Th M Di De Tti Ti Dti NYC the Media and Entertainment Industry In

ThMdiThe Media and dEt Entert tiainment tId Indust ry i n NYC : Trends and Recommendations for the Future

October, 2015 Introduction

The media and entertainment industry is an important contributor to New York City’s economy, providing high quality jobs which out -performed the US economy through the financial downturn.

Since our last report in 2012 the industry in New York City has seen a period of steady growth, particularly in sub sectors like scripted TV series which offer long-term and predictable employment.

This report, completed in April 2015, serves as an update to our 2012 publication. The report analyzes the development and growth of NYC media in the period 2012 through 2014, by once again examining different subsectors and identifying the latest trends that have shaped and will ll rights reserved.

continue to shape NYC ' s media and digital media sectors. AA

Since its establishment in 1966, the Mayor’s Office of Media and Entertainment (MOME),

through its Office of Film, Theatre and Broadcasting (MOFTB) has served New York City’s media nsulting Group, Inc. and entertainment industry – issuing permits, coordinating services and deploying the "Made in oo NY" logo and marketing campaign for qualifying productions. Under the new mayoral administration, MOME maintains its strong commitment to fostering the Media and

Media and Entertainment in NYC-Final.pptx 2 Executive summary (I)

Continued growth of filmed entertainment industry in NYC driven by strong expansion in scripted television • NYC has benefited from this trend, with FTE (full time equivalent) employment growth of 3.1% per year 2011-14, from 94K to 104K FTEs, and production spending growth of 6.4% per year, reaching $8.7 billion in '14 • Total number of New Yorkers employed in filmed entertainment has held stable at ~130K, with crews increasingly able to work year-round on productions, building sustainable and predictable careers

TV is a standout success story, with 14.8% annualized FTE growth and 17.0% annualized spending increase • Widespread adoption of new TV viewing platforms has intensified competition for TV audiences • More networks now commissioning original TV content, including pre-existing cable networks (Bravo, Starz, AMC) as w ell as n ew onlin epayes(e players (N etflix , H uu,ulu, Am az on ) • New series typically 8-12 episodes (vs. traditional 20+ for broadcast), with increasing turnover of shows – proactive approach to attracting new pilots and shows will be important to maintain a strong pipeline of projects • 2011-2014 saw a decline in head office FTEs for cable and broadcast of 3.7% and 0.8% respectively, as support ll rights reserved.

functions are consolidated and moved out of NYC, and companies re-orient toward digital / data-centric talent AA • In addition to production FTEs/spend, live TV filming estimated to generate ~$45M in tourism spend each year

Movie production in NYC much more variable, as a result of dollars being concentrated in 'tentpole1' films nsulting Group, Inc. • FbtljtdiiFewer but larger major studio movies pro ddhithUSduced each year in the US2 , causing var ia bility i n NYC movi e prod uc tion oo • Decision to locate a production in NYC driven by a broad range of factors including: Script, cost, preference of key talent, availability of stage, and potential complexities associated with filming desired action sequences and stunts • Increasing fluidity between TV and movie production jobs helps buffer the workforce from this variability 015 by 015 by TheBoston C

1. A "tentpole" production is a movie or television show that supports the financial performance of a movie studio or television network 2. e.g., looking at the top 100 grossing movies each year '11- '14 vs. '01-'04 , we see a 16% decline in the total number of movies released by the major studios and their subsidiaries, with a 33% decline in movies with budgets <100m © 2 Copyright

Media and Entertainment in NYC-Final.pptx 3 Executive summary (II)

NYC is one of only three cities in the world (along with LA, London) with a filming community large enough to enable a production to be made without needing any roles to be brought in from outside – cast, ATL or BTL1 • In additi on t o mai nst ream prod ucti ons, NYC al so h ome t o a th ri vi ng in die mov ie scene, an d the larges t concentration of documentary production in the US

Other media and entertainment in NYC • Thea tre in NYC has seen a s tea dy upwar d tren d in emp loymen t (2. 1% annua l grow th), an d s trong grow th in revenues (up 5.5% per year 11 to '14) due to diversification of audiences and shows, and cross pollination of stories and acting talent from TV and film • Publishing FTEs (full time equivalents) stabilizing, with 0.4% annualized growth from '11 to '14. Revenues grew 2. 2% per year in the same per io d, due to dig ita l c ircu la tion, pr ic ing, an d inves tmen ts in on line con ten t e.g., v ideo • NYC ad agencies capturing strong growth as their industry consolidates, shifts to digital, with FTEs growing at 5.3% per year, and revenues rising at 11.8% per year from '11 to '14 ll rights reserved. New me diDiitldia: Digital medi a and ent ert tiainment ti in NYC , and vent ure capit itlfal fundi ng AA • 2014 was a blockbuster year for funding of digital media and entertainment in NYC, with ~$1.5B of capital invested • Job growth also driven by expansion of NY offices of big-tech players: Facebook, Twitter, and Google all have a

substantial Sales and Marketing presence in NYC, as well as growing Engineering teams. nsulting Group, Inc. oo

In aggregate, the Media and Entertainment sector remains a highly significant source of revenues and employment for NYC • Employs ~290k FTEs in total, and outperformed overall NYC and US economies through the financial crisis 015 by 015 by TheBoston C • Industry across the US is increasingly aware of challenges of diversity, with stakeholders taking steps to address the issue. But there remains much room for improvement, and an ongoing dialog on the topic will be critical in

ensuing commitments translate into outcomes © 2 Copyright MediaATL = and above Entertainment the line, "creative"in NYC-Final.pptx cast and crew; BTL = below the line crew 4 Defining boundaries of the Media and Entertainment sector Sub-sectors in-scope for NYC market sizing and trends assessment

Other Film an d TV tditiltraditional medi a NdiNew media OtOut-of-scope

Filmed Advertising/PR Digital Music entertainment Includes commercials, TV Includes agencies Includes digital media and Live events shows and films. News (advertising, media buying, entertainment companies, • Concerts included under public relations, promotion, social media, and internet broadcasting and cable digital and direct publishing, both • Sports marketing) established and start-ups Associated Broadcasting Digital arms of traditional subsectors and Cable Publishing media not included realizing Includes all TV stations,

second-order ll rights reserved.

Includes books, AA TV networks, cable Mdi/thVCMedia/tech VC networks, radio stations newspaper, magazines, economic and satellite. Does not news services (AP, and incubators impacts include cable distribution Thomson, Bloomberg) Includes VCs that invest in digital media and have a nsulting Group, Inc. presence in NY oo Included in TV tourism1 Theatre2 employment, Includes tourism Includes Broadway, other not separately specifically driven by TV theatre analyzed shtihow tapings 015 by TheBoston C

Key changes since 2012 report: Inclusion of tourism and theatre. Refocusing of digital section on media and entertainment only © 2 Copyright 1. Based on survey of TV show taping attendees. Includes only tourists citing taping as deciding or important reason to visit NYC. 2. Economic impact as estimated by The Broadway League. Media and Entertainment in NYC-Final.pptx 5 Agenda

1 The TV and movie industry • Economic impact in NYC • Television: – National trends – Productions in NYC – NYC tourism •Movies: – National trends – Productions in NYC – NYC indie scene and documentaries

• NYC talent ll rights reserved. AA

2 Other Media and Entertainment in NYC • Theatre, Publishing, Advertising/PR agencies nsulting Group, Inc. oo 3 New media in NYC: Digital media and entertainment companies and funding 4 Total economic impact of Media and Entertainment in NYC • Diversity in the US media industry 015 by TheBoston C

5 Positioning NYC for the future © 2 Copyright

Media and Entertainment in NYC-Final.pptx 6 1 Multiple reasons productions choose to film in NYC Relative importance of each factor varies by production

