US International Trade Commission Affirms VFX Soldier

April 8, 2014

Last month many of you read about the blockbuster revelation by the MPAA that made national and international news and bolstered our legal effort to place anti-subsidy duties on trade distorting subsidized VFX. This was a case concerning dental braces and last week there was a ruling in the plaintiff’s favor that further helps our case: ITC Says Digital File Transfers Are Imports Under Tariff Act. You can read the ruling here where this key statement is highlighted.

I did an interview with Buzzfeed about the importance to this case where I explain the significance: How A Case About Invisible Dental Braces Could Change The Way Hollywood Does Business:

“If the MPAA is saying films are a tangible good, and those goods are heavily subsidized by a foreign government, the law allows us to put duties on that,” Lay said.

“The MPAA and the [International Trade Commission] have confirmed our position that digital products are goods, their electronic transmission are effectively imports, and the Tariff Act applies, which contains not only strong anti-piracy provisions, but strong anti-subsidy duty provisions too,” he said. “We have been working on the case, which we hope to submit in the coming months.”

The MPAA also had a charming response which I agree with:

“Congress has given the ITC broad authority to protect U.S. industries from unfair acts in importation, including copyright infringement,” Ducklo said in an email. “In order to fulfill that mandate to protect American business, the ITC must be allowed to tackle infringement where it most often occurs — online. Otherwise, American businesses lose an important protection, which puts them at a significant international disadvantage.”

Soldier On.

Assemblymember Mike Gatto Townhall Meeting Saturday

April 2, 2014

Assemblymember Mike Gatto is one of the main legislators behind the CA film subsidy bill AB1839. Last week he caught the attention of many of us after he expressed his interest in our anti-subsidy duty effort. This Saturday he will have a townhall meeting that you must RSVP to attend:

11 a.m. to 12:30 p.m. on Saturday, April 5
Glendale YWCA, 735 E. Lexington Drive.
Space is limited. RSVP by calling (818) 558-3043 or via email:

While I may not be able to attend Saturday’s townhall, we have been in contact with Mr. Gatto’s office hoping he’ll support our legal effort. For those of you that might attend his townhall meeting and get a chance to talk with him, urge him to support our anti-subsidy duty effort and explain to him why it’s important to you. I will send an update if I’m able to attend Saturday’s meeting. Let me know if you end up going.

Soldier On.

Frozen Breaks Animation Record

March 31, 2014

Over the weekend some great news:

Disney’s hit film “Frozen” has become the top-grossing animated film in box office history, knocking Woody off his pedestal. With its opening in Japan this weekend, “Frozen” has taken the top spot and pushed its worldwide box office to an estimated $1.072 billion, pushing past “Toy Story 3.”

Opponents of this blog have long argued that without subsidies and unorganized cheap labor, Hollywood would not be able to make successful movies. However Frozen is a glowing example that you can make successful movies with unions, no subsidies, and lots of great VFX. Oh and break some huge records too.

It’s also worth pointing out that this isn’t an exception, the most successful animated films have followed same course. What’s amazing to me is that given the parity in the skills for VFX, we haven’t really seen this trend in the international locations. Has there recently been a similar successful film like Frozen where it received no subsidies and was worked on by organized labor in international locations? Why is that?

Soldier On.

Digital Domain Holdings Loses $USD 25M In 2013

March 27, 2014

Latest financials have been released for Digital Domain Holdings which is the company that partly own’s Digital Domain:

DIGITAL DOMAIN (00547.HK) announced that in 2013, the revenue rose 153% yearly to $467 million; loss equaled $192 million, against a net profit of $5.95 million in the year-ago period. The loss per share equaled 1.955 cents. No final dividend was declared.

The numbers are in Hong Kong Dollars so the $HKD 192 million loss is about $USD 25 million. This January DDH (earlier known as Sun Innovation) warned that it was going to have some huge losses:

SUN INNOVATION (00547.HK) issued profit warning, projecting significant consolidated loss for the year ended 31 December 2013, due to operating losses incurred from its visual effects business, plus impairment of the participation rights in respect of the film Ender’s Game as at 31 December 2013.

Many in VFX believe co-productions are the answer but as I pointed out, it was very expensive for Digital Domain. Digital Domain minority stakeholder India’s Reliance Mediaworks also suffered massive losses and delisted their stock. There are also serious questions of the suspicious death of China’s Galloping Horse (Digital Domain was sold by GH to Sun Innovations last summer) owner Li Ming who died of a heart attack. It was revealed he was under interrogation.

