The Movie Theater Industry isn’t Dying, it’s Evolving

AMC Downtown DisneyThe American movie theater business is in a state of flux. Theaters are scrambling to come up with fresh ideas and marketing strategies aimed at attracting more people to their establishments. Digital technologies like 3D and IMAX formats have pushed theaters to increase ticket prices over much of the last decade. Finally, the growing popularity of streaming services, like Netflix and Amazon Prime, have given people across the country easier access to entertainment. Before the advent of new and emerging entertainment platforms, movie theaters provided many people with an escape from reality. Today, it remains questionable whether the industry has the same influence it once had over the entertainment world. Major chains like Regal Cinemas and AMC now face the challenge of updating their business plans and reminding the public why the movie theater experience is not going anywhere.

The Old vs. New Business Models

The relationship between the movie studios and the distributors remains somewhat strict when it comes to how much money each party receives from the films being shown in theaters. David Mumpower, a financial writer for the website Box Office Prophets, explains how most people assume the studios and distributors split the box office gross down the middle. In the past, film studios actually had deals with distributors to gradually give bigger slices of the revenue to the theaters over time. For example, in the opening weekend of a new movie release, the theaters would receive 10 percent of the profits and the following weekend they would receive 20 percent of the profits. This business practice shows how much Hollywood banks on distributing hit movies on a weekly basis. It also demonstrates how volatile the industry can be, especially for the theaters which have unfavorable circumstances when it comes to their revenue.

Today, movie theaters get a standard cut of the profits no matter which week the movie is in theaters. The third quarter income information provided by Regal Entertainment Group, the largest movie theater operator in the country, suggests a growing consistency with how much revenue their theaters get from tickets sales and concessions. In September 2014, Regal Cinemas made $2.19 billion in total revenue, but paid $1.1 billion in film rental and operating costs, which means the theaters received about 50 percent of the profits that year. Similarly, in September 2015, ticket admissions were $2.28 billion and film rental costs were about $1.17 billion, making the theater profits about 49 percent.

In both years, ticket admissions do make up most of the revenue, but the high costs of even renting out theaters for different movies takes away a lot of that revenue. Since the standard revenue for theaters remains fixed, they now depend more on their concessions alone for most of the revenue they actually get to keep. For example, Regal Cinemas made $575 million in concession revenue, which, out of the revenue remaining after the film studios got their cut, was about 49 percent. The cost to operate their concessions falls much lower, which means half of their profits usually come from their concession stands and the other half comes from ticket sales. Despite how nice this sounds for the theaters in theory, movie theaters are now facing problems which are undermining this system of compromise with the film studios.

Trends: Attendance and Ticket Prices

Screen Shot 2015-12-08 at 9.28.10 PMIn 2002, the average American went to a movie theater 4.9 times per year. In 2014, the number dropped to 3.6 times per year. Decreasing attendance has been a major factor in the decline of the old movie theater business model. According to CEO Randy White of the White Hutchinson Leisure and Learning Group, the last twelve years of per capita movie attendance had a steady drop of over 25 percent. The 2014 calendar year had only 1.26 billion consumers buying movie tickets which comes dangerously close to the 1.24 billion consumers seen in 1994. Overall, theater attendance does fluctuate every year, but the steady decline paints a negative picture of attendance in the long term.

What caused attendance to reach a twenty-year low last year? The National Association of Theater Owners point to the underwhelming performances of most tentpole movies and franchises in 2014. The Amazing Spider-Man 2 made nearly $60 million less than its predecessor and Transformers: Age of Extinction made nearly $107 million less than its predecessor.

Screen Shot 2015-12-09 at 10.26.40 AMIn its most recent annual theatrical statistics report, the Motion Pictures Association of America emphasizes the dramatic decline in 3D movie attendance as another culprit. On average, 27 percent of the population went to a 3D movie in 2014, but the numbers for different age groups have all dropped between 5 to 10 percent since 2010. Since the arrival of Avatar in 2009, the U.S. film studios have hoped to replicate its success; however, the push to make more films in 3D might be losing steam mainly because it costs too much to make, which has an adverse effect on ticket prices.

In a 2012 interview with technology site CNET, CEO of 3D digital production company 3ality Steve Schklair explained how studios rely too much on the expensive post production conversion process to transform their movies. He thinks this affects the experience the audience receives in the theater and, therefore, the willingness for people to continue spending more money. In the chart below, ticket prices have never been higher with a steady increase of 25 percent from $6.41 in 2005 to $8.17 in 2014. 3D movies might have their moments of greatness on the big screen, but since they are more expensive to make, they have had a negative effect on both 2D and 3D ticket prices. Earlier this year, consulting firm PricewaterhouseCoopers took a survey of over 1,000 consumers in fall of 2014. The company asked consumers the main reason why they stayed away from movie theaters; approximately 53 percent said admission prices were too high .

