Gordon Campbell on maximizing the gains from the Avatar sequels

large_avatarBy now, I’m sure we’ve all noted in our diaries the release dates (and alleged working titles) for all the Avatar sequels, but just in case… Avatar 2: The Way of Water is due in theatres on December 18, 2020 followed by Avatar 3: The Seed Bearer on 17 December, 2021. After a three year gap Avatar 4: The Tulkun Rider will emerge on 20 December, 2024, with Avatar 5: The Quest For Eywa due to hit the silver screen on 19 December 2025. Be still our beating hearts.

As agreed in a memo of understanding signed with the Key government in late 2013, writer-director James Cameron will be doing most of the circa $1USbillion worth of shooting (and post-production work) for these films in New Zealand. A few months ago, it became public knowledge that the Avatar production will be making use of some previously neglected regional resources. Reportedly, a five-year deal worth $500,000 a year has been struck for use of the old Avalon television studios and a six year deal has been mooted at $800,000–900,000 a year for use of the former Turner car auction site in Lower Hutt. Obviously, these arrangements mean that the bulk of the immediate multiplier benefits (retail spending, transport etc) from the Avatar sequels will be captured within the Hutt Valley.

Presumably, the Hutt has more accommodation available (at a cheaper rate) for the hundreds of staff who will be employed on Avatar, especially when compared to Seatoun or Miramar, where a sufficient number of affordable rental properties are no longer on the market. Ultimately though, the Park Road Post post-production facilities in Miramar will still be only a 25 minute drive away from Avalon. In Los Angeles terms, that’s virtually next door.

Along the way, the Avatar films will provide a useful illustration of the socio-economic benefits of the New Zealand Screen Production Grant (NZSPG) scheme. On this occasion, the immediate gains from this particular production will be systematically distributed beyond the usual film enclaves and watering holes in Miramar and central Wellington.

Predictably, the film rebate scheme’s detractors are already being heard from. Treasury has long decried the NZSPG as a sin against its free market ideology – the rebates work in practice but not in theory – and last week, it continued to mount its lonely crusade against the rebate scheme. For over a decade, Treasury has been the outlier in claiming that the NZSPG rebates deliver either a net loss, or at best, only a paltry gain to this country.

Every other major analysis carried out on the grants scheme has found the opposite. Last year’s analysis by the NZ Institute for Economic Research (NZIER) and this year’s Sapere Group analysis commissioned by MBIE (and largely validated in a peer analysis by two independent firms) has concluded that far from being a handout to Hollywood, the film subsidies were a major boon to the New Zealand economy, to the tune of tens of millions of dollars annually, even before the related skills transfers and industry cluster benefits are taken into account. Sure, it is always hard to pin down the exact causal link between Subsidy X and Outcome Y, but here for instance, was the gist of NZIER’s take:

Economic modeling undertaken by the New Zealand Institute of Economic Research (NZIER), based on the most recent available data (2015), estimates that without the International New Zealand Screen Production Grant (NZSPG) exports would shrink by $257 million, household consumption by $144 million and real GDP by $176 million per annum. Overall the screen industry overall contributes around $1.05 billion to real GDP and around $706 million to exports annually. The report also highlights the spin-off economic benefits for other industries such as tourism and screen infrastructure.

How can the findings of the analyses be so diametrically opposed? Good question. One reason is that the Treasury models – in line with its fixed hostility to any form of state subsidy – assume that similar economic returns, high paying jobs, skills transfers, tourism earnings etc etc would have occurred anyway, without the NZSPG. (Avalon studios, barely used for so long, stands in mute contradiction to that theory.) As a result, Treasury’s calculations of its entirely theoretical ‘opportunity costs’ all but cancel out the real time, real life gains that the rebates demonstrably deliver.

All but incidentally, this conflict over the film rebates is part of a wider dispute to do with economic theory. It is one in which the neo-Keynesians who believe that economies perform better when governments actively work in tandem with the business sector have largely won the argument against the market liberals, especially during the years since the GFC. In its adherence to market purism, Treasury is running on an intellectually empty tank. Neo-liberalism has been steadily losing this battle over the past ten years, all around the world.

