{"id":2712,"date":"2015-12-21T17:30:35","date_gmt":"2015-12-21T17:30:35","guid":{"rendered":"https:\/\/thunderbird.tv\/2015\/12\/21\/full-speed-ahead-5-key-trends-driving-the-canadian-screen-industry\/"},"modified":"2015-12-21T17:30:35","modified_gmt":"2015-12-21T17:30:35","slug":"full-speed-ahead-5-key-trends-driving-the-canadian-screen-industry","status":"publish","type":"post","link":"https:\/\/thunderbird.tv\/2015\/12\/21\/full-speed-ahead-5-key-trends-driving-the-canadian-screen-industry\/","title":{"rendered":"Full speed ahead: 5 key trends driving the Canadian screen industry"},"content":{"rendered":"

Katie Bailey, Julianna Cummins and Jordan Pinto \/ Playback<\/em><\/p>\n

From\u00a0Playback<\/em>\u00a0magazine: From mergers and acquisitions to the rise of Canadian feature animation, a look at key trends driving the industry forward.<\/p>\n

Canada\u2019s broadcast industry may have been reshaped this year by the CRTC, and some provincial governments took a scalpel to local tax credit regimes, but while both garnered headlines, behind the scenes the Canadian screen industry was already undergoing a metamorphosis, buffeted by global shifts in media consumption, an increasingly international marketplace and volatile commodities markets. Here\u2019s a look at five industry trends illuminated in 2015 that will have a ripple effect in Canada in 2016 and beyond.<\/p>\n

Mergers and acquisitions
\n<\/strong><\/p>\n

Arthur Evrensel, partner with business and entertainment law firm Michael, Evrensel and Pawar, is almost in awe of the volume of M&A activity in the Canadian production sector in the last two years. \u201cIt\u2019s incredible to me,\u201d he says. \u201cI\u2019ve never seen anything like it.\u201d<\/p>\n

Evrensel\u2019s firm has been at the centre of the action, handling a number of the 2014\/2015 deals including four for Thunderbird (Atomic Cartoons, Reunion Pictures, Great Pacific Television and Soda Pictures); NBC\u2019s minority stake in Lark Productions; Rainmaker\u2019s proposed acquisition of Shaftesbury and DHX\u2019s $57 million pickup of Nerd Corps. Outside of that, you have CPP\u2019s 17.8% stake in eOne (itself having been a major domestic M&A player since 2012); Fairfax Financial Holdings\u2019 majority stake in Temple Street; Image Engine and Cinesite on the VFX side; SIM Group and Tattersall in the post sector and more.<\/p>\n

He sees three main trends driving the volume of activity and the size of the investments.<\/p>\n

Canadian companies achieving global reach, both in terms of audiences and potential customers.<\/strong>\u00a0\u201cWhen the Canada Pension Plan investment board puts that kind of money into eOne and when Fairfax puts money into Temple Street, you know something else is happening beyond ordinary investors making related media investment. They\u2019re looking at the media space and saying \u2018this is a mature industry that we can work with.\u2019\u201d<\/p>\n

Relative value.<\/strong>\u00a0A low Canadian dollar in an industry bolstered by tax credits and funding programs combined with an under-performing resource sector that is less attractive to investors (creating the opportunity for their money to move elsewhere) has created a perfect storm of relative value, he says. With operating costs low in Canada and the currency gap in Europe, the U.K. and the U.S. between 30% and 50%, Canadian-made content is an attractive proposition.<\/p>\n

Quality of work.<\/strong>\u00a0\u201cThe expertise here is as good as anywhere. That holds true and people forget about that sometimes.\u201d<\/p>\n

Evrensel\u2019s summary is reflected in RBC Capital Markets recent overview of Entertainment One, which it ranks as an \u201coutperform.\u201d \u201cIn our view, eOne is a high quality company with meaningful global scale in a large and growing addressable market,\u201d its report said. \u201cWe believe it is well positioned to deliver attractive risk-adjusted returns by leveraging a solid position in the filmed entertainment value chain, strong relationships with creative talent, world-class sales and distribution infrastructure, and financial resources (including regulatory mechanisms) to support major annual investments in content.\u201d<\/p>\n

RBC\u2019s analysts were particularly impressed by eOne\u2019s acquisition of a majority stake in the Mark Gordon Company and signalling what may be the next big trend in the Canadian independent production sector: global investment.<\/p>\n

These newly well-capitalized companies are likely to now start looking for acquisitions of their own, a strategy Temple Street discussed with Playback (see pg. 22) and one which is reflected in Thunderbird\u2019s 2014 acquisition of U.K. distributor Soda Pictures or 9 Story Media Group\u2019s August acquisition of Ireland\u2019s Brown Bag Films.<\/p>\n

