An Economic Analysis of
Virginia’s Film and Video
Production-Distribution Industry
Prepared for
Virginia Film Office
Virginia Tourism Corporation
Center for Public Policy
at the L. Douglas Wilder School of
Government and Public Affairs
Virginia Commonwealth University
Richmond, Virginia
December 2005
TABLE OF CONTENTS
Page Number
Executive Summary ..........................................................................
i
Introduction .....................................................................................
1
Previous Research ............................................................................
2
Analyzing the Industry .....................................................................
3
Geographic Regions.........................................................................
Defining the Industry ......................................................................
Center for Public Policy’s Definition of the Industry ............................
3
4
8
Size and Composition of the Industry ..............................................
10
Measuring the Industry....................................................................
Relative Size of the Industry ............................................................
Freelance Employees .......................................................................
11
13
14
Economic Impacts of the Industry ...................................................
16
Impact to Virginia ...........................................................................
Impact from the Operations of Industry Firms.................................
Impact from Freelance Employees..................................................
Impact from Out-Of-State Production Companies ............................
18
20
20
21
Impact to Northern Virginia .............................................................
Impact from the Operations of Industry Firms.................................
Impact from Freelance Employees..................................................
22
23
24
Impact to Hampton Roads ...............................................................
Impact from the Operations of Industry Firms.................................
Impact from Freelance Employees..................................................
25
25
26
Impact to Central Virginia ................................................................
Impact from the Operations of Industry Firms.................................
Impact from Freelance Employees..................................................
27
27
28
Estimating the Impact of Out-Of-State
Productions Made in Virginia............................................................
29
Copyright © 2005
Virginia Commonwealth University, Richmond, Virginia
EXECUTIVE SUMMARY
An Economic Analysis of Virginia’s Film and Video
Production-Distribution Industry
By Mary Nelson, Virginia Film Office
January, 2006
VIRGINIA’S FILM, VIDEO AND NEW MEDIA INDUSTRY
The production of feature films, television shows, documentaries and videos has been an important
part of Virginia’s business landscape for decades, creating jobs, revenue and awareness about the
Commonwealth. Ever since Elizabeth Taylor and Rock Hudson came to shoot the opening scenes
of the feature film Giant in Charlottesville in 1955, Virginia has been a popular state for on-location
film production. Many well-known feature films have been shot in the Commonwealth since that
time, including What About Bob?, Dave, Dirty Dancing, Sommersby, Navy SEALS, The Jackal,
Lassie, G.I. Jane, Hannibal, Gods and Generals, The Contender, Cold Mountain and The New
World. Popular television shows such as The West Wing, New Detectives, FBI Files, Line of Fire
and the current ABC hit television show, Commander in Chief, all filmed in Virginia. HBO’s
acclaimed film Iron Jawed Angels was among the many made-for-television movies that shot in the
state, while several mini-series including Sally Hemings: An American Scandal, A Woman Named
Jackie and Tom Clancy’s NetForce were also filmed in the Commonwealth.
The state’s rich historic background has made it extremely popular with documentary filmmakers and
Virginia’s convenience to Washington, DC and its many military installations have provided a sizable
industry centered around educational, government and military videos. The sophisticated
technology industry in the northern part of the state, coupled with the proximity of National
Geographic, BET, The Learning Channel, Discovery Channel, PBS and its local affiliates, have
fostered the growth of a strong and flourishing content creation and post production industry in
Northern Virginia.
Virginia is an exceptional state for film and video production. The wide variety of scenery and
architecture found in the Commonwealth includes oceans, mountains, rural landscapes, scenic
valleys, small towns, major cities and a wealth of historic architecture and sites that provide
filmmakers with unlimited possibilities for film locations. A skilled workforce, college and university
media training programs and a close proximity to Washington, DC and New York City are also
advantages.
THE VCU CENTER FOR PUBLIC POLICY STUDY: RESULTS
In 2005, the VCU Center for Public Policy, under the direction of Dr. Michael Pratt, conducted an
economic analysis of Virginia’s film and video industry to determine the annual impact of the
industry on Virginia’s economy. Economists at the Center began the process by developing a
definition of the industry, which is a particularly challenging task because a sizable portion of the
workforce is not associated with a specific company or organization. The study examined data
from 2004 and reached the following conclusions regarding the impact that the film and video
industry has on Virginia:
Total economic impact: $510 million
State tax revenue received $19.8 million
Total number of Virginia companies: 259
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Average yearly salary of employees in Virginia companies: $55,000
Number of workers employed in the industry: 5969
Number of additional employees/jobs: 2553
THE VCU STUDY: METHODOLOGY
After an examination of existing literature and research from other organizations regarding the
motion picture industry, a definition for the industry was adopted and applied to Virginia. The
decision was made to measure the impact that the industry had on the state as a whole, and on
the three main regions of the state where the majority of production occurs. These regions are
Hampton Roads, Central Virginia, which includes Richmond and surrounding counties and cities,
and Northern Virginia.
Conventional methods of measuring the impact of any industry involve the use of NCAIS codes, a
classification system by which it is possible to determine the number of companies and their
employees that are involved in the industry being studied. However, the majority of those
employed by the industry work as freelancers or independent contractors and would not be
included in the NCAIS system. Therefore, it was necessary to develop a method of including them
in the study.
Using these parameters, VCU economists arrived at their conclusions by computing the direct,
indirect and induced impact of Virginia businesses and their employees as well as the freelance
crew members. The results can be found in tables 8 a, b and c in the report. As the report
discusses in more detail, when determining the total impact of any industry, three kinds of impacts
are studied. They are:
Direct Impact: Expenditures made by a company for the construction or operation of the
business.
Indirect Impact: Expenditures made by other organizations that supply goods or services
so that the company can operate.
Induced Impact: Expenditures made by employees of the company based on changes in
household incomes as a result of new or increased business.
THE VCU STUDY: SUMMARY
The study showed that there are currently 259 Virginia businesses that report being involved in the
business of the creation and distribution of filmed products. These businesses reported a total of
1657 people on their payrolls with an average salary of $55,500, making it the fourth highest paid
industry in the state.
The study reports that the number of companies in Virginia dropped from 292 in 2001 to 259 in
2004, a 12% reduction. Likewise, the number of employees dropped from a total of 1999 in 2001 to
1657 in 2004, an 18% reduction. This decline coincides with the period of time in which states
have instituted incentive programs, and it can be assumed that part of the reason that the industry
has experienced a reduction can be attributed to that fact. In addition, an uncertain economy
during this period was probably also a contributing factor.
In order to measure the industry as a whole, it was important to determine the number of freelance
employees working in the state. The Screen Actors Guild, the official union representing film and
television actors, reported that it has 1157 registered actors living in Virginia. Talent agencies in
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the three main regions of the state reported approximately 2000 additional actors who were not
members of the union but who earned at least part of their living as performers. IATSE, the official
union for crew members, reported 250 registered crew members belonging to the union, while it
was estimated that 825 non-union crew members also lived and worked in the state, making a total
of 4312 additional freelance workers involved in the production of film, video and television
product.
The final portion of the study was an examination of the impact that production originating from
outside the state could have on the economy. Economists studied expenditures reported by four
major feature films that shot in Virginia. Then, the IMPLAN economic impact model was applied to
estimate the direct, indirect and induced effects of these expenditures. The results were that each
$10 million of film production spending on location in Virginia would have a total economic impact
of $15.3 million, and would support 528 full-time and part-time jobs during the period in which the
company was working, including pre-production, production and post-production. The state taxes
received would result in tax revenues of $450,000 per $10 million of spending.