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What Else Is Hurting the Business?

Beasts-of-No-Nation-Poster-1It is hard to avoid the rise in online streaming services as a major reason why movie theaters are scared about the future. In October of this year, streaming giant Netflix released its own feature-length film called Beasts of No Nation. This film marked the second time the company released a movie online as well as in the theaters, which did not make exhibitors very happy. In an article from Variety, the four largest theater chains – Regal, AMC, Cinemark, and Carmine – announced they would not show the film because it did not follow the ’90-day delay rule’ between theatrical and home release. They do not see the the release of the film on various platforms as fair to any theater chain around the country.

Amy Kaufman, a producer on the film, noted the multiple ways people can get their content now and how that is shifting the film business in a different direction. Online streaming services like Netflix, Hulu, and Amazon Prime continue to have a large influence over the viewing habits of the average consumer. First, the convenience of renting or buying a movie through a subscription service from the comforts of your own home appeals to large portion of the population. Streaming services remove the whole ordeal of having to drive to a theater, pick up expensive tickets, buy expensive food, and deal with distracting people in a movie theater. As of April 2015, Netflix boasts over 60 million subscribers. Second, digital technology continues to evolve and audiences continue to crave more interactive experiences. In their 2014 report, the MPAA looked at how many devices moviegoers own and about 26 percent of them own at least 5 different devices. Therefore, theaters are not only competing for attention with television shows anymore, but also with computers, smartphones, and tablets.

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Why are Movie Theaters still Relevant?

amc-recliner-seatsDespite all of these issues, the movie theaters still have certain attributes that are difficult to replicate elsewhere and theater chains have started enhancing the moviegoing experience for they customers. AMC Entertainment, for instance, showed how it would lead the improvement in customer experience by spending over $230 million to upgrade some of their theaters in 2014. Some of the upgrades include replacing some of the smaller seats with cushy recliner chairs, increasing the variety of food and beverages available including the installation of bars for adult customers, and expanding their multiplexes by building more screens. In an interview with Deadline, CEO Gerry Lopez hoped the overall relaxing atmosphere the company is striving for will improve revenue per customer visit. Cinemark, the third largest theater chain in the country, had a decent start to the year even with a 2 percent drop in ticket revenue during the last three months of 2014. Their success, according to their CEO Timothy Warner, came from a growing demand for food and drinks after the company installed self-service concessions stands. Warner said in his interview with the Washington Post the food and drink sales had increased five percent since the new concession stands were installed.

This seems to have paid off for AMC and Cinemark this year when their stocks increased 24 percent and 9 percent in the first three months of 2015 of this year respectively.  Film business analysts say successful films premiering or in theaters during the non-peak seasons, like Fifty Shades of Grey and American Sniper, have changed how theater companies view the normal business model. Fifty Shades of Grey premiered in February and made about $94 million during President’s Day weekend. American Sniper opened in January with $107 million in its first weekend. Both movies had a large social media following before their respective premiere date, which suggests the identity of movie theaters as a place to have a social experience remains strong and the business does not have to limit itself to certain times of year or certain blockbuster films.

Screen Shot 2015-12-09 at 4.09.29 PMThe revenue trends from the last twelve years, courtesy of analysts from Bloomberg, show how film business experts project revenue for the movie theater business to reach approximately $11.5 billion this year. The business seems to still be alive and companies are starting to notice what makes the average consumer want to come back again and again: incentivization.

Incentivizing and Why It Works

Screen Shot 2015-12-09 at 9.24.03 PMThe MPAA says 11 percent of people in the U.S and Canada were frequent moviegoers in 2014, yet those same people made up over 51 percent of tickets sold. This information correlates with the increasing price of tickets: Film buffs are the people most willing to pay to see multiple movies over the course of the year, so they would likely make up a sizable amount of the tickets sold.

In December 2014, AMC Entertainment took this information to heart when they started beta-testing a new subscription service called MoviePass. The movie geeks dream app allows subscribers to pay a fee to see as many movies they want each month. Subscriptions differ based on specific cities people live in and subscribers can only watch one movie per day. The average subscription fee in the U.S. is currently about $30, which means avid moviegoers have the ability to see more movies at a lower aggregate price. This seems nice for the cinephiles around the country, but the downside for most people could be underusing the subscription. Since ticket prices continue to rise, the MoviePass subscription service means AMC and other theater chains might have found an alternative method of making profits by taking a note from their current competitors like Netflix.

