The Not-So-Great California Film Subsidy Debate

Yes, I’m still alive!! Sorry but much of my spare time has been consumed helping establish our legal challenge to subsidies.

Well it’s that time of the year: California politicians are debating film subsidies which is sparking some hope in CA based VFXers that the state will deliver them relief as other heavily subsidized locations are taking jobs away. Now believe me I feel their pain and I’ve seen countless cycles of displacement which was one of the motivating reasons to start writing this blog years ago.

In my opinion, asking taxpayers to pick up the slack when the VFX industry has itself been reluctant to fix a failed business model isn’t going to yield the necessary results.

The latest round of politicians are simply trying to generate publicity that will garner campaign funding contributions from US studios. One obvious example is how they peddle bogus reports funded by the MPAA. Most independent reports show film subsidies yield a net loss which is also true for California’s program. Even CA Governor Jerry Brown has called film subsidies a losing strategy that is a race to the bottom.

Even if California wanted to have an effective film subsidy program, it would probably have to cost at least $500 Million a year or more just to compete with the $437M British Columbia gives to US studios. Yet even with that huge amount of money, BC is losing work to other provinces that offer even more free money. BC’s own finance minister even criticized what US studios were doing:

“I think we’re being played in Canada,” de Jong responded. “We’re being played one province against another. And the time has come for us to get smart and sit down as provinces and say ‘Here’s what we agree to do in Canada’.”

“We are not either able or inclined to send more British Columbia tax dollars to a production house in Hollywood,” he said, to applause from delegates.

Our legal challenge made recommendations on how to discipline and mitigate the distortive and volatile effect of VFX subsidies. Rather than lobby politicians to pass a law, we would go directly to federal trade court where if we prove injury from international subsidies, a duty would be levied against US studios for the amount of subsidies they receive. The investigation and ruling would take a little more than a year and it would be far more cost effective than the current $100 Million currently spent by California. The CVD effort also gives the trade organization we are forming something else too: Leverage with the US Studios to negotiate sustainable practices in the VFX industry.

Soldier On.

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36 Responses to The Not-So-Great California Film Subsidy Debate

  1. tricky says:

    Great. So where do we sign up to lodge opposition to film subsidies for California please? Or is there already a petition going?

    • VFX Soldier says:

      The same mechanism we are using is available in every country and utilized quite often.

      I support any effort to challenge US state subsidies and I actually met with a law firm to challenge them. If a state is causing injury with their subsidies to a VFX company then we would have a case but it is not.

      However that does not stop you from going forward with a CVD challenge. If you mount a legitimate challenge to state side VFX subsidies, I would pledge $1000 to your effort.

      >

      • Jon S says:

        The corporate tax rate in California is 8.84%. As soon as they raise it to match BC’s at 11%, I will support this challenge. Until then, I will not support this unethical corporate subsidy.

      • VFX Soldier says:

        Uh studios don’t pay corporate tax in Canada…

        Secondly, check how the WTO defines a subsidy.

        >

  2. Whoa says:

    Thank you for your effort and dedication to this cause soldier. It is much appreciated by myself and many I know.

    • hector says:

      Although I am Canadian , I am totally against subsidies in this industry.
      But, I believe , things are not going to change in the future.

      • Dave Rand says:

        This will be a combined effort and will show that artists CAN effect change and help guide their own futures. Everyone will have a chance to contribute, and feel safe doing so… Stay tuned.

  3. LA says:

    OK but where do we go to petition lawmakers against Californian subsidies? I just tried the Cali state dept with no luck.

  4. Tom Atkin says:

    This is not a black & white issue, because most artists and vfx folks live in the grey area of the current business climate. The question is simple, “What can be done to assist the troubled visual effects industry in California…now?’.

    The answer is not clear other than to provide immediate assistance if possible. In order to fully develop an appropriate strategy the question shifts to which of these choices has the best chance to be achieved in both the SHORT TERM and LONG TERM?

    I have no idea, but I would caution those who are struggling to stay alive to consider what may be most beneficial for them in the SHORT TERM and LONG TERM.

    In fact, I strongly urge both of these to be developed. Truly, what is the downside versus the potential upside?

