Nevada’s film industry is growing in a very competitive international environment. “We currently exist in what is the most competitive environment for production we’ve seen,” said Eric Preiss, director, Nevada Film Office, Nevada Governor’s Office of Economic Development.
The film industry itself is expanding. The internet has changed the concept from movies to content, embracing films, television, commercials, radio and podcasts. The list of content types, and the demand, keep rising. .
“States around the country and countries around the world are competing for these productions,” said Preiss. “A lot of them are offering tax incentives to do so and that’s why Nevada has a competitive incentive program.”
With cities like Las Vegas and Reno-Tahoe, Nevada can effectively compete as a production location because of our brand, and because people want to come here.
Film Tax Incentives
There’s a lot more going on with the business side of the film industry as states and countries create incentive packages to drive production in their direction. “It’s as much of a financial business as it has ever been,” said Preiss.
And, the business side isn’t just concerned with locations, landscapes, sound stages and equipment, but with what incentives a state or country can offer.
“In 2014 we passed the Nevada transferable tax credit for film and other productions,” said Preiss. “That continues on through today as a transferable tax credit. When a production company complies with the program, meets the requirements and films in Nevada, they can receive a credit that can be applied to their tax liability in Nevada.” If they don’t have a tax liability, they can sell the credit to a business that does.
The credit starts at 15 percent and, if the production meets requirements set in place by the state, including working with local vendors and using Nevada locations, they can qualify for bonuses that increase the credit up to 25 percent.
“It’s very similar to what other states and countries around the world offer to incentivize productions to film in their state or region,” said Preiss.
The history of the tax credit hasn’t always run smooth. “Originally we passed it back in 2013 with $20 million to be used on a four-year pilot. So, it was $20 million a year, for a total of $80 million, to be transferable tax credits issued against the modified business tax, the insurance premium tax and the gaming percentages tax, so [productions] could get an incentive,” said Nevada Senator Moises “Mo” Denis. “Then we ended up taking the money in a special session because we needed to balance the budget, so it only ended up with $10 million.” The funds were reallocated as Tesla contemplated building their factory in Nevada, curtailing a boom in productions.
AB 492 in 2017 put back $10 million per year in film tax credits in addition to the remaining amounts from the special session bill. “We were able to use that to provide some tax credits for folks that want to do productions in Nevada,” said Denis.
To qualify for incentives, production companies need to spend at least 60 percent of their budget in Nevada on production and spend at least $500,000 to receive a transferable tax credit of up to 25 percent on cumulative qualified production costs. Credits can be carried forward for four years after issue. There’s a $6 million cap on any specific project and a funding cap of $10 million on program funding.
For Amy Murphy Anderson, who has her own production company, that means, “Basically the tax credit is coming back to me based on the amount of money I spend in Nevada. I can sell those to somebody in Nevada to get my money back faster. In Georgia, [for example], it’s a tax rebate and you wait for the government to get your money back to you.”
It’s a boon to lower-budget productions hiring and spending in Nevada. “I spend as much as possible in Nevada, whether that’s hotels, fuel, caterers, camera, utilities,” Anderson added. “The more money I spend in Nevada the better off we are as a film company and as a state, because it just goes back into the economic pool of our state. So, instead of hiring a grip electric from Utah, we’re spending in Nevada and hiring Nevada businesses to be vendors on my show.”
Anderson worked on Las Vegas Mayor Carolyn Goodman’s Film Coalition to help get tax incentives passed. One of the first films to utilize the transferable film tax credits was a yet-to-be-released movie starring Dakota Fanning called Viena and the Fantomes.
“In 2016 we gave out $4.3 million and in 2017 it was $5.2 million. In 2018 we changed the way we do things and had to retool so none was given out,” explained Denis. “In 2019 it’s $3.7 [million] and we’re projecting in 2020, $5 million and in 2021, $6 million.”
Some recent shows utilizing the program include Who Wants to be a Millionaire?, the Hell’s Kitchen reality show’s seasons 19 and 20 and future projects such as the Catch 21 game show and the 2020 National Football League draft.