Other options theater chains have already started exploring to boost ticket sales include loyalty programs. As of 2013, the Regal Cinema Crown Club offers discounts up to $1 off tickets at various locations in five different states. According to the 2013 Loyalty Census conducted by research firm Colloquy, loyalty programs across the entertainment sector rose 35 percent in 2012 reaching a total of 30.5 million people.

Towards The Future and Beyond

Movie theaters are not only thinking about financial changes, but also aesthetic changes. The audio company Dolby launched a new project called Dolby Cinema in 2014, which aims to compete with and move beyond the IMAX theater format by transforming entire theaters into interactive experiences. Some of the features include acoustic panels surrounding the speakers which are meant to immerse the audience in the movie. The official website shows the company will partner with AMC Prime theaters to begin bringing the premium moviegoing experience to people around the country.


When China joins the global reserve currency, who wins and who loses?

yuan-dollar-CNY-USD-shutterstock_1250pxThis past week, the International Monetary Fund announced it would introduce the Chinese yuan to their reserve currencies group. The global reserve currency currently consists of the U.S. dollar, the euro, the British pound and the Japanese yen. The elevation of the yuan on a global level will soon make up about 11 percent of the IMF special drawing rights, which is an international reserve asset supplementing the official reserves of the now five main countries of the global reserve currency group.This decision will not go into effect until October 2016, but many financial experts are expecting the internationalization of the yuan to have mixed consequences on other countries and regions of the world like the United States and Europe.


Although the yuan will not be an official player in the global reserve currency until next year, investors have already started promoting the positive global impact the change will have on the United States. Former New York City mayor Michael Bloomberg and former Treasury secretaries Henry Paulson and Timothy Geithner are leading a coalition to bring trading of the yuan to Wall Street. According to Wall Street Journal reporter Justin Baer, the group believes the inclusion of the yuan would lower costs for U.S. companies purchasing goods and services from China. They will continue to push for local yuan trading and work with both the Chinese and U.S. governments to develop the best currency trade plan.


Screen Shot 2015-12-03 at 9.33.41 PMThe British pound was the original IMF global reserve currency, until the U.S. dollar surpassed it in the 1920s. CNBC data journalists say since 2010, the pound has held 11 percent of the special drawing rights. However, the eventual addition of the yuan could reduce its holdings to 8 percent. The euro will most likely deal with an even greater loss. When the European union joined in 1999, the euro quickly gained ground accumulating over 37 percent of the special drawing rights by 2010. Now, the yuan could force the currency to reduce its shares for the first time by 6.5 percent. Both of the major currencies in Europe could be facing some stiff competition in the near future as more countries start adding the yuan to their reserve funds. As for the U.S. dollar, it seems like it will continue as the dominant global currency.


The inclusion of yuan in the reserve currencies group shows how the International Monetary Fund thinks China is ready for the big leagues. On the other hand, it also suggests the IMF wants to push the government of China to make its markets more accessible. Financial reforms in China have slowly increased in the last few years, but now China has the international and economic recognition to potentially move towards a free market economy. In an interview with Bloomberg Business, the head of the People’s Bank of China foreign central banks and global financial companies will not have to go through a pre-approval process to conduct transactions within the country. China is heading in an interesting direction, but time will tell if its new global status will have an impact on its economic policy.

What do the Paris terrorist attacks mean for French business sectors?

13_Flight_0The French stock exchange opened for business again Monday after ISIS militants killed at least 129 people in the streets of Paris. The attack was one of the worst human disasters in Europe since the end of World War II. While France recovers from the tragedy, many financial analysts expect the financial markets to take a small tumble.

This is not the first time a country dealt with a small financial crisis in the wake of violent attacks. According to USA TODAY writer Ryan Biek, Tunisia lost $515 million in the tourism industry. In 2004 and 2005, the BBC reported markets in Spain fell 2 percent and markets in the U.K. fell 1.5 percent after bombings occurred in both countries. However, the tourism industry in France represents about 7 percent of the GDP, which means this could be the section of the economy hurt the most by the actions of the terrorists.

However, the stock markets actually rose only a couple of days after the attacks, which suggests the potential for a smaller impact on the economy. Although the country seems to be recovering without too many issues, France might be facing some short-term changes in different business sectors, including tourism and defense.