Hey, but this column isn’t about economic theory, or the merits of the NZSPG rebate scheme. Werewolf’s previous evaluation of the film rebates available to Hollywood – and the gains they deliver to New Zealand – can be found here. Suffice to say that countries from Romania to Australia have seen the mutual benefits that accrue both to Hollywood and to the host countries that succeed in attracting major film productions to their shores. In 2018, the real challenge for New Zealand will be in how to maximize (and publicise) the local benefits generated by the Avatar series, and from other film projects – including Peter Jackson’s upcoming Mortal Engines film, which is due for release in December.

Leveraging Tourism

To put it mildly, the box office success of the Avatar sequels is not a given. For starters, the sequels will not begin to appear in theatres until 11 years after the original film was released. Despite being the highest grossing box office success of all time, Avatar generated no lingering cultural affection. As the AV Club has noted, it came and went without leaving much of a footprint behind, and its DVD and gaming rollouts became industry bywords for how not to attempt to generate ancillary income from your hit movie.

Moreover, and in sharp contrast to the Lord of the Rings series, there will be not be the same tourism potential for either Avatar or Mortal Engines to showcase New Zealand’s natural scenery. Both projects don’t appear to entail much in the way of shooting on locations that tourists can be enticed to visit afterwards. By and large, the new films seem to be the product of shooting inside, on sound stages.

That said, this may not entirely be the case. While the storylines for the Avatar films remain a closely kept secret, anecdotal conversations I’ve had with local extras used on the original film suggest that there is a lot of unused footage already in the can that was shot in and around Wellington, and which is consistent with a prequel narrative of what happened on Earth that triggered the colonisation of Pandora. (Elon Musk will be pleased to hear that Avatar’s 22nd century future also contains cute little electric cars.)

The reported Way of Water subtitle to the first sequel might also suggest that this first sequel/prequel could unfold against a backdrop that addresses global warming and rising sea levels. All pure speculation on my part, of course. Point being though, the upcoming films may not be entirely devoid of New Zealand locations to which foreign tourists can be invited to make their pilgrimages.

More importantly, the tourism potential of (and tourism industry planning for) the Avatar films has to be considered in the light of the recent Disney purchase of 20th Century Fox (which had previously owned Avatar) and this purchase will now give Disney an extra incentive and ability to maximize its returns from the Avatar sequels:

Disney would also own James Cameron’s Avatar, which it already licensed for theme park attractions at Disney World’s Animal Kingdom.

Reportedly, Disney has committed a sum in the ballpark of a half billion dollars on adding Avatar-themed attractions to its theme parks. So… what New Zealand may lose in not being a location showcase, it will gain from the fact that it will be the creation point for Pandora, and – instead of an LOTR film series progressively fading in memory – the release of each film will provide a fresh marketing opportunity to marry the film and its related theme park experience with New Zealand. Once we were Middle Earth. Soon, we will also be Pandora, and at Disney World, Pandora will be a daily experience for thousands of potential visitors to this country for the entire period 2020 to 2025, and beyond.

That should tell us where and how to target the tourism promotion. The challenge will be to make the connection between Avatar the soundstage creation, and New Zealand, the destination. If, as rumoured, the initial narrative of the Avatar sequels will grapple afresh with global warming and species extinction issues, this would be roughly in sync with any tourism campaign focused upon New Zealand’s natural attractions. It also won’t hurt that the country currently has a Prime Minister who has cited climate change as this generation’s prime challenge. We might even be able to rope into the marketing a few of those wealthy Americans who made New Zealand the ultimate bolt-hole refuge from the global apocalypse.

Making The Connection

Theoretically, the screen industry should have all the talent at its fingertips to communicate the socio-economic value of what it does. To date, it hasn’t done much to do so. Off its own bat, it has done next to nothing to dispel the perception that the film rebate scheme is just one big tax rort whereby big Hollywood studios get a handout, with no benefit to ordinary Kiwis.

This stereotype is understandable. The memories of how Hollywood successfully pressured the Key government in 2010 into undermining the working conditions of those employed on The Hobbit project remains a sore point for many. To this day, the Hobbit experience is making it more politically difficult for the current government to continue to support the film rebate scheme.

How to tackle those perceptions? Thankfully, the current subsidies are a rebate scheme. They do not consist of the classic tax breaks that helped to finance Lord of The Rings. The crucial difference? These days, Hollywood productions and Peter Jackson’s projects all have to spend 100% already in New Zealand, before they get the 25 % back. Meaning: the Kiwis who have benefitted from say, the Mortal Engines film project are already out there.