\u201cThey\u2019re doing exactly what they should be doing,\u201d Evrensel notes. \u201cGoing global not only with their product but asset purchases and expanding that base.\u201d<\/p>\n

The quest to capture\u00a0the millennial audience<\/strong><\/p>\n

While having a content-hungry audience in a young demo isn\u2019t exactly a huge problem for content creators, herding that particular group of (under 30) cats into monetizable channels is one of the biggest challenges facing the broadcast side of the industry.<\/p>\n

This year saw two big broadcasters join Corus by making moves into the MCN space: Bell launching Much Digital Studios and CBC launching the CBC | Fullscreen Creator Network.<\/p>\n

Now, few people or companies are getting crazy-rich off YouTube just yet (except YouTuber PewDiePie, whom\u00a0Forbes<\/em>\u00a0recently estimated makes $4 million a year from ads on his channel). But that\u2019s not really the point.<\/p>\n

Once in the driver\u2019s seat of mass media content creation, broadcasters are tacitly admitting by way of investment that they may not be the best-poised to launch the Next Big Thing for millennial and Gen Z audiences. These next-gen partnerships allow Big Media to tap into the DIY ethos driving the \u201cTV\u201d of tomorrow, says Max Valiquette, a strategic planner, consultant and former CMF board member.<\/p>\n

\u201cEveryone understands how important these two markets are, but I think increasingly people are understanding how difficult it could be to create really great content directed at this market,\u201d he says. \u201cIt\u2019s one thing to produce that content and say, \u2018This the content we have, I think it\u2019s relevant to you.\u2019 It\u2019s another entirely to be able to say, \u2018Look at who we\u2019ve partnered with, who we know is relevant to you.\u201d<\/p>\n

Another trend to watch is platform-specific content. With Snapchat hosting original series and mobile-centric Facebook pushing aggressively into video, broadcasters must also avoid the trap of simply repurposing content that works on linear properties or risk being left behind, says U.S.-based media consultant and pundit Shelly Palmer. The proliferation of smartphones with HD capabilities and connections to 4G networks means broadcasters have to be thinking about mobile-first content.<\/p>\n

\u201cYou are talking about a lot of network-connected miniature consumption devices that yield emotionally satisfying consumer experiences, and people are going to want content there,\u201d Palmer says. \u201cConsumers are looking for something to put on these screens\u2026if we [the industry] don\u2019t take care of those customers, someone else will.\u201d<\/p>\n

Branding yourself<\/strong><\/p>\n

While humans have always struggled to process excessive amounts of information, the problem has been exacerbated by abundance of choice, said Mark Tomblin, chief strategy officer at Toronto ad agency Taxi during his presentation at this fall\u2019s Playback Marketing Summit. And that means the more quickly you can create a mental shortcut for people, the better.<\/p>\n

\u201cWhy brands really matter is really simple\u2026they are a brilliant way of quickly navigating the astonishing and ever-increasing complexity of modern life. And it\u2019s only going to get worse,\u201d Tomblin said. \u201cBrands are fast mental cues that allow us to choose something, feel good about it and move on.\u201d<\/p>\n

This rings particularly true when considering what goes through a consumer\u2019s head while they scan a film festival lineup, VOD menu or venture outside Netflix\u2019s algorithms. Where will it matter most in 2016? When broadcasters recast their channels as individual pick-and-pay-preneurs, fighting for Canadians\u2019 attention in a sea of channel choices.<\/p>\n

It was a message reinforced by Comedy Central CMO Walter Levitt at the Summit, who said the network has spent the last several years transitioning its marketing from being a TV channel into a comedy brand \u2013 the comedy brand. \u201cEverything we do is about taking that lens and applying it,\u201d Levitt said, adding that the network no longer refers to its \u201cviewers\u201d but rather its \u201cfans.\u201d<\/p>\n

\u201cPeak TV\u201d and a fiercely\u00a0competitive marketplace<\/strong><\/p>\n

Is there #TooMuchTV? FX chief John Landgraf said (repeatedly), in 2015 he thinks there is, prompting a rash of consumer articles examining the idea (\u201c#TooMuchTV is real. Here\u2019s how to cope,\u201d advised the Washington Post in October) and some anxiety amongst those who ply their trade in it.<\/p>\n