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In 2013, France had about 83 million foreign tourists, making it the global leader in the tourism sector. Since tourism remains a large part of the European economy as a whole, some countries might experience a ripple effect in the aftermath of the Paris attacks. NBC News says many travelers will steer clear of neighboring countries like Belgium, where some of the terrorists are allegedly hiding. The drop in visitors mainly comes from a psychological response to the attacks: People are afraid to travel through Europe, even if the fear might be temporary.

Airlines might also struggle in the next few months even as the holiday season continues. On Tuesday, flight officials announced two Air France flights heading from the United States to Paris were diverted due to bomb threats.

In contrast, defense spending might see a boost in investment. French president Francois Hollande declared war on the ISIS militants and commissioned airstrikes on major terrorists sites in Syria. He even proposed new laws to the French parliament, including 5,000 additional paramilitary troops and no reductions in defense spending through 2019. In addition, the prolonged state of emergency prompted French police to conduct raids throughout the country.

This week, defense stocks increased, with Raytheon, Lockheed Martin, and Northrop Grumman moving up 4 percent, 3.5 percent, and 4.4 percent respectively. Recent threats from ISIS against the United States have also forced congressional leaders to revisit the idea of increasing federal defense spending. According to the Baltimore Business Journal, the U.S. defense budget for the fiscal year 2015 reached a low point of $562.5 billion, in comparison to the 2011 budget which was $678.1 billion. It is unclear how sharp of an increase there will be in defense spending in the United States and Europe, but the upcoming meeting between President Hollande and President Obama may shed some new light on the direction the world is heading.

The TPP and the Port of Los Angeles

2015-10-13 10.49.17On October 5th, 2015, the United States and eleven countries in the Pacific Rim finalized a trade agreement after five years of negotiations. Since the release of information surrounding the agreement, many people now know it contains a range of international trade issues including comprehensive market access. According to the Office of the U.S. Trade Representative, the Trans-Pacific Partnership will eliminate or reduce tariffs and other trade barriers in order to create new trade and investment opportunities for businesses and consumers.

Seaports, which constitute a major part of the U.S. economy when it comes to exports, have the potential for the most growth from the reduction in tariffs. The American Association of Port Authorities says for every additional $1 billion in exports shipped through U.S. seaports, U.S. jobs increase by 15,000. The Port of Los Angeles, for example, has a special position as one of the major ports connected with Asia and the Pacific Rim. Michael Keenan, the director of planning and strategy at the port, believes services industries at Long Beach and in Los Angeles as a whole have a positive future ahead as trade rises.

“There are about 15,000 longshore workers that support the Port of Los Angeles and Long Beach,” said Keenan. “On top of that, there’s a huge number of railroad, warehouse and logistics workers. Trade through the port supports about 190,000 jobs in the region and under an engrossed growth scenario with the TPP, we see that number going up.”

Before the Great Recession, exports coming into Long Beach were growing at 10 to 12 percent. The financial crisis brought cargo activity down to about 3.5 to 4 percent. Keenan looks at the TPP as a way to not only boost cargo activity, but the amount of jobs in the city of Los Angeles.

Another interesting part of the Trans-Pacific Partnership was the exclusion of China from the negotiations. Although China is a major trading partner with the U.S., Keenan does not think the TPP will have an effect on trade with the Asian country. However, there could be greater opportunities for smaller countries in the region.

“I think a lot of China’s neighbors are interested in being part of an agreement that offers them a set of advantages against China.” said Keenan. “If you’re trying to be competitive against the big dog on the street, the best way to do it is to find a set of friends who have that same interest. It offers our other friends in Asia a closer relationship with the U.S., which helps us.”

Despite the positive results of the multi-part agreement, there are some downsides to the TPP in relation to the ports. The U.S. economy continues to grow stronger, but its trading partners’ economies have grown weaker and it makes goods from the United States less competitive in the global marketplace.

“I think that’s the bigger challenge. Something like TPP that offers offsetting advantage could certainly help us, but the biggest driver for exports is going to be shared growth where other countries develop stronger economies and they can buy more of what this country produces. I have high hopes we’ll be able to see that within the next five to ten years.”

Why The Hollywood of the South Keeps Getting Bigger


Since the arrival of Iron Man, Marvel Studios has built a major platform for distributing profitable movies. In the summer of 2015, they introduced a new superhero called Ant-Man. In its opening weekend, the movie earned $177 million at the domestic box office. Forbes Magazine reported the movie actually made more initial money than previous films like Captain America: The First Avenger.