Talent Story Lead actor/director NYC often explicitly based in NYC, prefer to featured in stories: film locally, e.g.: • Iconic US urban • Madam Secretary environment, skyline • The Good Wife • Rich real-life history • The Blacklist • A 'walking city', lends itself • Unbreakable to coincidence, storytelling Kimmy Schmidt • Cen ter o f lit era ture, journalism – concentration of storytellers ll rights reserved. AA Crew base, State tax credit Enables NYC to be cost infrastructure competitive with other nsulting Group, Inc. • NYC has quality crew ltilocations, especi illally oo and stage capacity to factoring in other savings: support a great many • Little/no need to fly talent projects per year – e.g., to NYC the city readily hosted • Wide range of 'looks' 015 by TheBoston C 46 TV shows in '14 may avoid relocation costs Copyright © 2 Copyright

Media and Entertainment in NYC-Final.pptx 7 1 NYC filmed production industry has seen FTE growth from 94K to 104K since 2011, bringing dependable year-round employment

Filmed production work in terms of FTEs (full-time equivalents) continues to grow Growth concentrated in TV

NYC FTEs (K) Annual Strong growth in filmed entertainment 120 growth (production), driven by scripted TV '11-'14 3.1% • TV exhibiting consistent growth since 2011 104 renewal of tax credit; growth expected to 101 100 2.1% 97 -3.7% continue through next ~5 years 94 • Crews increasingly able to work all year on 87 88 86 08%0.8% 82 83 productions. Total # employed is stable at 81 1 80 78 78 ~130K, but utilization has strongly increased 72 • Film has been more variable: Strong in 2012 and 2013, with drop in 2014 as fewer ll rights reserved. 60 65%6.5% blockbusters shot in NYC AA

At the corporate level there has been some 40 streamlining of non-creative jobs nsulting Group, Inc. o ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 • Dip in head -office and news jobs at cable o Example companies: networks (e.g., due to backoffice 2 Bravo FOX NEWS COMEDY Cable networks CNN Channel CENTRAL HQ and news consolidation/offshoring of some roles) FTEs only Broadcasting2 4 NEW YORK WCBS-TV NEW YORK THiRTEEN • Broadcast holding relatively stable, at 0.8% 015 by 015 by TheBoston C 1 STEINER AMC TIMES SQUARE annual growth Filmed entertainment Bravo STUDIOS NETWORKS STUDIOS LTD  Incl. content for broadcast/cable

1. Many people in the filmed entertainment industry are short-term employees. 130K total represents 104K FTE jobs, based on latest view of production and employment trends 2. Employees © 2 Copyright engaged primarily in producing taped content are captured under "filmed entertainment". 3. Note that for Filmed Entertainment includes both core production and production relates activities. MediaSource: and BLS Entertainment data, BCG in NYC-Final.pptxanalysis for filmed entertainment. Note: Tax credit introduced 2005; expanded 2008; extended in 2011 through 2019. 8 1 NYC filmed production spending has increased 6.4% per year since 2011, reaching a total of $8.7B in 2014

Filmed production industry Largely due to increased production, spend in NYC also on the rise not cost rises

As with growth in FTE (full time equivalent) Spend ($B) Annual growth employment, spending growth driven by TV 10 6.4% '11-'14 • Proliferation of networks commissioning 8.7 scripted content (2 in 2002, 18 in 2014), as 8 7.8 new platforms fuel competition for audience 7.2 7.3 -13.6% 6.2% • Unscripted has also grown rapidly since 636.3 6.3 606.0 mid-2000s due to reality TV 5.6 6 5.5 5.4 6.6% 4.9 4.6 Decline in spend for commercials 4.2 • Shift toward fewer, high-value productions, 4

with remainder increasinggyly made in house ll rights reserved. AA by advertiser 17.8% 2 NY state tax credit remains a key enabler for production in NYC nsulting Group, Inc. 0 • Prior to incentive , productions would film oo ’02 ’03 ’04’05 ’06 ’07 ’08 ’09’10 ’11 ’12 ’13 ’14 elsewhere, only visit NYC for "beauty shots" • Post-production credit has attracted projects Other productions3 Film TV where primary filming was outside NY state Commercials News4 015 by 015 by TheBoston C Stakeholder interviews suggest 2-3% annual cost inflation across production types Copyright © 2 Copyright Source: BCG analysis for filmed entertainment Media and Entertainment in NYC-Final.pptx 9 1 Nationwide, we see strong shifts in filmed entertainment toward scripted television series

Multiple changes in TV networks competing for audience by how viewers experience TV investing in high quality scripted content

Content & channel "There's a drive for content because of the cable fragmentation and internet platforms that didn' t exist before " • TV studio executive

Connected TVs "We've learned that... a [Netflix] viewer is going to watch, on average , 2½ episodes a night" • Cindy Holland, VP of Original Programming, Netflix1 Place shifting "The quality of TV has increased tremendously ll rights reserved.

because the content for mid -budget films is now AA on TV; that's where the audience has gone" Multi-screening • Film studio executive "With so much high-end scripted content, talent is nsulting Group, Inc. ffflowing freely between film and TV... no longer oo Time shifting segmented between the two" • Film location manager

Media1. As citedand Entertainment in The Hollywood in NYC-Final.pptx Reporter. 10 1 Several US cable networks, online platforms have recently commissioned original scripted content for the first time

Timeline of origgpinal scripted content creation ( nationwide, with illustrative show titles)

20102011 2012 2013 2014 2015

Mozart Amazon Alpha In The Jungle The Man In House The High Instant Video Castle ee The A Hulu Original Battleground Deadbeat East Los hulu Awesomes High

Onlin Unbreakable House Of Orange Is Marco Kimmy The New Schmidt NETFLIX Cards Black Polo Marvel Daredevil Girlfriend’s Bravo Guide To Divorce Odd Mom

1 From Steven Soderbergh Out CINEMAX1 Hunted Banshee The Knick etworks ll rights reserved. AA nn Teen MTV Awkward Faking It Finding Wolf Carter 2 Da Vincis's starz Torchwood Boss Power Miracle Day Demons nsulting Group, Inc. isting cable isting cable oo xx FiFriend s Of TV tru The People

Pre-e Hot In Happily Younger Tvland Divorced Kirstie Laugh More Cleveland 015 by 015 by TheBoston C Scripted content seen to "anchor" a channel's lineup by creating loyalty among viewers/subscribers Copyright © 2 Copyright

1. Excludes Max in the Dark and Strike Back (since it aired first in the UK) 2. Half-hour and longer programming. Media and Entertainment in NYC-Final.pptx 11 1 US scripted shows shifting towards shorter seasons Short-run content originally limited to cable, but broadcast now also introducing short-run shows

'TV Guide ' highly-anticipated debut shows in 2009 and 2014 - National, not specific to NYC productions

2009 2014

The Accidentally Flash CBS Cleveland FOX Community NBC abc 'Black.Ish abc Cristela abc The Flash Gracepoint NBC On Purpose forward Show The Cougar Melrose The Mysteries abc abc Thegoodwife CBS THE CW FOX THE CW Forever abc Gotham Full-length Forgotten Town Place Of Laura Ncis: Ncis: season Glee FOX Mercy THE CW The Middle abc CBS MarrymeNBC Madam Secretary CBS CBS New Orleans New Orleans The Vampire JThJane The Modern Family Trauma Stalker CBS THE CW Scorpion CBS abc NBC V abc Diaries THE CW Virgin

How To Bad The Get Away NBCConstantine NBC CBS Short-run Judge Mccarthys With The Beautiful Murder season Life THE CW Red Band State Of ll rights reserved. abc FOX NBC MlMulaney FOX AA (broad cast) Society Affairs

Short-run The Affair SHOWTIME Happyland MTV Houdini Bored To H BBC HBO White Collar usa Intruders Kingdom season Death HISTORY AMERICA nsulting Group, Inc. Survivor's oo (bl)(cable) D starzZ Nation Syfy DIRECTV Remorse

Several cable networks sponsoring original scripted content for the first time (e.g . History , Starz , Syfy) 015 by TheBoston C

Note: Full-length season is defined as 18 episodes or more; short-run seasons are fewer than 18 episodes. © 2 Copyright Source: TV Guide 2009 and 2014 Fall TV Previews. Media and Entertainment in NYC-Final.pptx 12 1 National trends reflected in NYC TV productions

NYC seeing more scripted shows ... produced and produced, esp. short-run seasons... distributed by more networks