Soldier On.

DreamWorks Linked To ILM/Pixar Collusion Cartel

March 26, 2014

Three years ago I wrote about an anti-poaching agreement revealed in a Federal investigation between Pixar and ILM. The case later expanded to reveal that not only were big high-tech companies like Google and Apple were involved, but these anti-poaching agreements were designed by CEOs like Steve Jobs, Eric Schmidt, and Meg Whitman.

Now a recent article in Pando reveals that even more companies were involved and one of them is DreamWorks Animation. The court documents show messages from Pixar President Ed Catmull to Disney’s Head of Studio that clearly show the intention was to keep wages down:

Plaintiffs’ evidence also supports Dr. Leamer’s theory that Defendants’ anti-solicitation agreements were intended to avoid “bidding wars” for personal that could drive up wages. See, e.g., Shaver Decl., Ex. 60 (stating in an email that Pixar and Lucasfilm “have agreed that we want to avoid bidding wars”). As summarized by Pixar’s President, Ed Catmull, when writing to the head of Disney Studios:

We have avoided wars up here in Norther[n] California because all of the companies up here — Pixar, ILM (Lucasfilm], Dreamworks, and a couple smaller places — have conscientiously avoided raiding each other.

Read the rest of this entry »

Daemen College Prez Wrong On VFX Solutions

March 24, 2014


Last summer a number of readers emailed me about a college in Buffalo, New York partnering up with a subsidy induced VFX startup called Empire VFX. I largely ignored the story because if you knew the intimate details of NY’s subsidy program, you’d realize it was actually a woefully ineffective program.

Well, now the President of Daemen College, Gary A. Olson, has written an article in The Huffington Post piggybacking on ADAPT’s Oscar March to proclaim they have a solution to the problem. We Can Keep the Visual Effects Industry Here in the U.S.:

The college has signed formal agreements with several community colleges in the region agreeing to enroll those of their students who graduate with a two-year digital media degree into our certificate program in visual effects. Once enrolled, these students have the unique opportunity to work side-by-side with professionals in our partner company on actual projects for the film and advertising industries. A Daemen student intern, for example, just helped resurrect Charlie the Tuna for StarKist.

Unfortunately Mr. Olson is on a road to hell paved with good intentions. If you’re a reader of my blog you’ve known about the Digital Domain Institute fiasco where Florida State University tried a similar student program that bankrupted Digital Domain that left Florida taxpayers with a $100 million hole in their pockets.

Read the rest of this entry »

The Suckers Bet

March 20, 2014

Sigh. I’m really surprised that I have to write this post but I’ll go ahead.

Some in the VFX community are going starry-eyed over some potential carve out for VFX in the CA film subsidy bill. Some have been given the impression that if we continue support for the legal effort to place anti-subsidy duties on subsidized visual effects these provisions will be thrown out and it will be all ADAPT’s fault!

This assumes that lawmakers are sophisticated enough to know what visual effects are and most don’t have a clue. Most only know the various lobbying groups that write the checks: MPAA and Hollywood labor organizations. In fact, I’ve heard some of the “experts” advising the politicians think VFX is all going to New York because of subsidies. Little do they know that the NY subsidies are capped at $7 million a year for VFX.

First off, the current film subsidies and ones potentially going forward do not exclude VFX. Currently if you have a film that is budgeted less than $75 million and you are awarded the film subsidies which are capped at $100 million a year you could use them for VFX in your budget. Even if the law is changed to include bigger budget films, it won’t even come close to places like British Columbia which offers to pay 60% of resident VFX salaries. Secondly, this new law being discussed can’t go into effect until 2016!

Furthermore, if someone, I dunno, anyone, or let’s say someone who sort of looks like Charlie Brown tells you that a provision is being considered by the state to give subsidies to VFX if you end support for ADAPT and the anti-subsidy duty legal effort, you should probably be suspicious of the motive. The CA film subsidy and the anti-subsidy duties are not mutually exclusive. In my situation, one deserves my undivided attention and that’s the legal effort for anti-subsidy duties.

That being said, I’m amazed people are actually falling for the idea that some contingency plan exists for CA VFX subsidies if the anti-subsidy duty effort is defeated. That’s a suckers bet but then again I’m not surprised.

Soldier On.


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