The incentive package is helping build an industry of technicians and creators who can make their productions in Nevada.
“It’s a way of promoting Nevada and creating jobs. We’re close enough to California [to make it work],” said Denis. The original point wasn’t to have higher incentives than Louisiana or Georgia but to take advantage of Nevada as a destination and our proximity to California which makes driving or flying to a Southern Nevada location fast and easy.
James Reid, whose company, JR Lighting, is a full-service lighting and grip company, was heavily involved in getting the tax credits in place. Reid finds the credits to be a step in the right direction, but not far enough.
“The incentive is an important piece but it’s not quite as good as Georgia, or New Mexico or even California. So it’s difficult to compete when production is heavily driven by incentives,” said Reid, which most films are.
Reid has mixed feelings about the industry being driven by incentives, but they’re necessary to compete against 40 other states offering incentives.
“We’re just trying to be competitive and the incentive we have here is about as far as we can go with economics, but it would be really nice if it were another 5 or 10 percentage points higher,” he said.
And, in 2017, Nevada lost an incentive when AB6 reversed the exemption from the requirement for productions to obtain a state business registration. The change has had almost no effect and was largely administrative, Preiss said; where film production companies had been exempted from the $500 LLC business license fee, now they have to pay it (or $250 for other organizational forms).
Nevada offers more than tax incentives. Our natural advantages include desert landscapes and sunny days perfect for filming and snow and mountains in Northern Nevada. In addition, the Las Vegas Strip could have been made for movies with the glamour and number of entertainers both performing in Las Vegas and making it home.
Nevada exteriors themselves are a draw, from any movie filmed in Tahoe to every film that’s shown a neon-drenched Las Vegas exterior. But, the state is missing the interiors.
“We don’t have an LA style turnkey stage where we could film a car commercial or have a green screen,” said Anderson. There are smaller stages around town, but the one sizeable stage-slash-studio was demolished and made into a parking lot.
A lack of large studio space creates a problem. Interiors can be filmed anywhere, unlike Nevada’s iconic exteriors. The state is losing business when companies coming in for conventions want to tie-in their commercials using area talent or celebrities and there’s no stage or indoor space in which to shoot.
“In order to shoot your interiors, you’re going to have to find a place, create a space, rent a warehouse for six months to shoot for two weeks and build all your sets,” said Reid. “That’s not cost effective for anybody.” Nevada loses that section of the movie. Producers risk not having the 60 percent of the production filmed in the state where they’re getting the incentive. Which makes having a state-of-the-art sound stage all the more important.
“The time has come for Las Vegas to shine as a center for film production,” said Dr. Heather Addison, chair, UNLV Film Department. “I don’t think we’re ever going to be Los Angeles, but we can be something equally different and enticing to potential productions and to students.”
There are other parts of the infrastructure package missing, added Reid. Production companies don’t have a lot of choice as far as equipment. JR Lighting has lighting and grip production supplies, but props, cameras and costumes are hard to find. In California, a prop shop can supply 10 different cigarette cases for a film. In Nevada the production company probably has to buy them. “They don’t want to own 10 cigarette cases, they want to rent them.”
But there has to be enough work to sustain a prop shop, and there’s not likely to be enough work until there are prop shops. The same goes for personnel.
“One of the biggest problems we’ve had is, every time we build a decent crew base here the work starts to die down and they all leave town. That’s difficult,” said Reid.
The best way around that is to, not only, build the stage, but to build it with a content creator partner to entice production. After all, Nevada is competing with Georgia’s 30 percent and New Mexico’s 25 percent incentives.
“That’s competitive. Our little 15/5 is not competitive,” said Reid. Increasing the incentive might increase production and revenue, which would pay for a stage, and more production.
Nevada’s Natural Advantages
Nevada has everything from desert and alpine landscapes to ghost towns and metro areas. Nevada Film Office works with productions to nail down locations, and one of those tools is the office’s extensive database of locations. The free online resource allows businesses to create a simple Facebook page, add photos and info about their business of interest to filmmakers and producers of television shows, videos and documentaries.