# scripted shows produced in NYC Networks sponsoring NYC-produced scripted TV

50 20 Long-run series hulu Amazon 46 shows in instant video Short-run series 2014 Starz 40 MTV Blue Bloods 15 Tvland CINEMAX Royal Pains TNT 30 NETFLIX NETFLIX VH1 Bravo

Thegoodwife 10 COMEDY COMEDY COMEDY CENTRAL CENTRAL CENTRAL 20 AMC FOX tru tv

FOX USA FOX ll rights reserved. A The A FOX USA HBO USA Affair 5 HBO HBO FX HBO 30 Rock FX FX THE CW FX 10 THE CW THE CW SHOWTIME SHOWTIME Hope & Faith Nurse Power Jackie FOX CBS SHOWTIME SHOWTIME CBS CBS Rescue Flight Of The HBO NBC NBC NBC CBS NBC NBC Law & Order

Me Conchords Girls NBC abc abc abc NBC abc abc nsulting Group, Inc. 0 0 oo ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’02 ’04 ’06 ’08’10 ’12 ’14

# scripted 11 12 11 17 15 18 23 20 21 24 27 29 46 # networks: 2337101219 shows: 015 by 015 by TheBoston C

Note: Full-length season is defined as 18 episodes or more; short-run seasons are fewer than 18 episodes. Shows listed on left-hand-side graph are illustrative only. © 2 Copyright Source: MOME permit data. Media and Entertainment in NYC-Final.pptx 13 1 NYC TV production FTEs and spending has increased substantially since 2002, accelerating since 2010

Both scripted and unscripted TV have seen FTE (full ... with similar increases in total time equivalent) employment grow... production spending

Annual Annual Tot al NYC FTE s (K) growth TtlNYCTotal NYC spen d($M)d ($M) 17.0% growth '11-'14 '11-'14 40 5,000 4,696 14.8%

31 4,000 6.9% 3,718 30 15. 6% 4.8% 3,470 25 23 13.4% 2,931 3,000 2,595 2,495 20 1,967 2,543 20 19 1,608 2,067 18 18 2,129

16 16 1,688 ll rights reserved. 15 20002,000 AA 13 14 13 1,611

10 15.6% 17.8% 1,000 Scripted nsulting Group, Inc. oo 0 UitdUnscripted 0 ’02’03 ’04 ’05 ’06’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’02’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14

The Real Minuto Para Blue Bloods The Daily Show Scripted: 1hr dramas , Unscripted: Talk shows, reality shows, WITH JON STEWART Housewives Ganar 015 by TheBoston C OF NEW YORK CITY 30min series e.g.: The Good Orange Is The game shows and other types e.g.: Girls Bethenny America's got Wife New Black Wendy THE WENDY WILLIAMS SHOW Talent

Source: MOME permitting and city incentive application data; BCG Filmed Entertainment model. Spending estimates include 2-3% annual inflation. © 2 Copyright Media and Entertainment in NYC-Final.pptx 14 1 Increase in TV production has provided opportunity for crews to work year-round by combining projects

TV ppgyroduction once highly seasonal – now a year-round jjyob for many Jan Orange Is Jan Allegiance The New 2000 2014 Black Power Oct April Law & Order Alpha Special Victims Unit House

Law & Order Oct April Third Watch July

Most shows produced on established TV Thegoodwife season, standardized across networks, Boardwalk Empire leaving crews with gaps between projects Girls July

Film/TV Outside work / More 8-12 episode shows (e.g. Power, Girls – 10 eps. each), vacation departure from established TV season allow crew to combine

TV show examples are illustrative only. projects into year-round employment ll rights reserved. AA Year-round filming schedule offers crews stability, even drawing talent from feature films

" Having so much work here, and getting more " TV has moved beyond formulaic content – " Right now TV is so hot, it's easy for people

emppyloyment per year, makes [[]film/TV] more of a because of how many writers, directors, nsulting Group, Inc. to work on show after show" oo 'real job' and a sustainable life in New York" and producers are moving from feature • TV producer • TV producer films into high-end TV" • Broadcast network executive

1 FTE growth has primarily manifested in greater utilization of 015 by TheBoston C crews – total number of people employed stable at 130K

1. FTE = full-time equivalent (annualized). For example, a position requiring one person, fully committed, for 3 months would be 0.25 FTE. © 2 Copyright Media and Entertainment in NYC-Final.pptx 15 1 Growing churn in TV requires continued effort to attract pilots – as almost all shows stay in city where pilot was filmed

TV show 'churn' increasing: Higher Almost all shows stay in pilot city; NYC turnover results in more pilots each yr is second only to LA, but room to grow

TV series survival rate1 , % # broadcast pilots3 Almost all successful ~5% 100 100 pilot s st ay i n same cit y4

Move to new location Stay in pilot location 80 80 ~95%

Broadcast TV pilots, 2012-20143 60 60 150 ~130

As fewer shows survive, need to

40 40 ll rights reserved. attract more pilots to maintain level 100 AA of TV production in NYC Series survival ~60 20 20 Pilots 50 ~30 ~20 nsulting Group, Inc. oo 0 0 0 ’08 ’09 ’10 ’11 ’12 ’13 ’14 LA New York Vancouver Other

Attracting pilots key to future health of NYC TV industry 015 by TheBoston C

1. "Survival rate" defined as the % of shows on air in a given year that were/will be on air the following year. Source: MediaRedef, originally from SNL Kagan/FX Research/NY Mag. 2. Source:

TV by the Numbers. 3. Source: The Hollywood Reporter pilot season roundup (broadcast only). Chart of pilots by location includes only pilots for which a filming location was available (~80% © 2 Copyright of total pilots). 4. Comparison of final filming location to Hollywood Reporter pilot location Media and Entertainment in NYC-Final.pptx 16 1 Live filming attracts many tourists to NYC; most are day- trips, but overnight visitors typically stay 3-5 nights

% from outside NY metro varies Most "show tourists"1 are daytrippers from significantly across shows surveyed region, but some do travel from rest of US

% by area of origin % of total audience 100 80 NY metro Show not a deciding reason for visit to NYC Within region "Show tourists": Show was important or deciding 80 (NYS/NJ/CT/PA) reason to visit NYC Other US 60 International 60

40 2 29 40 ll rights reserved. AA

20 37 20 22 9 nsulting Group, Inc. 0 0 1 oo Today Late The Saturday Show Tonight Night Live NYS/NJ/CT/PA, Other US International With Show incl. NY metro David Starring Letterman Jimmy Typical length 3-5 7+ Daytrip 015 by TheBoston C FllFallon of stay: nights days

1. "Show tourists" are tourists who indicated that their trip is entirely or mainly for the purpose of seeing the live taping. Today, Tonight, Letterman, SNL results weighted to reflect total mix of

shows taping in NYC, based on genre and ticketing policy (how far in advance tickets are issued, whether admission is guaranteed, etc.). © 2 Copyright Note: SNL includes dress rehearsal and live show. Media and Entertainment in NYC-Final.pptx 17 1 TV audiences generate ~$45M in tourist revenue for NYC Conservative estimate of revenue generated from visitors who come to NYC to watch filming

14 shows filmed live in NYC, with ~575k total yearly audience...... stimulating ~$45M tourist spending

Studio Shows / Annual Assuming TV show attendees spend on par 1 audience year audience with other "cultural tourists": Letterman 460 190 87,400 • ~$250/day for international overnight SNL 330 22+223 14,520 visitors, $375/day for domestic overnight Tonight 290 190 55,100 visitors, $30/day (conservative assumption) for daytrip visitors4 Today ~2002 260 ~52, 000 Rachel Ray 120 190 22,800 Survey of audience members indicated that Wendy Williams 150 190 28,500 show was important or deciding factor for 4 Dr. Oz 180 190 34,200 ~50% of out-of-town visits ("show tourists") ll rights reserved.

• ~280k additional tourist-days AA Daily Show 200 190 38,000 – ~110k overnight visitors, ~170k day-trips GMA ~200 260 ~52,000 • $45M total additional tourist spending as The View 185 190 35,150 a result of TV show tapings nsulting Group, Inc.

