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Film Incentives Adopted by India & Other Countries
A road map for the growth In the AV & post-production sector in India- Part 1
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What do film series’ like The Lord Of The Rings, Harry Potter & The Hobbit have in common besides the fact that these were films based on literary works, produced and distributed by one studio, and did very well at the global box office with revenues of $2.91 billion, $7.7 billion & $2.93 billion respectively, and between them they collected 18 Academy Awards. The Harry Potter Series, The Lord Of The Rings & The Hobbit Series filmed in the UK and New Zealand respectively, also reignited the Post Production & VFX Sectors in UK & New Zealand. These films were produced in an era where you required a global distribution platform to showcase the films in various parts of the world.
Today, in the digital era OTT services are taking locally made content to various parts of the world. Fauda (Netflix Original Show from Israel), Money Heist (Netflix Original from Spain), Squid Game (Netflix Original Show from South Korea) are household names in India and part of social media & online conversations cutting across generations.
We juxtapose Indian film incentives with the global counterparts to understand this trend better.
As per an Olsberg-SPI White Paper, global film incentives comprise of the following types:
- 59% are based on Rebates.
- 34% are based on Tax Credit
- 5% are Mixed (combining more than one incentive type)
- 2% are based on Tax Shelter.
Across the world, these are some of the highest average possible rates of incentives:
Mean Global Film Production Incentive Values, May 2019
Countries from around the world have established their country’s film prowess in several ways. The UK established the ‘Harry Potter’ franchise and New Zealand showcased the ‘Lord of the Rings’ and ‘The Hobbit’ franchises for example. The table provided gives examples of three different countries with various incentive schemes that have prompted foreign filmmakers to shoot in the country:
Film Tourism: A Bi-product of Incentive Schemes
New Zealand is one such country that has benefitted immensely from the ‘Lord of the Rings’ movie trilogy. According to Rebecca Ingram (General Manager and Government Relations at Tourism New Zealand), “Nearly one in 5 visitors still cite The Lord of the Rings trilogy as a reason they choose to visit New Zealand, almost two decades after the first film was released”. Tourist numbers rose by 40% in just five years after the release of the first Lord of the Rings film. This has made tourism the nation’s biggest export industry bringing in NZ$39.1 billion (INR 1,81,424 Cr) annually.
The Lord of the Rings tourism pump has also accelerated the movies that are being shot in the country. ‘The Hobbit’ trilogy, ‘The Chronicles of Narnia’, ‘The Last Samurai’ and ‘A Wrinkle in Time’ are some movies that were shot in New Zealand. Even music videos such as Taylor Swift’s ‘Out of the Woods’ was filmed in Auckland and Queenstown in 2015. The people of New Zealand have in a way subsidised the ‘Lord of the Rings’ trilogy and Peter Jackson’s Weta Workshop. This subsidy is in the range of NZ$ 150 million (INR 696 Cr).
The success of Lord of the Rings for the local film industry in New Zealand even prompted the New Zealand government in 2010 to amend the labour laws so that New Zealand could be host to ‘The Hobbit’ franchise. Included in the deal was an offer of $25 million (INR 114 Cr), $15 million (INR 68.55 Cr) of that in tax breaks. The government additionally announced that on top of the overall package, New Zealand would offer extra tax rebates for each Hobbit movie on top of the usual 15% which would partly offset the costs of a joint marketing deal with Warner Brothers to promote the country as a film production and tourism destination. This franchise also provided employment opportunities to local labour.
‘The Beach’, a Hollywood movie starring one of the most sought-after actors in Hollywood, Leonardo DiCaprio, was shot in Thailand and in particular, Maya Beach. The potential for the scenic beauty of Maya Beach was recognised by the state and permission to shoot the film was granted. Granting permission for Maya Beach to form the setting for the movie is said to have injected $13 million (INR 96.85 Cr) into the Thai economy.
Like New Zealand and Thailand, which became tourist destinations due to the landscape of the countries depicted in ‘Lord of the Rings’ and ‘The Beach’ respectively, India is not short of such natural beauty. From mountains and valleys to lakes, rivers, deserts and beaches, India is host to some of the most beautiful places in the world. To put India on the map, we need to find ways to incentivise foreign studios to invest in India and use India as a filmmaking hub whether for production or post-production services which would in turn also benefit the economy. Film tourism could act as a turbocharger for this part of the Indian economy.
The ’Harry Potter’ series provided a boost to the tourism industry in the UK. The books and film were awarded a ‘tourism Oscar’ for their Outstanding Contribution to English Tourism. The number of tourists visiting the attractions displayed in the movie has grown between 50% to 100% because of the Harry Potter films. A professor at the London School of Economics in 2016 stated that Harry Potter was worth GBP 4 billion to the UK economy.
South Korea, is another example of a country that has benefitted immensely from film tourism. Winter Sonata, a South Korean Television drama that released in 2002 sold merchandise that surpassed $3.5 million in Japan alone and this also created a boost for tourism with foreign tourists travelling to Korea increasing by nearly 75% from 2003 to 2004. BTS, an extremely popular Korean band, generate around $3.5 billion per year in economic activity according to the Hyundai Research Institute. In 2017, approximately 800,000 tourists visited South Korea because of their interest in the band.
An Indian film has also contributed to film tourism for Spain. After the release of the Hindi film ‘Zindagi Na Milegi Dobara’ (the highest-grossing Bollywood film in 2011) which was a film that was shot in Spain, and explored the various parts of the country, the number of Indian visitors to the country increased manifold. 60,444 Indian’s are said to have visited Spain in 2012 (the year after the film’s release), which was nearly double the number of visitors in 2011 from India according to the Industry and Tourism Ministry. In 2015, this number had reached 85,000. The International Indian Film Academy Awards were also hosted in Madrid in 2016 owing to the growing popularity of Spain amongst Indian tourists.
The fact that a Bollywood movie has attracted so many tourists from India to visit a completely different country, shows the influence that an Indian movie can have among the Indian audience. The same could also apply to movies depicting the natural beauty of India and this aspect of film production needs to be looked at extensively.
Case Study – ‘Squid Game’ Netflix Series
Squid Game is a Netflix Series that originates from South Korea, and has quickly become one of the most popular Netflix shows amongst a foreign audience. More than 130 million people have watched the show within the first 23 days of release and Netflix estimates that the show will generate almost $900 million in value for the company while the production cost stood at merely $21.4 million. This Netflix series has reached the number one spot in more than 90 countries globally on Netflix and this is a testament to the investment Netflix made in Korean films and television of around $700 million from 2015 to 2020. As the premise of the show lies around Korean playground games, the show has gained popularity on social media through TikTok videos of people replicating the games and online retailers are hurriedly selling Halloween costumes based on the characters of the show.
The South Korean government has always had a focus on boosting Korean popular culture. The Ministry of Culture and Tourism has developed business plans with the help of public relations firms, technology companies and other parts of the private sector, to grow the overseas market for Korean TV dramas, movies and popular songs. They also offer loans to entrepreneurs and training for aspiring artists.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.