$500 Million?

That’s the amount of money the NZ taxpayers have spent to subsidize US film production there.

What’s amazing is that still isn’t enough for US studios as I pointed out in previous posts. Weta Digital’s VFX work is superb and New Zealand is the de facto location for Middle Earth.

So some were surprised that Warner Bros. wanted and successfully got more money out of the NZ government to do The Hobbit films there.

What’s even crazier is that with huge Canadian subsidies and a rise in the New Zealand dollar, the NZ government will have to probably provide even more money. For example, Australia which has a high currency,  is finding much of the runaway production work they get running away:

”I was told by a senior studio executive in Los Angeles just recently that at the moment the only way they will look at Australia is if there’s an important creative reason to go there, not a financial one,” said Rod Allan, the chief executive of Docklands Studios in Melbourne.

Subsidies in the US are also taking a hit. Michigan’s new governor has indicated his interest in killing their film subsidy. New Mexico’s governor has indicated she would like a closer review. Iowa’s governor intends to scrap their plan, so has Connecticut.

On the other hand, Florida has been a recent newcomer to the game and is intending to give Digital Domain $100 million to build a few facilities there. I guess there’s always a new government that falls for this kind of stuff.

I’m not against all subsidies but I’m for smarter ones. I’ve proposed that there has to be some sort of hook that keeps the studio producing films there so they just don’t get up and leave. For example, if a percentage of a film is subsidized by a government, that government should be entitled to a percentage of the profits. In fact, that’s exactly what UK film producer and director Matthew Vaughn has proposed:

Most of this finance comes from offshore (typically a US studio or other foreign distributor) so any profits arising from exploitation of UK films return to the origin of the finance and are taxed in that jurisdiction – none of the upside remains in the UK. The erstwhile aim of creating a sustainable and thriving home grown production business to sit alongside the buoyant services sector therefore remains illusive.

Here’s the thing. After all these years, after all the money spent by other governments, and all the changes to foreign labor laws making it cheaper to go overseas, California still finds itself very busy with VFX work. The capacity for VFX is huge and growing and scalability is only possible with having enough talent. Some are willing to move, while others rather stay here in California.

ILM has opened a  facility in LA to help with the huge amount of work they have: Tranformers 3, Super Eight, Pirates 4, Rango, Cowboys vs Aliens, etc.

Rhythm & Hues has moved to a larger facility in El Segundo working on X-men, Chipmunks, Red Riding Hood, Mr Poppers Penguins, Everybody Loves Whales, Hop, etc.

Digital Domain is expanding their facility in Los Angeles and has opened a facility in San Francisco with a very large amount of work on these films: Transformers 3, Real Steel, Thor, Jack the Giant Killer, X-men, etc.

Imageworks has Green Lantern, Men In Black 3, Spider-Man 4, Ghost Rider 2, Arthur Christmas, Smurfs, etc.

VFX work is also expanding at animation and games studios. DreamWorks is trying to make 3 animated films a year and announced development on “four Madagascar films, six Pandas and at least three Dragons“. Blizzard is expanding it’s film division in anticipation of more in game cut scenes.

Then there are those that argue that unions would bring an end to all that, yet those are the same people who beg for California to introduce film subsidies. I haven’t seen any VFX studios even try to lobby for tax subsidies, but the IATSE has and is actively lobbying.

With a recent change in California tax legislation that allows a simple majority instead of 2/3rds vote to pass and a new governor who is heavily supported by unions and US studios, that may be a strong possibility.

Soldier On.


5 Responses to $500 Million?

  1. VFX WTF says:

    There are two assumptions that are wrong here.

    A: That tax payers in (NOT) involved in the forming of markets.

    B: That the USA is a capitalist nation. and that markets are governed by an invisible hand.

    Markets sit a top a scaffold of state funding.

    Without a functioning union we are left wondering why our roles are increasingly marginalized.

    it should be obvious by now that this is because markets are researched, funded. built, maintained
    by the state. (Take the internet for example)

  2. VFX WTF says:

    A constant bone of contention for Americans is the notion of state control.

    While most nations are now offering (tax credits) the idea of state stimulation is not new.

    MIT has been cranking out technology for 60 years.

    genetic research

    all state fiscal projects.

    right or wrong that’s how it works these days.

  3. […] as I posted on my blog last November, even with film subsidies, runaway production was running away from Austrailia: When sequels of The Matrix had Sydneysiders tripping over Keanu Reeves in restaurants and coffee […]

  4. […] Australia for instance. I wrote in a post a few months ago that even though a 15% subsidy was offered for US runaway production, the larger subsidies offered […]

  5. […] pointed this out before: I wrote in a post a few months ago that even though a 15% subsidy was offered for US runaway production, the larger subsidies offered […]

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