The Chew 155 190 29,450 oo Does not include ~50% of out-of-town visits Late Night 290 190 47,500 for which M&E was a factor in choosing Kelly & Michael 230 190 43,700 NYC, but not a critical one Meredith Vieira 180 190 34,200 • Including many overnight visitors, as most 015 by 015 by TheBoston C Total ~575k day-trippers indicate M&E is deciding factor

1. Standard assumptions used to compute number of episodes. SNL based on permit data. 2. Estimated average. 3. SNL has 22 performances, plus 22 dress rehearsals (with separate audiences) 4. Excludes attendees from within the five boroughs, who are not counted as "out-of-town". © 2 Copyright

Media and Entertainment in NYC-Final.pptx 18 1 In movies, across the industry we see concentration of dollars into large 'tentpole' productions

7X growth in dollars spent on $150M+ budget As a result of piracy and movies in 2011-2014 vs. in 2001-2004 internationalization

Piracy risk increases pressure Total budget ($B) spent on top 100 grossing movies to generate revenues early at per year, 2001-2004 vs. 2011-2014, sp lit by bu dge t s ize box office 10 • Audiences more likely to go 2001-2004 8 watch 'tentpole' movies in 2011-2014 8 theaters vs. at home • Studios could previously rely 6 on home video revenues, 5 5 4 4 eroded by piracy

4 3 ll rights reserved. 3 3 AA 3 International audiences, 2 2 2 2 1 especially Asia, highly receptive 1 to movies with strong VFX

0 • >50% of revenues now nsulting Group, Inc. oo $0M- $25M- $50M- $75M- $100M- $125M- $150M+ generated overseas $25M $50M $75M $100M $125M $150M Industry shifting away from % change -9% -5% -27% -29% +32% +54% +697% midsize movies 015 by 015 by TheBoston C Total change '01-'04 vs.'11-'14 • Typically romantic comedies, dramas Copyright © 2 Copyright Source: IMDB, BoxOfficeMojo, BCG analysis Media and Entertainment in NYC-Final.pptx 19 1 National movie industry also "de-risking": dollars flowing into sequels and widely recognized characters, stories

Strong growth in dollars spent on movies with To enhance probability of comic book/other known concepts in '11-'14 vs. '01-'04 large box office sales

Total budget dollars ($B), for top 100 grossing movies per year, Concentration of movies in 2001-2004 vs. 2011-2014 Remake 'known concepts' already 15 Sequel underway a decade ago First time in a movie • Harry Potter, Lord of the Rings series both released from 2001 10 10 10 9 • Resulted in large share of 8 production dollars in 'hit books'

5 2011-2014 has seen significant 5 4 expansion of this trend

3 ll rights reserved. • Diversification beyond books , AA 1 into comic book characters New concept Hit book Popular comic Other known concept and other known concepts Story/characters e.g., Harry e.g., Spider-Man e.g., TV, video game, historic e.g., Lego Movie, Ninja Turtles nsulting Group, Inc. notkt known Potter, Hunger event, or sequel/ remake of oo Overall growth in share of audience prior Games 'new concept' movies (Lara to movie Croft, Smurfs, Noah, Dumb & spend on sequels/remakes vs. e.g., Dumb & Dumber To) first-time productions Dumber Concept familiar to audience • e.g., from 43% to 58% of 015 by TheBoston C comic movie dollars; 64% to % change -11% -23% +121% +34% 75% for 'other known concept'

Total change '01-'04 vs.'11-'14 © 2 Copyright

MediaSource: and IMDB, Entertainment BoxOfficeMojo, in NYC-Final.pptx BCG analysis 20 1 NYC film production costs and FTEs (full time equivalents) more variable than for television

NYC film production has ...as market segments between been variable during the period... bigger blockbusters and low budget films

Shift in movie industry toward small number Production spend ($M) FTEs (K) of blockbusters and more low-budget indies 2,000 12 • Fewer mid-budget films (esp. romantic -13.6% 6.1% comedies), as studios squeeze budgets 10 • Talent, content shifting to TV 1,378 1,402 1,450 1,500 13111,311 1,360 ... results in wider year -on-year variation in 1,262 1,257 8 1,044 1,064 movie production spend in NYC • NYC filming typically dependent on1: 866 1,000 824 846 902 6 – Whether scripts ask for urban location2 ll rights reserved.

3 AA -8.6% – Ratio of ATL vs . BTL costs 5.3% 4 – Preference of key talent to film in NYC 500 – Stage availability, given increased TV 2 production in NYC nsulting Group, Inc. – Ability of production team to work around oo the complexities of filming action 0 0 ’02’03 ’04 ’05 ’06 ’07 ’08 ’09 ’101 ’11 ’12 ’13 ’14 sequences and stunts in NYC <10M >50M Spend FTE Some biggp films expected to film in NYC in '15 015 by TheBoston C $10M-$50M FTEs growth rate growth rate • e.g. Ninja Turtles sequel

1. Omits tax credit, assumed to remain stable .2. With notable exceptions e.g., 'Noah', 'This is Where I Leave You'. 3. ATL costs not eligible for tax credit. Source: MOME permitting and city incentive application data; BCG Filmed Entertainment model © 2 Copyright Media and Entertainment in NYC-Final.pptx 21 1 Production related activities also an important source of jobs in NYC, contributing 37K toward the total 104K FTEs

Production related FTEs (full time ...compounding the importance of a equivalents) grew 14% since 2011... strong NYC filmed production industry

Total NYC FTEs (K) Production related jobs include all direct +14% supporting functions for film production 40 37 37 • E.g. equipment rental, transportation, 35 construction, costumes, laundry, direct food 35 33 31 service, etc., often provided by small 29 30 30 28 28 27 businesses. 26 25 25 24 104K FTEs employed by the NYC filmed 20 Production entertainment industry in 2014 includes both

related ll rights reserved. direct employment on a production, as well AA 15 as these 37K production-related FTEs 10 This does NOT take into account the vast 5 nsulting Group, Inc. indirect spend film brings to the city which oo 0 further compounds the industry impact ’02 ’03 ’04’05 ’06’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 • e.g. tourism, restaurants, hotels, etc. 015 by 015 by TheBoston C

Note: Production-related employment estimated by MPAA. Since not direct employment, excluded from BCG RIMS analysis.

Source: Production related jobs calculated based on MPAA methodology for NYS, conservatively estimating that NYC's share of state production-related jobs matches its share of direct state © 2 Copyright production jobs. Media and Entertainment in NYC-Final.pptx 22 1 In addition to 104K direct production and production- related FTEs, filming supports ~20K NYC jobs indirectly

After a production spends money in NYC, that money continues to ripple through NYC' s economy – creating more economic activity and FTEs (full time equivalent jobs)

~$8.7B spent on NYC NYC vendors, crew in turn spend money on food, ...generating additional producti ons i n 2014 rent, products (some in -city, some outside) – emplltiNYCoyment in NYC $$ circulates through NYC economy...

• In-town BTL crew • In-town ATL talent Indirect • Catering support of • Stage rental ... additional • ... Inside NYC ~20k FTE Crew member Deli owner pays Landlord pays 1 ll rights reserved. jobs in NYC AA Direct support of buys lunch in rent in NYC... NYC college... ~100k FTE (full time NYC... equivalent) jobs nsulting Group, Inc. o o Outside NYC • Out-of-town ATL talent ... which includes ... and pays ... and takes a • Out-of-town BTL crew fruit from Long federal taxes vacation outside • ... Island New York City 015 by 015 by TheBoston C

1. FTEs calculated using RIMS II Type I jobs multiplier (jobs-for-jobs), counting only direct employment (excl. production-related employment) and film ATL. Note: Type I RIMS II multipliers used, as wages likely inflexible in short-term due to union contracts. Detailed industry multipliers compiled using 2002 Benchmark Input/Output Table and 2010

regional data (most recent detailed industry multipliers available from BEA). © 2 Copyright Source: Bureau of Economic Analysis (Dept. of Commerce), RIMS division. Media and Entertainment in NYC-Final.pptx 23 1 Indie scene is a key differentiator of NYC filmed production Key contributing factors of flourishing indie scene in NYC – from interviews with industry leaders

