#1IEC Regional Economic and Potential Tourism Impacts in Rhode Island of NOS4A2 and The Gilded Age Prepared for: Newport County Development Council Presented to: State of Rhode Island House Committee on Oversight, Subcommittee on Tourism, Arts, and Recreation Presented by: Leslie Genova, Principal Joseph Chang, Associate Industrial Economics, Incorporated March 22, 2022#2Overview Key Findings Rhode Island Motion Picture Tax Credit Scope of Analysis NOS4A2 Expenditures Results - Regional Economic Impacts of NOS4A2 Brief comparison to the Rhode Island DOR Report Potential Tourism Benefits of The Gilded Age INDUSTRIAL ECONOMICS, INCORPORATED 2#3Regional Economic Impacts of NOS4A2 $57 million in Rhode Island Amount spent by seasons 1 and 2 of NOS4A2 on motion picture production tax credit-qualified expenses that contributed directly to the economy of Rhode Island through through payments to business and individuals in the state. 95% Each $1.00 of tax credit anticipated to be issued by the state of Rhode Island related to the production of both seasons of NOS4A2 generated approximately $5.44 of economic activity in the state. 1,532 Approximate number of full-time equivalent jobs in Rhode Island created across both seasons of NOS4A2 production activities. NOS4A2 expenditures were distributed across at least 37 municipalities in Rhode Island (95% of all municipalities in the state), including many far from major metropolitan areas. $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $18,000,000 $17 million in distributed tax credits generated approximately $93 million in economic activity across a wide range of industries, including rental of real estate and equipment, transportation, food and hospitality, retail, and construction. $10,000,000 $7,300,000 $6,900,000 $5,000,000 IEC 50 Motion picture industries Transit and ground transportation Commercial and industrial equipment rental and leasing $5,300,000 $4,900,000 Real estate NEW MONEY. OLD RULES. $37,500,000 Retail- Miscellaneous store retailers All other March 2022 FROM THE CREATOR OF DOWNTON ABBEY HBO ORIGINAL THE GILDED AGE NEW SERIES STREAMING JAN 24 HBOMAX Source: IMDB $3,200,000 $3,000,000 $2,800,000 $2,200,000 $1,900,000 Specialized Nonresidential Automotive Food and Drink design services construction equipment rental and leasing INDUSTRIAL ECONOMICS, INCORPORATED General Medical and Specialty Hospitals 3#4Rhode Island Motion Picture Tax Credit Between 2005 and 2020, 94 film and television productions received tax credits in Rhode Island Qualified production expenses ranged from $110,000 to $38 million Received tax credits ranged from $27,000 to $9.5 million Theatrical 12 Commercial 2 Documentary 8 TV Series 22 INDUSTRIAL ECONOMICS, INCORPORATED Web Series 3 Feature Films 47#5Rhode Island Motion Picture Tax Credit The Motion Picture and Video Production industry (NAICS 51211) in Rhode Island averaged 64 employees between 2000 and 2005 averaged 275 employees 2006 to 2020 430 percent increase in direct industry employment during the period following tax credit implementation 600 Rhode Island Employment, Motion Picture and Video Production 500 400 300 200 100 INDUSTRIAL ECONOMICS, INCORPORATED 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Year Source: BLS Annual Data, 2000-2020 5#6Overview of our Analysis Regional Economic Impacts NOS4A2 - PRODUCTION EXPENDITURES Production Company Pre-production Location Direction Scouting Travel Production ⚫ Equipment Set construction • Transportation Wardrobe Location DIRECT EFFECTS INDIRECT EFFECTS • Camera Post-production Reviewing and editing • Visual effects ⚫ Sound, titles Demand for employment for production activities Demand for goods rental and purchase INDUCED EFFECTS Increased input industry output and employment in supporting industries [000] Increased expenditures associated with personal income received INDUSTRIAL ECONOMICS, INCORPORATED Most expenditures occur outside of Rhode Island Likely effects SHOW RELEASE Advertising HA POTENTIAL TOURISM EFFECTS Increased awareness of filming location The Potential Tourism Benefits Gilded Age HA Increased visitation to site location Increased local advertising and activities Increased household goods and services output and employment#7NOS4A2 Expenditures in Rhode Island (Seasons 1 and 2) All other categories 20% Total: $57 million in expenditures, excluding above-the-line expenses Wardrobe 4% Office & Facilities 5% INDUSTRIAL ECONOMICS, INCORPORATED Set Dressing 5% Camera 5% Production Lighting 6% 8% Transportation 21% Set Construction 10% Location 8% Set Operations 8% 7#8Distribution of NOS4A2 Expenditures Expenditures in 95% of communities Utilized over 650 vendors in the state Source: AMC data. Note: Location data was not available for all expenditures INDUSTRIAL ECONOMICS, INCORPORATED WOON SOCKET BURRILLVILLE NORTH SMITHFIELD CUMBERLAND LINCOLN SMITHFIELD GLOCESTER CENTRAL FALLS PAWTUCKET NORTH PROVIDENCE JOHN STON PROVIDENCE EAST PROVIDENCE FOSTER SCITUATE CRANSTON WEST WARWICK WARWICK COVENTRY EAST GREENWIC WEST GREENWICH EXETER NORTH KINGSTOWN RICHMOND HOPKINTON WESTERLY CHARLESTOWN SOUTH KINGSTOWN NARRAGAN SETT BARRINGTON WARREN BRISTOL TIVERTON "PORTSMOUTH JAMESTOWN MIDDLETOWN LITTLE COMPTON NEWPORT NOS4A2 Expenses (S1 and S2) $0 <$10,000 $10,00-$50,000 $50-$100,000 $100,000-$500,000 >$500,000 NEW SHOREHAM 8#9Regional Economic Impacts of NOS4A2 Expenditures in Rhode Island INDUSTRIAL ECONOMICS, INCORPORATED