As casino gambling sprouts up across the United States—and a number of indicators suggest fewer tourists are vacationing in Nevada—the need for economic diversification of the state’s one-industry economy has received renewed interest. Many diversification proponents believe that boosting the number of film productions in the state will lay a firmer foundation for Nevada’s economy. Several elected officials and business leaders hope Nevada’s unique settings, proximity to Los Angeles and growing number of production and support facilities will make the state attractive to studios. A thriving film business in Nevada is indeed desirable, for a number of reasons. Unfortunately, the method the state is using to generate this business is unwise. Herewith, a look at why filmmakers should be welcome in the Silver State—and why the private sector should be in charge of selling Nevada to the entertainment industry.
They’re in the Money
Despite competition from television programs, video rentals and the Internet, movie ticket sales topped $6.4 billion in the United States last year—a record. By comparison, 1980’s box office gross was $2.7 billion. Almost 1.4 billion tickets were sold last year. There are now over 31,000 movie screens in the nation, up from 17,000 in 1980. Twenty-eight percent of Americans qualify as "frequent movie goers"—people who attend a movie at least once a month. While the numbers at home are impressive, the film industry is even more optimistic about the growth of audiences abroad. American distributors earned almost $6 billion in foreign countries in 1997, and current estimates have the overseas market growing at a rate of 6 to 7 percent a year.
There’s little doubt that the film industry has a bright future. But in addition to its growth, another way filmmaking could benefit Nevada’s economy is its traditional resistance to the business cycle. As Los Angeles Times reporter Sallie Hofmeister put it, "consumers take refuge in entertainment during tough times." That behavior helped Southern California during the last recession. PaineWebber analyst Christopher Dixon calls entertainment "the most bullet-proof industry in a recession, second only to Wonder Bread." (Despite Asia’s recent economic turmoil, theater admissions rose last year.)
As MPAA chief Jack Valenti notes, "costs remain a great shaggy beast prowling the movie forest." About $75 million is now needed to produce and market a major studio release. Soaring expenses are just one reason many in Nevada think filmmakers would be wise to turn their attention toward the Silver State. Lower prices and a tax structure favorable to business are advantages. So are the state’s sunny, dry climate and numerous one-of-a-kind locations to shoot. Nevada’s filmmaking infrastructure remains tiny compared to that of Los Angeles, but at least one major production facility is in the works. Black Mountain Studios, headed by Hollywood producer Doris Keating, plans to offer production facilities, sound stages, back lots, restaurants and office space. While naysayers consider her $110 million project too ambitious for the Southern Nevada market, Keating believes that Las Vegas has the potential to lure a significant amount of business away from Tinseltown.
The Government Model
In 1983, Nevada legislators created a new department within the state’s Commission on Economic Development: the Motion Picture Division. Like its counterparts in cities and states throughout the country, the agency was charged with drumming up film business. The division, now called the Nevada Film Office, has an annual budget of $600,000. The office’s director, Charles Geocaris, earns $60,000 a year. His agency’s objectives are to "promote and support" the use of Nevada locales, offer services (such as scouting and site planning) and "develop a permanent base for the expansion of Nevada’s production industry." The Film Office publishes shooting guides to Southern, Northern, and rural Nevada, and maintains a comprehensive listing of services available to filmmakers within the state.
A Private-Sector Alternative
With Americans and foreigners attending films as never before, one might surmise that Nevada—particularly Southern Nevada—is capturing a great deal of the industry’s business. While economic activity from movie productions has grown since the formation of the Motion Picture Division 15 years ago, 1997 actually saw a decline in revenue generated from productions within the state. In 1996, revenues from film production in Nevada totaled $97 million. In 1997, that figure fell to $70 million. But the slowdown may not become a trend, due to a new effort to bring filmmakers to Nevada. The Entertainment Development Corporation (EDC), in the words of its CEO L. Mimosa Jones, aims to "bring part of Hollywood’s $24 billion entertainment pie to Southern Nevada." Launched in September, the EDC provides Hollywood production companies access to the film community in Southern Nevada. "And if you look at the larger picture," Jones told Casino Journal, "we’re actually building a new industry in Southern Nevada." While the EDC receives some of its funding from the quasi-public Nevada Development Authority, the EDC has lined up an impressive list of member corporations, including Citibank, Nevada Power and—not surprisingly—Black Mountain Studios. The organization has produced a video which markets Las Vegas to filmmakers, and it has already helped connect Warner Bros., Disney and Paramount to EDC members. It is not yet clear if Jones’ coalition will steer a course away from government funding—and thus, government strings. But if it does, the EDC could effectively put the Nevada Film Office out of business. Since its members inherently know of the special needs of film productions—and understand the right way to market Southern Nevada to Hollywood—the EDC has numerous advantages over a public agency.
Clearly, state government has a role to play in the ongoing effort to diversify Nevada’s economy. But that does not mean tax dollars are needed to find business for every budding industry in Nevada. No state agency need do the work the private sector can do for itself. As the EDC demonstrates, many individuals and corporations within Nevada are willing to devote their own resources to a long-term effort to bring film production to Southern Nevada. (A similar—if smaller—effort could be launched in Northern Nevada.) Given the promise of the EDC’s effort, it is difficult to justify spending over a half-million taxpayer dollars on the Nevada Film Office. The Silver State would benefit from capturing a sizable share of the thriving film industry—thousands of new, higher-paying jobs would be created and the state’s general fund would receive an influx of non-casino revenue. But those best able to bring filmmaking to Nevada come not from government, but the private sector.
D. Dowd Muska, a non-smoker, is a contributing editor for Nevada Journal, the Nevada Policy Research Institute’s monthly magazine. He can be contacted at firstname.lastname@example.org.