Hollywood has a very, very big problem on its hands. It’s literally running out of room to make movies and television shows. Before the coronavirus pandemic ground production to a halt, soundstages, where shows and movies are largely filmed, were operating at their highest occupancy capacities in Hollywood history. The ballooning of streaming services and scripted series has put a strain on the supply of spaces needed to meet the ravenous demand of content. Now, if a studio hopes to film on a soundstage, they may have to reserve the space as much as 18 months in advance.
In this climate, rival studios claw at one another for soundstage residency, and the expenses are becoming alarming and detrimental to the long-term health of the industry. It’s only getting worse thanks to the global production shutdown caused by the pandemic. Productions are facing a massive pile up when Hollywood is given the green light to resume. Who gets priority when the floodgates open? Projects that weren’t able to wrap production before COVID sidelined them? Projects that were reserved more than a year ago? Most importantly, can every production prioritize health and safety moving forward? Business as usual isn’t designed for worker-friendly conditions.
In Hollywood terms, there’s a giant meteor hurtling toward the industry and Bruce Willis and Ben Affleck are not here to save the day. But while the world is sheltering in place, one company, Kane Studios, is plowing ahead with its designs for the future. The plan: use economic incentives to create a new production studio that addresses all of the inefficiency and safety problems currently plaguing film and television production. Observer spoke to the company’s leadership and construction partners to figure out how they’re pulling this all off in the middle of a pandemic.
“The team’s primary priority is to build the best, purpose-built content production facility in the world. We know there’s currently a major soundstage shortage in the industry, and the need is only growing,” said Scott Taylor, co-owner of Carter Development, which is constructing the facilities. “Kane Studios can accommodate major, long-term productions and help alleviate the growing pipeline backlog of projects.”
Juicing the opportunity zone
Kane Studios, to be built in Albany, Georgia, has starry eyes and grand ambitions that at first come across as naive. Its stated goal is to revolutionize the production side of Hollywood despite the fact that the industry has remained largely static over several decades.
“This is years of my life,” founder and CEO Patrick Millsaps told Observer, “and I’ve brought some smart people in. But I think the best ideas will still come from the people and companies who come and work with us. If you have a project that everyone’s happy on and works well together, you can see it on the screen.”
To address the squeeze on available space, Kane hopes to be the largest production studio in the world. That includes approximately 3,000 total acres and upwards of 800,000 square feet of new soundstage space, 300,000 square feet of production offices, 100,000 square feet of auxiliary space and more than 1,000 acres of backlot. For comparison, Pinewood Atlanta stretches 700 acres with backlot of 400 acres. Kane is as ambitious as Charlie Chaplin, Howard Hughes or Walt Disney could have ever imagined once upon a time.
But as the adage goes, the size doesn’t matter as much as how you use it. Kane will employ nontraditional approaches to address the long-standing issues of an increasingly complicated production process, a lane that has remained relatively unchanged for decades and is now looking at a pandemic and over-crowded studio space.
The complex plan has a simple origin: money. Since Georgia introduced a state tax incentive for film and TV productions in the mid-2000s, it has become a Hollywood hotbed. Most notably, Disney utilizes Pinewood Studios in Atlanta for some of its biggest Marvel productions. Kane will double down on the financial incentives for studios, especially as the pandemic leaves many—both big and small—strapped for cash. They’re constructing a massive campus which includes the aforementioned soundstages, backlots, housing for employees, STEM-based educational programs for students and a sustainable local community-farming operation.
Kane can do all this because its acreage is located in an “opportunity zone”—an economic incentive that was enacted through the controversial Tax Cuts & Jobs Act of 2017, passed by the Republican-led Congress to pump capital into economically depressed areas in exchange for tax benefits. There are roughly 8,600 across the country as of now. Los Angeles has utilized this legislature to incentivize production as will Kane Studios, potentially saving the Disneys and Netflixes of the worlds tens of millions of dollars in the process.
“When you’re talking about big studios, this is a way for them to perhaps take before-tax money and invest in a new business in an opportunity zone,” lawyer and opportunity zone expert Matt Peurach told Observer.
Detractors have criticized opportunity zones for giving state policymakers too much influence in the designation process, not including enough protections for locals to benefit from investments, and offering potential loopholes that don’t stimulate the community economy. But they do allow developers like Kane to come in and build, with a counterargument of their own. “They’re getting a tax savings and an economic benefit while simultaneously helping out these distressed communities and creating jobs,” said Peurach.
Economically, Kane will be studio-friendly, which is crucial in Hollywood’s financial downturn. Outside of Netflix, nearly every major media entertainment conglomerate has seen its stock plummet over the last six months. Pinching pennies will be the norm for the foreseeable future, especially as the industry stands to lose $160 billion over the next five years due to COVID-19.
The hope is that the community will also benefit. It’s the 12th poorest congressional district in the country, and the state is already behind in math, science and reading compared to national levels. The goal is to employ between 2,000 and 3,000 people for this endeavor, and collaborations with two and four-year colleges for educational programs beginning in sixth grade are already in place.
“There’s also a partnership with a major university to provide a training program to have the citizens of this very distressed area learn the trade and actually get a job afterwards,” Peurach said. “It’s a place where there’s going to be massive job creation in an area that certainly would not have seen it but for the opportunity zone initiative.”