Strong indie community Increasing affordability

Close knit group, with an indie 'mentality' Reduced cost of technology • "Not competitive, people willing to help" • Previously needed lighting crew, grips, etc. - less essential with new equipment Distant from commercial lens of LA • Distribution, access to audience is now the key challenge • "If you're in LA, you're signaling you want to be in the studio • "It's relatively easy to pull together a group of your friends and system; NY makes movies for ototherher reasons: art , storytelling , shoot something" festivals, critical acclaim"

"...indie productions can access the same "LA is consumed with the business of exterior locations, same city 'energy' as a $100M productions; NYC can focus on the craft" blockbuster" – NYC producer – Union leader

Support from NY organizations Potential route into mainstream ll rights reserved. AA Festivals and awards: Tribeca, Gotham Awards, New York Film Some make a career from indie, prefer the "honesty" of the Festival, NYC doc small-production world • e.g., Patricia Clarkson IFP labs and co-production market ...but many use independent movies as a chance to acquire nsulting Group, Inc. State and cit y s upport : State ta x credit ; MOME Permits and proven skills , as a path into unions oo location advice, Made in NY Media Center and location library

Film schools: High quality training "Indie movie industry... used as 'farm team' by major studios, to test out talent"

Media and Entertainment in NYC-Final.pptx 24 1 ...and NYC dominates the US documentary industry Particularly strong concentration of documentardocumentaryy production companies in Brooklyn Heights/DUMBO

Number of nominations received by production companies headquartered in each city, for feature-length documentaries, at a selection of top-tier US award ceremonies, '11-'14: Academy Awards, Tribeca, Sundance, AFI docs1

B B Europe A Sweden 3 1 Finland Netherlands 8 Denmark 9 1 Lithuania C UK 24 1 Poland 5 2 Germany Belgium 11 1 Serbia 10 Unknown France 1 Georgia Manhattan/ 2 Switzerland A US Brooklyn 3 Israel

S. Portland 1 Qatar Canada 4 1 Cambridge 1 1 Seattle Boston 3 C Asia/Australasia Georgetown 1 1 2 Newark 5 3 Other NY 1 St. Paul 1 Philadelphia 1 1 1 Korea 1 1 China ll rights reserved. Pittsburgh 1 1 1 1 AA Wilmington 3 8 Chicago 4 1 1 Baltimore 2 5 3 1 Sacramento 2 DC 5 Cincinnati 1 4 1 1 India 7 Berkeley 3 Boulder Columbia Silver Spring 5 1 3 2 2 1 9 San Francisco Wichita 2 Louisville Durham 3 96 1 2 3 1 Philippines 1 Las Vegas 13 2

1 nsulting Group, Inc.

48 Athens oo New York 3 2 1 1 Dallas 1 City 7 Los Angeles / New Orleans Santa Monica/ Austin 3 1 Venice 1 1 Melbourne Houston 2 Miami Beach 1 Australia 3 2 US, state unknown 015 by TheBoston C New Zealand 2 11 In NYC, unknown ZIP 1. First listed production company only; Some films nominated for multiple awards (e.g., in 2014: 1971, Dinosaur 13, Ivory Tower, The Overnighters, Virunga were selected twice). Each Copyright © 2 Copyright nomination counted separately Media and Entertainment in NYC-Final.pptx 25 1 Abundant local talent in NYC: Deep crew base and few remaining gaps in post production. ATL varies widely by project

Response from expert interviews Well established base of local NYC producers, directors, actors • While ~70% of ATL is typically based in LA, NYC is home to most of the remainder of US ATL talent • Strong film schools, Broadway provide a steady flow of future talent for NYC • Out-of-town ATL typically relocates to NYC on a semi-permanent basis for television productions – "Not hard to convince people from elsewhere to come to New York" • ATL talent moving more fluidly than ever between film, TV, and commercials Writing is a key role remaining strongly LA-centric (outside of comedy/variety) Above the line • Small share of sitcom/episodic TV – with exceptions, e.g.: Boardwalk Empire, Blue Bloods, 30 Rock • Perceived lack of 'critical mass' of TV writers in NYC – many feel need to move out West "to make it" • Studios can be reluctant to locate writing rooms away from LA-based creative executives

Even with 46 TV shows, multiple movies in 2014, talent pool broad enough to staff crews locally ll rights reserved.

• Greater demand for crews, but still possible to pull together a world class team AA • A limited number of roles typically less abundant in NYC, e.g. senior construction coordinators, production designers, mechanical effects (typically come from LA for big movies) Below the line Possible to pull from Broadway talent too, as required nsulting Group, Inc. Post production in NYC reaching scale, as a result of tax credit oo • Strong multidisciplinary skills in NY due to co-location of commercials, branded content • Post production is agnostic of where principal photography occurs; driven by location preference of director. Growth of directing talent in NYC therefore benefits NYC post production industry • Can be challenging to find senior freelance supersupervisorsvisors at present, but talent expected to scale 015 by TheBoston C Post – by rising through the ranks, as well as relocating from other cities production • Movies/TV increasingly reliant on VFX; talent expected to grow in near term, e.g. from SUNY Buffalo Copyright © 2 Copyright

Media and Entertainment in NYC-Final.pptx 26 Agenda

• NYC talent ll rights reserved. AA

2 Other Media and Entertainment in NYC • Theatre, Publishing, Advertising/PR agencies nsulting Group, Inc. oo 3 New media in NYC: Digital media and entertainment companies and funding

4 Total economic impact of Media and Entertainment in NYC • Diversity in the US media industry 015 by TheBoston C

5 Positioning NYC for the future © 2 Copyright

Media and Entertainment in NYC-Final.pptx 27 2 Strong growth in Broadway grosses, and steady upward trend in overall theatre employment

Theatre employment, Broadway ticket ...Fueled by effort to expand audience, revenues rising steadily... with new and varied content

NYC FTEs (K) Broadway gross ($B) Theatre, incl. Broadway, continues steady 16 2.5 Annual 21%2.1% ggpyrowth in employment and revenue growth • Employment growing steadily 1.3% 14 13 13 '11-'14 13 13 13 13 • Strong growth in ticket revenue 12 2.0 12 12 12 2.0% 12 11 11 – Revenue outpaces growth in attendance – Efforts to attract new audience ppyayin g 5.5% 1.5 off, e.g. ¡Viva Broadway! 8 5.9% Cross-pollination with filmed entertainment 1.0 2.1% helps both industries connect with audience ll rights reserved. • Famili ar actors, stor ies, c haracters from film AA 4 0.5 or TV help attract new audiences, e.g.: – Disney, Matilda bring children/families – Rocky appealed to men, sport fans nsulting Group, Inc. 0 000.0 – Stars (e.g. Ne il Pa tr ic k Harr is ) do oo ’02 ’03 ’04’05 ’06 ’07 ’08 ’09 ’10 ’11’12 ’13 ’14 limited-run Broadway, attract fans to Other theatrical FTEs shows – a trend initiated by '07-08 Dance company FTEs FTE Revenue writers' strike 015 by 015 by TheBoston C Theatre FTEs growth rat e growth rat e • BdBroadway s hows a dtdfdapted for screen, e.g. Broadway grosses August: Osage County; Jersey Boys

Source: BLS (employment data), The Broadway League (Broadway ticket revenue). Note: BLS data includes direct employees of theatre and dance companies; it does not include other © 2 Copyright ancillary industries (e.g. orchestras, law firms, accountants, advertising agencies), even if primarily focused on the theatre industry. Media and Entertainment in NYC-Final.pptx 28 2 Publishing jobs in decline, revenues recovering slowly as industry shifts to digital

FTEs still declining 2011 to 2014, but ... as digital revenues offset less sharply than in 2002 to 2010... contraction of print sales and ads

