Canadian Heritage Committee on March 9th, 2015

[The Chair, Conservative, Gord Brown]

Thank you.

We'll now go to Mr. Young for seven minutes.

[Terence Young, Conservative, Oakville, ON]

Thank you, Chair.

I thank everyone for coming here today.

I'd like to start with Mr. Petrollini, please. You made a comment about relaxing the production control guidelines. I appreciate the suggestion. That's the kind of help we're asking for. However, I wanted to ask your opinion. Can we do that without it leading to a situation where Canadians become the actors and the singers but they don't have the value-added jobs, which is what we're trying to do? We're trying to create value-added jobs in everything we do, jobs of the future, and with fair trade more jobs.

For example, we don't just want Canadians to be the actors or the singers but also the writers and decision-makers, producers, directors, and financiers. If we relax those guidelines, doesn't that lead us in a direction we don't want to go?

[Lui Petrollini]

It's a good question.

My suggestion is not to eliminate the role of the Canadian producer. We still have to have a feature film industry where Canadians are producing, but there are other guidelines that really limit their ability to partner with non-Canadian producers or receive financing from sources that could potentially provide the majority of the financing.

There's a written guideline, and it is a guideline, mind you, that if you have 75% of your financing coming from one non-Canadian source, it could be implied that the company providing that financing is in the position to dictate to the producer how to produce their film, to have more than just a say over key creative elements but to have a say in the day-to-day operations. So I'm not suggesting that we remove the role of the producer.

My comment was focusing on the commercial viability of our films. One rule I question is the need for one of the top two highest-paid actors being Canadian. If we could relax that rule, we could perhaps still require that there be a Canadian screenwriter or a director, because that is one of the guidelines. However, if we relax the ability to bring people to the production that the rest of the world will associate with better to make our productions more viable, that's the sort of thing I'm looking at.

The last thing I want to see is our being known as a country that provides all these incentives and all that we're creating are actors and singers. That's the last thing we want to see.

[Terence Young, Conservative, Oakville, ON]

Right. Thank you.

Mr. Dhaliwal, welcome. How can we get more big projects, the kind that you often work on, such as Pompeii? I understand that was a very big-budget production and a lot of work. How can we get more projects like that one produced in Canada in order to create more work for Canadians?

[Ken Dhaliwal]

That's a very good question. Pompeii, as an example, was a co-production, which I think indicative of most of the larger-budget Canadian movies that are shot in Canada. It was a treaty co-production with Germany. The reason you're able to have these larger budgets on co-productions is that you're able to automatically access, as Mr. Petrollini was saying, cast and directors and financing because of the more relaxed rules around co-productions. Pompeii had some very big stars in it who wouldn't have been able to be employed in a Canadian content without a co-production, just because of the control guidelines and the points test.

So the co-production is one way, and probably my favourite way, to increase the size of productions and increase the quality of the people that Canadian producers produce with. I think it's the way that a lot of Canadian producers are going in terms of trying to access bigger markets and more payday.

[Terence Young, Conservative, Oakville, ON]

Thank you.

Mr. Joly, is that creating an international star system? The star system has been dominated by Hollywood for decades and decades.

One of the other people who came before the committee advised us that we don't necessarily have to go and compete with Hollywood and the “moneyball” and stuff, that the star system is becoming international. We can go around them and create an international star system that would benefit Canadian actors.

[J. Joly]

I think to a certain degree that's true. Again, I'll be a little bit of a dissenting voice and say that the packaging's comparable model is not as accurate as it used to be. You can look at recent articles in Forbes and stuff, and even for the current generation, when they come up, they don't recognize.... It's arguable whether Johnny Depp could open a movie anymore. I would say that in fact if you look at his movies of late, he can't open a movie anymore.

There are recognizable international stars. When you look at a place like China, they recently beat North America, for the first time ever, in their box office...absolutely. There are stars who increasingly will be that. But in my terms of looking at the business, and the bifurcated nature of the business, I would bank on YouTube stars before I'd bank on the long tale of what my IP was going to be. That's kind of what we've started to do.

I look at protecting the downside. I focus on genre pictures and launching new careers. My thing is that I'm never going to make a big picture. But if I could make a pipeline of low-budget, high-quality, high-performing content with a built-in audience—if I could make it like Jason Blum of Blumhouse, where I'm making a $3-million horror movie that makes $72 million its opening weekend, with a 2,600% ROI—that's a business I'd want to be in.

[Voices]

Oh, oh!

[J. Joly]

So I don't know. Again, these are very different things. By nature I'm a high-risk individual, with private money and high risk. People are taking a big chance on me.

I have great respect for Ken and Lui, but they represent a different kind of...more of a producer. They're bringing a lot of jobs to the country, and they're bringing bigger productions, but my big thing is I that want to find the next Peter Jackson. I want to find the guy who builds the Weta here. I want to find that.

[Terence Young, Conservative, Oakville, ON]

I wrote out a list of things that you want to do. It sounds like you're achieving them all by building the audience first. I wonder if you could just summarize how you do that. I'm talking about discovering talent, creating entrepreneurs, finding new ideas, building an audience, and reducing discovery costs. Are those all part of your model?

[J. Joly]

Those are tenets of our model. The last one was how we attract more private equity—by figuring out ways to protect the downside, by creating more...or monetizing the system, not just when the product's created when it goes out to market but while it's still in development, trying to eliminate some costs across the whole board.

