What Networks & Streamers Are Getting Wrong About Incentives
This short-sighted strategy is costing EVERYONE.
I’m not going to mince words here: some networks and streamers are really screwing up when it comes to collecting production incentives for their fully commissioned, unscripted content.
It’s costing everyone: Production companies. The jurisdictions where they’re filming. Even the networks and streamers themselves.
Allow me to explain.
When a network or streamer fully commissions content, their contract typically requires production companies to pursue any available incentives.
Usually, the production company is responsible for tackling most - if not all - of the paperwork and record-keeping involved.
In the good ole days, the production company would often receive a slice of that incentives pie for their trouble.
But that’s changed.
These days, networks and streamers often keep 100% of the incentive for themselves (minus any associated costs to the production company, like accounting and audit fees).
I get it: during these tough economic times, they need to boost their bottom line any way they can. They could even argue that since they’re paying for the content, they deserve to keep 100% of the incentive.
But in doing so, they’re destroying any, well, incentive for a production company to save the network even more money by maximizing the amount collected.
In a classic case of the principle-agent problem, one producer shared, “Why should we go out of our way to do more work when the network’s just going to keep all the money anyway?”
ADDED EFFORT - AND RISK
Let’s face it, saving money takes effort, whether you’re shopping around for the best deal on a new car or maximizing an incentive on a production.
Incentives require time — countless hours spent researching and comparing jurisdictions, determining which expenses qualify and which don’t, tracking expenses, and managing the application process (read this to find out how to make it all easier).
In this age of tightening budgets, production teams are already stretched. Many can’t fathom adding another task to their already overburdened to-do list - especially when there’s no clear “what’s-in-it-for-me.”
Maximizing an incentive might also add risk.
Broadly speaking, maximizing an incentive = maximizing local spend.
That could mean hiring more local crew (if out-of-jurisdiction labor doesn’t qualify), renting equipment locally - possibly from a shop you’ve never tried before - and even shifting post-production to an untested facility in that jurisdiction. It could involve moving shoots to locations outside major business corridors to benefit from uplifts - or even shifting production to an unfamiliar jurisdiction altogether.
Those changes help the local economy and industry - which is, after all, the main purpose of an incentive.
But working with new people, in new locations, and with new facilities adds risk and uncertainty for the production company, which could lead to delays and overages.
So to maximize an incentive, a production company must accept additional work, risk, and uncertainty … while the network collects 100% of the benefits.
Why would any sane producer go through the extra effort, and assume additional risk, for zero return?
INCENTIVES ESCAPE HATCHES
“But,” cries the network exec, “the production companies has to apply for the incentive. It’s in their contract!”
True. But a production company can point to several “escape hatches” to justify not applying for an incentive, including:
“It only applies to local companies.” In some cases, this may be true. But often, a production company can fulfill this requirement by simply registering as a business in the jurisdiction and filing a local tax return. Any crew brought from outside that jurisdiction may be subject to local withholding. All this involves extra time and expense. It’s often worth the return…but only for the network/streamer, if they’re keeping all the incentive.
“The jurisdiction doesn’t offer an incentive for our type of content.” This could be a legit argument for location-based content. Sometimes, though, a film commissioner might have discretionary power to grant an incentive. Sometimes, a bit of lobbying can help a film commission see the value of extending their incentive to a category of content not covered (even if it takes a season or two to secure legislative approval). Sometimes, the shoot location is flexible, but by the time people start considering incentives, everyone’s gone too far down the development rabbit hole and committed to a jurisdiction that doesn’t offer one (because they didn’t read this post).
“We didn’t meet the minimum qualifying spend.” This might be a legitimate argument—but I’ve seen this used as an excuse when, with a little effort, a production company could have hit that target. Decisions like hiring more roles locally, booking travel through a local agent, and renting equipment locally can add up and push a budget over the threshold. But again - why would a production company assume the extra work and risk, for zero reward?
Let me be clear: Even if production companies are cut out of the incentives haul, I still strongly recommend they pursue them. As programming budgets tighten, incentives could mean the difference between a greenlight and a pass; not pursuing them could put you at a disadvantage next to companies that are. And if your allocated budget for a returning series doesn’t keep pace with inflation, an incentive could help fill the gap. I’ve also seen incentives used to cushion the blow of overages, helping everyone avoid some difficult conversations - and sparing pocketbooks on both sides.
Networks and streamers can help encourage companies to apply for every available incentive AND maximize them with one simple decision:
Offer them a slice of the pie.
The pie will only grow in response, and everyone — networks, streamers, production companies, and jurisdictions — will be better off for it.
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Film commissions: you can also help!
How? By making it easier for production companies to film in your jurisdiction, and minimizing the risk and uncertainty they associate with working in new places and with new people.
Nurture a robust local talent pool producers can trust—especially for roles likely to be hired locally (including but not limited to PAs, second camera, sound, hair & makeup, local drone operators, gaffers, electricians, set designers/construction, and more). Make it easier for production companies to find these people via crew databases—and consider training and certification programs to help recruitment, training, and to add a layer of confidence for those hiring.
Making film permits faster and easier to obtain is a no-brainer. You can also help make your community more film-friendly by teaching local leaders and businesses about the complexities of our industry. Finally, solicit feedback from departing productions to identify any areas of improvement, and follow up on any problems they may have encountered.
Production companies: Got some incentives-related pain points? Confused about where to begin? We’d love to hear from you.
Film commissions: Want to brag about your incentive in this newsletter?
Just drop us a line at carrie@globalcontentstrategies.com, or via our website.