    So, at the end of the day, each of you must ask yourselves what do you believe is right and what do you need to stay alive and involved in the visual effects industry?

    I believe the answer is to pursue both subsidies for California (SHORT TERM) while taking on the broader concept of the legality and validity of subsidies (LONG TERM) until such time that one can be proven a better and more feasible solution.

    You cannot lose playing both of these scenarios out to some sort of viable conclusion. Why limit the choices?

    The only thing that must be accomplished is a consensus to agree and support at least one or several alternatives. Whether you choose subsidies, fighting subsidies or whatever…there must be enough voices to be heard by those making the decisions.

    Strength is in numbers agreeing…not those arguing endlessly.

    • tell_it_like_is says:

      California Aid or Not….

      The big issue at hand is…..what ever you call the dead hole in Los Angles right now….it will continue for at least another year.

      The CVD ruling (if it actually gets applied) will probably happen sometime next year. And if it does catch a ruling…you have to wait to the fiscal years end before you can assess the fines.

      Bottom line to all the laid off workers is…. help is NOT coming from the CVD case or any Golden Subsidy Fart from Jerry Browns coffers. (just being honest)

      California is so broke it is releasing murderers from prison because it can’t pay the bills. If any subsidy money does arrive it would be from a federal level. (and congress can’t agree it has a debt not alone helping its own citizens).

      I had several friends choose positions in Vancouver last week. One was forced by his employer who now has an expanding Vancouver office…:either move or we will find someone else”….and the other friend went to Vancouver for a power position.

      At some point you are happy for the work.

      A scary thought is their will come a time when Vancouver’s golden seats actually get filled by Europe and LA talent….and it will be hard to find VFX work in California AND Vancouver.

      I think it is important to remember that this drought may last next year…..can you survive?

      Short term…you have no job…
      Long term….you still may have no job….

      • scott squires says:

        Just to clarify once the CVD legal documents are filed the clock starts ticking on any productions after that time, not when the court approves. So even though they may not assess the damage until the end of the fiscal year, the studios could find them selves having to pay for any projects done since the paperwork was filed. Will they risk it if they will likely have to pay a penalty?

        But for all practical reasons LA workers should assume it take a year minimum for things to take place so they have to consider what they can do and where they can work. But they need to consider and support the CVD if they ever want work to return to the US.

      • chexmix says:

        Scott,

        Thanks for that clarification. I think if we plan for the layoffs…and the length of the drought…the easier it will be to plan to survive the drought. The CVD can really work…..espiecally if we can plan for it.

    • suzanne says:

      @Tom – I totally agree, there is strength in numbers….complaining ceaselessly does nothing…..

      • Mike Chapman says:

        I believe the involvement of CA government (subsidies) *might* very well bring about a short term solution, but the ineptitude of government will assuredly sabotage long term solutions and efforts. It is also not fair to taxpayers and social organizations that can truly use state funding.

        Sometimes there is no quick fix to a problem.

  5. Mattonium says:

    Enhanced film subsidies is in the best interest of every artist currently residing and working in CA. We need to stop trying to change the world in such an idealistic way and start fighting for our interests, like every other group with an interest does.

  6. drew says:

    I still fortunately happen to be able to find jobs in Los Angeles CA as a vfx artist. I only have had to spend 3 1/2 months unemployed this year, and hope not to add any more time to that figure considering my wife (who also works in vfx) is now pregnant with our first child.

    At my current job the VP (of a one of hollywood big 5 studios) vfx departments stopped in for a visit to check on us. She then proceed to bitch and moan about how mocap was keeping 1 too many clean up artists on pay role, and threatened to pull the whole project from them if we did’t immediately fire that 1 extra artist. She then accused them of milking her studio and if they ever tried that again she would no longer employ their services. She then informed everyone the final plates for vfx would be sent to Bangalor India, and we would soon be wrapped. She then drove fuming off in her executive class car.

    I hate the idea of being paid begrudgingly because people can do it cheaper in China or India and then treated like I’m a problem because I want to make a living wage in LA. I’ve been cut down in price every year for the last 5 years, what next, do I need to work for free??

    I always dreamed of working in film, since I was a kid. I’ve taken art classes since I was 6 years old, done digital art since I was a kid on my Amiga 64, and got a degree in film and digital art. I bring allot to the table not to mention I’ve worked on a ton of feature films.