NYC FTEs (K) NYC revenues ($B) Persistent challenges for industry with shift 80 55 Annual away from print sales and traditional 50 growth advertising 70 -2.0% '11-'14 45 • Advertisers, readers shift to digital, mobile – -0.4% 60 56 though print players remain most trusted 55 54 54 55 56 40 53 51 providers of content, even in digital space 48 35 50 46 47 46 45 • Newspaper revenues have recovered 30 -17.0% 40 somewhat since 2011 due to online 25 -2.1% subscriptions, but magazine revenues 30 20 2.2% 1.9% continue to fall ll rights reserved. AA 20 1.6% 15 10 NYC employment affected by backoffice 10 -2.1% consolidation, may be further impacted if 5 digital acquisitions made outside of NYC nsulting Group, Inc. 0 0 • Central functions moving to low-cost areas oo ’02’03 ’04’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 or offshore; executives stay in NYC Avg salary 83 88 91 95 101 106 112 106 108 115 120 123 140 • Future acquisitions in digital will likely ($K) 1 operate from their original location vs. be Other publishing FTEs Magazine FTEs 015 by TheBoston C relocated. Many already in NYC, but others Newspaper FTEs Total revenues Book FTEs FTE Revenue in Silicon Valley

growth rate growth rate © 2 Copyright Source: BLS (FTE, salary data); AdAge, NAA, MPA, Bookstat (revenue data) 1. "Other publishing" includes mailing lists/directories, phone books, calendars, etc. Media and Entertainment in NYC-Final.pptx 29 2 Advertising/PR agencies continue to shift jobs to New York amid slow national recovery

Ad FTEs (full time equivalent jobs) have ...As agencies evolve their grown despite lower traditional ad spend offering toward digital, mobile

NYC FTEs (K) NYC revenues ($B) Strong growth in digital has offset flat or 80 22 Annual slightly declining market for print, TV ads growth 5.3% 20 70 64 '11-'14 US ad industry expected to remain strongly 2.3% 62 18 60 59 concentrated in NYC 54 55 16 3.8% 51 51 51 • Most new specialist digital agencies arising 49 50 47 14 44 44 45 1.9% in New York vs. Silicon Valley 12 40 11.8% • New services e.g., programmatic buying 10 benefit from access to finance trading talent 30 8 ll rights reserved. AA 5.7% Agencies capturing growth by buying digital 20 6 5.3% 4 firms, or building capability in-house 10 • Clients seeking holistic offering spanning 2

traditional and digital, vs. multiple partners nsulting Group, Inc. 0 0 – This benefits the major agencies of NYC oo ’02 ’03 ’04’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 • Strong job market in digital intensifying in Avg salary 93 96 99 105 107 111 113 109 115 119 120 123 132 recent years. Main gap is senior leadership ($K) (10+ years digital experience), as many in 015 by 015 by TheBoston C Oth er FTE s TlTotal revenues that era left to join dot coms PR agency FTEs FTE Revenue Ad agency FTEs growth rate growth rate Copyright © 2 Copyright Source: BLS, SNL Kagan, MOME Bookstat, MMA and BCG analyses Media and Entertainment in NYC-Final.pptx 30 Agenda

• NYC talent ll rights reserved. AA

2 Other Media and Entertainment in NYC • Theatre, Publishing, Advertising/PR agencies nsulting Group, Inc. oo 3 New media in NYC: Digital media and entertainment companies and funding

4 Total economic impact of Media and Entertainment in NYC • Diversity in the US media industry 015 by TheBoston C

5 Positioning NYC for the future © 2 Copyright

Media and Entertainment in NYC-Final.pptx 31 3 2014 was a blockbuster year for digital media funding in NYC ~$1.5B invested . Growth primarily coming from increase in valuations, vs. number of deals

Media & Entertainment venture capital ... with NYC investments increasing sharply... capturing greater US share

Ven ture C apit itlMdial Media an dEttid Entertainmen tit inves tmen ts ($M) %f% of annua lil inves tmen ts

6,000 5,748 80

Other LA NY 60 4,000 Silicon Valley 1,549 Silicon Valley

2,972

40 27% of national ll rights reserved. AA total in 2014 2,317 2,267 2,072 2,000 1,845 1,763 NY 1,506 1,512 526 1,347 20 1,178 Other 591 345

240 nsulting Group, Inc. 697 257 249 oo 621 271 9% of national total in 2002 LA 0 0 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 015 by 015 by TheBoston C Copyright © 2 Copyright Source: PWC MoneyTree and Crains NY business, Gridley NY Digital Medias Media and Entertainment in NYC-Final.pptx 32 3 double click

NYC' s digital and technology landscape TACODA

Activity 2007 2008 2009 2010 2011 2012 2013 2014

Yipit Shutterstock betaworks BUDDY MEDIA MediaMath Raised $100M IPO, $77M foursquare art.Sy TREMOR Digital is founded appnexus bit.ly Raised $500M StackExchange VIDEO Vice from A&E Series A companies IPO, $75M Tumblr. Open RENTHERUNWAY Raised founded or Raised Sky Qiurky appnexus $110M SiSeries A SkillSlate $50M funded hunch fotolia from WPP Raised $150M LEARNVEST FanDuelRaised $70M from KKR

Google / YAHOO! salesforce Tumblr. double click ($3.1B) AOL interclick YAHOO! Adobe fotolia THE BUDDY MEDIA ($800M) HUFFINGTON ($264M) $1.1B Key digital ($745M) Comcast Comcast POST j2 acquisitions YAHOO! / rm ($680M) ($315M) Google Zynga OMGPOP DAILY ZIFF DAVIS rocketfuel [x+1] ($125M)NBC UNIVERSAL ($30B) ($183M) AOL / TACODA ($275M) CANDY Admeld ($165M) ($235M) ($400M) ll rights reserved. Ongoing, expansion AA IAC Big tech techstars twitter facebook of big-tech in NYC Announces Google actions announces spin-offs of officially opens Google facebook twitter comes to first non-CA Interval ticketmaster Googleplex in open NYC offices New York office to open leisure New York City Rapid growth in 'we work' offices, providing in NYC

group HSN tree.com space and community to NYC startups nsulting Group, Inc. oo wework

Mayor releases NYC creates NYC Digital MEDIA NYC MediaNYC City-funding of first ever roadmap and Technion CENTRE support 2020 initiatives start-up 'Chief Digital announces announced incubators Cornell University Officer' $100M grant for Opening of the Made in 015 by TheBoston C Cornell and position Applied Sciences NY Media Center by IFP, Technion Research in Brooklyn Campus selected Copyright © 2 Copyright Source: Gridley's Guide to Digital NY, CB Insights, CapIQ, AGC Partners, MOME Media and Entertainment in NYC-Final.pptx 33 3 Influx of startup funding and continued growth of big tech have fueled expansion of digital media & entertainment in NYC

Acceleration of growth in digital media and entertainment employment Trends driving NYC figures

Proximity to traditional media provides inherent NYC digital media and advantage for digital media and entertainment entertainment FTEs (K) • e.g., strong links to revenue generation, as 21.7 22 marketing dollars still channeled through NYC- +23% based agencies 20 18.1 18 Continued gggrowth of 'big tech' in NYC • Google, Twitter, Facebook attracting top 16 15.1 engineering talent from across the US 14 • NYC offers alternative to tech monoculture in +13% 11.8 12 11.1 Silicon Valley ll rights reserved. 10 AA 7.9 Over 6000 startups in NYC, of which ~450 are in 8 7.4 6.6 media and entertainment 6 5.2 • NYC particularly strong in ad tech, marketing tech 4.1 4.0 4.0 4.5

4 and editorial content nsulting Group, Inc. oo 2 • Continued potential for growth, as business models evolve to link content and revenues 0 • Incubators and programs like Cornell Technion ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10’11 ’12 ’13 ’14 helping to grow talent pool – but continued efforts requidtired to reac hlh leve lfStfdl of Stanford – BklBerkeley – 015 by TheBoston C Silicon Valley Copyright © 2 Copyright Source: Digital.NYC, BLS, Gridley report, SNL Kagan and BCG analysis Media and Entertainment in NYC-Final.pptx 34 Key chapters of 2015 report

• NYC talent ll rights reserved. AA

2 Other Media and Entertainment in NYC • Theatre, Publishing, Advertising/PR agencies nsulting Group, Inc. oo 3 New media in NYC: Digital media and entertainment companies and funding

4 Total economic impact of Media and Entertainment in NYC • Diversity in the US media industry 015 by TheBoston C

Media and Entertainment in NYC-Final.pptx 35 4 In aggregate, ~290k FTEs (full time equivalent jobs) employed across the media sector in NYC

