By David Cheshier, Associate Professor and Director of Academic Programs, Creative Media Industries Institute, for Georgia State University.
The Georgia State University (GSU) Creative Media Industries Institute was launched in 2016 to better prepare media and entertainment industry-interested students in advanced technology storytelling. Today, on the GSU downtown campus, roughly 4,000 students major in related programs of study. As a result, we have built close connections to the film and television industry, and those have connected us to discussions about Georgia’s tax credit investments.
As state support for the industry has grown and the credit comes under closer scrutiny, the systems for auditing production credit activity also has expanded. In part, this was triggered by interest from the industry itself, which welcomed the predictability a more mature auditing process would provide.
But it also was prompted by state reaction to, among other factors, a 2012 Pew Research Center report—“Evidence Counts: Evaluating State Tax Incentives for Jobs and Growth”—which recommended states get a better handle on the return on investment their specific tax incentives and economic development incentives had generated. In that report, Georgia was rated as “trailing behind.”
Since then, Georgia actually has implemented one of the country’s most rigorous efforts for tracking incentive expenditures. Ten years later, the 2022 passage of SB6 by the Georgia Legislature mandated rolling five-year evaluations of tax incentives and a report on the entertainment industry incentives, which will soon be released.
My colleagues and I were struck by a requirement in SB6 that a periodic evaluation of generated economic activity using the normal metrics of job creation and generated economic activity be conducted, but also a look at other potential “public benefits” of state investments in a sector or program.
The requirement was not, as I understand, focused on the film credit, but reflected a basic recognition that some economic development investments will understandably fail the, let’s say, job creation test, but are well justified on other grounds. While few expect the historic preservation credit to leverage major contributions to state GDP, the public benefit of preserving Georgia’s past justifies that credit.
We were interested in this element of the state evaluation process because for many years our sense has been that the industry believes there has been a sometimes hard-to-quantify value to the growth of entertainment work in Georgia. When a state audit evaluated the aspect of the credit that provides a 10% boost when the Georgia logo is included in on-screen credits, the report authors mainly dismissed the potential ROI of that investment since the reputational value of a logo is hard to document.
But in industry circles, the value of that logo to the Georgia brand is understood as exceptionally large. And other benefits of state investments in the digital creative economy also seemed to slip out of the public conversation when the data proved hard to find.
As we began work on a research report about the industry, we hoped to start a conversation about some of those dimensions of the industry’s contributions to the state’s economy, issues that might be otherwise underreported.
It can be easy to forget that the film production tax incentives are a smart way to deliver corporate tax relief. The approach of focused, but transferable tax credits yields a double benefit: Incentives achieve their sectoral aspiration to lure entertainment work to the state, but also making tax relief available to any enterprise that does business in Georgia.
Transferability is a key aspect that is often unappreciated. Critics assume that tax rebates send taxpayer money outside Georgia, but a high percentage of the credit is resold on secondary markets, connecting corporate tax relief to mainly Georgia enterprises.
Thinking of the credit as part of Georgia’s larger corporate tax strategy undercuts some of the urgency behind proposals meant to apply stricter controls on the credit. Several years ago, the General Assembly cut the corporate rate. The cuts were defended as essential to job creation and a vibrant economy.
No one now argues for their repeal in an environment of tight labor markets or as the accumulating revenue loss grows. Nor did anyone suggest that a general corporate tax cut should connect to auditing every recipient to assure they were spending their cut in the right way. Yet sometimes the same voices defending general cuts with no sunset or time limit or cap criticize the film credits or argue that it should be considered temporary. The industry perspective we often heard is that tax relief is tax relief.
Another example: The film industry was among the state’s most responsive when it came to post-COVID recovery. The Georgia film industry pioneered back-to-work protocols that kept pace with the changing situation, and this meant that Georgia’s studios were among the first to open while others remained shut down.
The result was a remarkable and continuing rebound that focused on these factors:
The first is creative industry investments, which have made Georgia an international center for entertainment content creation. As the number of states offering entertainment tax relief has dwindled, Georgia has emerged as the clear regional winner, eclipsing otherwise active entertainment work in Louisiana, Florida and North Carolina.
The credit benefits radiate beyond film, and Georgia is also a growing hub for game design, music and visual effects. This broader ecosystem for media work is likely to continue to offer economic benefits to Georgia.
Why? Because by some estimates the creative industries now leverage nearly 30% of all economic value—the estimate seems high but not when one considers the wide range of economic value generated by entertainment, design, strategic communication (advertising, PR, corporate communication), sports, broadcasting, games, fashion, music and other creative sectors.
An ongoing economic transition, often described as a Fourth Wave, entails the generation of wealth from information, Big Data, digitally centered financial services, AI and application-driven mechanisms for connecting consumers and producers.
This social transformation everywhere transforms what it means to be literate in the 21st Century. While core competencies—writing, computational, scientific—are as important as ever, new digital literacies now are necessary for success in the new century’s economy.
Young workers who can collaborate across technology platforms, create a website, navigate social media and its possibilities for networking, edit music or video if only in a basic way, will have an economic edge in the global economy. Investments in the entertainment industries that attract workforce and student interest, finding ways to connect artistically-inclined young people with advanced technology platforms even if they had not otherwise considered STEM careers, are thus essential steps as Georgia prepares to capitalize on the digital economy.