    This new industry environment is toxic and I’m sick of it. There was a time skilled artist where sought out because of there skill and ability, nowadays they cant wait for me to wrap so I will get off the books. I can’t stand getting jobs pulled last second, getting my pay cut every year, and looking for work every week / month, only too find out another studio up and left for free money to give the studios in Montreal. What intensive do I have to continue in this line of work? Its counter productive and I am being taken for granted by slave masters. Seems to me the problem is the studios, and as long as they are calling the shots, we will all continue to suffer. They will invent new ways of cutting costs, cheating employees and ditching passionate and talented artists. We are not just people on the dole, we are artisans who care and have families to think of and have invested our lives in this career.

    I have tried many avenues to get out of VFX this last year, as soon as I find my new nitch, I’m gone.

    • vfxmafia says:

      Drew:

      I think the next academy award protest should be at the house of that Studio Executive’s house that you mention.

      IMO we need to start pointing fingers at the Studio Execs……

      The cliche of “The studios are just trying to make money” is not acceptable anymore. Predatory economics has to stop…

      • Tom Atkin says:

        Hey vfxmafia,

        How are you doing?

        May I strongly suggest ending the ‘finger pointing’. For years, VES blamed the studio execs only to quickly turn around during their request to support California subsidies and state that the business model ‘may be a problem’ while the studios were just businesses trying to make a buck. In fact, I believe this is all referenced in Jeff Okun’s letter to VES and others the day before the announcement to support subsidies was formally made under Eric Roth’s signature representing VES.

        The point is that ‘finger pointing’ no matter who it is aimed at and no matter who is doing it…doesn’t do anything positive…or, so it would seem based on history to date.

        Truly, the solution(s)…if they exist…must come from a consensus and collective agreement…one way or another.

        I fully understand that many may be responsible for the current situation, but truly, only one group can have the most impact on fixing it…and, those are the real artists and technologists who comprise this industry. Until they unite with a single voice focused on specific actions, only time is wasted blaming folks.

        With all due respect, this is accomplishing absolutely nothing except, perhaps, some additional bad will. The studios are not going to change because people ‘point fingers’ at them.

        The visual effects industry must get its own house in order, and proceed accordingly with specific plans and commitment to form a union, trade organization or whatever it believes will work best to achieve its goals, which should be far more detailed and realistic than a generic “Bill of Rights” which sounds wonderful and gets nothing done.. Otherwise, it just keeps going around in circles.

        Consensus, commitment and action on a few key issues is what is needed to get things moving. The industry MUST do most of this on its own, and that may be the very reason that, sadly to date, so little has actually been accomplished.

        I don’t believe in pointing fingers, but if this is something you believe is relevant, you need to start pointing at the visual effects industry (especially California) and those who comprise it. Blaming others may feel good, but it just does not work.

        Just saying…

      • vfxmafia says:

        Tom,

        Im doing OK Tom….but I’m actually unemployed right now….and its starting to get really scary on a professional level and personal level…..(im sure you can tell by the aggressive tone in my postings)

        I think the voices that matter the most right now are the signatures on the CVD petition. I don’t see any sight of California Aid……

        “Drew’s” story really resonated with me…because is my harsh reality as well. I really don’t know how you can have any sympathy for the studio executives.

      • Tom Atkin says:

        Hey VFXMafia,

        I am really sorry to hear things are not going well.

        To be clear, I do believe the studios are a big part of the problem…but, the focus must stay on the people in the industry. At least, you are supporting the CVD and are an active blogger.

        I am pointing a finger at you for being one of the folks whose actions speak for themselves. All you need is a few thousand others who can collectively make your voice heard.

        Hope there is a job coming your way in the immediate future.

        Be well.

      • vfxmafia says:

        Thanks for the kind thoughts Tom.

        To respond your quote:
        “All you need is a few thousand others who can collectively make your voice heard.”

        Actually all we need is a couple dozen signatures on CVD filing.

      • Tom Atkin says:

        vfxmafia,

        question:

        Aren’t there a few dozen signatures just from the folks who put up the initial 15K (not sure this is the right number) for VFXSoldier to do the initial legal R&D?

