ADAPT Membership/Fundraiser Drive Starting Soon

July 22, 2014

I haven’t had time to post on some recent VFX news since I’ve been focused on getting ready to launch the ADAPT membership and fundraiser drive. We are officially a non-profit organization now and are setting up our site to allow supporters to join or donate to our organization to help fund our legal effort to end VFX subsidies.

Before we do launch we want to do a little user testing. I feel pretty comfortable for tester coming from the US. However if you are a potential donor or member coming from New Zealand, Europe, and Canada, email me: vfxsoldier at gmail dot com.

I’d like to try to get one or two users from each region to test the site.

Soldier On.

UK Film Subsidies Cost $3.4 Billion

June 25, 2014

Lots of VFX news today. I’ll wait for more details to come out and let the dust settle before I comment. In other news, it’s pretty rare to get international governments to provide oversight of their subsidy programs and disclose their costs. The UK has been a particular tough nut to crack.

Recently the UK House of Commons Committee of Public Accounts did a critical report on subsidies paid through tax expenditures. Interestingly, the costs of the film subsidy offered in the UK is singled out for it’s runaway costs which have been $USD $3.4 billion over a decade:

The data published by HMRC did not compare the actual costs of tax reliefs with
forecast costs. When a revised form of film tax relief was introduced in 1997, officials had
forecast it would cost £30 million in the first three years. However, its costs rose
significantly, and reached nearly £700 million by 2005–06. It took ten years, at a total cost
of over £2 billion, before HM Treasury and HMRC amended the relief to bring down the
costs. A significant proportion of the costs incurred in film tax relief had not fulfilled the
purpose of the relief, or the intention of Parliament. HMRC told us that it had taken a
series of steps, from 1997 to 2007, in which it had put in place various restrictions for the
relief, and that it had introduced each restriction after considering the policy perspective.
However, it had not been Parliament’s intention that the excessive cost of film tax relief
should have been allowed to continue for so long.

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Ubisoft CEO Unsure Of Montreal Studio’s Future After Subsidy Cuts

June 19, 2014

A few weeks ago I pondered if cuts in Quebec subsidies would trigger a migration for games and VFX studios in Montreal. IGN reports that Ubisoft’s CEO is seriously analyzing the cuts and :

Quebec is cutting back on $500 million in subsidiary bonuses, La Press reported, which will cost Ubisoft Montreal and Ubisoft Quebec large quantities of government-funded production dollars. Ubisoft Montreal CEO Yannis Mallat told IGN, “I think we need to analyze with this means for us. Then once the analysis is done, we’ll be able to decide what the next stage is for us.”

I laughed out loud at the term “subsidiary bonuses”. Let’s be clear, these are government subsidies where the taxpayers are paying 37.5% to 60% of people’s salaries who work in the games and film industry. In the long run this is completely unsustainable and Mr. Mallat’s stunning admission is a great example of that:

“I think what Quebec has become over the years in terms of video game development, it’s not a hotbed,” Mallat said. “So obviously this tax program was here to help build that environment. So we see this program as an important reason for the growth of the sector in Quebec.”

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Mill Exec: If You Don’t Like Long Hours Then Get Out

June 12, 2014

UK VFX execs are on a roll this week:

Speaking during the Unreality Checked panel of the VFX Summit, The Mill chief creative officer Pat Joseph said that although the nature of the work – particularly commercials – called for long hours, “the pay is fairly good and the work is absolutely fantastic”.

Joseph said: “You will always have disgruntled people who feel they have to work long hours, but quite honestly, they should get out of it. We don’t make up the schedules and the budgets for the projects. We live within a commercial environment.”

Pretty irresponsible statement but not surprising information coming from that group. BECTU conducted a survey for VFX artists that should be concerning for employers:

  • 77 per cent of people knew someone who had recently left the industry over workloads, overtime and poor working conditions;
  • 81 per cent of people had felt pressured or bullied into working overtime for free on films;
  • 83 per cent of people said it was difficult, or very difficult, to raise a family whilst working in VFX

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Casualties Of The Subsidy Trade War: Prime Focus London

June 11, 2014


Tuesday morning I woke up early to do an interview with the BBC about the VFX industry. I argued that while the UK is benefiting from recent increases in subsidies for the film industry, I warned that Canada was offering much larger subsidies that pay 60% of labor wages.

A few hours later I get contacted by some people in the UK with indications that Prime Focus would shut down their London office after the email above was sent to employees. One would suspect the reason why an Indian VFX firm like Prime Focus would shut down operations in London was to ship more work to India but that was not the case. The email clearly confirms what I told the BBC earlier that morning: The subsidies in Canada are larger and US studios that receive them have demanded more VFX work be sent there.

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Is Ontario Next To Fall Over Film Subsidy Cliff?

June 9, 2014


Last week I posted about Quebec winding down it’s film and games subsidy program by instantly cutting it by 20%. This week report Will Campbell uncovers an internal Ontario document that seriously questioned the sustainability of offering film subsidies and it seems to repeat what this blog has said for a long time:

The document states the subsidies may be a “zero-sum game or simply a race to the bottom” as Ontario and other jurisdictions outdo themselves to offer juicier tax credits while the total number of film and TV productions remains static.

You can view the original document here. Film Incentives 101 has more info on the number.

Some of the juicy parts:  Almost 70% of foreign films (mostly US based) and 60% of VFX companies who received subsidies that pay 60% of labor and 25% on non labor costs paid ZERO taxes.

Soldier On.



Quebec Austerity Measures Signal End Of Film And Game Subsidies

June 5, 2014

The Quebec government announced this week that it would cut subsidies across the board by 20%. This includes film and games subsidies:

On the spending side, an across-the-board cut of 20 per cent will be applied to the popular tax credits that government agencies often use to attract investment in industries such as video games, information technology, aerospace and pharmaceuticals.

That’s just the start of a complete review of how business tax credits and subsidies are doled out.

The longer term view by the government is to effectively eliminate industry specific subsidies:

Québec has many targeted tax assistance measures for businesses, particularly large corporations. These measures are costly and can create unfairness. The government wants to gradually change these incentives so that they are general rather than specific in scope. These measures of general scope will be simpler to apply, thus maximizing their benefits and limiting the administrative burden on businesses,

Here is what Quebec currently offered for VFX. On all expenses it paid for 25% of costs. For VFX labor it adds 20% on top of the 25% and when you add the 16% federal labor subsidy you could match the 60% subsidy British Columbia offers on labor. Since BC doesn’t offer to pay 25% on non-labor expenses like Quebec does, you can see why many VFX facilities are recently flocking there instead of BC. For the games industry QC offers to pay 37.5% of salaries.

As you can see, this is a completely unsustainable white collar welfare program. The latest budget slashes 20% across the board (so instead of 25%, it’s 20% etc) making it 20% more expensive to do production work there and that’s just the beginning. Those who argued that provinces in Canada could just continue to freely spend money to subsidize their jobs are dead wrong.

While Quebec is deep in debt those in British Columbia should be warned. BC’s debt-to-GDP ratio (17%) is less that half of Quebec but still more than twice of California (7%). The BC government recently proposed $56 million in education cuts which is leading to big strikes.

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