With talk of a federal tax incentive for filming in the US taking serious shape at present, a new, MPA-commissioned study offers insight into what such a program could really offer. Blake & Wang P.A. entertainment attorney , Brandon Blake, shares the topline insights you should know.
An Extra $125B in Production Spend
The MPA study suggests that production spending between 2027 and 2035 could see a $125.3B uptick should a federal film tax incentive program be implemented. It also suggests that there could be around $250B in overall economic activity added in addition to direct improvements. Additionally, up to 143,500 full-time jobs could be created. Altogether, this would raise the US’s share of filming globally to around 65% across feature films and TV projects.
That’s a lot of exciting numbers. At a time when the momentum for the President’s suggested federal tax incentive seems determined to see it through to the end, complete with the bipartisan backing of lawmakers, the MPA data offers further backing and enthusiasm. Perhaps we even have enough energy brewing to see this one through to the finish line.
The Flip Side of the Coin
However, enthusiasm is one thing. Another critical question is, what happens if we don’t establish a federal-level incentive program? The MPA’s commissioned study gives some further insight into that question, too.
Their data suggests that, if incentives remain at the state level only, the only boost we would see to overall production spending would lie in inflation over time. The actual power of that spending would remain relatively flat, if not in active decline. Currently, the US drives about 34% of all feature film projects and 42% of TV projects globally. Without the projected impact of a federal-level incentive, that is projected to decline to 25% and 29%, respectively.
Of course, since we do not yet have a formal bill on exactly what a federal tax incentive would look like, there are some assumptions in play here. However, these projections include a transferable tax credit of at least 20%, which is reasonable, with a possible 5% for indies and labor costs in FEMA disaster areas. It also, of course, assumes global production spend will increase at a rate around 3.7% annually, so it wouldn’t account for another COVID hiding in the wings, for example. Probably the most critical assumption, however, is that an incentive would be stackable with what states already offer, but this is a model already in play internationally.
What it does make clear, however, is that without some way for the US to keep pace with expanding global initiatives, it will steadily lose competitiveness with other nations. We’re already seeing the country lose ground to alternate international destinations, like Canada and the UK, due to better tax advantages. A federal tax credit would be a good way to even that playing field and re-encourage productions to consider the US as a destination. At the end of the day, that’s what the domestic industry needs the most.
With substantial subscriber gains and a compelling balance sheet for their fiscal Q4 on offer, Tubi is having a strong year. Entertainment attorney at Blake & Wang P.A., Brandon Blake
Successful Q4
Tubi can now claim over $1B in annual revenue, with their fiscal Q4 delivering their highest revenue quarter to date. They have also added around 10M monthly active users to the platform, bringing their total to over 110M. They equate this to 14% audience growth, with time watched growing by 17%.
Tubi has, of course, become Fox’s strongest digital asset. Growing from its FAST origins, it has enabled them to introduce other digital business lines that have vastly expanded their stable. Most of Fox’s current digital activity is taking place through their Red Seat Ventures arm. They are also set to acquire Roku in an M&A deal expected to close within a year, if all disclosure processes go well.
Tubi’s choice to remain a free service (at least at present) seems to be doing well for them, especially as many of the larger streaming platforms turn to paywalls on their more premium content. We have even seen Disney contemplating offering a free tier recently, though it is unclear if this will come to fruition.
Advertising Anchored
Of course, these “free” streaming options are mostly ad-supported, and we’ve seen the rising trend of turning to advertising money to enable further growth accelerate in recent years. Even Netflix eventually caved to the trend and added an ad-supported tier. With Tubi, Fox has made a particularly strong case for how powerful this strategy can be, with entertainment inventory beyond their broadcast network to offer, and a strong stable of sports ad inventory on offer.
As with many of the streaming platforms recently, live sports has become a particular drawcard for Tubi, as has its inclusion of Fox’s broader “creator” base into channel offerings. Part of the reason for this particularly successful quarter, after all, was their FIFA World Cup partnership, as well as the growing audience for their Formula 1 deal. The FIFA World Cup has been credited with bringing in younger audiences to Tubi, as well.
On their audience call for the quarterly results, string data collection was also credited for some of the success. As digital has increasingly encroached on entertainment spaces, this sort of data collection and harvesting has become a rich source for both the platform hosts themselves, as well as the advertisers being increasingly courted.
Looking ahead, it seems Tubi may be focusing on expanding their live sports offering, and introducing further exclusive originals to the platform. They also mentioned wanting to expand the creator side of their offerings into longer-form content.
Among smaller streamers, Tubi is certainly a success story to watch. As, indeed, was Roku and the Roku Channel itself, which will soon be folded into the Fox stable alongside Tubi. Given that there was a point at the start of the streaming boom where it looked like FAST channels were set for failure, it’s certainly interesting to see how they have thrived.