NYC media sector has grown in ... with growth concentrated in terms of employment and salaries ... three sectors

Annual NYC media sector seeing strong NYC FTEs (K) growth growth in filmed entertainment, '11-'14 400 digital media , and advertising 350 3.3% 1.5% Filmed entertainment continues to 300 279 287 266 22.6% 258 252 261 grow strongly, led by TV 241 249 249 250 229 225 224 235 -0.5% 200 4.7% NYC a significant center of digital media and entertainment 150 6.5% employment ll rights reserved. 100 • Fueled by rising VC investments , AA -1.6% 50 and expansion of big tech 4.1% presence e.g., Facebook, Twitter 0

’02 ’03’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 nsulting Group, Inc. Salaries continue to grow, with oo Avg NY media 85 89 93 98 102 107 110 107 111 111 113 116 129 NYC significantly above national salary ($K)1 Avg US media average in media industry 54 56 59 61 64 69 71 72 75 79 83 89 92 salary ($K)

Digital Filmed entertainment 015 by TheBoston C FTE Cable and broadcasting Publishing and news growth rate Advertising Other2

1. Digital media and entertainment not included in national/NYC salary data, as figures not available 2.Includes theater © 2 Copyright Source: BLS data, BCG analysis Media and Entertainment in NYC-Final.pptx 36 4 Since 2011, NYC has generated 50% of US media sector employment growth

US media sector has created ~50k Subsector shift has helped NYC jobs; ~25k (50%) in NYC ('11-'14) overcome nationwide decline

Nationwide, media sector has shed jobs, % NYC NYC job while NYC continues to hire jb/ttlUSjobs/total US 2002 2011 2014 l growth • NYC has gained share of US jobs across all 2 jobs since '11 sub-sectors Filmed ent. 11.2% 12.2% 14.0% 21% Strong growth in TV generates consistent Advertising 12.4% 13.0% 17.4% 15% strength in filmed entertainment, despite variability in movie production Broadcasting 8.2% 10.5% 10.6% -1% and cable

Salary growth across all NYC media sectors, ll rights reserved.

Publishing and AA 7.7% 9.5% 10.3% -5% news even in sectors that have cut jobs (e.g. print publishing) Total 9.4% 10.8% 12.5%

Average US nsulting Group, Inc. 54k 79k 92k oo salary2 Average NYC 85k 111k 129k salary 015 by 015 by TheBoston C

1. Using BLS data; BCG filmed entertainment model (using 2009 estimates – little change since) and focusing on refreshing extant views of data. © 2 Copyright 2. Digital media and entertainment not included here, as national figures not available Media and Entertainment in NYC-Final.pptx 37 4 NYC Media and entertainment growth outperformed US economy, overall NYC economy through the financial crisis

NYC media sector outperformed NYC ... losing fewer jobs in the downturn and US economies through the crisis... and growing more rapidly in recovery

FTEs (2002=100) 140 JJbobs l ost JJbob growth Digital media, filmed entertainment '08-'09 '11-'14 (led by TV) growing even faster 120 NYC media/ -3% 10% entertainment 10, 000 FTE lost 25, 000 FTE

100 Total NYC -3% 5% economy 110,000 FTE lost 180,000 FTE ll rights reserved. A A

80 Total US -5% 5% economy 6.2M FTE lost 6.0M FTE nsulting Group, Inc. oo 60 ’02’03’04’05 ’06 ’07 ’08 ’09’10’11 ’12 ’13 ’14

NYC media / entertainment FTEs

Total US employment 015 by TheBoston C

Source: BLS (unemployment rate, and employment numbers from QCEW – both for NYC only); BCG filmed entertainment model for filmed entertainment employment (within M&E). © 2 Copyright

Media and Entertainment in NYC-Final.pptx 38 4 Industry leaders in media and entertainment have increasing awareness of diversity challenges across the US

Key challenges Description Industry increasingly cognizant of the topic, but perceived urgency varies Industry awareness/ • Appetite strongest where tangible benefit is perceived – in quality/availability of prioritization content or talent, size of audience, or revenues of the issue – e. g., shows like Grey' s Anatomy, Orange is the New Black, that reflect the true heterogeneity of the population in the US

Women and minority Relatively few diverse candidates entering the industry 'pipeline' - in film education and schools or entry level jobs awareness

Mentors and Minorities, women less likely to have network and mentors to coach them in

network building their career ll rights reserved. AA

Financial Some skills e.g., writing, difficult to hone without access to financial resources, constraints to provide support ahead of achieving regular employment in the industry nsulting Group, Inc. Stu dios and net work s i ncreasi ngl y t aki ng f ewer, l arger b et s on 't ent pol e' oo Risk aversion productions – less likely to support someone with a less proven record, or to provide a second chance if the first project isn't a hit

Media and Entertainment in NYC-Final.pptx 39 4 Multiple initiatives underway to address these challenges

Key challenges Sample of actions/initiatives noted by industry experts across the US

• MtMost maj or me difidia firms now ilddiitinclude diversity as a ktfthikey aspect of their hiri ng process, andtd track Industry diversity metrics – but need to ensure diverse candidates advance up the ranks awareness/ • Illinois tax credit requires productions to actively consider diversity of BTL crews • Increasing breadth of publications promoting the issue, e.g., in filmed entertainment: prioritization – Academia ((gUCLA, San Diego State Universit y)y, Columbia) ofthf the i ssue – Diversity groups (NALIP, NAACP, Milken Institute, GLAAD) – The press: Widespread commentary of diversity in awards nominees, winners Women and • MOME supporting Brooklyn College Film School, recruiting a diverse student base minority education • "Made In New York" Production Assistant Training Program • Outreach to school, college students, to make them aware of career options they may not have and awareness considered, and provide guidance/role models for how to make it happen • Franklin Leonard "black list", whereby scripts are submitted/selected from a repository – a Mentors and "democratic" process, with equal access irrespective of industry contacts, race, gender ll rights reserved. network • Programs lik e S und ance women i niti ati ve fe llows hip, o ffer ing menthitorship as partft of award AA

Financial • Funding, e.g., by minority-oriented entities like chicken and egg pictures. Can apply without having constraints contacts/network. Provides credibility to filmmaker, in addition to financial support nsulting Group, Inc.

• Critical and financial success of projects led by diverse individuals should ultimately erode this oo concern. Greater diversity in the next generation of media industry would also reduce the probability Risk aversion of future leaders perceiving enhanced risk in the first place • Interviewees additionally suggested that linking diversity to add-on tax credit for productions could be an effective driver of change 015 by 015 by TheBoston C Gaining entry to • Affirmative steps (e.g., DGA's diversity committees) bringing greater diversity to the pipeline unions Copyright © 2 Copyright

Media and Entertainment in NYC-Final.pptx 40 Agenda

• NYC talent ll rights reserved. AA

2 Other Media and Entertainment in NYC • Theatre, Publishing, Advertising/PR agencies nsulting Group, Inc. oo 3 New media in NYC: Digital media and entertainment companies and funding

4 Total economic impact of Media and Entertainment in NYC • Diversity in the US media industry 015 by TheBoston C

Media and Entertainment in NYC-Final.pptx 41 5 Multiple advantages of NYC for the Media and Entertainment industry...

