#SaveBCFilm’s Unlikely Foe: Visual Effects?

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.

State Film Subsidies Show Losing Strategy

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. Threatens New Zealand

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.

BC Film Commission: #SaveBCFilm Supporter Incorrect

#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:

http://tinyurl.com/a5qvo47

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.

The Institutionalization of Displacement In VFX

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.

Framestore To Open In Canada?

Well well well, looks like UK-based VFX facility Framestore might be opening an office in Canada:

Framestore are interested in connecting with VFX artists and production crew across all disciplines and levels in Montreal.

We will be coming to Montreal in the coming months to meet with candidates interested in hearing more about Framestore both in the short and long term.

Why might Framestore open in Canada? My guess is it’s the subsidies. Look at this comparison of subsidies between the UK, BC, and Quebec and you can see that Canadian subsidies offer a lot more free money than the UK.

The Accelerating Subsidy War

This blog routinely points out that subsidies in the VFX industry have led to a “race to the bottom” where various governments engage in a trade war as they outbid each other trying to lure US studio work.

If you remember, two years ago I wrote a few posts about how WB threatened to film The Hobbit elsewhere if the NZ government didn’t sweeten the incentives deals.

Well now it seems US Studio producers want more as the PM visits to meet with Hollywood execs:

“People are cutting extraordinary deals,” said Rubin. “Thirty, 45% tax kickbacks if you make your movie there.”

To lure Hollywood to New Zealand, Key would have to offer more than just “incomparable” scenery, he added.

Rubin said the strong New Zealand dollar, which has doubled in value since The Lord of the Rings trilogy began to be shot here in the late 1990s, is a problem for the country’s film industry.

Film Works LA Interviews Rhythm & Hues

If you read one article on the VFX industry this year then you might want to check out Film Works LA interview with VFX facility Rhythm & Hues. In my opinion it’s the article of the year because it reveals so much inside information about the business:

More interesting yet, Berger said Rhythm & Hues could often match a bid from Vancouver for the same money even using his California artists.  “But what has happened in recent years with many studios,” Berger said, “it’s easier to understand the tax credits than it is to understand a discounted price.”

Think about that. No matter how efficient or competitive your VFX facility is, you are at the complete mercy of a government offering a subsidy. Even with a huge 35% subsidy in Vancouver, California VFX can still be competitive which is something I’ve said for a long time. I’ve seen people lose their homes, their families, and their careers over something so absurd.

Simply put this is why subsidies violate many trade agreements. They are a form of protectionism that create a barrier to market economics.

You can read more at Scott Squires blog.

Soldier On.

The New York Super Subsidy

New York Governor Andrew Cuomo recently brought a bazooka to the subsidy war as he passed an expansion of the state’s film subsidy for post production:

The law signed today by the Governor increases the percentage of tax credits available for projects that did not film in New York but will now qualify for credits for post-production work done in New York. Under the new law, the qualified film and television post production credit increases from 10 percent to 30 percent in the New York metropolitan commuter region…

An additional five percent (for a total of 35 percent) in tax credits would be available for post-production expenditures in locations elsewhere in the state.

When you combine that with the fact New York pays out almost half a billion a year in film subsidies you realize this is a HUGE subsidy.

Casualties Of The Subsidy Trade War: Rockstar Vancouver

Right off the heels of the potential closing of Vancouver’s oldest gaming company, Rockstar Vancouver is closing. Looks like VFX isn’t the only industry pitched in a race to the bottom:

Rockstar Vancouver is being dismantled, Take-Two Interactive announced today. The 35-person team, best known for its work on Bully, is being offered new positions at Rockstar Games, specifically the expanded Rockstar Toronto studio.

and the reason?

“Rockstar Games’ decision to expand its Toronto studio demonstrates the confidence in Ontario’s leading-edge digital gaming industry. By providing financial support and tax incentives to help companies grow, we maximize Ontario’s competitiveness in the global economy and support job creation,” said Brad Duguid, Minister of Economic Development and Innovation.