[Terence Young, Conservative, Oakville, ON]

Can you tell us, if I have a minute left here—

[The Chair, Conservative, Gord Brown]

No, I'm sorry, you're out of time.

[J. Joly]

I'm happy to write you an email, if you want, and describe the process.

[The Chair, Conservative, Gord Brown]

Thank you. We're going to have to move on.

Ms. Nash and Ms. Sitsabaiesan, I think you're going to split that five minutes?

[Peggy Nash, NDP, Parkdale—High Park, ON]

Yes, thanks, Mr. Chair, I will split my time.

Mr. Joly, let me continue with you. It sounds like you have a very innovative and interesting business model. You use an aggressive social media campaign to choose which production to focus on.

First, do you see the future of Canadian film being increasingly digital, or will there be a shift in the mix of distribution to the Cineplexes of the world? Obviously there's a radical shift in how we consume television and film. How do you see that affecting the work you're doing?

[J. Joly]

That's an excellent question. I still think that theatre is an incredibly important window. It's a great marketing window and I think you can make a lot of money in that first window.

Again, the great thing about having a Cineplex in our country is that you can use them as dynamic inventory. That's what we did through the social media. And we're not just about social—

[Peggy Nash, NDP, Parkdale—High Park, ON]

Excuse me, what do you mean by dynamic inventory?

[J. Joly]

It means that if you have the analytics, you can put the movie in the theatre where the most people are aggregated. You don't have to open it at a regular run. I'm increasingly interested in event screenings and how you put it in the right theatre for maybe one night, or maybe it's a carryover, or maybe you can be more experimental where you do what's called a “date and date”.

I don't know everything, but I do like experimenting. What I found with a great partner like Cineplex is that, as we've been able to prove our assumptions into actuals, they're increasingly willing to roll the dice with us. Cineplex is a great partner.

In terms of television I do think we would be remiss not to really acknowledge that foreign pre-sales are in trouble. I think everybody would say that—that the red tide in all of the SVODs and over-the-top we're seeing.... But the great thing is that it's a big opportunity, too. If you can create that pipeline.... The arm's race is new content, so that's a really great thing.

Canada has the soft money. We have the co-production treaties. If we could find urgency and deploy capital faster we can be a world leader.

Again, the audience doesn't decide our voice. They help us filter. We look at the kinds of users there are. We look at reach, retention, engagement, sentiment, structured data, and unstructured—

[Peggy Nash, NDP, Parkdale—High Park, ON]

I just want to ask one more quick question.

I think it's an interesting, exciting model for generating and finding Canadian content. Do you think with the Netflixes of the world that it's going to be more challenging for Canadian content, or do you think that it is helpful in terms of Canadian content?

[J. Joly]

That's a great question and on the next panel I really encourage you to ask Naveen that question because he's right in the midst of it.

I don't want people to take this the wrong way, but my company doesn't make Canadian movies for an international audience. We make international movies that just happen to be made by Canadians. We've already proven that there are WolfCop fans in all kinds of places around the world, so for me, when my audience goes on Facebook they're having a global water cooler conversation.

We have a movie that was probably one of the most heavily pirated Canadian movies last year. It was because the U.K. released it four months ago and then Germany released it. Tomorrow, finally, the U.S. is releasing it. In that time there was a conversation going on and you couldn't go to iTunes Canada or to Netflix Canada, so where did you go? You went to BitTorrent. Thankfully for the movies we make, we love piracy because it sets up our sequel really nicely because they're the mountain....

[Rathika Sitsabaiesan, NDP, Scarborough—Rouge River, ON]

I'm going to interrupt you, if I may, Mr. Joly, because I know that the five minutes is going to be almost up and I want to try to get at least one question in.

You mentioned earlier that it would help if there were capital infusion in smaller chunks throughout the process, rather than what Mr. Petrollini and Mr. Dhaliwal have mentioned with the tax credits. You mentioned that the support from the government is coming in probably a year afterward, because once it's completed you're filing your corporate income taxes, and then you get it only in a very slow process.

I think Mr. Petrollini 's suggestion was to ensure that people are meeting the criteria in advance and that possibly we could be having interim funding through the tax credits.

What other tangible suggestions or recommendations do you have, other than just making sure you meet the requirements in advance? Is there something we can actually be doing? Are there changes to the procedure or process that any of you would suggest?

[J. Joly]

Other kinds of money, or just...?

One of the things I'm trying—

[Rathika Sitsabaiesan, NDP, Scarborough—Rouge River, ON]

I'm going to assume it's with respect to the interim funding because that's something all of you have mentioned.

[J. Joly]

Yes, one of the things I'd like to see, and what we've been trying to do is the same thing you can do with technology in B.C., which is how do we incentivize...? There is something called an EBC for technology. If you're a B.C. investor you can invest in a British Columbia tech company and you can receive 30% back and you can get money back on your RRSP.

For my model, one of the things I would love is to figure out if there is a way to incentivize Canadians to invest in content, especially content pipelines. I personally think this would be a very interesting model to look at.

I do think there is a lot with crowd funding and crowd sourcing, especially around how that's eventually going to grind things, too. That's a bigger, hairier beast we have to tackle in this world.

But I'm going to leave it to these two gentlemen to talk about the other one.