If you read my blog you know I tend to repeat this saying:
The Michigan experience stands as a cautionary tale for anyone involved in incentives. States need to be aware that not every film company will be able to deliver on all its expectations. And film companies, their employees and local businesses need to be aware that politics is a volatile area, and a shift in administrations can mean a drastic shift for everyone involved.
Steve Hulett has his post on the issue at The Animation Guild Blog.
US Studios can basically bill the government of Michigan 42% of their production costs of work done in the state. For the VFX industry the real reason producers move jobs to various regions is so they can be awarded subisidy money or what others call Welfare for Hollywood.
My problem is facilities market subsidized regions as the answer to the VFX industry’s volatility. Back 2007 I remember colleagues at Sony Imageworks being pitched it’s new Albuquerque facility as a more stable and affordable environment. Fast forward today and you’ll find that the subsidy is capped and the focus by Imageworks and other facilities on Vancouver and it’s more aggressive subsidy.
Of course in order for this to work, you need VFX artists willing to move. As hot as things are in Vancouver, it’s been very difficult for studios to find workers to move there. If what I’m hearing is correct, one very large Vancouver facility may lose a huge show because of the inability to find workers.
Variety’s David Cohen tweeted what sums up the situation best:
Problems at Maxsar Digital & Kerner Optical point up a
#vfx management practice that must stop: using new deals to pay past obligations.
#vfx practice of using new deals to pay old bills is why some refer to the entire vfx business as a Ponzi scheme.
Remember that tweet. Tattoo it to your arm if you can because if you think these Ponzi-like schemes are limited to just small facilities, wait until you get a load of what some of the bigger facilities are trying to do to get subsidy money.