THE MCINTIRE SCHOOL OF BUSINESS STUDY: 1995
The VCU study follows an earlier study conducted in 1995 by the McIntire School of Business at
the University of Virginia. The McIntire study was an examination of the film and video production
industry in Virginia entitled, Achieving Competitive Advantage in Interjurisdictional Competition:
The Case of the U.S. Film Production Industry. In this study, numerous recommendations were
made on strategies to make the industry more competitive. In its conclusion, the report states:
Currently the state has many physical locations which are very conducive to location
filming. However, the lack of adequate studio space, a large and experienced crew
base, and the lack of financial incentives for film production, among other factors,
are preventing growth in this area.
These concerns have been addressed in the decade since the study was released. The
state now has two film studios, New Millennium Studios and New Dominion Pictures, and
numerous Virginia universities have established training programs for various aspects of
film and television production. The state’s sales and use tax exemption, once at the
forefront of programs used to recruit production, was established and has now been
adopted by the majority of the states. However, Virginia, once a leader in this area, has
fallen behind in recent years because of newer, more aggressive incentive programs
designed to stimulate investment adopted by its competitors.
ECONOMIC IMPACT
Until recently, all of these elements have resulted in an industry that has shown strong and steady
growth over the years. Since 1980, when records were first kept, the economic impact of the
industry has exceeded $2 billion. This impact includes a direct impact of the film projects
themselves and also includes indirect impacts that benefit communities where film production
occurs. When a project shoots on location, it typically leaves 25% to 35% of its budget behind in
the community in which it films. A feature film can easily spend $10 million of its budget in a
locality. A recent example of the kind of impact a film shoot can have is Steven Spielberg’s
blockbuster film War of the Worlds, which spent $5 million and shot for 5 days in Rockbridge
County and Lexington. Documentaries, commercials and video shoots, while having smaller
budgets, also spend a significant amount of money hiring local labor and purchasing local goods
and services.
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TOURISM IMPACT
In examining the economic impact of this industry, it is important to consider the effect that filmed
entertainment has on tourism. Over the years, many films have brought visitors to the locations
where shooting occurs or to areas which are featured in films, documentaries and television
shows. In Virginia, the feature film Dirty Dancing has brought visitors to Mountain Lake Resort
since it was shot there in 1986, a trend that still continues today. Recent films having Civil War
themes include Gods and Generals and Cold Mountain, both of which resulted in significant
increases in enquiries about Virginia’s Civil War sites and attractions. Currently, The New World, a
film about the founding of Jamestown, is generating interest in Virginia on the eve of the 400th
anniversary of that important event in American history. These films, with their multi-million dollar
promotional budgets, give Virginia national and international exposure that would be impossible to
obtain through conventional advertising and promotional efforts. The increased visitation resulting
from films such as these is substantial and can bring millions of dollars in revenue to the state.
A COMPETITIVE DISADVANTAGE
Virginia’s film and video industry is at a critical point in its development. For the past decade, the
industry nationwide has been in a state of flux, as an increasing amount of production has been
leaving the United States for countries offering financial incentives. The most successful country is
Canada, which has seen billions of production dollars flow across the border because of the
significant financial incentives offered by the Canadian government as well as by cities and
provinces within the country.
In 2001, state legislatures began to see the economic value of following Canada’s lead in investing
in the film and video industry through financial incentive programs. To date, 20 states have
enacted significant incentive programs. They are Arizona, Florida, Georgia, Hawaii, Illinois,
Louisiana, Maryland, Massachusetts, Mississippi, Missouri, Montana, New Jersey, New Mexico,
New York, North Carolina, Oklahoma, Oregon, Pennsylvania, South Carolina and Utah. In
addition, many other states are considering incentive initiatives in their current legislative sessions.
States having incentive programs in place are reporting substantial returns on their investments.
For example, Illinois production tripled from $25 million to $75 million in one year, New Mexico
reported an increase from $8 million to $200 million in two years, while Louisiana, with the most
aggressive and far-reaching incentives in the country, experienced industry growth from $20 million
to $300 million in two years.
Even more devastating to Virginia is the fact that half of the states having incentive programs are
Virginia’s direct competitors for business. In fact, every state along the eastern seaboard and Gulf
Coast from New York to Louisiana has enacted legislation aimed at recruiting film and video
production except Virginia and Alabama. This has drastically impacted Virginia’s ability to compete,
and has had a detrimental effect on the industry in the state. An estimated $800 million of
production that could potentially have been shot in Virginia, selected other places to film based on
financial incentives.
CONCLUSION
The film and video industry is an important one for Virginia. With a total economic impact of more
than $500 million yearly, 8500 workers and a high average salary for company employees of
$55,000, it makes a significant contribution to the state’s economy. The estimated state tax
revenue of the industry is nearly $20 million each year and, of course, that amount would increase
with the addition of new business recruited as part of a targeted incentive plan. The potential for
increased tourism to Virginia based on film production only increases the value of the industry to
Virginia.
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The fact that the number of businesses and workers have steadily declined during the same period
in which many states have enacted incentive plans to recruit new business, is an alarming trend
that must be addressed. The twenty states that have already enacted legislation for investment in
the industry are putting Virginia at a clear competitive disadvantage, and the fact that half of these
states are among Virginia’s strongest competitors is certainly having a detrimental affect on
Virginia’s ability to remain competitive.
A film incentive plan is an investment in Virginia that will bring great benefits to the Commonwealth.
Virginia’s proposed plan is a performance-based initiative that will rebate a portion of expenditures
made in the state on workers or on goods and services. It is intended to recruit new business,
strengthen and expand the existing in-state industry, create jobs and bring new revenue to the
Commonwealth.
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INTRODUCTION
This report presents findings from an economic analysis of the Film and Video
Production-Distribution Industry within the Commonwealth of Virginia and three of
its metropolitan areas.
This Industry is comprised of businesses and freelance
individuals who are responsible for the production, post-production, and distribution of
motion pictures, television shows, videos, documentaries, and commercials.
Clearly,
the production of films, videos, and television shows provides value to the public by
creating sources of entertainment and information. This report will show that the Film
and
Video
contribution.
Production-Distribution
Industry
also
makes
an
important
economic
In particular, this analysis shows how the industry contributes to the
local job and expenditure base of the Commonwealth and its jurisdictions, through
local-area expenditures and by generating tax revenues for the areas.
Virginia Commonwealth University’s (VCU) Center for Public Policy conducted this
analysis of the Industry on behalf of the Virginia Film Office, a division of the Virginia
Tourism Corporation. The project had five primary objectives, as listed below:
1. To develop a definition for the Film and Video Production-Distribution
Industry (including commercials, documentaries, films, television,
videos, and post-production) that would allow data to be collected about
the Industry;
2. To estimate the number of firms, number of employees, and average
wages paid by businesses that comprise this Industry;
3. To estimate the Industry’s economic impact and tax revenue impact on
the Commonwealth of Virginia;
4. To estimate the Industry’s economic impact and tax revenue impact on
three regions within Virginia (Northern Virginia, Hampton Roads, and
Central Virginia), where a majority of the Industry employees are
located; and
5. To develop a method for using in-state expenditure data, provided to
the Virginia Film Office by out-of-state film production companies, to
estimate the economic impact generated by film production spending
within Virginia.
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The following sections of this report discuss previous industry research that has
been conducted for the Virginia Film Office and present definitions that have been used
by other states to measure the size and composition of the industry-sector that
includes film and video production.
This information served as the starting point for
the VCU Center for Public Policy’s analysis of the Film and Video Production-Distribution
Industry within Virginia. After developing its own definition of the Industry, the Center
for Public Policy research staff collected data on the number of firms and the
employment level of companies that comprise this Industry, as well as wages paid to
its employees.