However, the most impressive feat the film pulled off was becoming the cheapest film to date in comparison to previous Marvel Studios productions. One of the biggest blockbusters of the year cost $130 million to make and a majority of the budget was spent in one city: Atlanta, Georgia.

Tax incentives and more job opportunities continue to shift the established economic model of strictly Hollywood filmmaking. The increasing number of runaway productions, or movies filmed in other states for economic reasons, has given other states some advantages and disadvantages in the lucrative film business.

Inexpensive filming locations, like Atlanta, are fast becoming a favored spots to make a movie, but the city also has the potential to become the new entertainment capital of the United States.

Why did Georgia want a piece of the film industry pie?

Before the earliest introduction of tax incentive programs, films were made in locations outside of Hollywood for creative reasons. Some films and television programs today still follow this procedure, such as the HBO series Game of Thrones, which films in Ireland and Spain to reflect the locations in the original novels.

In 1997, everything changed when Canada introduced the Production Services Tax Credit program. According to the Department of Canadian Heritage, the program was designed to promote Canada as a less expensive place for film productions to take up shop. The Canadian government created a 16 percent tax credit to alleviate the expenses productions usually incur in Hollywood. Tax credits are tax incentives created by states and countries to remove a small amount of the income tax productions companies owe the state or country. As a result, Canada started looking like a cheaper place to invest in both television and film.

Screen Shot 2015-10-28 at 9.12.58 AMIn the last several years, Canada has built a large repertoire of foreign film productions, with many coming from the United States. Between 2010 and 2011, about 33 percent of film and television production in Canada was through foreign production
companies. Once the Canadian government started their program, runaway productions began to affect the United States.

A 1998 study conducted by the management-consulting firm Monitor Deloitte revealed 285 of the 1,075 films recorded for the study were economic runaways. Due to almost a third of productions moving out of state, the U.S. lost $10.3 billion, which combines the loss in direct production spending and the loss in spending and tax revenues.

Today, 37 states including Georgia have similar tax incentive programs because of the growing fear of runaway productions in places like Canada. More states now compete to counter the massive success of their neighbor to the north. In a sense, Georgia began its own program about fifteen years ago because every other state had the same mentality: If Canada can have the same economic benefits of Hollywood in California, why can’t I?

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(Courtesy: California Legislative Analyst’s Office)

A Brief History of the Georgia Film Tax Credit

Since the 1970s, Georgia has been the location for several movies, television shows and music videos. Famous films like Deliverance, Fried Green Tomatoes, Forrest Gump, and Remember The Titans all found their home in and around the state capital Atlanta. Although Georgia had a steady amount of film production for a number of years, it was not until 2001 when the state government became more interested in capitalizing on the filmmakers interested in heading south for cheaper production opportunities.

The Georgia General Assembly passed legislation in 2001 exempting the television and film companies from sales and use taxes on production expenses. This meant productions did not have to pay taxes on the film equipment they needed and bought in the state. In 2005, the creation of the Entertainment Industry Investment Act allowed out-of-state production companies to apply for a 9 percent base tax credit for productions over $500,000. The state income tax in 2005 was set at 35 percent, but with the 9 percent tax credit it meant larger productions only had to pay 26 percent. In addition, the law gave another 3 percent tax credit to filmmakers who spent money in poor and rural counties or on income paid to Georgia residents.

As film production declined in 2006 and more states like Louisiana and North Carolina began constructing their own incentives, then Georgia governor Sonny Perdue was quick to revise the law in 2008. He expanded the tax credit from 9 percent to 20 percent. Additional incentives included another 10 percent for placing a Georgia logo in the finished film. The potential to receive a 30 percent tax credit for working in Atlanta instead of Los Angeles started to become more lucrative for production companies.

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Three Reasons Georgia has (arguably) the Best Tax Credits in the U.S.

1. Transferable Tax Credit – Georgia is one of 14 states who offer transferable tax credits, which allows production companies with tax credits exceeding their tax liability to sell the credits to other taxpayers. Since most productions companies coming from out of state do not have tax liability, tax credits in Georgia have a greater value.

2. Multi-Year Tax Credit – Georgia has a carry-forward period of up to five years for tax credits. This means production companies have up to five years to claim the tax credit against tax liability.

3. No Production Caps – Production companies can request unlimited tax off-set liability. This means Georgia has a better chance of attracting big-budget movies capable of bringing in large amounts of revenue.

