Pinewood's not done with its expansion
The days when Pinewood was a single location studio 20 miles outside London are long-gone. Having joined forces with Shepperton and Teddington to create the UK’s number one studio business, parent company Pinewood Shepperton plc has now transformed itself into a leading global player.
Pinewood’s international expansion began in earnest during 2009 when it did a deal to take over the sales and marketing of Canada’s Filmport, which is now known as Pinewood Toronto Studios. Subsequently, it has opened satellite businesses in the US, Germany, Malaysia and the Dominican Republic. On top of this, it recently announced a strategic partnership with the Welsh government which will result in a new studio for Wales.
“The strategy is quite simple really,” says Pinewood Shepperton director of communications and strategy Andrew Smith. “We are targeting regions of the world where the demand for content is increasing. In the case of Malaysia, for example, it’s a response to the fact that the Asia-Pacific production market is growing strongly. You won’t see us in every country in the world, but you will see us continue to respond to demand.”
Having studios in Toronto and Berlin makes sense, since these are well-established rivals to London for high-end movie business. But why has Pinewood opened up in locations like the Dominican Republic and Malaysia, as opposed to any other neighbouring countries? Explaining the rationale, Smith says: “We’re driven by the same considerations as filmmakers. What are the facilities and infrastructure like? What are the fiscal incentives? Is there an established talent pool there? Does it put us in the proximity of locations that interest producers?”
The Dominican Republic, for example, has stunning locations and an attractive 25% tax credit on all qualifying local spend. With 6-10 feature films made in the country every year, it also has a well-established production infrastructure – to which Pinewood can now be added. “There’s 50,000 sq ft of sound stage space and an 8 acre water effects facility,” says Smith. “Pinewood has a very strong reputation for water filming and that’s something we are taking worldwide. We’re just building a new water tank in the Malaysia studio.”
Like in the Dominican Republic, Malaysia had a number of things to recommend it as a base for Pinewood. Interesting tropical locations are near at hand, for example, and there is also a 30% incentive. In addition to this, Pinewood now provides five sound stages, production offices, three water tanks (including Asia Pacific’s only green screen tank) and digital post-production on the lot.
While there may seem like a high element of risk in Pinewood’s rapid expansion, the company has been careful to spread the financial burden in new markets. A case in point was its 2013 decision to create a 288-acre, five sound stage studio complex in Atlanta, USA. In this case, it entered a joint venture with investment firm River’s Rock LLC. Under the terms of the deal, River’s Rock is funding the land and studio construction costs while Pinewood’s main focus will be sales and marketing. Although Pinewood only has a 40% stake in the business, the deal will see the studio branded as Pinewood Atlanta, which will help the company as it continues to expand its international reach.
As with Pinewood’s other international ventures, the decision to enter Atlanta was based on factors such as local incentives and the state’s recent track record as a film hub. In 2012, for example, 333 productions were shot in the state, generating around $3.1bn in revenue: “We’re very pleased with the response we’ve had in Atlanta,” says Smith.
Generally speaking, Pinewood’s approach is to build studio complexes that can act as production hubs, with third-party companies (for example post-production facilities or equipment rental firms) either taking space on site or in the immediate environs. Recently, however, the company has also started getting involved in the pre-financing of production – as a way of trying to bring new work into its studio facilities.
This began in a relatively small way with Pinewood Productions, a scheme that offers equity finance to productions using Pinewood UK facilities (examples being A Fantastic Fear Of Everything, Robot Overlords and Belle). However recent times have seen Pinewood become a much more high-profile player thanks to a new financing set-up entitled Pinewood Pictures.
Pinewood Pictures was launched after Pinewood was given management control of the £25m Isle Of Man Media Development Fund. It then expanded further after Pinewood established a joint venture with the Wales government in 2014. This collaboration did two things. Firstly it put Pinewood in charge of the Welsh government’s £30m media investment budget (which can be used in conjunction with the Isle of Man’s £25m fund). Secondly, it brought a commitment from Pinewood to build a studio in Wales. With the Welsh government’s money only available to film and television projects that shoot 50% of their principle photography in Wales, Pinewood’s aim will be to service any productions that are able to access the new fund.
Pinewood and the Welsh government held a press conference at MIPTV in Cannes this year in which they explained the details of the new joint venture. Commenting on the scheme, Pinewood Pictures director Steve Christian said the deal will provide “a major boost for the local economy, providing jobs and opportunities in the Welsh Industry. We’re hugely excited to be working with the Welsh Government, not only to support British filmmaking but also to highlight the fantastic facilities Wales can provide, soon to be complemented by Pinewood Studio Wales.”
The addition of a Welsh studio may seem surprising given that Pinewood already has three English studios and is part of the group that owns MediaCityUK in Salford (Peel). But Smith says “they are serving different needs. Pinewood and Shepperton are servicing very high end international movies, whereas the new Welsh facility is likely to be based more around high-end TV which has been a major growth area for the country.”
While the majority of Pinewood’s international activity involves the management of Pinewood-branded sites, this isn’t the only way it is expanding its sphere of influence abroad. In March 2014, for example, it entered into a Consultancy Services Agreement with the Dalian Wanda Group to advise on the design and construction of a new film and television studio complex in China. Opening in 2016, the studio, which will be located near Qingdao, will cover a 200-hectare area and comprise sound stages, workshops, a post-production area and themed backlots. Once completed, it will be one of China's largest film and TV studio facilities, explains Smith.
It’s early days in terms of judging the success of Pinewood’s ex-UK expansion. For the company’s last set of interim results, international only accounted for £0.5m out of a total £36.6m revenues. Presumably, that figure will start to rise in the next year or two. In the meantime, Smith points to the level of work going through the various sites as a vindication of Pinewood’s expansion strategy.
“Don’t forget we’ve got Star Wars VII in Pinewood UK. Overall we’re optimistic about our international strategy because the Pinewood brand is so well-known to filmmakers. When they are spending millions on a production, it’s a comfort for them to know Pinewood is running the studio operation.”