Lastly, the employment and wage data were used to estimate the
Industry’s economic impact for the Commonwealth of Virginia.
PREVIOUS RESEARCH
In 1995, Dr. George Overstreet, of the University of Virginia’s McIntire School of
Commerce, prepared a report for the Virginia Film Office titled “Achieving Competitive
Advantage in Interjurisdictional Competition: The Case of the U.S. Film Production
Industry.” This document discusses methods for understanding and approaches for
enhancing competitiveness of the film production industry – with a particular link back
to Virginia’s indigenous film production industry.
While the University of Virginia report is not intended to be an economic impact
analysis, it addresses elements that are still relevant for Virginia’s Film Industry and
the current economic impact study, such as the following:
•
“The film production industry remains highly fragmented and remains very
much a cottage industry … [with] small production and service firms versus the
large studios.” 1
Data from the present economic analysis of the Film and Video ProductionDistribution Industry confirms that Virginia’s Industry remains one where
small companies and freelance employees form most of the Industry.
•
“The inability to quantify their economic impact makes film commissions
susceptible to underfunding….” 2
1
Overstreet, George. Achieving Competitive Advantage in Interjurisdictional Competition: The Case of the U.S. Film
Production Industry. Page 14.
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The primary reason that the Virginia Film Office contracted with the VCU
Center for Public Policy was to conduct an economic impact study of
Virginia’s Film and Video Production-Distribution Industry. By quantifying
the Industry’s impact to the Commonwealth, the Virginia Film Office hopes
to expand support for its programs. If an expanded tax incentive program
and additional funding are made available, the Virginia Film Office will be
able to attract additional film production to the Commonwealth.
The
economic activity associated with this new production will bring additional
jobs and new tax revenue to Virginia.
•
When discussing the findings from a focus group with thirteen “key state film
commissioners or competitors,” Dr. Overstreet notes the methods used for
developing an economic impact for the film production sector by some of the
film commissions.
These included: “production manager forms / project
sheets,” “ballpark figures from production accountant,” “personal contact with
companies to judge spending,” and “half the production budget.” 3
The research presented in this report will provide the Virginia Film Office
with a well-established methodology for the Virginia’s Film and Video
Production-Distribution Industry.
ANALYZING THE INDUSTRY
As the initial step in analyzing the industries that comprise Virginia’s Film and Video
Production-Distribution Industry, it was necessary to determine the geographic regions
for which employment and wage information would be collected. These boundaries
could have been identified in multiple ways, including specific cities, counties, multicounty regions, or even the entire state. After establishing the geographic boundaries,
the next step in this research was to develop a definition of the Industry that would
allow data to be collected about the firms and individuals operating within the Industry
and within the geographic areas.
Geographic Regions
The Virginia Film Office chose four geographic regions as the focus for this analysis.
These areas were: the Commonwealth of Virginia, Northern Virginia, Hampton Roads,
and Central Virginia. The three sub-state regions were chosen because it was felt that
most of the operations of the Commonwealth’s Film and Video Production-Distribution
2
3
Ibid. Page 23.
Ibid. Appendix 5a. Page 1.
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Industry took place in those sections of Virginia. Each of the four regions is described
in more detail below.
1. Commonwealth of Virginia: This area included all of the counties and
independent cities that are located in Virginia;
2. Northern Virginia: This region was defined as the Virginia portion of the
“Washington-Arlington-Alexandra, District of Columbia-Virginia-MarylandWest Virginia” MSA;
The Northern Virginia region is comprised of the independent cities of Alexandria,
Fairfax, Falls Church, Fredericksburg, Manassas, and Manassas Park, as well as the
counties of Arlington, Clarke, Fairfax, Fauquier, Loudoun, Prince William,
Spotsylvania, Stafford, and Warren.
3. Hampton Roads: This region was defined as the Virginia portion of the
“Virginia Beach-Norfolk-Newport News, Virginia-North Carolina” MSA;
The area includes the independent cities of Chesapeake, Hampton, Newport News,
Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach, Williamsburg, plus the
counties of Gloucester, Isle of Wight, James City, Mathews, Surry, and York.
4. Central Virginia: This area was defined to match the official definitions of
two of Virginia’s Metropolitan Statistical Areas (MSAs) – the Richmond MSA
and the Charlottesville MSA.
The combined region is comprised of the independent cities of Charlottesville,
Colonial Heights, Hopewell, Petersburg, and Richmond, as well as the counties of
Albemarle, Amelia, Caroline, Charles City, Chesterfield, Cumberland, Dinwiddie,
Fluvanna, Goochland, Greene, Hanover, Henrico, King and Queen, King William,
Louisa, Nelson, New Kent, Powhatan, Prince George, and Sussex.
After establishing these geographic areas for the analysis, the next step was to develop
a definition of the Industry that would allow employment and wage data to be collected
for Industry’s firms.
Defining the Industry
While reviewing research from throughout the United States that examined the
“Film Industry,” or a related, similarly-named industry group, the Center for Public
Policy found that a wide variety of organizations had studied this industry.
These
groups included regional partnerships, economic development organizations, state and
local government agencies, academic institutions, and research firms.
Table 1
presents examples of some industry definitions used elsewhere.
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Table 1. Selected Industry Definitions for the
“Film Industry” and Related Industries
Geographic
Region
Industry
Name
Arizona
“Film and Video
Industry”
Austin,
Texas
“Visual Media
Industry”
California
“Entertainment
Industry”
Definition
NAICS codes 512110, 512120, 512191, and 512199
Defines the Visual Media Industry as “film and commercial
production and film festival tourism.” Industry data are
provided, but there is no indication of the way in which data
were collected. Does not cite industry codes.
MPAA survey of its California Group members. Data were
collected on employment, payroll, vendor expenditures,
taxes, and construction products. Primary survey data
supplemented with data from other sources
(Association of Independent Commercial Producers, California Film
Commission, Entertainment Industry Development Corp., MPAA
Research Department, and Trade publication research).
Does not cite industry codes.
“Entertainment
Industry”
NAICS codes 512110, 512120, 512131, 512132, 512191,
512199, 512210, 512220, 512230, 512240, 512290,
515120, 515210, 517410, 517510, 541922, 711130,
711410, and 711510.
SIC codes 7812, 7819, 7822, and 7829
Florida
“Motion Picture
Industry”
(These SIC codes are roughly equivalent to NAICS codes
512110, 334612, 512191, 512199, 532220, 532490, 541214,
541690, 561310, 711510, 423990, 512120,
512120, 512199, 519120.)
Los Angeles
County,
California
“Film Industry”
NAICS codes 512110, 512120, 512191, and 512199
Manitoba,
Canada
“Film Industry”
Does not cite industry codes.
Continued
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Page 5
Table 1, continued. Selected Industry Definitions for the
“Film Industry” and Related Industries
Geographic
Region
Industry
Name
New York
City
“Visual Media
Industry”
Definition
Refers to the use of SIC codes from an earlier MPAA study.
Does not cite industry codes.
Oregon
“Film and Video
Industry”
Defines the Industry as the sum of three segments:
indigenous film and video industry, out of state productions,
and television broadcasting. Data sources cited are U.S.
Bureau of Labor Statistics, Census Bureau, film surveys,
and the Oregon Department of Employment. Does not cite
industry codes.