Criticisms of the Georgia Film Tax Credit

This past summer, Georgia governor Nathan Deal announced film and television productions made $6 billion for the state during the fiscal year 2015. Some critics argue this number is inaccurate because the direct spending in Georgia this past year was $1.7 billion. The Atlanta-Journal Constitution reported in August the state economic development department uses a specific multiplier, 3.57, to estimate the economic impact of film production. Officials from the department said they were unsure of the credibility of the multiplier, even if it did supposedly quantify the revenue generated by production companies.

Another big issue in the film tax credit world is whether tax credits are a form of corporate welfare. Corporate welfare refers to a disproportionate amount of tax breaks given to corporations rather than groups in need of the money. The Tax Foundation, a non-partisan research group from Washington D.C., released a report in April 2015 saying state tax incentives actually cost states revenue and can increase taxes in other areas of their budgets.

Runaway production has also had huge impact on the people working in the film industry. As more production companies are making places like Georgia their home, more workers based in Los Angeles get hurt by the constant maneuvering of out-of-state production. However, the workers are trying to fight back. Last year, Variety reported Los Angeles-based visual effects artists launched a campaign to get the U.S. government to place a tax on countries taking away business by subsidizing labor costs. These actions indicate the constant traveling of film production workers has taken a toll. In the race to have the best tax incentives of any state, Georgia is also alienating some members of the industry with their lucrative tax credits.

Goodbye Hollywood, Hello Y’allywood

The film industry in Georgia continues to flourish today as more production companies decide to not only shoot movies, but also take up shop in Atlanta. Pinewood Studios Group, a multinational film facility company based out of the United Kingdom, opened Pinewood Atlanta Studios in 2014. It was the primary filming location for Ant-Man and, according to its website, will now serve as the filming location for the upcoming Captain America sequel.14819408718_068fbb88f8_b

The sharp rise in the tax incentives has also had an equally dramatic effect on the number of productions. The chart above shows, between approximately 2003 and 2005, there were less than 5 film productions in the state. In a statement released by the commissioner of the Georgia Department of Economic Development in July 2015, the state had 42 productions filming at the same time. He argued more than 100 new businesses flocked to Georgia since the expansion of the tax credit in order to support the industry. Although the economic impact of film and television production appears to be heading in the right direction with greater job opportunities for multiple businesses, there are still major issues Georgia faces as it builds its identity as an entertainment powerhouse.

Issues Facing The Georgia Film Industry Part 1: Suitable Workforce

In June 2015, the Motion Picture Association of America reported the state film industry provides over 24,000 jobs and pays local workers over $1.68 billion in wages. In addition, the MPAA said the average salary for a worker in the industry is $84,000.

Well-paying jobs are bringing in a greater number of local people seeking employment, but the industry lacks the proper workforce to keep film production at a high standard. In the earlier days of the Georgia film incentive, the major challenge for the state was how to keep people within the industry to build their careers in Atlanta. Production companies would import people in from Los Angeles to do the work needed because Georgia did not have enough local citizens who had the skills needed to be successful in the industry. Today, Georgia continues to struggle with this problem. An NBC News article published in September revealed industry executives in Atlanta wanted to hire people from within the state, but instead were forced to look everywhere else to get the necessary workers.

However, recent events indicate Georgia may have found a solution: The Georgia Film Academy. The academy reflects a growing need for film industry training and education. According to the Atlanta Business Chronicle, Kennesaw State University professor Jeffrey Stepakoff was chosen to head the program, which will work in conjunction with university and technical college systems in the state. The academy will offer certification for entry level positions in the film industry in order to give people an opportunity to land a job with specialized skills. In addition, production and studio companies are taking notice of the new initiative. Pinewood Studios is the first major partner of the academy, which will give students the chance to get hands-on experience on real film sets as part of their classes.

How can Georgia measure job success in the film industry?georgia-table__140521200918

Georgia is a right-to-work state, which means any workers can work for a living with or without joining a union. However, in the last several years, the number of people joining film worker unions in Atlanta has grown dramatically. (U.S. Department of Labor) These numbers suggest a shifting trend in the industry from imported workers from the west coast to local workers with more expertise in film production.

Issues Facing The Georgia Film Industry Part 2: Competition

Another obstacle for the Georgia film industry remains the stiff competition with different states and Hollywood itself. A year ago, California governor Jerry Brown signed an expansion of the film and television tax credits. The main goal of the legislation was to triple the size of the tax credits to $330 million and reduce the amount of production that was leaving the state. In an interview with the Atlanta NPR station, the communications director for Los Angeles mayor Eric Garcetti explained how the employment gains in states like Georgia puts middle class jobs in California in danger.