SECTOR EMPLOYMENT (FTE) LABOR INCOME VALUE ADDED OUTPUT Motion picture and video industries 337 $16,000,000 $16,000,000 $18,000,000 Transit and ground passenger transportation 520 $7,000,000 $7,000,000 $7,300,000 Commercial and industrial machinery and 28 $1,150,000 $3,800,000 $6,900,000 equipment rental and leasing Other real estate 39 $550,000 $1,840,000 $5,300,000 Specialized design services 92 $4,900,000 $4,900,000 $4,900,000 Construction of other new nonresidential 62 $2,600,000 $2,700,000 $3,200,000 structures Automotive equipment rental and leasing 19 $520,000 $1,700,000 $3,000,000 All other food and drinking places 47 $1,100,000 $1,500,000 $2,800,000 Hospitals 11 $900,000 $1,200,000 $2,200,000 Retail - miscellaneous store retailers 60 $630,000 All Other Sectors 319 $14,600,000 Total Effect 1,532 $50,000,000 $780,000 $23,600,000 $37,500,000 $65,000,000 $93,000,000 $1,900,000 Source: AMC data, IMPLAN and IEC analysis. 9#10Regional Economic Impacts of NOS4A2 Expenditures in Rhode Island Sources: AMC data and IEC analysis. INDUSTRIAL ECONOMICS, INCORPORATED All other sectors 40% Retail - Miscellaneous store retailers 2% Hospitals Food and Drink 2% 3% Nonresidential construction Automotive equipment rental and leasing 3% 4% Motion picture industries 19% Transit and ground transportation 8% Commercial and industrial equipment rental and leasing 8% Real estate 6% Specialized design services 5% 10#11Regional Economic Impacts of NOS4A2 Expenditures in Rhode Island The production of NOS4A2 is estimated to receive $17 million in tax credits (30% of qualified expenditures). • $17 million in tax credit generated $93 million in economic activity in the State across a wide range of industries. Each $1.00 of tax credit issued by the State of Rhode Island related to the production of NOS4A2 generated approximately $5.44 of economic activity in the state. The production created demand for approximately 1,532 full-time equivalent jobs in Rhode Island between 2018 and 2020. Sources: AMC data and IEC analysis. INDUSTRIAL ECONOMICS, INCORPORATED 11#12Comparison to 2021 Rhode Island DOR Report RI DOR evaluates how the taxes paid to Rhode Island associated with film production spending compared to the state taxes foregone by Rhode Island in granting the tax credit Considered 11 productions filmed between 2016 and 2018 Relied on an incomplete set of available tax data from the Rhode Island Department of Taxation Our analysis differs from this DOR report in several respects, so it is difficult to make apples-to-apples comparisons between them INDUSTRIAL ECONOMICS, INCORPORATED 12#13Estimates of Film Tourism and Example of The Gilded Age Literature and widespread anecdotal evidence suggest that film and TV productions have the potential to increase local tourism. We reviewed 39 academic and industry studies of film tourism: . . Studies provide estimates of film tourism for 38 film and TV productions, which range widely Studies use 3 approaches: case studies (visitor surveys), regional and national studies (trend studies), estimates of advertising exposure value Studies identify production characteristics that increase likelihood of film tourism INDUSTRIAL ECONOMICS, INCORPORATED 13#14Potential Tourism Benefits of The Gilded Age The Gilded Age possesses characteristics that could increase the likelihood for it to attract film tourists to Rhode Island ● Potential for strong iconic identification with Newport and the Newport Mansions Potential for popularity and longevity of the production Production setting as a period drama with heritage buildings · Support from a major production company and Rhode Island-based partners* Source: Architectural Digest *Rhode Island partners include the Rhode Island Film & TV Office, the Rhode Island Commerce Corporation, Preservation Society of Newport, Discover Newport, Newport Chamber of Commerce, Newport County Development Council, and Airport Corporation INDUSTRIAL ECONOMICS, INCORPORATED 14#15Potential Tourism Benefits of The Gilded Age • It is premature to estimate specific impacts of the Gilded Age on tourism, but early signs are promising. The Gilded Age has been “green-lit" for a second season after only a few episodes of its inaugural season, it has continued to increase in audience viewership across its first season, and it ranked among the top ten in-demand series at points during this period (Parrot Analytics, 2022). A preliminary estimate of exposure value suggests that each distinct exposure of Newport in an episode could be valued at $45,000 in advertising value. METRIC Distinct Views / Minutes of screen timea Average audience per episodeb Cost per advertisement Value per impression HYPOTHETICAL EXPOSURE VALUE 3 million $260,000 INDUSTRIAL ECONOMICS, INCOR Exposure value per episode $0.015 $45,000 a Defined as discrete scenes or shots where a clearly identifiable Rhode Island location is present. Initial estimate is based on the number of exterior shots of Rhode Island locations and scenes filmed in the interior of the Newport Mansions. b Initial estimates available for episodes 1-4. We do not differentiate between an audience member who views the show during its initial airing versus an audience who watches the show via a streaming platform (or similar) after it's initial airing date: https://deadline.com/2022/02/the- gilded-age-ratings-viewership-grows-15-week-2-surpasses-white-lotus-1234924598/ Source: HR&A, 2013. 15#16IEC Thank you! Questions?