Seattle,
Washington
“Film and Video
Production”
NAICS 51211, 51219, 541922
Washington
State
“Film & Video
Production”
NAICS 51211, 51219, 541922
Source: The source for each of these definitions is provided in Appendix A
Some of these definitions, such as the ones for Washington and Florida, were very
precise and identified the exact industry groups that would be included as part of the
Film Industry (or a related industry group). The Washington definition indicates that
its “Film and Video Production” sector includes industries with the NAICS codes 51211,
51219, 541922 (the NAICS coding system will be explained later in this report).
Similarly, the Florida study used industries specifically defined with the Standard
Industrial Classification (SIC) system, a precursor to the NAICS coding system. Other
definitions, however, tended to be general and did not identify specific limitations for
the type of companies that would be considered part of the industry.
Collecting sound statistical data on any industry requires that consideration be
given to the data needs of the proposed analysis. An economic impact analysis, which
was the main focus of this report, requires data on industry employment and wages.
Because of this, it was essential that the Center for Public Policy’s approach to
measuring the Film and Video Production-Distribution Industry took into account the
availability of these data when developing its definition.
A definition that was very
general would make it very difficult to obtain data on wages and employment levels,
VCU Center for Public Policy
Page 6
since the researcher would not know what specific industries, or firms within those
industries, to count. Industry code definitions, in contrast, make it clear what types of
firms are included, and which are excluded, from a definition.
The lack of consensus
on how to define the “Film Industry,” as evidenced by the varying definitions in Table
1, underscores the importance of choosing a definition carefully.
The size and
composition of the industry can vary greatly, even for the same geographic area,
depending on which industry sectors are included.
Focusing on the industry-specific definitions, several of the groups being examined
had been developed using classification codes from the North American Industry
Classification System (NAICS). This system, which was developed in 1997 through
collaboration among the statistical agencies of the United States, Canada, and Mexico,
provides the basis for classifying businesses by industry and collecting data on the
economic activity in these industries.
Under the NAICS system, establishments that
use the same or similar processes to produce goods or services are grouped together
and assigned a unique classification number – the NAICS code. 4 For example, grocery
stores and supermarkets, which provide a service to consumers, are classified using
the 6-digit NAICS code of 445110.
Economic data about the level of employment,
wages and salaries, and the number of firms for the grocery store and supermarket
sectors are compiled and made available using this NAICS code as a method for
identifying the specific sector.5
After considering the research from other areas and having conversations with
senior staff members of the Virginia Film Office, the Center for Public Policy chose to
create its own NAICS-code definition for Virginia’s Film and Video ProductionDistribution Industry. The challenge was to develop a definition that includes all
industries exclusively producing output for Virginia’s Film and Video ProductionDistribution Industry, but does not overstate the size by adding industries that are only
tangentially related.
A NAICS definition allowed for the precise identification of the
types of companies that would be considered part of the Industry, and it also allowed
for measuring the Industry’s employment, wages, and number of firms.
4
Development of NAICS. U.S. Census Bureau website. www.census.gov/epcd/www/naicsdev.htm
5
Prior to the implementation of the NAICS system in 1997, the U.S. government used a similar system of codes called
the Standard Industrial Classification (SIC) to report data on various industries. The SIC classification system was
originally adopted in 1939 and last refined in 1987. As of 2002, government data are no longer reported using the SIC
codes and only the NAICS system is used.
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The Center for Public Policy’s approach began by determining those industries that
were wholly engaged in production, post-production, or distribution of filmed product.
In addition to these industries and their underlying firms, this analysis includes
freelance employees who work for the Industry, but for whom data are not reported in
the same way as for the employees of wholly-engaged industries.
Center for Public Policy’s Definition of the Industry
For its analysis, the Center for Public Policy developed a definition of the Film and
Video Production-Distribution Industry that included four NAICS codes, each at the sixdigit level of detail (see Table 2).
Table 2. Center for Public Policy’s NAICS Code Definition for
the Film and Video Production-Distribution Industry
NAICS
Code
Industry Description
512110
“Motion picture and video production -- This industry comprises
establishments primarily engaged in producing, or producing and
distributing motion pictures, videos, television programs, or
television commercials.”
512120
“Motion picture and video distribution -- This industry
comprises establishments primarily engaged in acquiring
distribution rights and distributing film and video productions to
motion picture theaters, television networks and stations, and
exhibitors.”
512191
“Teleproduction and other postproduction services – This
industry comprises establishments primarily engaged in providing
specialized motion picture or video postproduction services, such as
editing, film/tape transfers, subtitling, credits, closed captioning,
and animation and special effects.”
512199
“Other motion picture and video industries – This industry
comprises establishments primarily engaged in providing motion
picture and video services (except motion picture and video
production, distribution, exhibition, and teleproduction and other
postproduction services).”
Source: U.S. Census Bureau, 2002 NAICS code descriptions, and VCU Center for Public Policy.
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Page 8
Within
the
NAICS
system,
there
exists
a
group
called
“Film
and
Video”
establishments. This aggregation includes the industries listed in Table 2 (NAICS codes
512110, 512120, 512191, and 512199) and two others:
1. “Motion Picture Theaters (except drive-ins)”; and
2. “Drive-In Motion Picture Theaters.”
The Center for Public Policy definition does not include these two industry groups since
they are only about the viewing of movies and videos.
Even if there were no film or
video production or distribution companies within Virginia, there would still be movie
theaters where films (produced entirely elsewhere) would be shown.
By excluding
these two industries, the Center for Public Policy definition only includes those firms
that exist because film and video production and distribution is present in the
Commonwealth.
Examples of the type of companies included within the Center for
Public Policy definition of the Film and Video Production-Distribution Industry are
shown in Table 3.
Table 3. Example Establishments within the
Film and Video Production-Distribution Industry
NAICS
Code
Establishments
512110
Motion Picture and Video Production: Motion picture studios producing
motion pictures; Video production; TV show production; TV commercial
production; Animated cartoon production; Instructional video production;
and Music video production.
512120
Motion Picture and Video Distribution: Motion picture film distributors;
Video film distribution; Film libraries that offer commercial distribution;
Television show syndicators; Tape distribution for television; and Animated
cartoon distribution.
Continued
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Table 3, continued. Example Establishments within the
Film and Video Production-Distribution Industry
512191
Postproduction Services and Other Motion Picture and Video
Industries: Motion picture or video editing services; Motion picture
production special effects, post-production; Closed captioning of taped
material; Film or video transfer services; Motion picture sound dubbing
services; and Post-production special effects for motion picture production.
512199
Other Motion Picture and Video Industries: Booking agencies for
motion picture or video productions; Stock footage film libraries; Motion
picture film processing laboratories; and Reproduction of motion pictures
for theatrical distribution.
Source: U.S. Census Bureau, 2002 NAICS code descriptions.
SIZE AND COMPOSITION OF THE INDUSTRY
As explained earlier, an economic impact analysis of Virginia’s Film and Video
Production-Distribution Industry (or for any industry or group of industries) requires
data on the level of employment within the Industry and the wages paid to its
employees.
Using the Center for Public Policy’s NAICS-based definition, employment
and wage data were collected for the four geographic regions of interest for this study.
These data were obtained from the “Quarterly Census of Employment and Wages”
(QCEW) reports. 6
QCEW information is collected and reported by the labor commission of each state –
for the Commonwealth, the source is the Virginia Employment Commission. The QCEW
data provide a count of the number of employees and wages for virtually every nonagricultural firm in the United States. 7 However, it is important to note that measures
presented in the QCEW data are only for private-sector firms and include neither
freelance employees nor any employees not covered by unemployment insurance. This
6
Formerly called “Covered Employment and Wage” data or “ES-202” data, information from the Quarterly Census of
Employment and Wages provides employment levels, wages paid, and number of firms within each industry of
Virginia. QCEW data are published with a two-quarter (six-month) time lag.
