I just returned from my trips to NY and SF. I’ll have a post up about the meetings but first I wanted to give a few thoughts of some recent trouble brewing in the VFX industry.
Image by Jesse Toves
An unprecedented display of corporate power over a sovereign nation.
In 2010, WB & Peter Jackson demanded that the NZ government offer more generous subsidies and a change in national labor laws or else the Hobbit would be made elsewhere. Prime Minister John Key eventually agreed and at the time I wrote a warning that the US studios would look to take advantage of them again.
Then in 2011, the US studios showed up again. This time they tried to take advantage of emergency legislation needed to help Christchurch earthquake victims by attaching bills that would grant them the power without due process to disconnect internet access of anyone they suspect of piracy.
Imagine my surprise when this past December James Cameron and Avatar producers demanded another increase in the amount of subsidies they would receive to make the Avatar sequels in New Zealand.
I often write about the absurdity of film subsidies and in the United States, one of the biggest offenders is the state of Louisiana which offers a 35% subsidy for film and television shows that shoot there. This is sort of why you probably see so many shows with Louisiana-based themes like Duck Dynasty.
This subsidy also goes to pay cast salaries which reportedly is $200,000 per episode. That means the Louisiana taxpayer cut Duck Dynasty producers a check of about $70,000 per episode for each cast member which was mentioned on a thread earlier this year. One of the cast members, Phil Robertson recently got into trouble with some very anti-gay remarks.
Mr. Robertson is allowed to have whatever anti-gay view he wants and A&E is allowed to give him a show or not at their discretion. The major problem I see here is that the Louisiana taxpayer is forced to endorse his view by providing funding of 35% for their show. This is in a state where a recent poll showed that 9 out of 10 residents oppose gay and transgender discrimination.
Furthermore, in general these film subsidies have been a big money loser in Louisiana. I pointed out earlier this year that the state loses a whopping -85% on the amount they dole out.
In the interview with FX Guide we talked about why this blog came into prominence: It was my observation 3 years ago that an accelerating subsidy race, not cheap labor in Asia, would dominate where VFX work would go.
One week later, the UK announces it will increase it’s subsidies from 20% to 25%:
The measures are intended to make the UK a more enticing location for filming special effects, sound and location shooting work, following fears that the industry will lose its world-leading position, and talent, to countries such as Canada, which already offer significant tax breaks.
I pointed this out last year. The idea with these subsidies is that it should create a sustainable local industry but that hasn’t been the case as various locations have to keep ratcheting up the amount paid to US studios or risk having the whole industry collapse. Also, as one UK director Edgar Wright notes, these subsidies are actually crowding out local filmmakers:
While the tax break is good for Hollywood films shooting here, it’s probably not that great for British films shooting in the UK,” he said. “Some middle-to-low budget films are going to find themselves without crew because all the American films are shooting here.
Other locations on the other hand are starting to question the policy of paying US studios to bring VFX work to their locations.
Well it’s that time of the year! Seems almost every October the US studios start bullying New Zealand into handing over more free taxpayer money or else they’ll pull film work from the country. This time it’s about Avatar:
After the success of movies like The Lord of the Rings and Avatar, the New Zealand film industry is now facing crippling losses.
There are new calls for the Government to review tax incentives for foreign productions as the industry faces losing a billion dollar blockbuster.
Industry rumours about Avatar have been flying thick and fast – that production is moving to Australia or even Mexico.
For the last few months film workers in British Columbia formed a group called #SaveBCFilm which protested the film industry’s exodus to Ontario and Quebec which offer significantly larger subsidies.
This week events culminated with a delivery of 30,000 signatures from #savebcfilm asking for larger subsidies and a meeting where BC’s Finance Minister basically asking Ontario to stop the race to the bottom:
“Calling these things ‘tax credits’ is a bit misleading … they are subsidized incentives,” B.C. Finance Minister Mike de Jong told the Star on Tuesday.
“They’re playing the taxpayers off one against the other,” de Jong said after a meeting with Ontario Finance Minister Charles Sousa in Toronto.
“The first step is to stop being whipsawed for one another because that’s just crazy.”
That statement by Mike de Jong is a stunning endorsement of the argument this blog as made for quite a while. The money offered to studios are not tax credits, they are subsidies costing over $300 million dollars a year which US studios look to game against other locations in a race to the bottom.
Chief Economist Greg Albrecht reveals how much money Louisiana film subsidies lost.
Last week I criticized the VES for advocating for more subsidies in California. As I pointed out, Governor Jerry Brown believes films subsidies are a losing strategy. Other states seem to show the same problem.
Warner Bros. sends a clear threat to New Zealand:
Warner Bros is threatening that the Government’s release of confidential documents about the Hobbit union debate would be a “major disincentive” to future film-making in New Zealand.
The New Zealand Ombudsman has ordered the Government to release documents about the deal it struck to ensure the Hobbit movies were made in the country.
The Government secured the three movies by changing employment laws and beefing up the tax rebate sweetener for the productions, resulting in an additional $25 million in incentives for Warner Bros.
Steve Hulett has more here.
2 years ago I wrote about the debacle concerning the Hobbit. Most media reports focused on the premise that Peter Jackson and WB were concerned about a union group looking to organize Hobbit actors and threatened to take filming to another location. I disagreed, studios have generally dealt with unions no matter where they shoot.
In fact, it was later revealed that email exchanges with the NZ government showed that while Peter Jackson was publicly saying the union boycott was a threat, he privately told the NZ government the opposite.
#SaveBCFilm supporters have been circulating a Vancouver Sun op/ed article by BC film worker Daryl Makortoff. He writes that the program in BC is not a subsidy program paid for by taxpayers. In fact he was so sure of that he came on my blog yesterday to argue that the number I got from BC Film’s own website was incorrect.
That drew the attention of frequent commenter Adrian Mcdonald. He’s the Director of Research at the LA film office and an expert on film subsidies. Adrian offered to contact the BC Film office to verify if Mr. Makortoff’s article was correct as he proclaimed. Today BC Film responded to inform Adrian that Mr. Makortoff was wrong and the numbers on my site are correct. You can view the email here:
The writer of this article is incorrect. Tax credits are not based on taxes paid/withheld by individuals or corporations; they are based on total BC labour expenditures. Your example noted below is correct.
From the Montreal Gazette:
Britain’s Framestore Inc., a leading supplier of visual special effects and animation for the movie and TV industries, is setting up operations in Montreal and expects to provide 200 new jobs over the next three years. The project is being backed financially by the Quebec government with a repayable grant.
I wrote about this 3 months ago and pointed out that the reason for this move was because Quebec offers significantly larger subsidies than London. For every $100 in VFX salary paid there, the Quebec government offers $60 to the studio regardless of the amount of taxes owed.
Layoffs at Framestore London?
While things are looking up in Montreal with 200 new jobs, rumors are that 100-150 people at Framestore London may lose their jobs. I’ve been unable to verify the authenticity of this email which may have been sent out to Framestore London employees:
As projects approach their final weeks we have been reviewing the crew requirements for confirmed work in London. Whilst we are bidding on a number of projects we don’t expect work in London to pick up again until the Autumn so we need to reduce the headcount across all the VFX teams.
Following an initial review of crew schedules we would like you to attend a group meeting tomorrow at 10am in the Wells Street Cinema. At this meeting we will tell you more about the process we will follow to reach final decisions on which roles and individuals will be impacted by this and answer any questions you may have. There will be an opportunity for individual meetings over the next week or two but it is very important that you attend this group meeting. Your Producer and Supervisor know that they need to spare you for half an hour.