VFX tax breaks and incentives

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VFX tax breaks and incentives

So lets start with something very exciting and dare I say… sexy. That’s right! We’re going to talk about tax breaks. Keep your shirts on! This is a classy blog.

Right. That’s better. Let’s begin. The humble tax break has been a friend of the Studio and a close confidant to the Producer for many years. It’s a way to keep costs down, and boy do they need to keep costs down. Movies have never been so expensive, or had so much at stake. That’s why tax incentives are so damn tasty.

For those doing the tasting at least…
Say Québec decided to put out a pretty decent tax incentive. Oh you know something like,
– 25 % cash-back on all expenses
– 20 % bonus on all CGI and Green screen shots applicable on extended eligible labor.
– No minimum spend, no caps

Well if I was a studio or Producer I’d think that was pretty darn interesting. Tell me more Québec….

But do the VFX houses get any of that tax breaky goodness?

Well no, not really. It basically means Studios get cash back. Which in the scheme of things means they pay less for what they get out of the VFX house.

And if you’re some sort of of multiheaded VFX co-ordinating supercomputer reading this, and are currently in the position of bidding for a big budget VFX show… well it would really be rather clever of you to move over to Montreal, open up a facility and move some of your VFX team there before the other ones do… because then everyone will hire you, because if they hire you they get Canadian cash back. And this is why the VFX community is doomed to roam the wastes of corporately mandated geographical locationing, like a nerdy version of the Amazing Race.

But this is the way of the world you say! That’s why the communists lost! Long live the free market! Yeah well, you’re right. The rest of the world knows this. But then why are all the Californian VFXers complaining..?

Well they want a tax break/cash back too! And Eric Roth the Executive Director of the VES, (supposedly the global organisation for visual effects) is all about the Californians. Probably because he is one. But I quote, “We certainly recognize that we live in a global economy and in fact, VES has members in 30 countries around the world. Many of those countries – and many states elsewhere in the US – offer aggressive tax incentives – which seek to lure visual effects work to their communities and away from our state.”

Way to speak for everyone there Mr Executive Director.

So lets play a game shall we… Say Californian VFX artists get this tax incentive/relief/break and the Studios get Californian based VFX houses to do their shows. Well that can’t be your endgame, surely? Because those tax breaks/cash backs/incentives are still going back to the Studios! What would happen is that the Californian VFX artists would get to stay in California, and everyone else would have to come too! Never mind their families in London or Vancouver or Wellington. Same problem, different day.

And it’s a problem that won’t go away by petitioning or complaining. I doubt it would even go away by crowdsourcing a legal challenge against these tax incentives. Kudos for trying though.

There needs to be a more forward thinking approach. Lets not grasp at quick fixes. What the industry needs is wholesale change. It needs to climb above the line in the budget. It needs to become a gross participant, it needs to shed the shackles of indentured servitude, and it needs to realise its a global game. The stakes are high, and if your left hand is fighting with your right hand over who gets to hold the cards, then nobody is watching the Studios and Producers cheat the system. And yes, that is a very strange metaphor involving possessed hands. But I’m going to stick with it. All the VFX houses should be holding hands on this. Because they ultimately hold the power, in those hands… There are very few places that can make a Hollywood tentpole picture. They could Writers Strike this thing! I say that because a VFX facility (although filled to the gills with talented ninja magicians) is in the eyes of the world at large, the equivalent of a Writer or a DOP, even though they are legion.

I’m sorry to say it but the folks at the top of the VFX corporate bundle, the ones who’ve been making the bad deals, undercutting each other at every turn, and migrating their respective workforces, are ultimately the ones that need to solve this problem. The artists can strike and moan and scratch and unionise as much as they like, but none of the balls are in their court.

So petition your bosses to petition their bosses to hold hands, and then climb above the line in the budget… Together. Or you know, race to the bottom in a last man standing, free-for-all,
knock-down-drag-out-battle-over-ever-decreasing-returns to the death. Probably taking place this summer in Montreal, Quebec.

Your Movie without VFX, (my thoughts on the protest)

I woke up to a very strange thing this morning. Something completely odd. I switched on my Facebook and found a large number of my friends’ smiling faces were replaced by green squares. All of these people work in Visual Effects for the movies. It was a protest.