7
Bureau of Labor Statistics. Report titled People are Asking. BLS website (www.bls.gov/cew/peoplebox.htm#1).
QCEW data covers roughly 97 percent of all non-farm employment in the United States. Covered employment data
includes all jobs that are covered by unemployment insurance.
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fact is the reason why the Center for Public Policy definition needed to be expanded to
include freelance industry workers.
For Virginia’s Film and Video Production-Distribution Industry, the number of
freelance individuals is sizable.
By combining data from the QCEW reports with
information about the number of freelance workers in the Industry, the Center for
Public Policy was able to include both groups in the economic impact analysis.
Measuring the Industry
To measure the size and composition of the Film and Video Production-Distribution
Industry, the Center for Public Policy began by using two datasets from the same
source.
QCEW data for 2004 (annual) and for the 4th Quarter 2004 were obtained
from the Virginia Employment Commission.
Annual 2004 QCEW data revealed the
number of firms, number of employees, and average wages paid to workers in the
industries that comprised the Center for Public Policy’s Industry definition.
However,
non-disclosure restrictions would not allow annual data to be released for certain
sectors of our Industry definition for the metropolitan areas of Northern Virginia,
Hampton Roads, and Central Virginia.
As a supplement to the annual 2004 data, the Center for Public Policy annualized
quarterly data from the 4th Quarter of 2004 to estimate annual values for the missing
sectors.
Using annualized, quarterly data provided a “best estimate” for the missing
annual values and it allowed the Center for Public Policy to bypass non-disclosure
restrictions for these data.
After the Center for Public Policy obtained QCEW data for each of the industry
sectors within its NAICS code definition of the Industry, the data were aggregated and
estimates of the size and composition of the Industry’s firms within Virginia and the
three metropolitan regions were made (see Table 4). It is important to note that these
data only represent information from QCEW sources and does not yet include freelance
workers in the Industry. Those employees will be addressed later in the report.
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2004 data for each of the four geographic regions being studied are presented
below:
•
Virginia: QCEW data reported that there were 1,657 people working at 259
establishments in the Film and Video Production-Distribution Industry.
These employees earned an estimated average annual wage of $55,500.
•
Northern Virginia: This region was the largest of the three sub-state
areas being considered, in terms of the number of firms, the number of
employees, and average annual income. This area of the state was
estimated to have Industry employment of 877 individuals who were
working at 137 firms during 2004. These firms paid an average annual
wage of $70,500.
•
Hampton Roads: This area of Virginia was the second largest in terms of
the number of employees. QCEW data indicate that there were 549
individuals working at 33 firms in Hampton Roads. Workers in the Film and
Video Production-Distribution Industry within this region earned an average
annual salary of $42,500.
•
Central Virginia: The smallest of the metro regions being analyzed (in
terms of the number of employees), Central Virginia’s Film and Video
Production-Distribution Industry had an estimated 123 workers, employed at
45 establishments making an average annual salary of $47,000.
Table 4. QCEW Data for Film and Video
Production-Distribution Establishments
in Virginia and Three Metropolitan Regions
Locality
Employment
Level
Number of
Establishments
Average Wages
& Salaries per
Employee
Virginia *
1,657
259
$55,500
Northern Virginia **
877
137
$70,500
Hampton Roads**
549
33
$42,500
Central Virginia **
123
45
$47,000
* The Virginia total is not equal to the sum of the three jurisdictions listed. There are other regions of
Virginia that have employees and firms within this Industry. Those other regions are not presented
here.
** Data for Northern Virginia, Hampton Roads, and Central Virginia were obtained by annualizing 4th
Quarter 2004 data for the jurisdictions and the NAICS codes of interest.
Source: Virginia Employment Commission QCEW data and VCU Center for Public Policy estimates.
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Relative Size of the Industry
It is also important to understand the relative size of Virginia’s Film and Video
Production-Distribution Industry, as compared with all industries in the Commonwealth
and measured using QCEW data. For 2004, the Film and Video Production-Distribution
Industry accounted for about 0.05 percent of the Commonwealth’s total employment
(3,495,107) and 0.12 percent of its total establishments (219,253). 8
While these
levels do not represent one of Virginia’s largest production sectors in terms of the
number of employees or quantity of firms, the Film and Video Production Distribution
Industry did have wages that were well-above the annual average for all industries
($55,500 average for the Industry versus a statewide, all-industry average of
$40,500).
As an additional point of comparison, Table 5 provides historical information about
Virginia’s Film and Video Production-Distribution Industry, for 2001 through 2004. This
table shows that the size of the Industry in Virginia, whether measured in terms of
number of employees or number of firms, has been decreasing each year.
At least
part of this decrease would be due to the “runaway film production” that is taking place
as movies and video productions are shifting from the United States to Canada and
other countries.
In addition, there has been an increase in film incentives offered by
various states, particularly those states that are direct film and video competition with
Virginia. 9 These incentives may have caused production work to move from Virginia to
other states.
8
2004 Annual QCEW data, Virginia Employment Commission.
9
Incentive data provided by the Virginia Film Office.
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Table 5. Virginia’s Film and Video Production-Distribution
Industry, 2001 through 2004
Year
Number of
Employees
Number
of Firms
Estimated Average
Wages & Salaries
per Employee
Estimated Average
Wages & Salaries
per Employee
(Current dollars)
(2004 Dollars)
2001
1,999
292
$45,000
$48,150
2002
1,915
281
$49,000
$51,450
2003
1,792
264
$47,500
$48,925
2004
1,657
259
$55,500
$55,500
Source: Virginia Employment Commission, Annual QCEW data, 2001, 2002, 2003, and 2004. Inflation
adjustment performed using data from the Consumer Price Index for All Urban Consumers (CPI-U).
Freelance Employees
In addition to the employees who are represented in the QCEW data, information
provided by the Virginia Film Office allowed the Center for Public Policy to address
freelance (self-employed) individuals working in the Industry.
Actors working in the
film and video industry are the most important group of freelance individuals added to
the Industry definition.
Table 6a presents data for Freelance Actors working in
Virginia’s Film and Video Production-Distribution Industry. Table 6b presents data for
Freelance Crew.
Table 6a. Freelance Actors
Film and Video Production-Distribution Industry
Virginia and Three Metropolitan Regions
Category
Locality
Employment Level
Actors: Union
Statewide
1,157
Northern Virginia
636*
Hampton Roads
185*
Central Virginia
301*
(Screen Actors Guild)
Continued
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Table 6a, continued. Freelance Actors
Film and Video Production-Distribution Industry
Virginia and Three Metropolitan Regions
Actors: Non-Union
(IATSE)
Statewide
2,080**
Northern Virginia
1,330
Hampton Roads
350
Central Virginia
400
* For the Union Actors, it is assumed that Northern Virginia accounts for 55 percent of the
statewide total, Hampton Roads for 16 percent, and Central Virginia for 26 percent. The
Statewide employment total does not equal to the sum of the values for the individual regions due
to rounding and because data for other regions of Virginia are not presented separately. (The
Virginia Film Office estimates that other regions account for about 3 percent of the statewide
total.)
** For Non-Union Actors, it is assumed that the sum of data for the three regions is equal to the
Statewide total.
Source: Virginia Film Office.