1297368677-film_incentive_mapOther states, such as New York, New Mexico, and Louisiana, have similar ambitions to Georgia. They want a piece of the $57 billion dollar film production pie in the United States. In the state of New York, the tax incentives were raised to 30 percent in 2008. In New York City, the potential tax credit is now 35 percent, which is much higher than Georgia. In New Mexico, the tax credits sit at 25 percent, but the state established a Film Crew Advancement Program, which reimburses 50 percent of wages of local workers for hands-on training. Georgia will begin its own program, the Georgia Film Academy, in January 2016. Louisiana began offering refundable, permanent and transferable tax credits in 2002. Similar to Georgia, increased film production enabled the state to expand its infrastructure and labor force.  Overall, Georgia faces stiff competition for film production from around the country. However, their goal of trying to become one of the top five film destinations in the country and the distinct perks of the tax credits compared to other states like California does give Georgia an edge over the competition.

The Future of the Georgia Film Industry

Despite various roadblocks, the film industry in Georgia continues to expand to attract more people. There are several reasons why the film industry will remain vibrant in Georgia.

The construction of more film studios brings in more foot traffic to the area. According to the Atlanta Journal Constitution, close to 80 film industry companies relocated or expanded to Atlanta in the last six years. Several production companies and real estate developers have chosen Atlanta as their base of operations, including Jim Jacoby. He plans to build a 5 million square foot production facility catering to film, television, and video game development. The massive Atlanta Media and Campus and Studios would include sound stages, offices, and classrooms.


Financial stability of the state film industry will play a huge role in attracting more people to turn Atlanta into the new Hollywood. Some states, like California, expanded their tax credits, while others are now looking to eliminate incentives all together. In addition, the film industry could succeed because of the mass migration of several other businesses to the area. Service industries, such as tourism or catering, could see a large boost in profitability as the interest in films produced in Atlanta expands further.

State identity could be another reason why the film industry succeeds. Georgia has a variety of shooting locations needed for different films, whether its an urban or rural environment that would be needed. In addition, Atlanta is home to Hartsfield-Jackson International Airport, which holds the title of busiest airport in the world. The airport has direct flights between Los Angeles and Atlanta several times a day, making travel accommodations for the cast and crew of a film fairly easy.

Georgia is in the midst of a major shift in its emphasis on the entertainment industry, but the future looks bright for the state as it embraces more alternative methods to make it the Hollywood of the South.

Making IT Chocolate Cake

2620ce1Internet technology has become an essential part of every day life. The economic boom in the United States during the late 1990s was in part due to the expansion of websites and search engines. Over time, businesses began to utilize the technology in order to remain profitable and relevant.

Today, computer technology continues to evolve. Many companies need people who are fluent in the language of the Internet. Internet technology consultant firms play an interesting role in how companies function in the 21st century. Daniel Cohn, an IT consultant from Atlanta, Georgia who created his own firm over twenty years ago, says the purpose of his company is to provide hassle-free managed IT for other small and medium businesses.

“We talk about providing IT chocolate cake for our clients: Delivering the best experience for them without them having to worry about the ingredients. We help avoid the avoidable problems and minimize the impact of the unavoidable ones,” said Cohn.

His company, Cohn Consulting Corporation, provides services ranging from cyber security and maintenance to disaster recovery solutions for small business owners. Since the business of IT consulting depends on the state of other businesses, his consulting firm tends to mirror what the overall economy does.

“Our business is spread over multiple sectors. We are not niched, so things may be down in one sector but up in another, which keeps us in a fairly steady state.”

Cohn says the ‘infrastructure-focused’ and ‘utility-like’ nature of the IT consulting business keeps economic activity flat for most of the year. However, during the first and fourth quarters of every year, companies do their budgeting and spending, which leads to cyclical fluctuations in economic activity.

“Companies look to change their IT environment or at least spend on it while they have the money,” said Cohn.


During the recession, the company changed its business model from break/fix to management services. Instead of paying a fee for a single service, clients started paying a regular fixed amount on a monthly basis. It gave the firm an opportunity to gain new clients, dealing with higher-priced services, who were looking to control their costs.

“Even in a down economy, we tend to stay flat or grow,” said Cohn, “From 2008 through 2014, we grew revenues each year by 10 to 20 percent.”

Due to investments in new technology and the recent growth in profits, the Cohn Consulting Corporation continues to expand with an efficient system benefitting the consumers and the producers. Nevertheless, the company faced and continues to face major challenges in keeping the profitable machine functioning.