The ‘green screen’ is the blank canvas that all VFX (Visual Effects) start on. It’s what films like the Avengers or Life of Pi would look like without VFX. That was their protest. It’s the first of its kind I’ve seen on a social network. An act of global VFX solidarity. And I think it’s the beginning of something that will either end badly for a whole lot of people. Or it will change the face of the movie industry.

At the Academy Awards on Sunday, VFX was slighted. Three times. Once I think they would have been okay. Twice, maybe a little pissed. But three times? Oh boy.

When Actors deliver their usual on stage banter about a particular category, (in this case VFX) and then midway through, decide on a whim to talk about something else and make light of the nominees. Well that’s strike one. Samuel L Jackson, that one’s on you.

When both the DP and Director of Life of Pi choose not to thank the army of VFX artists and designers that painstakingly built the world they filmed… and instead thank their lawyers and mothers, you get strike two.

When you play the Jaws theme song to force off the VFX academy award winner Bill Westenhofer as he starts to talk about how making this movie has forced his company, Rhythm and Hues into bankruptcy… Well that’s strike three.

And that’s what’s led to the green boxes on Facebook  When I say strike three, it’s more like strike 57010485405042. The VFX community has long suffered at the hands of the studios. When the majority of the top 100 box office successes of all time are VFX reliant, you start to see a picture. There’s no share in their massive profits, just ongoing systematic undervaluation of the VFX community’s creative talents. The billions of dollars of pure profit made on the backs of VFX workers must be extraordinary. And yet VFX house after VFX house is going bankrupt. The ones left standing are either indentured to the 5 studios, or bending over backwards to facilitate their budget and time constraints. Like a beaten wife, the VFX houses keep coming back to the studios for more, for fear that they might look elsewhere for an alternative.

I know I paint a dire picture, but that’s the way I understand it. And in turn, your average movie-loving VFX artist, super creative and ingenious, bends over backwards for their respective effects house. Sure, they get paid for it, we live in a free market after all, but their talents far outweigh their treatment.

Big movies are no longer made on sets, in vast sound stages.  They’re made in computers, by some of the most spectacular artists our world has ever known. And yet they’re credited below the caterers and truck drivers on films! (Yes I know the form is to go pre, production and then post…) They have somehow turned into gears and screws, simplified into a commodity. Misunderstood by the world at large. And especially by Samuel L Jackson.

They’re forced to live nomadic, freelance lifestyles, following the tax incentives of their companies… driven by the studios. Tax incentives that basically go back to the studios anyway! And yet they do it because they love making films. Testament to this, is the huge number of VFX students and graduates desperate to get their foot into the door, desperate to join the VFX diaspora at any price. But it’s not sustainable. It can’t be.

And this is the bit where I give a solution… Except there isn’t one.

I see a future where studios run their own internal VFX houses. Where budgets are allocated, rather than bid on, and the majority of the VFX work is shipped overseas to low cost centers in India and China. Fewer high level VFX artists will be employed internally, and the ones that are, will act as mere overseers, supervising from afar. This is what would be financially prudent, and economically sensible, right?

In the end the dream machine will crush the dreamers.

But what if?

An ideal world would have VFX houses with percentage points on the gross profit of these big films. Profit they could funnel back into their own company. It would allow them to develop their own properties and content. Allow their VFX artists to have job security, benefits, and regular working hours.

Imagine a company like Rhythm and Hues or MPC or Weta, using the Google model and giving their amazing artists a day a week to create new content and ideas for the company. Imagine the worlds they could create, worlds the VFX houses could market and sell and build on. Content is king, right?

An ideal world would have a union of Animators like the WGA or or the DGA where guild members could be reassured that they’re not being unfairly driven into the ground in the quest for cheaper overheads.

An ideal world would create new methods of distribution and exhibition, that could bypass the studios wholesale to create VFX houses that could employ the thousands of new VFX graduates, attracted to the bright lights like moths to flame.

But most importantly, an ideal world would celebrate these amazing artists, and not play them off to the theme tune from Jaws.


If you want to read further about the protest, I suggest this wonderful piece by Drew McWeeny over at Hit Fix http://www.hitfix.com/motion-captured/the-visual-effects-community-sees-red-in-the-wake-of-oscar-protest-and-on-air-snub/1

or hop over to this marvelously angry letter: http://vfxsoldier.wordpress.com/2013/02/24/an-open-letter-to-ang-lee/#more-3389