Increasingly compelling data makes the case that economic growth today is driven by the ideas and innovation economy, and that America’s lead in the technology sector is jeopardized in ways that might be revitalized by interests in the creative economy. The direct and less direct connections between the entertainment industries and the broader IT, Big Technology social media, and data services sector synergistically combine to boost Georgia’s place in the wider digital economy.
New production facilities might best be understood as data centers given the needs for fast processing data connectivity and the integrated networks required of complex media production where editing can be simultaneous with shooting. The same infrastructural support provided by regional IT and electrical utilities often boosts movie studios as prepares larger data centers.
Because the internet and what used to be called the Information Superhighway provides the common infrastructure for this economic transformation, demand for workers who can align their entrepreneurial, advanced technology, and creative talents to this work will continue to scale sharply upward. State decision-makers might best judge digital entertainment investments as leveraging this broader creative and technology-centered economy and establishing a global leadership role for Georgia.
The second factor is an expanding entertainment sector can be a powerful economic development engine in locales expanding well beyond Atlanta. Creative industry work is not only an attractive option for urban economic and workforce development, but also is contributing to rural economic development as content creation work radiates beyond Atlanta and Savannah.
To the extent the industry is encouraged, the gains are likely to accumulate in the state’s suburban and rural communities. By now, large studio complexes, which started first at large scale in the close Atlanta suburbs, are popping up across Georgia. The wider economic impact of this infrastructural buildout is significant.
CBRE says, “Institutional investors have been increasingly attracted to the sound stage sector over the past decade, creating a burgeoning new asset class within commercial real estate. The entertainment industry is a major space occupier and employs more than 3 million people in the U.S.”
Beyond the formation of valuable light manufacturing assets, this commercial real estate class overperforms economically.
According to CBRE, these production spaces have long been overlooked as investment assets due to their ownership structure, limited inventory and intensive operating model. However, institutional investors have been increasingly attracted to the sound stage sector over the past decade, catalyzing its rapid evolution as an asset class. The advent of streaming video has created seemingly insatiable demand for content that presents unique opportunities for real estate investors.
Recent Georgia-specific research has documented some of the beneficial spillover effects of studio expansion. Velma Zahirovic-Herbert and Karen Gibler, scholars at the University of Memphis and Georgia State University respectively, have documented that film studio expansion has beneficial impacts on local home property values and can thus serve as “possible drivers of redevelopment.”
Using metro Atlanta as an example, they conclude that:
Industry participants have repurposed existing facilities in metro Atlanta, including fairgrounds and military posts, and spurred the construction of new studio buildings. They appear to be contributing to a rise in residential property values, which can help stabilize, revitalize and spur development in surrounding neighborhoods…
These benefits are economically complex—the authors also note that studio-enhanced property values can further local gentrification and could displace other industries. But the benefits were measurably clear cut, and “suggest that the siting of studios can be an important component of an urban redevelopment strategy.”
Finally, Georgia leads the nation in diversifying media industry work. Georgia workforce training programs are more diverse than the industry as a whole, and the state’s leadership in the film, hip hop and other creative industries includes a range of artistic voices eager to tell their stories.
Diversity is both a calling card and a brand for Georgia, given the strong role played by companies including Tyler Perry Studios and the state’s emergence as a hip hop capital. Georgia’s universities and affiliated initiatives like the Georgia Film Academy attract increasingly diverse student interest.
Diversity investments in the creative industries yield disproportionately positive social dividends. Because the cultural industries shape society’s perspectives about race and gender, a concentrated focus on diversifying entertainment, by expanding the range of stories we encounter and consume, the creative industries can empower healthy racial transformations.
When minority voices are absent from the entertainment marketplace, when audiences from minority communities do not see mentors or role models who look like them, further polarization and alienation is the inevitable outcome. When the media industries do not reflect diversity, given their very public role in shaping the public and informational narratives we consume, the impact disproportionately scars racialized minorities.
For industries reliant on audience interest, of course, diversity also makes economic sense.
The fact is that entertainment audiences seek diverse content. A survey of arts patrons done by SloverLinett Audience Research in December 2020 identified broad categories of change that would make arts and culture organizations better for Americans. One of those trends is an expressed desire for “more reflective and dynamic content [that]includes “‘stories or content that connect to my life’ and ‘more frequent new works or exhibits.’ Over a quarter of Americans (29%) want one or both of these changes.”
The flip side is also true: When the media commit to better reflect the true range of social diversity—racial, political, orientational, gender, ethnic—the educational benefits are also disproportionately helpful. Stories reflecting the American people in all their diversity can help counter the human tendency to caricature and stereotype those who are different, and lure audiences outside their instinct to associate only with people like themselves.
Entertainment stories humanize people we don’t know or only infrequently encounter and can spark empathy by helping us see the world through the eyes of another.
If Georgia wishes to build a digital economy that transcends the important value of its film and television sectors, policymakers should consider sustaining investments in technology centered content creation sectors (such as music, post-production, video games and esports).
The convergence of content creation platforms, where a worker trained in a particular software package is thus trained for work in film/TV but also game design or music, means investments in these other areas produce benefits greater than the sum of their parts.
To read more features from the Creative Economy Journal, visit here.
