Contact Us
News

'Y'allywood's' Dominance Facing Threats From Abroad

Tyler Perry Studios
Tyler Perry Studios President Steven Mensch

It isn't Hollywood that Y'allywood — a nickname Atlanta's entertainment production hub has earned — has to worry about when it comes to real competition for film and television production. The locations fighting Atlanta for business are more than 7,000 miles away.

The next hub of movie production from nimble film studios will likely be China, Tyler Perry Studios President Steven Mensch said during Bisnow's Southside Atlanta event Wednesday morning, despite a number of states in the continental U.S. offering lucrative tax incentives to film and television studios to lure production their way.

“If the incentive goes away, there's a lot of studios who will shutter their doors. The businesses will leave,” Mensch said during a panel discussion at Virginia Crossings office building in Hapeville.

Instead of California or North Carolina or even Louisiana, which have tax incentives as well, “it's going to go to China.”

'Y'allywood's' Dominance Facing Threats From Abroad
Tyler Perry Studios in South Atlanta

Georgia's current tax credit system — in which studios can earn up to 30% tax credits on total production costs — has led to a boom in movie business stateside. Last year alone, studios spent $2.7B on more than 300 productions in Georgia, including “Guardians of the Galaxy Vol. 2” and “Logan Lucky” and television shows “Stranger Things” and “The Walking Dead.”

The state even outpaced California as home to the number of feature films shot.

It also helps that Georgia has a film industry talent pool as well as strong infrastructure, aspects that buttress the state as a filming destination. Michigan attempted to lure studios with a 40% tax break, but failed to lure significant productions because it lacked talent and infrastructure, Mensch said.

In 2015, Michigan Gov. Rick Snyder signed a bill that dismantled the state incentives for film production, in part because every dollar in tax credits spent since the inception of the incentive in 2007 generated only about 60 cents worth of private sector activity, the Detroit Free Press reported

If political will falters and the incentives get rolled back or disappear altogether, so will the studios, Mensch said.

China is already making inroads to become the Hollywood of the Far East. In 2007, some 400 films were produced in China. By last year, that number nearly doubled to 798 films, according to Statista.com. A recent Deloitte report said China was entering into a cinema “golden age,” with box office revenues among the fastest-growing in the world.

Deloitte predicts Chinese box office revenues will exceed $30B by 2020, nearly tripling the money spent on seeing movies in the United States, which tallied $11B last year.

Chinese involvement in films is also growing. In 2015, films co-produced with China-based studios contributed to 60% of total box office revenue, Deloitte officials said.

Southeast Capital partners Raulet Property Partners
Southeast Capital Partners CEO Jay Clark huddles with Raulet Property Partners Managing Director Tyler Edgarton during Bisnow's Southside Atlanta event in 2018.

Despite pressures from the Far East, Tyler Perry is among the big Hollywood names making significant investments in Georgia, along with EUE/Screen Gems Atlanta, Mailing Avenue Stageworks, Pinewood Atlanta Studio and Third Rail Studios.

But the competition is real. Raulet Property Partners Managing Partner Tyler Edgarton — whose firm owns three studios in Atlanta, including Mailing Avenue Stageworks — said the state already lost television show pilots this year to Canada.

“It's a manufacturing business at its core. It's really a content manufacturing business,” Mensch said. “And people will go ... where they can make it for the least amount of money.”