Table 6b. Freelance Crew
Film and Video Production-Distribution Industry
Virginia and Three Metropolitan Regions
Category
Locality
Employment Level
Crew: Union
Statewide
250
Northern Virginia
138*
Hampton Roads
40*
Central Virginia
65*
Statewide
825
Northern Virginia
454*
Hampton Roads
132*
Central Virginia
215*
Crew: Non-Union
* For both Union and Non-Union Crew, it is assumed that Northern Virginia accounts for 55
percent of the statewide totals, Hampton Roads for 16 percent, and Central Virginia for 26
percent. The Statewide employment totals do not equal to the sum of the values for the
individual regions due to rounding and because data for other regions of Virginia are not
presented separately. (The Virginia Film Office estimates that other regions account for about 3
percent of the statewide total.)
Source: Virginia Film Office.
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By combining these freelance employees with the measure of employment from QCEW
data, we estimate that the Film and Video Production-Distribution Industry within
Virginia has 5,969 employees.
As shown in Table 7, the Northern Virginia region has
an estimated 3,435 employees in this Industry, Hampton Roads has 1256 employees,
and Central Virginia has 1104 employees.
Table 7. Total Industry Employment
QCEW Data and Other Employment Data for
Virginia and Three of its Metropolitan Regions
Locality
QCEW
Employment
Freelance
Employment
Total
Employment
Virginia*
1,657
4,312
5,969
Northern Virginia
877
2,558
3,435
Hampton Roads
549
707
1,256
Central Virginia
123
981
1,104
* The Statewide employment totals do not equal to the sum of the values for the individual regions due
to rounding and because data for other regions of Virginia are not presented separately. (Other regions
account for about 3 percent of the statewide total.)
Source: Virginia Film Office.
ECONOMIC IMPACTS OF THE INDUSTRY
After obtaining employment and wage data for the component industries of the Film
and Video Production-Distribution Industry, the Center for Public Policy developed
economic impact models for the four geographic study areas and applied these data in
order to estimate the Industry’s economic impact.
was used in preparing these estimates. 10
The IMPLANPro TM computer model
IMPLAN is an input-output economic
modeling system that allows a user to examine the relationships between the
components of an economy – recognizing that market transactions made by one sector
will have an economic impact on other sectors.
10
IMPLAN (Impact Analysis for Planning) was developed in 1979 by the United States Department of Agriculture,
Forest Service in cooperation with the Federal Emergency Management Agency and the United States Department of
the Interior, Bureau of Land Management. The IMPLAN program originally required a mainframe computer system,
but has progressed into a program that runs on a standard microcomputer. The IMPLANPro software was created in
1996 and is maintained and updated by the Minnesota IMPLAN Group, Inc.
VCU Center for Public Policy
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Using this model, the first step was to define the economic region of analysis (i.e.,
Virginia) and have the model generate the economic linkages between the industry
sectors in that region.
Data available for use with IMPLAN allow the researcher to
construct an economic region with as many as 509 industry sectors for any area of the
United States, with the county-level being the smallest region of analysis available.
The first regional economic impact model developed for this project was for the
Commonwealth of Virginia and included all of Virginia’s employment for the Film and
Video Production-Distribution Industry. The estimated annual employment and wage
data for the component sectors were used as the source data for these IMPLAN models.
All of the economic impact estimates presented in this report are in 2004 dollars.
The total economic impact of any industry, or group of industries, is comprised of
three components: direct, indirect, and induced economic effects.
The direct effects
are the expenditures made by companies for construction and operation of their sites.
Indirect effects result from expenditures made by businesses that supply products and
services to the main industries being analyzed.
When supplier firms receive orders,
they must use inventory or purchase additional inputs to produce their products or
services. The economic activity generated by these purchases also contributes to the
overall economic impact, in terms of jobs and additional output for the region.
The
final component of economic impact is the induced effects associated with changes in
household expenditures.
As companies increase their outputs because of the new
business activity that is being created, they will hire new employees or pay existing
employees to work longer hours.
When household incomes increase, employees will
spend more money in the area, generating an even greater economic benefit for the
region.
To determine the direct economic impact on the economic region being studied
(e.g., Virginia), expenditures must be adjusted to exclude all expenditures that do not
stay in the local economy. These include the cost of goods sold that are not produced
in the region and the final purchases of consumers that are made at establishments
outside of the region.
As part of the modeling, IMPLAN estimates these leakages of
purchases to areas outside of the local economy as well as the margin earned on sales
to account for the cost of goods sold.
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Data generated by an IMPLAN economic model includes estimates of the direct,
indirect, and induced impacts for each of the following elements:
•
Employment – the number of total jobs, including both full-time and
part-time employees;
•
Economic Impact - the economic impact generated in the region;
•
Value Added – in addition to personal income, this includes income
from rents, dividends, profits, royalties, interest, and indirect business
taxes paid by companies; and 11
•
Labor Income – this includes wages and salaries paid, including
benefits for employees of firms. It also includes payments received as
income by freelance employees.
The “Valued Added” component from IMPLAN can be interpreted as the industry’s
contribution to a state’s Gross State Product (GSP), i.e., the value of all final goods and
services produced within the borders of a state.12 The GSP is the state-level version of
the Gross Domestic Product (GDP) of the United States.
Impact to Virginia
The economic impact from Virginia’s Film and Video Production-Distribution Industry
is comprised of the economic activity generated by the following three components:
1. In-state expenditures (goods, services, and payroll) made by the businesses
in Virginia’s Film and Video Production-Distribution Industry;
2. In-state expenditures made by freelance employees working in this
Industry; and
3. In-state expenditures made by out-of-state companies that are producing
movies, television shows, and other productions within Virginia.
Table 8a presents the combined economic impact to Virginia from these three
components.
Tables 8b, 8c, and 8d provide the details of the total impact, citing the
individual impacts for each component, respectively.
11
Olson, Doug and Scott Lindall. “IMPLAN Professional Software, Analysis, and Data Guide.” Minnesota IMPLAN Group,
Inc. 1996.
12
Friedenberg, Howard and Richard Beemiller. “Comprehensive Revision of Gross State Product by Industry, 1977 –
94.” Survey of Current Business. June 1997. From the Bureau of Economic Analysis website:
www.bea.doc.gov/bea/ar/0697rea.pdf. In this publication, the Gross State Product is defined as “the sum of the costs
incurred (such as compensation of employees, net interest, and indirect business taxes) and the profits earned in
production.”
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As shown in Table 8a, there were an estimated 5,969 jobs (“direct employment”)
within Virginia’s Film and Video Production-Distribution Industry during 2004.
The
economic activity associated with this level of employment supported 2,553 additional
jobs in other sectors of the economy and generated a total economic impact to Virginia
of $510 million.
This economic impact included $364 million of Value Added for Virginia.
Because
value added is equal to the Industry’s estimated contribution to Gross State Product,
expenditures made by firms in this industry and by freelance employees contributed
about 0.11 percent of the Commonwealth’s total Gross State Product for 2004. 13
Beyond these economic contributions, the Industry’s operations expenditures in 2004
were responsible for $300 million of Labor Income and generated almost $20 million in
state tax revenue for the Commonwealth.
Table 8a. Total Economic Impact to Virginia
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
5,969
2,553
8,522
Economic Impact
$274.3
$236.0
$510.3
million
million
million
Value Added
$225.2
$138.5
$363.7
million
million
million
Labor Income
$212.7
$86.9
$299.6
million
million
million
$19.8
State Tax Revenue
million
Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual
QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made
using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of
Labor Statistics.
Impact from the Operations of Industry Firms:
As the firms in this Industry
make purchases for goods, services, and labor, the spending will generate economic
impact for the Commonwealth.
employees, directly.
