OTTAWA — The rise of online streaming services, and their race to churn out must-watch original content to lure subscribers, has driven a renewed production boom in Canada. However, while Canada’s popularity as a film and TV hub is helping domestic producers’ businesses grow, a federal government report says it’s also driving up their costs. 

Increased foreign location and service (FLS) production—content filmed here by international firms, or on their behalf by domestic ones—accounts for almost all the recent growth in the Canadian film and TV industry. The Canadian Media Producers Association estimated such work was worth $4.86 billion in the 2018–19 fiscal year, one and a half times as much as the Canadian content generated—a reversal of the position five years ago. While FLS production has more than doubled over that period, domestic volumes increased by just a fifth.

A briefing note prepared for Heritage Minister Steven Guilbeault in February cites “growing competition along online video streaming services such as Netflix, Disney+ and Amazon Prime Video” as one factor in the increase, along with the cheap Canadian dollar, tax incentives and the quality of the sector workforce. Film and TV makers say the influx has brought benefits, but also costs, according to a June 2019 survey of 335 production and post-production companies commissioned by the federal heritage department. 

A majority of respondents said foreign location and service work “has a positive impact on the quality of Canadian productions,” citing the retention and improved expertise of local talent, financial resources and infrastructure improvements, according to documents obtained by The Logic via access-to-information request. And while they felt international assignments constrained the amount of Canadian content they made, most companies also reported the revenue such work generated was crucial to funding their domestic projects. 

But almost all domestic firms in the major industry centres of Quebec, Ontario and British Columbia also said infrastructure was less available and labour and other production and post-production costs had increased as a result of foreign projects. And while the federal government has proposed new regulations that would require streaming platforms to pay to make more Canadian content, with those new opportunities for domestic producers will come more demand for studio space and crews. 

“Before it was boom and bust,” said Alfons Adetuyi, president of Toronto’s Inner City Films. U.S. studios and broadcasters in particular would come north when the Canadian dollar was low, drawn by the increased buying power as well as provincial production tax incentives. But this time, any downturn from exchange-rate shifts has been offset by new digital demand. “The streamers have come online, and they just love shooting up here because of our crews,” booking up studio space for “years ahead,” said Adetuyi. 

That’s forced Inner City, which doesn’t take on FLS work, to shift some of its original productions overseas, particularly to South Africa, which has a favourable exchange rate. Adetuyi recently went there to shoot part of Dreams of the Moon, a forthcoming film based on the true story of NASA astronauts training for a lunar mission in his hometown of Sudbury, Ont. (Cost wasn’t the only factor; the barren landscape that once stood in for the surface of the moon has been planted over with trees since NASA used it.)  

In Vancouver, Erin Haskett, president of Vancouver-based Lark Production, started to feel the resource crunch about five years ago. In January, the company began work on “Family Law,” a legal drama for Corus Entertainment’s Global. “There was no studio space available,” said Haskett, so the company converted a home-improvement store. Lark was able to hire crew because a few service productions had recently concluded. “Financially, [we] are in a different ballgame when we’re making an one-hour drama for a Canadian broadcaster,” she said, comparing it to the reported multimillion-dollar episodic budget of a series like Netflix’s “Altered Carbon.”

Union contracts include different rates based on the size of the production, allowing smaller domestic projects to staff up, notes Daniel Bekerman, president of Toronto-based Scythia Films. The city has “a fairly healthy crew base,” he said. “There’s a wide spectrum in terms of the experience level [and] the appetite for how much money they’re making.” Still, there are gaps in entry-level positions across roles, and in fields like accounting. Studio space in and around the city is also growing, mostly due to FLS demand. 

Scythia typically does four or five projects a year, split between foreign service and originals that qualify for Canadian content funding. This year, because of the pandemic, that’s down to one each. “There certainly is a feedback loop of content, relationships and money [through which] the service productions support the original productions,” Bekerman said, noting that the size and profile of his firm’s own work has increased over time. 

The majority of companies in the heritage department’s survey mostly or exclusively made Canadian content, but almost 30 per cent of domestic respondents said they’d acquired expertise by working on foreign productions, particularly in finance, management and commercial functions.

Sector executives emphasized the need for production hubs to maintain a balance between making movies and shows for international clients and domestic productions. For example, Saskatchewan has faced “a near-complete collapse” since the provincial government eliminated its industry tax credit in 2012, said Bekerman. “They were overly reliant on the service productions.” Crew get other jobs and vendors go out of business, making it difficult to ramp up if economic conditions turn favourable again.

Ottawa has considered further interventions. The February briefing note said the department would monitor the sector “to assess whether, in the medium and long term, changes to tax incentives must be made in order to ensure a fair balance” between foreign and Canadian content productions. The government doesn’t currently have any plans to make such modifications or to introduce measures to address FLS work’s inflationary effect on costs and limiting of infrastructure availability, said Canadian Heritage spokesperson Amélie Mathieu.

Nonetheless, some producers are hopeful that Ottawa’s proposed system requiring foreign digital services to pay to make Canadian content will benefit domestic producers. Netflix picked up the Adetuyi-directed romantic comedy Love Jacked in international markets; Inner City has been in talks about producing Netflix Originals, which have become more attractive as the pandemic has curtailed theatrical releases, he said. Haskett sees an opportunity for Canada-set stories in the increasingly global market for content. “We’re watching shows from all over the world, and people don’t seem to care where [they’re] coming from,” she said.