Made in Oregon

By Todd Longwell

Say what you want about Oregon's gloomy slate-gray skies, but producer Dean Devlin says they are crucial to setting the mood for his TNT series "Leverage," which films on location in Portland.

"We shoot the show digitally and that cloud cover is almost like hanging a beautiful silk above our lights," he says of the action-drama, which stars Timothy Hutton as the leader of a gang of high-tech crooks who steal from the wealthy and corrupt. "It really gives us rich and beautiful colors."

Atmospheric skies are just some of the advantages of shooting in the Beaver State that "Leverage's" producers have discovered since the show relocated there from Los Angeles last year to take advantage of Oregon's production incentives.

The state also offers a wide variety of geographic looks. Portland doubles frequently for Boston, where the show takes place, and various locales have stood in for Washington, Nebraska and even Kiev, Russia. The state has also proved a rich source for acting talent, thanks in part to the presence of the renowned Oregon Shakespeare Festival in Ashland.

"When we got up there we were expecting to fly in three or four cast members an episode, but we average about one or two," co-creator/executive producer John Rogers says. "Some of the (local) actors have been so good, we've made them recurring characters on the show."

Oregon has hosted a number of notable productions over the years, from studio films like "Animal House" (1978) and "The Goonies" (1985) to numerous works by Portland-based director Gus Van Sant. But it wasn't until the state upped its total labor incentive in 2005 to 16.2% that it became a regular destination for Hollywood films such as "Twilight" (2008) and "Extraordinary Measures" (2010). Last year, Oregon enjoyed its biggest year ever, attracting more than $62 million in film, television and commercial production.

At first glance, the state's incentive isn't overwhelming when compared with those offered by states like Michigan, which boasts a 42% tax credit. But looks can be deceiving

"When I ran the numbers, based on the amount of local crew that was available, Oregon was very competitive," says Nan Morales, producer of "Extraordinary Measures" and the Jennifer Aniston-starrer "Management" (2008), which also shot in Oregon.

The majority of crew are in the Portland area, and there are others in Bend and elsewhere who come in and work as locals, which saves money on lodging and per diems, says Morales. "There are also people in Seattle who can come down and work as nearby hires, which is really inexpensive. The hourly rates for the IA crews and Teamsters are also lower than places like Detroit or Boston," she says.

Traditionally, Oregon's crew base has been supported by TV commercial shoots, many generated by the Portland ad agency Wieden+Kennedy, whose clients include Beaverton-based Nike.

The state is also a popular destination for car commercials, drawn by Oregon's concentration of diverse terrain, from rocky coastline and rain forests in the west, to arid high deserts in the east, with the snow-capped Cascade Mountains in between.

So if the Beaver State is this great, why hasn't it snatched up a larger portion of the production pie from places like Louisiana, New Mexico and Vancouver? The answer: The incentive's annual $7.5 million cap can easily be tapped out by a single film whose budget is in the $40 million range.

"We currently have half of that incentive money still available for the rest of the year," says Vince Porter, executive director of the Oregon Film and Video Office and a former vp production at Showtime. "But when we have 'Leverage' and then another big project like 'Extraordinary Measures' (in the same year), there's just not the incentive available left over for other major productions. We compete very well with features in the $5 million-$20 million range and basic cable shows that don't do 22-episode orders." ("Leverage" has 16-episode seasons.)

If the incentive is too small for the state to be co-opted by the entertainment industry and turned into a Hollywood North -- or even a Vancouver South -- that's probably OK with most Oregonians.

"The Oregon psychology -- it's largely an indie mentality," says Travis Knight, son of Nike founder-owner Phil Knight and the CEO of LAIKA, the Portland-based stop-motion animation studio responsible for the Oscar-nominated "Coraline" (2009) and commercials for clients ranging from Apple to Arby's. "We're strange people. We do have this progressive urban center, but you go outside of Port land and it's clod-hoppin' hillbilly territory. Anytime you have that kind of push and pull, you have the opportunity for a really great creative tension and fertile ground for artistry and innovation."

Actor Bruce Campbell agrees. "In Oregon, there are no rules about how you make a movie," the recent Oregon transplant says. He shot the 2008 horror spoof "My Name Is Bruce" on the property surrounding his home in hills of Jackson County and at Land Mind Studios, a converted pear-packing facility in downtown Medford.

"Half the lumber for my backlot came from one rancher who had a sign out in front of his property that just said 'stuff for sale' and his number," Campbell says. "This guy had ridiculous supplies of sheet metal and 1-by-12 barn wood. In L.A., I would have paid top dollar for fresh lumber and then had somebody make it look old." Campbell got a good deal and in return pumped an estimated $250,000 into the local economy.

That's peanuts compared with a weekly series like "Leverage," which pays its crew per diems in rarely circulated $2 bills to demonstrate its economic impact to the locals. Not to say, of course, that anyone is asking the show to justify its presence.

"From top to bottom, it's a very friendly state without an agenda," "Leverage's" Rogers says. "On a Los Angeles location, people start honking their horns and turning up the music in their house, hoping to get some kind of pay-off. You show up at a location in Oregon and people come out of their houses with trays of cookies and milk."

Does Marketing matter

Analysis suggests that big spending on tentpoles pays off

Hollywood Reporter: By Larry Gerbrandt

June 10, 2010, 08:42 PM ET

When a movie hits big, almost no one cares what was spent; when a release fails to make opening-weekend estimates or has a 60% drop-off during its second week, everyone begins pointing fingers.

