There’s always been big money in Hollywood – but never like this.
In the last few years HBO, Netflix, Amazon and Hulu – the cable and streaming giants of a new class of dream merchants – have been racing to produce award-winning content as they vie for shares of what we choose for entertainment. Total spending this year will top $25 billion on production of shows formatted for personal devices and television.
With most of this cash spent in Los Angeles there’s been a predictable ripple effect across L.A.’s 30-mile “studio zone,” aka the TMZ, a distance used for decades by trade unions to fix labor rates. Creative talent and production trades are working at full tilt and L.A.’s historic film and TV back lots and about 4 million SF of soundstages nearly are booked solid. In the L.A. area almost everyone in “the industry” lives and works in the TMZ.
“Nobody would deny that this has been essentially an unprecedented influx of money,” says Brett Danaher, Ph. D., assistant professor of economics and management at Chapman University’s Dodge College of Film and Media Arts.
Danaher tells LINK that spending in L.A.’s bygone days – from the silver-screen and the golden age of television to creation of the DVD – “was nothing like what is happening right now.”
“This dwarfs that in size. It can be seen in the explosion of the amount of content,” Danaher said. The results of this free-spending period have earned this era the title, “peak TV,” which Danaher says he and his colleagues believe could be lasting.
“The elevated spending may be sustainable due to the ability of streaming services to learn what consumers want, which reduces risk, and market more effectively using consumer-level data,” Danaher said.
The sums, all previously reported or disclosed in corporate announcements, are stratospheric even by industry standards. Amazon is spending $5 billion this year, and HBO is spending $8 billion. Netflix says it’s boosted its production budget this year from $8 billion to more than $12 billion. Apple says it plans budget hikes from $1 billion this year to $4 billion in 2022. Disney is set to dive into the streaming world in 2019. Broadcast networks ABC and CBS are spending between $3 billion and $4 billion a year.
Additionally, there’s a raft of second-tier producers that includes BuzzFeed and Facebook Watch. They’re spending millions to produce original serials and short-form online videos. And don’t forget the thousands of commercial spots. All this production is squeezing available soundstage space that usually operates between 70% and 80% capacity. Netflix has tied up soundstages with 10-year leases to protect production schedules.
The surging demand, of course, is welcomed by state and local government officials nationwide seeking to attract the money and jobs and sometimes the glamour that can come with production of a blockbuster series. A recent survey lists 40 states with an array of tax subsidies to attract TV and film production.
“We’re getting calls from states and countries we’ve never had before,” says Gary Bastien, the industry’s leading soundstage architect. Bastien tells LINK that his Tustin, California, firm has been asked to propose on designing soundstages in New Zealand, Serbia and Spain as well as Hawaii, Louisiana, New Mexico and Massachusetts.
Soundstages have several distinctive features, including overhead grids for catwalks and lighting along with floor space unobstructed by columns, Bastien said. Clear height of 35 feet to 45 feet is normal. Typically, each stage requires about 5,000 to 6,000 amps to power lights and other equipment, including air conditioners needed to cool that much space.
“They’re really acoustical boxes,” Bastien said. Since 1992, Gary Bastien & Associates has designed 250 soundstages worldwide, including Hollywood’s newest, two 18,000-SF studios developed by NBCUniversal.
Bastien says that by his count there are 380 sound stages in Southern California. About 18,000 SF is ideal for TV and feature films, he said, adding that some are as large as 40,000 SF. Some industrial buildings have been adapted with additional temporary power.
He said that the tight inventory of space and commercial land for development will continue to drive up development costs and lease rates, likely making long leases more common along with build-to-suits between the giant producers and soundstage developers and operators.
“We did Manhattan Beach Studios in 2000. That was 14 soundstages. The cost then was $130 a square foot. Now it’s about $300,” Bastien said.
“Despite all the advancements in film and video production equipment, there’s still no substitution for action on a physical set that actors can respond to. Sets with street scenes, or whatever is called for in the story, are still valid,” he said. “Green screens are less effective because the actor can’t see the bear chasing them.”
August 02, 2018