“A lot of small businesses run their business more on hope and nerve. When I first started my business, it was easy to spend money. Once things flattened out, I lost money and I didn’t even know it. I hired a business consultant. There’s all sorts of metrics you need to be looking at like individual profitability of clients. I learned how to understand numbers,” said Cohn.

Cohn also mentioned the reason some of the IT consulting firms did not survive the recession was because they did not switch their business model to match the needs of the clients.

“The financial goals of the services and the company are not in alignment,” said Cohn, “You could make a thousand bucks profit if the client has more problems. It’s now in my interest for them not to have problems.”

Folders_CloudOnce Cohn restructured his organization, part of his growth plan involved getting larger clients. This led to his firm competing against national and local IT consulting companies with larger pools of clients.

“I’ve been having strategic wins against Dynasis and Blue Wave. They are the big gorillas in Atlanta. You see them on billboards. They have brand recognition,” said Cohn.

Companies like Comcast and Dell have now entered the competition, providing their own Internet services including phone updates for customers. Cohn believes the commoditization of the IT consulting industry makes it a greater challenge to make sure his company remains a viable choice for customers.

“Everyone does management services,” said Cohn, “Suddenly you’re competing against the cable vendor. Now, the price is being driven down. But, the other companies will just throw an engineer at the problem.”

Cohn thinks many people today are now questioning the need for IT consultants as they move their information to a cloud provider. He argues clients need people like him to help them pick the right Internet option for their business.

“The question remains whether you want to be Godiva or Hershey’s chocolate,” said Cohn, “How do you be the Godiva? When there are people that can safely say you are more worth it than these other guys. If you own the relationship with the customer, you will be successful. You want them coming to you. You want to be the trusted advisor. You are the indispensible option.”

The Buttered Popcorn Index – A Deliciously Twisted Look At Economic History

movie_theaters_68947In an age where streaming movies on Netflix or Hulu has become the norm, many people assume the movie theater industry is a dying relic of a more financially stable time.

Every year, Hollywood releases reports blaming mediocre films for turning audiences away. Other people in the media think the industry is failing because younger generations are less interested in the big screen experience. Unfortunately, most of these reasons lack any statistical support.

The movie theater industry follows a rollercoaster-like business cycle that reaches its peak during different periods of time much like many sections of the U.S. economy. However, the unique characteristic of the movie theater business is that it thrives when most businesses are struggling to survive.

This is the Buttered Popcorn Index.

Throughout the history of U.S. cinema, there has been a trend in movie theater attendance as it correlates with the economic climate in the country.

During the Great Depression, the film industry had to cut costs in production and theaters had to lower ticket prices. This led to an enormous surge in the film industry with roughly 60 to 80 million people heading to the movies each week.

In 1982, movie theater attendance climbed 10 percent while the unemployment rate increased at a similar pace. However, as the economy healed, attendance dropped about 12 percent.

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Now let’s look at our most recent recession. In 2008, the movie theaters earned roughly thirty million dollars less than in 2007. In 2009, the summer box office had an enormous spike in ticket sales after declining in 2008. The chart above shows how, between 2008 and 2009, theaters earned over one hundred million dollars more than 2008.

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Movie theaters have not been able to maintain the 1.42 billion people they brought in during the rescission. The Hollywood Reporter released statistics in 2014 stating the number of people going to the movies had dropped six percent from 2013, which was the lowest in twenty years.

Ticket prices have played a large role in how people perceive the movie theater experience. Between 2001 and 2015, The price for move tickets increased from $5.66 to $8.12. The prices have blown up dramatically within the last fifteen years, yet there were more people going to the theater in 2009.

One of the main reasons why movie theaters had a surge during the recession was because even with the rise in prices, tickets have remained below ten dollars. Therefore, when times are tough for people, less of them look at going to the movies as an expense and more as one of the few remaining affordable options for entertainment.

“Generally, when economic downturns hit, we have seen an increase in box office and attendance in six of the eight last recessions,” said spokesman for the National Association of Theater Owners Patrick Corcoran in an interview in 2011,  “People seek relief in forgetting their problems, so they go to the movies, and it is the least expensive form of entertainment.”

Another reason for the success of the movie theater business in 2009 was the types of movies being released. Happier films like Pixar’s Up and the comedy film The Hangover raked in close to $300 million each during the summer months. This suggests many people were looking for an inexpensive way to enjoy themselves in a tough economic climate.

The Buttered Popcorn Index demonstrates that no matter what era it is, people tend to flock to movies to escape the realities of their financial situation.