Stuart Baxter, president of eOne Television International, says he disagrees with the idea that there\u2019s too much TV. Not only did eOne have its busiest-ever MIPCOM this year (according to a fall 2015 RBC analyst report), he thinks film is partially to blame. \u201cI think it\u2019s filling a void, where some of the retention of the sequential releasing in the film business has meant that film probably hasn\u2019t evolved as quickly as consumers would want it to and TV moved into that vacuum. You see both money and talent following it.\u201d<\/p>\n

But while Baxter isn\u2019t worried about consumers finding the time to cram enough TV into their schedules, he says the effect of the above-mentioned trend has put pressure on the talent side of the business. While the talent pool in TV (in front of and behind the camera) has never been greater, the competition for it is fierce, with U.S. studios and networks being the first stop for agencies. It was that trend that prompted eOne\u2019s big Hollywood play in 2015, taking a majority stake in the Mark Gordon Company (MGC). Hailed by some analysts as a \u201cgame changer,\u201d the investment gave the company an important position at the top of the TV food chain.<\/p>\n

\u201cWhen we looked at our drama slate, [there] were some very good Canadian dramas and international coproductions, but in Hollywood, we\u2019d had less success getting the best talent the best shows. They tended to go to the networks first or the studios \u2013 which were a little bit more expensive to buy,\u201d he said with a laugh. \u201cThe sole exception is Mark. And that\u2019s what really made it. So we\u2019re seeing a lot of better quality projects a lot earlier, which is the key to success in this industry.\u201d<\/p>\n

He predicts, however, a bounce-back in the light entertainment, reality and documentary genres. And with shows like Good Witch on W Net breaking ratings records \u2013 and Supergirl being one of the few breakout hits of the fall TV season \u2013 one senses the saturation of dark dramas may have the effect of turning some viewers back to an older style of feel-good light drama.<\/p>\n

What really matters, Baxter points out, is having a \u201cbalanced portfolio,\u201d a strategy you\u2019ll see reflected at many of Canada\u2019s top, most active prodcos. Expect the diversification to continue in 2016, as the recent spate of M&A and subsequent capital infusions play out across kids, factual and yes, drama.<\/p>\n

The rise of Canadian feature animation<\/strong><\/p>\n

If you feel like you\u2019ve been hearing more about Canadian feature animation in 2015, it\u2019s probably because you are. Led on the West Coast by companies such as Arcana (which released full-length feature\u00a0Pixies<\/em>\u00a0this year, with Christopher Plummer in a lead voice role); Bardel Entertainment, which was acquired this year by Europe\u2019s biggest animation studio Rainbow, and Bron Studios, which opened a new animation studio in B.C. In Eastern Canada, Portfolio Entertainment this fall opened a new animation studio and relatively new player AMBI is currently in pre-production on two animated features:\u00a0Groove Tails<\/em>\u00a0and\u00a0Arctic Justice: Thunder Squad<\/em>, both populated with big-name voice talent.<\/p>\n

The culmination of three main factors is driving the trend, says Michael Hirsh, the former CEO of animation powerhouse Cookie Jar who now sits on the boards of DHX, TEAM and Cinecoup. First: the inevitable ripple effect of Disney\u2019s aggressive acquisition strategy in the U.S.; second, tax credits and currency fluctuations, and third, the depth of Canadian animation talent.<\/p>\n

\u201cThe almost monopolistic business that Disney was enjoying now has competition. So the potential for independents to be successful is definitely there now,\u201d Hirsh tells\u00a0Playback<\/em>.<\/p>\n

Equally as important is the global demand from OTT services for family-friendly animated feature content, which has created new space in the markets for indies to fill. The Netflix-driven demand for moderately budgeted animated features ($15 million to $35 million) is a major driver, agrees Barry Ward, president of Bardel Entertainment, as now distributors are more willing than before to pick up animated properties.<\/p>\n

But Ward also sees a change in viewer behaviour, in which audiences are increasingly inclined to see movies not made by the major studios: \u201c[Films from indie animation studios] are usually unique, they stand out a bit from the clutter. No one\u2019s trying to compete head-to-head with the huge studio productions \u2013 it gives them a little more freedom to be unique and original.\u201d<\/p>\n

However, none of it would be possible without the stockpile of talent Canada has amassed, built and honed over many years of investment by schools like Sheridan and Capilano University. Although developing talent for the animation industry is a skill set of its own, beset by the challenges of constantly changing technology and often-changing artistic trends, the long-term investment is paying off, emphasizes Hirsh. \u201cOur talent pool has matured, especially in the area of feature film,\u201d added Ward.<\/p>\n

This article originally appeared in Playback\u2019s Winter 2015-2016 edition<\/em><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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