        To: VFX Soldier. Would you, please, add any relevant information to assist. Thanks.

        To be fair, I have not read every detail about the CVD, but feel I have a good general understanding. I guess I am confused about needing such a relatively small number of signatures to go forward.

        Can you explain this, please?

      • VFX Soldier says:

        Tom,

        I’ll write a post to answer your question. It will come out tomorrow morning. Thanks.

    • suzanne says:

      Don’t worry Drew their time is coming and I mean this for everyone out there that ever has dared to dream big…… let the studios deal with cheap crappy artists. Pretty soon there won’t be any quality left. I went through a sweatshop type situation at the end of last year for a VFX project that I contributed to for a well known television station. I was in grad school and I did the job for free because it was a production class, I have never ever been so disrespected and poorly treated as an artist in my whole life, and I’m not a kid. Sadly, after this experience, I vowed I would not work for any large studio ever. It squashed my dreams of working in film. Not only that, after I graduated I became very ill and I believe the stress from that horrible experience contributed to it. I am still recuperating 9 months later. You seem like you have a wonderful little family and that you are very talented. I’m sure there is something much better waiting for you out there. Stress and unhappiness in a job are just not worth it. I am a good example of that. Not sure if you are like me, I am very creative and can come up with new ideas artistically. I plan to go it alone and develop these ideas I have swimming around in my head and I plan to present them to the public. I realize many digital artists are strapped with obligations. But sometimes it’s a good idea to risk it and take a chance with your own innovations.

      Wish you all the best and I definitely hope you get away from that terrible unfairness. Disgusting. Artists can be as innovative as a scientist, their brilliance is immeasurable in creating magic that has never been seen before. None of us should ever ever be unjustly treated. These people get up and put their pants on like everyone else.

  7. […] my last post, Tom Atkins asked how support for our effort could be […]

  8. Ex Pat who LOVES BC says:

    So if BC can’t give the monies to American companies directly they will just give it to the BC VFX companies who will then discount rates they offer US Producers, which I actually think is better for the BC industry in the long run and make it even more successful. So you’d better watch what you wish for.

    Not only is your comment from the Finance Minister out of context, the government in BC has finally recognized the positive indirect spending the subsidies provide and they plan to INCREASE the subsidy for all Post Production related jobs in early 2014. And these are good paying IATSE jobs for the most part. Yes, Vancouver is the only region outside the western 13 and NYC that is IATSE.

    This is not indicative of a province who thinks they are in a race to the bottom. What we pay here in BC in taxes makes the subsidy essentially a wash, and we spend the rest of our income monies here, keeping money in the province instead of it going to other states and we bring in much indirect spending as the ML’s now recognize. That’s the real story. The is no race to the bottom in BC, it is a wash at best.

    The State of Georgia contributed nearly 150 million in tax credits to KIA to lure them to build a plant in their state, beating out other states who wanted the plant. You can’t stop people who want their people to work.

    Really, life in BC is much better than California. Your kids will actually get a decent education here and they won’t get shot at school.

    • VFX Soldier says:

      Actually BC can continue to give money to the US studios, we are just implementing a tax on it that would offset the effect.

      Whether the subsidy is given to BC VFX houses or US studios directly does not matter. As long as the US studios derive a benefit from those subsides that injure the domestic VFX industry the merits of the case still stand.

      The VFX jobs in BC are not repped by any union. What is the source of your info?

      The BC finance minister has criticized the film subsidies numerous times and has drawn the ire of savebcfilm. He has been on record saying that the BC film subsidies lead to a net loss. What is the source of your info?

      You said the govt agreed to increase the subsidies: again What is the source of your info?

      >

      • Andreas Jablonka says:

        Agreeing with soldier here.Sources are important. The “life is better” argument is a personal preference and generic truth.

        The Ex Pat is referring to IATSE existence in Vancouver (Dusty Kelly runs the local chapter). I have met with her numerous times and have tried to get DD Vancouver to sign more rep card. To the best of my knowledge no vancouver shop is currently under an active IATSE bargaining agreement though ;(

  9. . says:

    dude. you either support the stop of ALL subsidies or it’s california – vs the rest of the world.

