Georgia’s Other Creative Industries
With the help of entertainment tax credits, Georgia’s creative industries have grown more than state leaders could have ever imagined.
Critically Acclaimed: Matt Thompson, executive producer of FX’s Archer
It’s hard living in the shadows of a great success – even more so when you’re a powerhouse in your own right. Just ask Georgia’s lesser-celebrated, yet equally booming animation, video game development and television commercial/support service industries.
While a lot of attention has been given to the explosion of the state’s film and television industries, these areas have been steadily expanding just out of the spotlight, growing year over year. They’ve put millions into Georgia’s economy – and gotten the state closer and closer to becoming a leader in more than one entertainment arena.
The State of Gaming
“A lot of people don’t know that digital entertainment, video gaming more specifically, makes more money than the film industry,” says Asante Bradford, project manager for digital entertainment and media at the Georgia Department of Economic Development (GDEcD).
Bradford and his team at GDEcD have been working hard to cultivate Georgia’s digital entertainment industry since passage of the Georgia Entertainment Industry Investment Act of 2008. Though entertainment tax credits were introduced in Georgia in 2005, the 2008 retooling made them easier to understand for investors and businesses alike. Now, it’s a straightforward calculation: Qualifying projects with an investment of at least $500,000 receive a 20 percent tax credit, plus another 10 percent if their project includes a promotional Georgia logo.
It’s a simple program – and it’s proven to be quite effective. For video game development alone, the Entertainment Software Association (ESA) estimates that the industry added $102.7 million to Georgia’s economy in 2012. ESA also reports a job growth rate of 17 percent from 2009 to 2012, adding roughly 110 full-time positions with an average salary of nearly $88,000.
“In 2005, there were only eight video game studios in Georgia, including my own,” says Andrew Greenberg, president of the Georgia Game Developers Association. “And now we have more than 80. The existence of the tax credits is a direct factor leading to that explosive growth.”
The credits have played an integral role in expanding the state’s game development industry by providing a funding buffer for local companies during the grueling game development cycle (an 18- to 24-month cycle is typical) and boosting the confidence of investors who might not be familiar with the space, says Greenberg.
Unlike investment trends throughout the rest of the entertainment industry, Georgia’s video game investors tend to come from within Georgia. “It’s led to a home-grown industry. With one exception, all of our largest studios were grown in Georgia with Georgia investments,” says Greenberg. “What the tax credit has done has helped Georgians make games and hire more Georgians and support a Georgian industry.”
The state’s growing roster of gaming companies is as diverse as the game development market itself. In addition to entertainment-focused video games like first-person shooters, sports games and massively multiplayer online role-playing games, Georgia is at the forefront of a number of gaming subsets, including gaming for health, exergaming and serious gaming.
For example, Decatur’s Virtually Better uses virtual reality technology to help treat those dealing with anxiety disorders, including veterans with PTSD. FIX in Midtown Atlanta integrates gaming into corporate wellness programs for companies across the country. In FIX’s A Step Ahead: Zombies, for instance, users elude zombie armies by simply walking more during the day. Meggitt Training Systems, located in Suwanee, fuses gaming technology with weapon simulations to train military, paramilitary and security forces in real-world conditions.
The state is also home to leaders in the PC gaming industry, including Hi-Rez Studios, Kaneva, CCP North America and Roswell’s Tripwire Interactive, which celebrated its 10th birthday in February. Tripwire Interactive was founded in 2005 as a way to capitalize on winning Epic Games’ “$1,000,000 NVIDIA Make Something Unreal” contest. Over the next decade, the company grew from a tiny team of developers to an award-winning company. Its fifth title, Killing Floor 2, is scheduled for release this year, complete with a console version for PlayStation 4 – a first for the company.
“We’ve gone from two employees to 50, and there’s plenty around who could do the same,” says Alan Wilson, the company’s vice president. Though Tripwire Interactive was founded in Georgia mostly due to luck (two of the four founding members lived in Europe, and Metro Atlanta beat Baltimore), he cites the tax credits as an integral part of the company’s growth, especially in the early years. “Those tax credits do make a big difference because … you can actually turn [them] around into working capital, which enables you to grow faster, especially in a fast-moving industry.”
The gaming industry requires a steady flow of highly skilled, highly qualified talent – and in the 1990s and early 2000s, Georgia was seeing a lot of its talent leaving for opportunities elsewhere. Extending the entertainment credits to digital media was one way to combat this growing problem, according to Bradford, while also attracting new companies to the state.
“A big part of it was, ‘How can we keep this talent here?’ “ he says. “Talent is always the top of the list for these guys – just knowing that they have a pipeline of workers. If they’re going to move here, they want to make sure that they have that pipeline.”
There are currently more than 2,000 students in Georgia colleges and universities studying game-related degree paths, and initiatives like Georgia Day of Code – celebrated for the first time on Dec. 10, 2014 – demonstrate a state-level commitment to furthering computer programming education.
“I’m very excited about the future. I think we’re really starting to train and educate high schoolers,” says Bradford. “A lot of them now who wouldn’t have been looking at majoring in this before are now looking at it as an opportunity, and better yet their parents are finally understanding that … their kids can actually make money doing this.”
A Georgia ‘Toon Boom
For years, most of Georgia’s animation business came from Turner Broadcasting’s animation giants Cartoon Network and its late-night, adult-oriented programming block Adult Swim. Although animation is steadily growing in the city, it can still be traced back to Williams Street.
“The reason that I’m here is Adult Swim,” says Matt Thompson, executive producer of FX’s Archer and co-founder of Atlanta-based Floyd County Productions. Before Archer, Thompson and his business partner, Adam Reed, ran 70/30 Productions, which produced Sealab 2021 and Frisky Dingo for Adult Swim.