“It really helps drive the production community to small businesses around the state,” said Reid. And, both benefit from the matchmaking. The location’s owner receives a location fee and the producers find their locations easily. They can also work with location scouts listed in the database, which can connect crew and vendors with productions.
Productions filming in state must register with Nevada Film Office; after that they benefit from a range of services to help them finish on time and within budget, said Preiss.
The Film Office can also help them navigate the permitting process and understand the jurisdictions they need permission to work in.
Changes in the Film Industry
Not all productions use tax credit incentives. Independent and, sometimes, crowd-sourced films are ramping up production in Nevada. Local films have premiered at Cannes such as Emily Skyle-Golden’s 10 Syllables, a docu-drama inspired by the #MeToo movement, or The Mustang, highlighting a Nevada prison program that rehabilitates wild mustangs which premiered at Sundance. Local films also enter into film festivals like the Nevada Women’s Film Festival, Dam Short Film Festival in Boulder City and the Las Vegas Film Festival.
And, production doesn’t just mean movies and television anymore. In 2019, content creation at every level is key, from major studio movies to those independently produced, to commercials, documentaries and videos.
“I read a statistic [recently] from the Nielsen company that does all the ratings and, it’s hard to believe, but the average American in 2018 consumed 11 hours of content per day,” said Preiss.
That’s an enormous amount of time, and it’s growing. Statistics from PricewaterhouseCoopers anticipate that, once self-driving cars are mainstream, they’ll free up another billion hours of available attention and most of that will be spent consuming content.
All that content has to be created somewhere, and Nevadans would like it to be created here.
Next Gen Film-Making in Nevada
Another significant change in the industry has been the move from actual film to digital that’s happened over the last 15 years.
“That means anyone who has the desire and perseverance can learn the technology to make a film,” said Nikki Corda, executive director and founder, Nevada Women’s Film Festival. That film doesn’t have to be made in Hollywood, either.
The change means anyone with a story to tell can learn to do so. Corda said she’s seeing a lot of local independent films and documentaries about social issues.
There’s a difference between the economics of film making and independent ventures, between films and videography. Corda, who teaches documentary and beginning videography at Nevada State College (NSC), said it’s the difference between students learning to work as videographers who can go find jobs and those filmmakers driven by a passion to make movies, even if they have to be crowd-sourced.
Financial Impact of Nevada’s Film Industry
Everything that films in Nevada brings jobs for local crew members and vendors, said Preiss, so everything filming here affects the state’s economy. The more production companies that film in Nevada, the more local businesses are involved, the more the industry identifies the missing pieces and those roles can be filled by other local or relocating companies.
People are moving to Las Vegas for its film industry. “It’s always been here, but because of the tax incentive and with, what I call, the ‘gold rush for content’, people are coming to UNLV, graduating and getting to work right away in great positions. It’s hard to move up quickly in LA because it’s saturated. You can move up fast here because it’s a smaller market,” said Anderson.
Once content is shipped to the waiting world, attention turns to Nevada as the location and that can bump up tourism.
“We’re all fighting for attention, all these forms of content … are competing for that end consumer’s attention, so when we’re producing content in Nevada and we’re exporting that content to the world we’re driving the attention to Nevada,” said Preiss. “That’s what it’s all about, having as much content created in Nevada as possible.”
A significant amount of production has shifted outside Los Angeles, Addison noted, allowing other states and countries to create incentive programs and compete for productions.
“Incentive programs are important because they bring creatives to the state,” said Addison. Creatives attract other creatives and the industry flourishes.
“Nevada is an almost ideal place for film and television shows to come because we’ve got great weather, proximity to Los Angeles, no income tax, we do have a tax incentive package and film programs training the next generation of students,” Addison added.
Nevada also has a proactive Film Office, a variety of landscapes, relatively low prices and 300 sunny days a year for filming.
“These are the kinds of things that actually attracted people to Southern California back in the day. A hundred years ago filmmakers headed west because they had the same advantages that Nevada has now,” said Addison.