Creators take notice of France’s tax credit scheme

As kids content makers take advantage of France’s tax rebates, producers are seeing bigger budgets and fiercer competition.
May 28, 2018

There’s no question the improved tax credit scheme in France for movies, drama and animation has intensified sector growth since funding body Centre National du Cinéma et de l’Image Animée (CNC) reformed the country’s three tax credits—film, audiovisual, international—in 2016. At that time, the CNC enhanced the rebate on eligible expenses for feature films and TV projects to 30% and 25%, respectively—up from 20% each—while bumping the Tax Rebate for International Productions (TRIP) from 20% to 30%.

Local producers have certainly taken notice. According to a recent CNC appraisal of the changes, US$2.4 billion was spent in France in 2017 for projects benefiting from the three reformed tax credits. The domestic film tax credit, for example, was applied to 142 films last year for expenditures of US$980 million in France, while TRIP went to 52 projects (30 more than in 2015) for US$270 million in eligible expenditures—an increase of US$201 million compared to 2015. The domestic audiovisual tax credit, meanwhile, applied to 1,554 hours of programs for US$1.2 billion in local expenditure.

Given that cartoons are generally easier to export than French-language live action, the animation and visual effects sector in particular continues to be strongly impacted by the reforms. Presales of French animation abroad jumped from US$37 million two years ago to US$49 million in 2017, according to CNC. Some notable big-budget visual effects features have taken advantage of the enhanced TRIP incentives as well, like last year’s record-breaking Wonder Woman and upcoming film Fantastic Beasts: The Crimes of Grindelwald, to name a few.

The tax breaks have also been luring productions back to French soil. The rate of offshoring for French film productions fell from 27% before the 2016 reforms to 12% in 2017, and film shoots in France increased by more than 90% last year.

While the growth has been positive, it has left some challenges in its wake. David Michel, Federation Entertainment co-founder and president of Paris-based Cottonwood Media (Squish, Find Me in Paris), says the increased workflow in the animation sector has made things tougher from a staffing perspective—something he and other producers predicted might happen following 2016′s changes. “The main change is that the new system incentivized a lot of producers, including smaller ones, to set up their own production studios, which is great, but there’s a lot of tension on the job market,” says Michel. “It’s not an unstable workforce, but it’s a constantly challenged one, with a lot of talent being poached from one studio to the other.”

To stay competitive and maximize available incentives, Michel’s team is looking to help homegrown talent become more international themselves. “You can still work with a majority of English-speaking writers, but you can’t access all of the bonuses unless you have a majority of French ones on board,” he says. “So we’re looking to train French writers to work in writers’ rooms with English-speaking ones from North America. It takes a lot of work, but it’s worth it.”

As Michel notes, if a producer secures a sale to one of the main French networks like public broadcaster France Télévisions (the main financier of animation in the country) or TF1, and all the subsidies are included, a show can be financed at approximately 60% or more. “You would likely only need one European sale to be fully financed and ready to go, which would be fantastic,” says Michel.

TeamTo and Thuristar's  My Knight and Me recently sold to broadcasters including Hulu, UYoung and YLE

TeamTo and Thuristar’s My Knight and Me recently sold to broadcasters including Hulu, UYoung and YLE

Will the bubble burst?

Meanwhile, as demand for local programming in France remains high, France TV is under pressure from President Emmanuel Macron’s government to find an additional US$61 million in cost savings on top of budget cuts imposed by the previous administration. Despite the difficult situation, French media regulator Conseil Supérieur de l’Audiovisuel (CSA) gave the national pubcaster a seal of approval last November for how it executed the first year of its strategic plan for 2016-2020. The CSA was especially impressed by France TV’s support of French animation, where its 2016 spend totaled US$33 million.

“The government knows that even with the cuts, there will still be a very high level of commissioning from France TV. But the government is going to keep cutting because we are at the height of a bubble as an industry,” says Michel. “There’s obviously a bubble in France because of the tax system, and there’s one in the international market because of new players like Netflix. There’s too much good content, and good enough content, on the animation side.”

Bubble or not, Michel says Cottonwood is currently focused on finishing its new 52 x 11-minute CGI-animated kids series Flea Unleashed, which qualified for the reformed tax credits. It’s a show that might not have been possible to produce domestically a few years ago. “CGI typically used to be a technique not used in France because the cost of labor was too high,” he says. “But now, the raised level of tax credit actually makes France cheaper than subcontracting somewhere else.”

Beyond a budget-friendly landscape, Michel contends that the sustainability and strength of the French industry ultimately comes down to the next generation of emerging animators. “At the end of the day, it’s about whether or not you have the right ecosystem, and that really starts with the training and the schools,” says Michel.

Learning to fly

Students at TeamTO's free animation school L'Ecas were picked based on their natural knack for animating

Students at TeamTO’s free animation school L’Écas were picked based on their natural knack for animating

Parisian prodco TeamTO (Take it Easy Mike, Yellowbird) took a proactive approach to ensuring that France’s lauded animation school system keeps up with the current competitive climate. Earlier this year, the company opened its first school, l’Écas, to help address the growing demand for 3D animators and expand the domestic talent pool with recruits from unconventional sources. Operated in partnership with world-renowned animation school La Poudrière, l’Écas commenced its free seven-month intensive course in CG animation with just 31 students (from a pool of 1,000 applicants). They were selected solely for their natural abilities and aptitude for animating.

“The school was TeamTO co-founder Guillaume Hellouin’s vision of enabling people who don’t have the opportunity, financial means or schooling background to receive the option of studying animation,” says TeamTO co-founder Corinne Kouper.

The school let any French citizen apply for initial consideration, as long as they were 18 years or older and had no previous industry experience. Submissions were whittled down to the top 150 contenders who displayed the best natural knack for animating. From there, the finalists were chosen after a four-hour test followed by person al interviews. Classes kicked off with a curriculum that covers art history, character design, rigging and scene blocking, with a focus on performing as part of a creative team. “Students are working about eight to 10 hours per day, and there is a very good chance they could get jobs in CG animation immediately following the completion of the course,” says Kouper.

For Kouper and the TeamTO team, those new recruits could be a boon if the studio’s production slate continues to grow. Its Activision Blizzard co-pro Skylanders Academy was eligible for the updated tax credit scheme, as was its animated comedy My Knight and Me, a co-pro with Belgium’s Thuristar with support from several European broadcasters. And the company has its eyes set on making higher-budget films.

“One of our next big challenges will be to finance an ambitious, high-end movie,” Kouper says, “because we are now in the process of getting our pipeline organized to produce more features.”

About The Author
Jeremy is the Features Editor of Kidscreen specializing in the content production, broadcasting and distribution aspects of the global children's entertainment industry. Contact Jeremy at jdickson@brunico.com.


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