Originally based in Manhattan, Thompson and Reed moved production to Atlanta “largely because of taxes and time,” Thompson says. Proximity made decisions faster and easier – and working in Manhattan meant paying taxes to both the state and borough of Manhattan.
“We came to Atlanta to escape double taxation and … once we transitioned into making shows for networks, we’ve actually gotten even more of a benefit of the Georgia tax credits. It’s like taxes have brought us here, and then taxes have kept us here.”
Floyd County Productions employs about 120 people to produce Archer, as well as pilots for three more adult animated comedies. Though Thompson won’t know if the pilots are greenlit until this summer, adding just one show to production could easily create 50 new positions.
And just like with video game development, animation jobs tend to pay very well, averaging $72,400 nationwide according to the U.S. Department of Labor’s Bureau of Labor Statistics. The bureau’s numbers for Georgia are lower, though, hovering in the mid-$50,000s.
Animation in the United States is still pretty uncommon. While a lot of animation work is done internationally in Canada, China, India and South Korea, only small pockets exist in this country, usually in California and New York.
So when Bento Box Entertainment, a Burbank-based animation company that produces shows like Fox’s Bob’s Burgers and The Awesomes for Hulu, chose Atlanta over international locations, it was a big win for both Georgia and the U.S. Georgia’s tax credits played a big role in Bento Box’s decision to buck the outsourcing trend, says Bradford.
Other key factors working to Georgia’s advantage across all creative industries are its location on the East Coast, proximity to a major international airport, lower cost of living and higher quality of life. Its infrastructure is also strong; the TechAmerica Foundation ranked the state fifth in the nation for Internet and telecommunications services in 2013, and Google recently announced it would be bringing Google Fiber, its ultra-high-speed Internet and television service, to portions of the Metro Atlanta area in the next few years.
Georgia’s colleges and universities also are essential to attracting companies. As part of the professional recruitment process, Bradford will often arrange meetings between prospective companies and state schools to ensure that a good working relationship is established early in the process. “That relationship is crucial to pretty much every company I’ve been bringing in,” he says. “Companies want to have a relationship with colleges.”
Students want companies to have a relationship with their colleges, too. Bento Box is currently working with Georgia Tech students to develop interactive apps, and Floyd County Productions works with SCAD to make sure its courses include instruction in emerging animation technologies. These partnerships help ensure that students graduate with directly applicable experience and in-demand skills, while teaching students about employment options in Georgia.
“We have a big company here. We just got nominated for our first Emmy last season. We’re doing good, critically acclaimed work, and we’re a very young company,” says Thompson. “It’s good for them to know, ‘Hey, you don’t have to leave Georgia if you don’t want to.’”
Other often-overlooked areas of growth in the entertainment industry are television commercials and support service companies. The impact of these two can be a little tricky to quantify – commercials because many filmed in Georgia do not reach the $500,000 threshold unless aggregated, and ancillary companies simply because they’re hard for GDEcD to definitively track.
The state’s sales tax exemption program, which ended in June 2012, allowed smaller-budget productions that didn’t meet the spending threshold to still benefit by doing business in the state, while also giving the department a tracking mechanism for smaller projects. Since its dissolution, the department hasn’t been able to track smaller-budget commercials at the same level, but companies can aggregate commercials to meet the $500,000 requirement; for example, one $200,000 commercial would not qualify, but three $200,000 commercials combined would. Using this method, GDEcD has tracked 42 commercials for FY 2014 with a budget of $11.4 million, up from 33 commercials with a total budget of $6.8 million in FY 2013.
The department has also seen an increase in support service companies moving to the state – a healthy indicator of the entertainment industry’s success. Georgia’s growing film/television and digital entertainment business has attracted an estimated 100 companies since 2008, including 11 soundstages alone, says Lee Thomas, deputy commissioner for GDEcD’s Film, Music & Digital Entertainment Office.
A small sampling of the types of companies moving to the state includes trucking companies, lighting companies, prop shops, casting companies, catering companies and tax specialists. Pinewood Atlanta Studios in Fayetteville, the first studio in the United States for U.K. behemoth Pinewood Studios, even has its own dedicated space for ancillary companies, giving it easy access to animal actors, rental cars, chiropractic services and more.
“They’re not incentivized in any way, but because we have so much business, they are landing here,” Thomas says. “For example, in 2012, MPAA [Motion Picture Association of America] member companies alone paid $696 million to 4,066 vendors in the state. That’s a lot of different people that they’re hitting. I think people tend to think of the main food groups of camera people or actors, but there are so many businesses that are impacted when a film comes to the state.”
That’s a phenomenon that Leeman LeClair, co-founder of boutique video company Luxeve Media, can attest to. “With gear being more affordable and the types and amount of content that companies demand, it’s easy for a lot of people to invest in some gear and start a production company, or just become a one-man show,” he says.
LeClair co-founded his company in 2007, with offices in Atlanta and Boca Raton, Fla. Since moving to Atlanta in 2011, he’s seen his business, as well as the number of film-related companies and creative workers in the city, grow exponentially. “We’re finding ourselves surrounded by people in the same industry, and it’s always great to meet new people in a similar business,” he says. “In many ways it validates Atlanta as a creative town where exciting things are happening.”
Exciting things are happening in editing rooms and classrooms all over the city, but perhaps nowhere is that excitement felt more than in the GDEcD offices. Film and television have thrust Georgia into the national spotlight, and Bradford and his team believe that Georgia’s digital entertainment sector is poised for a national breakthrough of its own.
Its growth is “something we need to keep not just promoting, but actually investing in,” says Bradford. “I think we have a chance to become a digital entertainment state, or at least have it known as one of our key industries. I think that we are very close to making that happen.”