Longstanding center of gravity for multiple sub-sectors • Strong communities in publishing, theatre, movies/TV, journalism, advertising, etc., hard to replicate elsewhere • Broad range of sustainable career opportunities in each field, enabling deep base of strong talent to accumulate

Revenue generation heartland for Silicon Valley tech, and stronghold for "New News" startups • Home to sales, marketing teams of Facebook, Twitter, Google, as well as growing Engineering groups "There are so many industries on top of each other • HQ for many of the most popular sources of content for millennials: – social circles span actors lawyers, bankers, ad HuffPo, Gawker, Buzzfeed, VICE, Tumblr executives, you name it . It makes NY a natural place for storytelling" Highly attractive place to live, especially for young professionals and creatives • Acting talent, ATL and BTL all happy to live in NYC, or visit long- ll rights reserved.

term for a production e .g ., TV series AA – NYC one of only three cities (plus LA, London) where you can create a movie/show without bringing anyone in • Eclectic 'scene' with ability to cross-pollinate e.g., between

movies/TV, new media, Broadway nsulting Group, Inc. oo Great support from city and state for filmed entertainment • MOME help to facilitate the creative vision of Film/TV projects – Permits, advice on neighborhoods, communication of safety

regulations, other guidance on filming in the city 015 by TheBoston C • Tax credit instrumental in ensuring productions come to NYC for full production, rather than just exterior shots Copyright © 2 Copyright

Media and Entertainment in NYC-Final.pptx 42 5 ...but a number of perceived challenges to work around or mitigate

Rising cost of living and doing business in New York City, especially as the US economy recovers "NYC real estate is an issue – hard to find places for • Need for affordable real estate options for businesses and people to live at reasonable rates" individuals, especially in creative industries, startups "Post needs significant amounts of specialized space, in specific locations (western SoHo), but we're competing – e.g., difficult to secure space in traditional locations for post with all the other industries in NYC production (SoHo), or casting directors (Midtown)

Complexity of filming on location in a global metropolis • The city is thriving, but this brings more congestion, makes it harder to find parking, space to film • Increasing number of stakeholders controlling access to locations (conservancies, associations, alliances, etc.) – increases the importance of MOME's role as 'one stop shop' • Dense population and traffic in NYC creates complexity for filming action sequences – movies typically film key scenes upstate, or ll rights reserved.

move elsewhere AA

Traditional business models for publishing and broadcast/cable being challenged • Shift to digital/OTT networks well underway; revenues not yet nsulting Group, Inc.

keeping pace oo • Responding to cost pressures by shedding jobs or moving non- core functions to cheaper locations "There is a perception that NYC lacks critical Perception of being below 'critical mass' in select roles mass of episodic TV writers, or they need to be co- located w ith creativ e ex ecu tiv es – bu t it is difficult for 015 by TheBoston C • Writing jobs slow to move from LA; tax credit helping establish a writers to oversee from afar; there's great value bigger talent pool in post having them based in NYC, on set" Copyright © 2 Copyright

Media and Entertainment in NYC-Final.pptx 43 5 Subsector-specific trends hold varying implications for NYC: Summary view

Overall Subsectors outlook Sector trends NYC trends • Overall growth due to strong • Benefiting from growth in TV, Filmed increase in TV production providing stable employment entertainment

• RidiRevenues growing, audience • CtiitbContinuing to bene fitffit from Theater expanding, thanks to strong industry and the tourism new/varied content it draws

• IdIndus try evol living w ith • Shift in NYC-bdbased corpora te Broadcast increase in networks and organizations: Increase in digital and cable distribution platforms talent, reduction in support networks functions ll rights reserved. AA • Industry continues shift to • NYC expected to remain the Publishing digital home of the industry nsulting Group, Inc.

• Overall growth due to • Consolidation of industry oo Advertising increased spending on digital benefits major agencies, ads headquartered in NYC • Industry growing strongly, with • NYC tech scene capturing Digital idtitlincreased access to capital iihfitldincreasing share of capital, and 015 by TheBoston C media/tech talent base growing Copyright © 2 Copyright

Media and Entertainment in NYC-Final.pptx 44 5 Subsector-specific trends hold varying implications for NYC (I) Detailed view

Overall Subsectors outlook Sector trends NYC trends  Rapid growth in spending on  Boom in scripted television in NYC high quality TV productions  Crews able to work back-to-back  Diversification in the number of  Growth in post production work in TV networks commissioning NYC due to tax credit and content increased VFX in TV  Increase in post production –  Strong support from the city Filmed visual effects used in almost all – Variability in major movies, due to entertainment movies there being fewer but larger  TV series increasinggyly 8-12 vs. pp,roductions, and constraints to traditional 22 episodes studio space/stunts  Fewer but larger major studio – Strong need for improved internet movies (shift to budgets >100m) bandwidth, affordable real estate – Reduction in mid-size movies for post production ll rights reserved. ($50-$100M budget) AA  Content continues to be "king"  Increased content production in Broad-  Proliferation of distribution NYC

casting platforms  NYC based networks evolving to nsulting Group, Inc. oo and cable – OTT/New media business reflect new market realities networks models still evolving  Increasing shift toward hiring digital • Headquarters – OTT networks based on West talent and news only Coast – Relocation of support functions out ofNYf NY 015 by TheBoston C

Positive trendEmerging opportunity Challenge to NYC   © 2 Copyright Media and Entertainment in NYC-Final.pptx 45 5 Subsector-specific trends hold varying implications for NYC (II) Detailed view

Overall Subsectors outlook Sector trends NYC trends  Expanding audience, rising  Broadway remains premiere prices increasing gross receipts theatre center in US  Content, talent overlap with  City benefits from Broadway filmed entertainment helping to tourism Theatre attract new demographics  Increasing use of limited runs lets  Increasing use of digital/special film, TV stars do theatre effects in big-budget shows – Challenged by availability of digital talent, esp. in marketing  Digital publishing driving sales  NYC will remain the US growth headquarters for publishing  Print titles remain the most industry trusted content, even online  Digital publishing start-ups also Publishing ll rights reserved.

 Growth to occur via digital concentrated in NYC AA acquisition  Incubators e.g., DUMBO, Techstars – Print subs reducing to smaller fueling future growth core  Traditional talent transition to digital nsulting Group, Inc. oo 015 by 015 by TheBoston C  Positive trend Emerging opportunity Challenge to NYC Copyright © 2 Copyright

Media and Entertainment in NYC-Final.pptx 46 5 Subsector-specific trends hold varying implications for NYC (III) Detailed view

Overall Subsectors outlook Sector trends NYC trends  Strong growth in digital  Strong employment growth in digital – TV, print spending flat or slightly  Creative teams evolving their declining offering e.g., to include Vine videos  Clients increasingly seeking as well as 30-spot TV commercials holistic offering, spanning  Major NYC agencies benefitting traditional and digital from clients' preference for single Advertising  Major agencies actively holistic partner, vs. multiple expanding digital offering, both specialists via acquisition and internal  Sppp(g,ecialist startups in NYC (e.g., expansion programmatic buying) benefit from NYC ecosystem, and have strong exit opportunities via acquisition ll rights reserved.

 Decreased capital requirements  Major presence of big tech , AA  Easier technology access attracting increasing numbers of  Strong funding and exit engineering talent to NYC Digital opportunities (VC investment,  Media start-ups booming

IPOs, acquisitions)  Growing talent base; continued need nsulting Group, Inc. media and oo for engineers as startups scale up entertainment  Increasing importance of close links with top educational institutions e.g., Carnegie Mellon, to attract talent to NYC 015 by TheBoston C

Positive trendEmerging opportunity Challenge to NYC

Media and Entertainment in NYC-Final.pptx 47 5 Key suggestions for attracting and assisting filmed entertainment productions in NYC

Improving ease of filming in NYC Enhancing community relations Boost MOME resources for permits and IitttkIncrease community engagement to keep a community relations 'finger on the pulse' in the city and better address complaints Maintain and expand strong relationships with keyyyg city organizations , even as the Exppypplore ways to support local businesses number of stakeholders increases • e.g., encourage crews to eat at local • e.g., NYPD, Buildings, Parks, Education, establishments FDNY Attracting more productions to NYC Explore ideas to alleviate constraints • e.g., on-location parking, parking lots, shuttles Monitor growth in stage capacity • Ensure capacity meets rising production needs, for film and TV ll rights reserved. A Helping to reduce production costs Assist in post facilities gaining access to A real estate, high speed internet Work with state to maintain stability of tax credit for productions/post Provide real estate/housing opportunities for talent • Consider other incentives to encourage nsulting Group, Inc. business Continue to ensure NYC talent grows to meet oo demand, and reflects diversity of the city Work with studios to negotiate industry rates for Showcase NYC facilities to network and studio hotels executives 015 by 015 by TheBoston C Ongoing dialog with industry stakeholders important to

Media and Entertainment in NYC-Final.pptx 48 Thank you

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