Consider MGM's $30 million to tub-thump "Hot Tub Time Machine," which cost about $35 million to make: First-week gross was $20 million, dropping 60% the following week and winding up with $50 million in domestic gross. Or Disney's $200 million production "Prince of Persia: The Sands of Time," which has raked in $63 million domestically to date against a prints-and-advertising spend stateside of $75 million.

On the other hand, Disney's "Alice in Wonderland," similar in cost and marketing budget to "Prince," has grossed $334 million domestically and $1 billion worldwide.

In short, there might not be a more daunting challenge than opening a major motion picture: Create an internationally recognized brand name that lasts a lifetime, and do it in a couple of weeks with no second chances to course-correct. It's little wonder that the average P&A spend for major releases last year topped $37 million, according to Baseline Intelligence, the highest number since 2003, when the MPAA estimated that the six largest studios spent an average of $39.5 million on domestic P&A. Sometimes it works, sometimes not.

We've assembled a cornucopia of data that break down P&A spending by media category, release pattern and major studio, but the most interesting and consistent ratio to emerge is the relationship between negative cost and domestic P&A spend.

For the past seven years, domestic P&A has accounted for 34%-37% of combined production and domestic-releasing costs for movies released by the six largest studios.

In fact, after taking a big jump in 2003, the combined negative plus domestic P&A has hovered around the $100 million-a-film mark, with last year hitting $102.3 million, up from $87.9 million in 2008, according to Baseline Intelligence. (The MPAA stopped releasing six-studio stats in 2007.)

Looked at another way, for every dollar spent on producing a major film, the studios have been spending 51 cents-58 cents to release and market it in the U.S. and Canada. Assuming distributors get an average of 55% of domestic ticket sales, the average 2009 release had to generate $186 million in domestic boxoffice gross to recoup production and domestic-releasing costs -- an unrealistic goal for all but a handful of titles -- which is where the international brand-building challenge kicks in.

The connection between production budgets and P&A spend is repeated at the individual studio level.

Last year, Paramount had the highest average negative cost ($87.7 million) and highest P&A average ($50 million a release). Universal had the lowest average negative cost ($51.7 million) and lowest P&A ($30.4 million).

The "P" portion of prints and advertising represents less than 10% of the overall spend, and with digital distribution becoming more widespread it is heading downward. The actual cost of a print can vary widely depending on the volume of prints ordered, the film-release stock chosen, length of the movie and quality-control considerations. Prices can range from less than $1,000 to more than $3,000, but what the majors pay is based on volume deals cut in aggressive negotiations between high-level studio and lab executives and might include rebates from such film-stock manufacturers as Kodak and Fuji.

Through the years, there have been periodic attempts to control escalating P&A spending, which can soar to the $85 million range on tentpole releases involving 4,000 screens.

This includes finger-pointing at ego-driven demands by actors and directors to blanket major-city skylines with giant billboards and lavish creative campaigns, but Nielsen Ad*Views data suggest that the overwhelming portion of the spend is on television advertising. Last year, Nielsen estimates that of the $26.5 million in media spent on the opening weekend of a 2,000- to 5,000-screen release, 80% went to network, cable and spot TV buys.

In contrast to just about every other product release, a movie faces a singular challenge: It must create near-instant national brand-name recognition within a span of a few days to a couple of weeks. The only way to do this, especially with a highly visual product like a film, is with a well-crafted TV spot campaign.

While overall TV viewership is at record levels, it also is increasingly fragmented across dozens of channels. Spending on network TV actually has increased, from 35% of opening-weekend budgets in 2006 to 41% last year, in addition to an increase from 26% to 28% in cable-network spend. These increases have come largely at the expense of spot TV, down from 18% to 11%, and newspapers, down from 12% to 9%, Nielsen said.


At various points along the way, especially with the ascent of social media, there have been calls to shift a larger portion of media budgets to the Internet, especially given that medium's lower ad rates, massive inventory and ability to target key demographics.

This certainly has happened with limited- and medium-release movies. Those bowing on fewer than 500 screens have seen online-media spend jump from 5% in 2006 to 12% last year; 500- to 2,000-screen releases allocated 6% to the Web last year, double the 3% mark in 2006.

Industry peer pressure and second-guessing also play a part in keeping P&A spending trending upward.

"When a studio like Disney tries to rein in these costs, they are second-guessed and doubted for trying a new media mix and paradigm," says Jim Lukowitsch, product manager at Baseline Intelligence.

Web-delivered over-the-top (OTT) television might open additional opportunities for movie marketers, but at present the Internet remains a text-driven medium, and usage is so fragmented across tens of thousands of sites that it is difficult to buy in the massive tidal wave needed to create overnight brand awareness -- which is where TV outshines all other media, albeit for a premium price.

Indeed, TV spot rates are likely to rise as the economy improves and midterm elections, which could draw record TV campaign spending, further drive up spot pricing.

The big question facing movie marketers is how to deal with the declining DVD window.







Conventional wisdom has been that the massive spend around the opening theatrical window could be justified by the "afterglow" effect lasting into the DVD and even PPV/VOD windows. This was further justified by steady shrinkage of the theatrical-to-DVD window, lessening the need for a second big spend to promote the home video release. With Google TV entering the OTT fray -- all of which have movie rentals and subscriptions as core offerings -- it would be logical to see a further shift of ad spend to online.

What isn't likely to happen is a change in the need to create that initial brand awareness in the theatrical window. Although a small-budget release might bet on multiple Golden Globe and Oscar noms to give it a promotional push, that type of strategy is simply too risky for larger-budget movies.

It might be the ultimate example of that old adage, "You never get a second chance to make a first impression." With movies, it is an impression that lasts a lifetime.