When you pair the opportunity zone benefits with the Georgia tax credits already available within the state, there’s an undeniable economic incentive for a studio CFO to take advantage of this and locate themselves in Albany, Georgia, for production. Whether that betters the community in the long term remains to be seen, but it’s a major selling point of Kane’s development.
Streamlining the production process
Due to rising real estate prices, geographic limitations, transportation costs and the litany of other expenses that quickly accumulate, production in major hubs like Los Angeles and New York is fragmented by necessity. Soundstages, backlots, makeup and costumes, editing bays are spread across the map. This inevitably leads to longer hours and a general inefficiency. One of Kane’s goals is to centralize and eliminate those inefficiencies.
“Instead of developing this based on location or property, like is normally done in the industry, you’ve got a purposefully designed studio that is meant to tick off all the things that production would look for, and do it all inside one fence,” Bert Brantley, COO Georgia Department of Economic Development, told Observer.
In Kane’s plans, the backlots are near the soundstages, which are located close to the editing bays, which are just a quick hop over to cast and crew housing accommodations, eateries and screening rooms. Beyond the physical space, Kane is also developing a proprietary software that knows Georgia audits, grants and tax credits, so that it can create a standardized system to automatically submit proposals to the to the Georgia Department of Revenue—the same one-stop-shop philosophy of the studio in software form.
“It would be a unicorn,” Brantley said of Kane’s holistic approach, calling it “something that has not been done before.” And like other so-called “unicorn” startups, Kane has the benefit of a blank slate—unencumbered by the bloat or bureaucracy of the legacy entertainment companies—to build its business from the ground up.
Using a pandemic’s timing to establish best practices
Tyler Perry will begin production at his Atlanta-based Tyler Perry Studios on the second season of his BET show Sistas on July 8. To protect against the spread of the coronavirus, his facilities will incorporate multiple testing periods for cast and crew, catering pods that minimize the risk of outbreak, private planes to transport out-of-state individuals, and using the old military base’s living quarters for those involved in the production. All of this unsurprisingly comes at “enormous cost to the budget.” Universal’s Jurassic World: Dominion is set to become the first major studio movie to resume filming in the U.K., with an additional $5 million in costs devoted to health and safety. Such measures may not be feasible for all production outfits, even if they’re necessary in a post-COVID world.
Kane Studios, with funding commitments at the ready, was meant to break ground in April before the pandemic hit. Those plans were paused to ensure that its designs included the most advanced and effective sterilization techniques available. This means installing UV lighting in all soundstages and common areas so that buildings can be sterilized quickly. Even though the studio is not set to open until late 2022, it plans to stay ahead of the curve to ensure safety on its campus.
“The project’s timing gives the team the benefit of incorporating new industry standards into its facilities from its inception,” Taylor said. “We’ll enlist subject matter experts to help write the guiding principles for all health and safety protocols. There will also be a heightened focus on the HVAC, lighting and access control systems to ensure they are supporting a healthy environment.”
While other facilities scramble to compose a plan of action for the new realities of production, Kane says it is using the delay to design safety accommodations from the outset—and ideally avoid exorbitant costs down the road.
Serving Hollywood (and hopefully Southwest Georgia, too)
Millsaps, Kane’s CEO, told Observer that unlike other segmented productions that require massive upfront investments, Kane is intended as a “creative ecosystem” born out of the “waste” and “unmanaged risk” he observed during his time as a film producer. Some of the famous L.A. soundstages are approaching 100 years old and, thanks to real estate prices and space restrictions, have only managed to build on top of one another without making the day-to-day duties of the production process any easier.
Millsaps said he has spent years gathering input from writers, showrunners, directors, producers and actors on what works and what doesn’t—where the inefficiencies and are and what needs to be done to correct them.
“For Hollywood, I want Kane to be a place where the people involved want to stay longer after they’ve finished. We’re building big houses and condos so you can bring your family, we’re going to display art, we’re going to have an 80-acre farm, there’s going to be amazing amenities so that it feels like a little vacation,” Millsaps said. “For the local economy, I want to end generational poverty.”
The CEO concedes that his plans sound like a “pie in the sky.” But he insists that there’s a strategy behind Kane that makes all of the idealism feasible.
“The first major strategic decision we made was to build the complex where land is abundant and inexpensive,” he explained. “The cost of production is already skyrocketing, and I never understood why studios were expanding on the most expensive real estate in the U.S. in L.A., New York, and even metro-Atlanta. Being outside of the metro-Atlanta area, my land costs are exponentially cheaper, which are savings I pass on to productions. Now, with all the added cost of COVID-related requirements and insurance costs, this margin will matter more than ever.”
But, sticking with the Hollywood metaphor, is it really true that if you build it, they will come?
“We are in negotiations with several major studios and production companies for long-term leases of our stages,” Millsaps said carefully. “But we have high standards. We only want companies on our campus who want to increase their financial margins, keep their casts and crew happy and healthy at a facility that grows its own organic fruits and vegetables, will have a negligible carbon footprint and will change the lives of thousands of people for generations to come.”