Table 8b shows that the Industry employed 1,657
The economic activity generated by these firms supported an
additional 1,319 workers in related businesses. The operations expenditures of the
Industry generated an economic impact of $302 million for Virginia, contributed
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$201 million in Value Added, and added $162 million of Labor Income.
This
economic activity also generated an estimated $11 million in state tax revenues.
Table 8b. Economic Impact to Virginia from
the Operations of Industry Firms
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
1,657
1,319
2,976
Economic Impact
$175.8
$125.7
$301.5
million
million
million
Value Added
$126.7
$74.4
$201.1
million
million
million
Labor Income
$114.2
$48.1
$162.3
million
million
million
$10.6
State Tax Revenue
million
Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual
QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made
using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of
Labor Statistics.
Impact from Freelance Employees:
Freelance employees of the Film and Video
Production-Distribution Industry will spend their incomes by making purchases
within the Commonwealth and elsewhere.
employees is presented in Table 8c.
The economic impact of the freelance
This table shows that the economic activity
generated by the 4,312 freelance employees supports 971 additional jobs in other
sectors of Virginia’s economy. The economic impact of this level of employment was
$189 million per year.
This activity resulted in $151 million of Value Added, $130
million of Labor Income, and almost $9 million of state tax revenues.
13
Bureau of Economic Analysis. Gross State Product data for Virginia, in 2004, was $329.332 billion. October 26,
2005 revisions.
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Table 8c. Economic Impact to Virginia
from the Industry’s Freelance Employees
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
4,312
971
5,283
Economic Impact
$98.5*
$90.9
$189.4
million
million
million
Value Added
$98.5*
$52.3
$150.8
million
million
million
Labor Income
$98.5*
$31.3
$129.8
million
million
million
$8.7
State Tax Revenue
million
* The contribution made by these freelance employees to “Value Added” and “Economic
Impact” is the Labor Income that they receive (i.e., the fees charged for their services).
Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual
QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made
using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of
Labor Statistics.
Impact from Out-Of-State Production Companies:
Table 8d shows the
economic and employment impact that occurs within Virginia, as a result of in-state
spending by out-of-state production companies.
Data provide by the Virginia Film
Office indicated that $25.3 million was spent within Virginia during 2004, by
production companies located outside of Virginia.
Approximately $14.2 million (56
percent) of this amount was for non-payroll expenditures; it is that value of
spending for which the economic impact was generated. 14
Table 8d reports the
economic activity generated by the non-payroll, in-state spending made by these
firms. An estimated 263 jobs were supported by these expenditures, along with $19
million of economic impact, $12 million of value added, $8 million of labor income,
and about $500,000 of state tax revenues.
14
The data presented in Tables 8b and 8c already represent the impact that comes from payroll to company
employees (working at Industry firms) and Freelance Employees who would be working on projects from the outof-state companies. To avoid double counting the impact of those employees, the payroll figure has been
removed from the $25.3 of total expenditures. It is estimated that 44 percent of this amount goes to payroll.
The economic impact is estimated on $14.2 million of expenditures (the remaining 56 percent).
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Table 8d. Economic Impact to Virginia from In-State
Spending by Out-Of-State Production Firms
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
0
263
263
Economic Impact
Value Added
Labor Income
$0
$19.4
$19.4
million
million
million
$0
$11.8
$11.8
million
million
million
$0
$7.5
$7.5
million
million
million
State Tax Revenue
$0.5
million
Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual
QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made
using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of
Labor Statistics.
Impact to Northern Virginia
The economic impact from the Film and Video Production-Distribution Industry in
Northern Virginia is a combination of the operations of Industry firms in that region
and the expenditures made by the area’s freelance employees.
Table 9a shows the
combined economic impact to Northern Virginia from these components. The Industry
employed 3,435 individuals during 2004 in Northern Virginia. In addition, 952 jobs in
related sectors were supported by the economic activity of this Industry.
The total
economic impact to Northern Virginia was estimated at $258 million, which supported
$204 million of Value Added, $173 million of Labor Income, and $11 million of state
tax revenues.
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Table 9a. Total Economic Impact
to Northern Virginia
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
3,435
952
4,387
Economic Impact
$161.5
$96.7
$258.2
million
million
million
Value Added
$143.0
$61.3
$204.3
million
million
million
Labor Income
$134.3
$38.4
$172.7
million
million
million
$11.1
State Tax Revenue
million
Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual
QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made
using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of
Labor Statistics.
Impact from the Operations of Industry Firms:
During 2004, there were
877 employees working at Industry firms within Northern Virginia. As shown in
Table 9b, this level of employment supported an additional 560 regional jobs.
The operations expenditures of firms in this Industry were estimated to have had
an economic impact of $161 million, including $122 million of Value Added and
$101 million of Labor Income. The Industry in Northern Virginia was responsible
for
generating
an
estimated
$6
million
of
state
tax
revenues
for
the
Commonwealth.
Table 9b. Impact to Northern Virginia from
the Operations of Industry Firms
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
877
560
1,437
Economic Impact
$103.9
$57.4
$161.3
million
million
million
Value Added
$85.4
$36.9
$122.3
million
million
million
Labor Income
$76.7
$23.8
$100.5
million
million
million
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$6.4
State Tax Revenue
million
Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual
QCEW data obtained from the Virginia Employment Commission. Inflation adjustments
made using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S.
Bureau of Labor Statistics.
Impact from Freelance Employees: Table 9c shows the economic effects that
resulted from in-region spending by freelance employees of this Industry.
The
total economic impact to the region was estimated to be $97 million. This level
of economic activity supported a total of 2,950 jobs (including the 2,558
freelance employees and 392 jobs in related sectors), generated $82 million of
Value Added, and was responsible for $72 million of Labor Income.
This
economic activity also generated $5 million of state tax revenues for Virginia.
Table 9c. Impact to Northern Virginia from
the Industry’s Freelance Employees
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
2,558
392
2,950
Economic Impact
$57.6*
$39.3
$96.9
million
million
million
Value Added
$57.6*
$24.4
$82.0
million
million
million
Labor Income
$57.6*
$14.6
$72.2
million
million
million
State Tax Revenue
$4.7
million
* The contributions to Value Added and Economic Impact from these freelance
employees is simply the Labor Income that they receive (i.e., the fees charged for
their services.
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Impact to Hampton Roads
The total economic impact from the presence of the Film and Video ProductionDistribution Industry in the Hampton Roads region comes from operations expenditures
(including payroll) by firms in the industry and payroll to freelance employees. Table
10a shows the total economic impact of this Industry on the Hampton Roads region.
In 2004, the Industry generated $124 million of economic impact, supporting 1,852
jobs, $78 million of Value Added, and $65 million of Labor Income.
The Hampton
Roads portion of this Industry generated, directly and indirectly, $4 million of state tax
revenue for Virginia.
Table 10a. Total Impact to Hampton Roads
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
1,256
596
1,852
Economic Impact
$72.0
$52.0
$124.0
million
million
million
Value Added
$48.8
$29.5
$78.3
million
million
million
Labor Income
$45.1
$19.4
$64.5
million
million
million
State Tax Revenue
Impact from the Operations of Industry Firms:
$4.3
million
Employment in Hampton
Roads’ Film and Video Production-Distribution Industry was estimated at 549 for
2004. As shown in Table 10b, the economic activity resulting from this level of
employment was estimated to generate 435 additional jobs in the region (for a
total of 984 jobs).
This activity also provided an estimated $94 million of
economic impact, created $55 million to the Gross State Product of Virginia,
supported $44 million of labor income, and generated $3 million in state tax
revenue for Virginia.