    • suzanne says:

      Why does California have to be the R and O of everything. I don’t think that is VFX Soldiers intention. I live in California and I believe it is an injustice to other artists all over the country and the world for that matter to make this a legal and binding contract for just one STATE. The problem is competition is everywhere. We just have to face that fact. I think globally, at this very moment, it is an impossibility to incorporate all entities. However, if for example, (this is not set in stone it could be the UK, New Zealand, Australia….) we can focus on the U.S. and maybe even Canada we would become a force to be reckoned with……and, yes, it is very important to note the fact….all artists.

      I know some extremely talented artists in other states and I would hope they would be included in all the hoopla. In this day and age, what is wrong with working from home long distance these days?

      • VFX Soldier says:

        Suzanne, I don’t think you understand the issue. Have you actually working in the VFX industry – ie did VFX on a film or television show that was produced by one of the 6 US studios?

        I ask because some of the questions you are asking are confusing.

        >

      • SH says:

        Soldier, I certainly do understand the complexity of subsidies.

        Why do I feel like I have to defend my self. I have a long history in the technical arts. My BFA is in Graphic Design and I had a Graphic Design business for several years. I know design and typography like the back of my hand which is an advantage because I find I am able to create titles and credits. Something I have found that many VFX artists are unable to do. I taught 3D animation and compositing/motion graphics at the college level for 3 years part time during Grad School, and I have worked in gaming as a 3D artist doing everything from modeling, texturing, rigging, skinning/painting weights, as well as animation. I did that for 2.5 years. My Masters Degree is in Animation/VFX with a focus on texturing, lighting and compositing. I have been a fine artist all my life and could draw recognizable objects at age 3. I have my own characters that I have won awards for. I have done all of this even though I have had a chronic disease since the age of 19…..And believe me I am probably close to your age. No I do not have your experience in film but I have years of art experience behind me. I can however tell you that while in grad school, I was asked to be in a production class where the class contributed to a short film for a well know U.S. television channel. I know all to well the sweatshop type treatment VFX artists endure because of that class. That class contributed to making me quite ill, literally and that class made me not want to work for a large studio, even though
        I love the camaraderie of working in a team with other artists. My passion is standing up for what I feel is right and fair. Not unlike many of you, first and foremost, I am a problem solver. I hate whining.

        You wrote “Rather than lobby politicians to pass a law, we would go directly to federal trade court where if we prove injury from international subsidies, a duty would be levied against US studios for the amount of subsidies they receive.”

        Hmmm, I’m wondering if this will only anger the studios more? Having as much money as they have they could eventually find a loophole and further distance themselves from US artists and develop new strategies. I believe there has to be a global initiative that invites all artists to become a conglomerate corporation of sorts. With rules and bylaws that encompass the rights of everyone working in visual effects or within any type of technical art form all over the world and this has nothing to do with competition. Talent will predict that. Being diplomatic with the studios may be the answer. We ain’t in Kansas (California) anymore. The future is staring us all in the face whether we like it or not. It is inevitable.

        Nonetheless, Soldier, I do understand what you are saying, and I admire you and support you for your contribution in trying to make things work within the industry for all of us. But one thing I know for sure is that the bickering and demeaning has to stop. Egos have to stand outside the door. We are all artists with unique talents. Many of you are extremely gifted and you have years of expertise. Have you ever thought about opening your own studio? I have noticed on Facebook, here and in other consortiums it is always the same. “What do we do, what do we do.” It’s like chicken little saying the sky is falling. Yikes! We are creatives……brainstorming comes to mind. That is what we do. We are the idea people. So far I have seen one person doing the job for many. What about a big meeting where everyone explores new ideas. I’m sure some of you are filled with them.

        My apologies for being so blunt. Hope I haven’t ruffled any feathers…..but this is how I see it… I tend to be a futurist….Sigh.

  10. […] this blog when you consider some of the predictions made here: New Zealand, Prime Focus, and now California. In the California post I argued against lobbying for film subsidies because it would be costly, […]

  11. […] currently trying to get on the panel as one of the few who has consistently pointed out that subsidies are a losing strategy. However if you would like to attend I encourage you to RSVP. I’ll be in attendance and hope […]

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