already difficult puzzle of making a profit.  Creating a product or service, pricing it properly, marketing it and fending off competition is never easy.  When government policy or exchange rates are added in, companies are at the mercy of things they cannot control.

There is also the upcoming issue of the CRTC's pick and pay decision.  As of next March, cable subscribers will be able to abandon packages of channels in favour of only paying for what they want to watch.  To date, YTV has been paid for by everyone in Canada who subscribes to cable, whether they have children or not.  They will undoubtedly lose subscribers.  Teletoon is part of a package, and no one knows what percentage of the people who purchase it actually watch it.

(Update: Canadian Press is reporting that the number of cable subscribers fell by 95,000 in 2014.  That compares to a drop of 13,000 in 2013.  It estimates that Netflix went from 3 million to 3.9 million subscribers in Canada last year.  Even without the CRTC decision, revenue for cable channels, where the majority of Canadian animation appears, is dropping and that is bound to have an effect on production levels, budgets and deadlines.)

While the animation business in Canada is booming at the moment, I'm not optimistic.  I worry about a contraction coming within the next two years.

Canadian gaming studios tend to be either very large or very small.  There are branches of Ubisoft, Rockstar and Electronic Arts in Canada.  There are also small indie studios that are often less than a dozen people.  Those small studios are surviving due to low overhead and a business model that allows them to sell directly to consumers over the web.

I suspect that Canadian animation studios are too married to series production and international financing to be able to work the low end of the market.  I'm waiting (and hoping) to see the entertainment equivalent of indie game companies arise, where small groups develop their own intellectual property and take it directly to the audience.

So long as Canadian studios depend on government regulations and the exchange rate, they are skating on thin ice.  We'll see how well Nova Scotia withstands the reduction of the tax credit, but what's happened in Nova Scotia could happen anywhere in Canada.   I hope that studios are preparing for that eventuality.

Sunday, April 05, 2015

The Upside and Downside of Influences

When a baby goose hatches, it starts following the first moving thing it sees.  As that is usually its mother, instinct serves it well.

People don't have an instinct that strong, but from around the ages of 5 to 20, humans are deeply influenced by what's around them.  Sometimes these influences cause an ignition moment; a person sees someone or something and suddenly knows the path to take.  I'm old enough to remember the first appearance of the Beatles on The Ed Sullivan Show, and my classmates were utterly transformed by the event.  I'd love to know how many guitars were sold in the weeks after that appearance.

Even when an influence isn't instantaneous, it still shapes shapes a person.  The things you are exposed to during your impressionable years contribute to who you are.  As they say, the child is father to the man. 

There's a strong emotional component to being influenced at that age.  The emotions generated by the things one likes cement their influence on you.  While I have seen many good movies since my twenties, few have the emotional impact that films I discovered as a teenager had.  When you reach maturity, something happens to how you respond; the impact is not as great. 

Creative people are formed during that 15 year period.  It's why you can look at the mass culture of any decade and find that it's distinctive.  It's because the people creating during that period grew up with the same influences.  While they don't reproduce those influences exactly, they shape the work in similar ways.

The emotional affection for something in its simplest form results in nostalgia.  It's fun to share childhood memories with someone the same age.  There's a pleasure to re-experiencing something you loved when younger.    The original emotional is evoked.  That's why there are oldies stations on the radio, even though the decade(s) they feature are constantly advancing with the age of the listening audience.  Good luck finding an oldies station playing '50s rock and roll now.

The emotional attachment to the things that formed us have repercussions for creators.  It's why animation studios and broadcasters hunt for young talent.  That talent is closest in age to the audience, so it shares more of the same influences.  Those people are often inexperienced in the ways of production, but studios think it's a worthwhile risk.  Production smarts can be bought more easily than an emotional link to the audience. 

It also means that everyone who is creative is in danger of losing the audience over time.  As media content shifts, creators often can't shift with it.  Because newer approaches rarely evoke the emotional response of the work they grew up on, staying current often produces a superficial result.  It apes the surface but can't connect to the core; it lacks sincerity. 

This has become very obvious to me recently.  I mentioned to one of my classes that I haven't really watched TV animation in 20 years, though I've stayed reasonably up to date with animated features.  Partly this is because I know first hand the limitations of TV budgets and schedules and when I watch TV animation all I see are the compromises and shortcuts.  The bigger issue is that I'm past the age where I can emotionally connect with shows aimed at children or teens.  The influences that formed the people making these shows are alien to me.  While my students may love Gravity Falls or Steven Universe, I'm never going to love them in the way that I love Chuck Jones or even Bosko cartoons, something I admit have little absolute value.  While I admire the work of Miyazaki, Takahata and Kon, I'm betting that younger people exposed to their work love it in a way that I can't.

(One of the oddities of growing up in the early TV era is that my generation was exposed to older work our parents grew up on: theatrical cartoons, the Marx Brothers, Humphrey Bogart, James Cagney, Abbott and Costello, The Three Stooges, Laurel and Hardy, and The Little Rascals.  This  proves that the work that influences you doesn't have to be contemporary, only that you experience it during your impressionable years.)

Twenty years from now my current students will discover that they're estranged from the younger people entering the field as they won't have the same influences.  Agism in the media is very real, and this is the root of it.  The gap between creators and the audience results from a difference of influences and the less common ground that creators share with the audience, the harder it is to connect.  Steven Spielberg's latest films are no longer the events they once were, and Spielberg is as audience-wise as anybody.  And I suspect that when we reach the point where young adults no longer grew up on The Little Mermaid, Beauty and the Beast, Aladdin and The Lion King, I'm guessing that the desire to make drawn animated features will be a lot less widespread.

While we are less instinctual than goslings, we may also be less flexible. Goslings eventually move beyond their mothers, but do any of us escape our childhood influences?