VCU Center for Public Policy
Page 25
Table 10b. Impact to Hampton Roads
from the Operations of Industry Firms
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
549
435
984
Economic Impact
$55.9
$38.4
$94.3
million
million
million
Value Added
$32.7
$21.8
$54.5
million
million
million
Labor Income
$29.0
$14.7
$43.7
million
million
million
$2.9
State Tax Revenue
million
Sources: VCU Center for Public Policy estimates developed using IMPLANPro.
Annual QCEW data obtained from the Virginia Employment Commission. Inflation
adjustments made using the “Consumer Price Index for All Urban Consumers” (CPIU) from the U.S. Bureau of Labor Statistics.
Impact from Payroll of Freelance Employees: Data provided by the Virginia
Film Office indicated that there were 707 freelance employees working in the
Industry within Hampton Roads.
The economic activity from this employment
supported an additional 161 jobs, and generated $30 million of economic impact,
$24 million of Value Added, and $21 million of Labor Income.
There was also
just over $1 million of state tax revenue generated for the Commonwealth.
Table 10c. Impact to Hampton Roads
from the Industry’s Freelance Employees
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
707
161
868
Economic Impact
$16.1*
$13.6
$29.7
million
million
million
Value Added
$16.1*
$7.7
$23.8
million
million
million
Labor Income
$16.1*
$4.7
$20.8
million
million
million
State Tax Revenue
$1.4
million
Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual
QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made
using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of
Labor Statistics.
Impact to Central Virginia
VCU Center for Public Policy
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Central Virginia’s Film and Video Production-Distribution Industry was estimated to
have 1,104 total employees (including company and freelance employees). Table 11a
shows that this employment generated an economic impact in 2004 of $60 million and
supported an additional 295 jobs in the region.
The Industry within Central Virginia
generated almost $3 million of state tax revenues during 2004.
Table 11a. Total Impact to Central Virginia
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
1,104
295
1,399
Economic Impact
$33.6
$26.6
$60.2
million
million
million
Value Added
$30.6
$15.9
$46.5
million
million
million
Labor Income
$30.2
$9.5
$39.7
million
million
million
$2.6
State Tax Revenue
million
Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual
QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made
using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of
Labor Statistics.
Impact from Operations Expenditures: Employment in Central Virginia’s Film
and Video Production-Distribution Industry was estimated at 123 full- and parttime jobs during 2004. Table 11a shows that this employment level created
economic activity that resulted in an additional 77 jobs for the region, for a total
employment
impact
of
200
jobs.
The
operations
expenditures
were
also
estimated to generate $17.5 million in economic impact, $12 million of value
added, $10 million of labor income, and $600,000 of state tax revenue.
VCU Center for Public Policy
Page 27
Table 11b. Impact to Central Virginia
from the Operations of Industry Firms
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
123
77
200
Economic Impact
$10.6
$6.9
$17.5
million
million
million
$7.6
$4.2
$11.8
million
million
million
Value Added
Labor Income
$7.2
$2.6
$9.8
million
million
million
$0.6
State Tax Revenue
million
Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual QCEW
data obtained from the Virginia Employment Commission. Inflation adjustments made using the
“Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of Labor Statistics.
Impact from Payroll of Freelance Employees:
The figures in Table 11c
present the economic impacts that occur within the Central Virginia region as
freelance employees of the Industry spend their wages and salaries.
The
economic activity associated with this spending is estimated to generate almost
$43 million of economic impact, support for 1,199 total jobs, $35 million in value
added, $30 million of labor income, $2 million in state tax revenues.
Table 11c. Impact to Central Virginia
from the Industry’s Freelance Employees
(Dollar Values in 2004 Dollars)
Type of Impact
Direct
Impact
Additional
Impact
Total
Impact
Employment
981
218
1,199
Economic Impact
$23.0*
$19.7
$42.7
million
million
million
Value Added
$23.0*
$11.7
$34.7
million
million
million
Labor Income
$23.0*
$6.9
$29.9
million
million
million
State Tax Revenue
$2.0
million
Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Annual
QCEW data obtained from the Virginia Employment Commission. Inflation adjustments made
using the “Consumer Price Index for All Urban Consumers” (CPI-U) from the U.S. Bureau of
Labor Statistics.
VCU Center for Public Policy
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ESTIMATING THE IMPACT OF OUT-OF-STATE
PRODUCTIONS MADE IN VIRGINIA
In addition to the economic impact for non-payroll expenditures by out-of-state
production companies, shown in Table 8d, the Center for Public Policy developed a
methodology for estimating the impact of all expenditures (including payroll) by these
firms.
The Virginia Film Office provided in-state expenditure data on four movies
filmed in Virginia -- “Cold Mountain,” “Hannibal,” “The New World,” and “Hearts in
Atlantis”. These expenditure data were combined to form an expenditure profile that
could be used for other movies made within Virginia by out-of-state production
companies.
Using this expenditure profile, a hypothetical $10 million spent on film
production was allocated to the various sectors of the profile and economic impacts
were generated.
Potential Economic Impact of $10 million
in Film and Video Production Spending
The total economic impact of film production activity on Virginia will result from the
impact of the direct expenditures made in Virginia during the time period in which the
project is undertaken. These new expenditures made in Virginia will ripple through the
economy producing both indirect and induced effects. The tax-revenue impact for the
Commonwealth is a result of these increased incomes and spending.
To estimate the total economic impact of a film production in Virginia, new direct
expenditures that are likely to occur in the Commonwealth were estimated using an
index developed from production expenditures and input data provided by the Virginia
Film
Office
for
four
film
productions
that
occurred
in
Virginia
representing
approximately $27.3 million of direct expenditures in the Commonwealth.
This
information was used to calculate relative expenditure data for a hypothetical $10.0
million in film production activity undertaken in Virginia.
The IMPLAN economic impact model was used to estimate direct, indirect, and
induced effects of the expenditures associated with $10.0 million in film production
activity.
The economic impact of the expenditures associated with $10 million in film
production are expressed in terms of increased output (the sum of intermediate sales
to other firms plus final users), employment (the total number of new full and partVCU Center for Public Policy
Page 29
time jobs), labor income (the sum of all employee compensation), and value added
(the sum of employee compensation plus property income).
The state tax impact of
the new expenditures is estimated using state tax rates associated with each type of
taxable expenditure.
As summarized in Table 12, $10 million of film production spending conducted on
location in Virginia would have a total economic impact of $15.3 million. The economic
activity associated with this impact would support about 528 full-time and part-time
jobs during the operations period (pre and post production, as well as production
periods), provide about $8 million of value added, and $6 million of labor income. This
economic activity would also generate $450,000 in state tax revenues for the
Commonwealth.
Table 12. Economic Impact of $10 million of Film Production
Spending within Virginia (Dollar amounts are in 2004 dollars)
Type of Impact
Economic Impact
Employment
(During operations period.)
Value Added
Labor Income
State Tax Revenues
(Direct sales tax impact is excluded
to account for the current sales tax
exemption.)
Direct
Impact
Additional
Impact
Total
Impact
$8.8
$6.5
$15.3
million
million
million
321
207
528
$4.2
$3.7
$ 7.9
million
million
million
$ 3.2
$2.3
$5.5
million
million
million
$ 0.45
million
Sources: VCU Center for Public Policy estimates developed using IMPLANPro. Expenditure profile
used to the distribution of $10 million of production spending was based upon the Local Community
Expenditure Report for four motion pictures filmed in Virginia.
From the economic impact analysis presented in this table, it can be seen that film and
video production activity in the Commonwealth – even though the production spending
may be made by out-of-state companies – provides significant returns to Virginia’s
residents and businesses.
VCU Center for Public Policy
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