It would therefore be relatively simple to include in the DVD extras a documentary on the making of the film that focused on the benefits of that spend voiced by those benefitting at every step of the multiplier chain (a) in cafes and restaurants, (b) among transport operators (c) local actors and extras… scaling up into (d) the jobs and skills enhancement for film crews, costumers, miniature makers, set builders etc (e) the opportunities for screen industry sub-contractors and (f) the spinoffs generated in fields like gaming, virtual reality and A.I. from the upgrades in expertise and technology that this stream of major projects continue to bring to this country.

Arguably, documentary content along those lines should be an automatic DVD extra on every major film that taps into New Zealand’s film rebate scheme – both to underline the scheme’s worth, and to make the linkages between the film itself, and New Zealand’s role as a high tech economy and tourism destination. At the LOTR premiere in Wellington, Viggo Mortensen was the only speaker who thanked New Zealanders for the tax breaks that had helped make the Rings films possible. Mortensen would be an ideal guide in explaining the advantages New Zealand delivers to film-makers, and the benefits these films deliver to New Zealand.

Equal Opportunity.

Given Treasury’s hostility, the screen industry needs to reach out and make friends in a political climate where other business sectors resent the advantages it enjoys. Tough. The screen industry has earned its place. It is the only example of where – thanks to those initial tax credits and current film rebates – New Zealand has succeeded in creating a modern, IP-driven, value-added, globally competitive digital powerhouse. That should be treated as a success, not as a sin. Moreover, in contrast to foreign investment and foreign ownership rules that see most of the related profits heading back offshore, we have succeeded in capturing most of the benefits from our film subsidies right here, onshore. Long may that continue.

In the meantime, where can the screen industry find the friends it needs? There are a few obvious allies, but it will need outreach by the screen industry to bring them on board. As in other countries, the New Zealand workforce is facing the impact of automation on white collar occupations. In some quarters, there are rosy expectations that the main labour force impacts will be phased in over a long period of time, and that the jobs lost will be balanced by the jobs gained, with little consideration of the social damage that’s likely to ensue, en route. So far, little attention has been paid to the quality of the jobs concerned – or to the fact that if Silicon Valley and the gaming industry are anything to go by, the highly paid upper echelons of the new AI/virtual reality meritocracy will be dominated by the next generation of wealthy white males.

With that in mind, it would be interesting to know the gender balance that currently exists in the realms of screen industry jobs that are being supported by the NZSPG scheme. Overseas, the Gamergate scandal and the bro culture that prevails in Silicon Valley both indicate the need to tackle this problem, head on. If, in return for maintenance of the NZSPG, the screen industry could show that it has an active gender and Treaty sensitive hiring programme, it could become the vanguard industry in ensuring automation does not perpetuate a Boys Only culture within New Zealand’s digital economy.

What I’m getting at is that the argument for sustaining the NZSPG need not only be framed in terms of the economic gains and skills transfers that it undoubtedly delivers. It would also be in the screen industry’s own best interests to (a) pro-actively engage with the government’s Future of Work exercise (which includes the state’s response to the gig economy) and (b) be seen as promoting equal employment opportunities and pay equity within its own ranks. Right now, the critics of the film rebate scheme have the field virtually to themselves. As someone said in the original Avatar film: “They’re just pissing on us, without even giving us the courtesy of calling it rain.” That needs to be stopped.

Cardi B, Bo Diddley

Incredibly, 2018’s breakout rap presence Cardi B will be the headline act for the Bay Dreams gigs in Tauranga and Nelson… On her new single “Money” she’s as sharp as ever in baiting the likes of Nicki Minaj: “All y’all bitches in trouble/Bring brass knuckles to the scuffle/I heard that Cardi went pop/I did go pop/That’s me bustin’ they bubble”. Nice final namecheck too, to her new baby girl, Kulture.

Still, even pop hip hop as accessible as Cardi B can still rile quite a few readers of this column. As a plea in mitigation, here’s an opening clip from the film that D.A. Pennebaker made about the 1969 Toronto rock’n’roll festival. It kicks off with a long ride alongside John Lennon’s limousine into Toronto, and then segues into the remainder of a great, great performance of “Hey Bo Diddley” onstage by Bo himself and Cookie V… I’m sure that Cardi B would feel a lot of kinship with them both…