What If UK Film Subsidies Didn’t Exist?

How different would the UK VFX industry be without government film subsidies for US Studios? One can look no further than the problems suffered by the UK animation and games industries:

More than three-quarters of Britain’s 600-plus independent animation firms have either moved already or are considering shifting overseas, says a new report, Securing the Future of UK Animation. British stars such as Aardman Animations, creator of Wallace & Gromit, are pushing production work abroad to enjoy vital subsidies.

Interestingly enough, Aardman Animation’s next feature Arthur Christmas was done at Sony Pictures Imageworks in Los Angeles, California where the work received no subsidies.

The UK games industry trade association has been basically begging for subsidies for quite a while:

Between 2008 and 2010 the UK video games industry’s workforce declined by nine per cent. At the same time, annual investment in the UK video games sector has fallen from £458 million to £417 million. Overseas publishers have reduced investment in the UK and refocused their operations overseas. For example, earlier this year THQ confirmed that Digital Warrington will be closed down, but at the same time it has expanded its new Montreal office in Canada.

I know some blue bloods in the UK VFX industry proclaim that the bulk of the work is due to talent, not subsidies. I think the work they do is great but the subsidies play a huge role for US Studios choosing to do VFX work in the UK. As a VFX artist you need to be informed about why work moves around and in most cases it’s because of the subsidies. Most of us want long term careers and yearn to have a family and settle down but how can this be achieved when the industry is so dependent on the next regional subsidy?

What’s remarkable is the situation in the US. For the most part, there are no subsidies for VFX, games, and animation yet we have a flourishing industry: Blizzard, Dreamworks, Pixar, Disney, Microsoft games. We have a thriving industry that doesn’t need subsidies. Why is that? Of course the VFX industry here is getting really hurt by the subsidies but we still get a significant amount of work.

I find the UK’s subsidy strategy flawed. If you’re going to offer them, give them to the UK companies that are developing intellectual property, not to the US studios who are just there to collect a rebate.

Soldier On.

23 Responses to What If UK Film Subsidies Didn’t Exist?

  1. rfk says:

    Subsidies that punish UK filmmakers — what a surprise! if it wasn’t self-hating, it wouldn’t be British.

  2. Guest says:

    Aardman also produces their own live action stop motion show ~Pirates~ in the UK currently with a big VFX portion. While your not saying anything wrong I find the way you choose what information to present is very unbalanced. if your using Aardman as example, be fair and mention both shows running not just the one that helps your point. thank you.

  3. Doubious MF says:

    Survive and move back home US studios. Let the talent build their own studios in their own countries/cultures. Do whats right and make the move back home like a college student whose lived beyond his or her means. I’d rather see a studio from LA move back to the US and give us the jobs we need here. If they relocate to…Albuquerque its better than the UK…this mass exodus was corporately induced and was not something that naturally happened due to the fact that we are slowly moving towards a world with open trade, open culture, and open minds. It was a greedy man desire to fill his pockets not the kindness to offer our wonderful artform/work to entirely different countries…Not to be mean. Sorry if i sound like an ass or whatever…Its just I think we all know the times call for some reasonable measures. Not really drastic…just logical. Survival maybe? The few that come back home might survive…The rest can and will go bankrupt or fold er whatever…Its all fair when these companies decided to leave the communities that built them. With their absence i can bet local up starts will blossom and manage to do amazing things…The light will find its way to the ground…And new life will grow! The internet …Is our friend…physical relocation however isnt a part of this.

  4. fizz says:

    Of course you do realize that the article you quote is talking about animation for television and *only* animation for television? There isn’t any tax relief available for that – it was stopped years ago. The article has absolutely no relevance whatsoever to Aardman’s feature animation operation which is distinctly separate from television operations.

    Arthur Christmas is being produced at Sony who are providing animation services at a heavily discounted cost subsidized by the earnings they expect to make from distributing the film. Aardman has no significant computer animation resources, they do however have a huge stop motion resource which is why Pirates is being produced in Bristol, England where Aardman has its headquarters – right now they’re slammed with work. Pirates will also be released through the deal with Sony which was signed in the wake of their separation from Dreamworks after they fell out with Katzenberg – the physical locations of these productions are only indirectly determined by UK tax relief which Pirates actually qualifies for.

    BTW: America’s native TV animation industry bailed on the country *decades* ago in favour of South Korea. It’s not going to come back even if all the subsidies in the world were ended.

    • Jim corway says:

      Although VFXsoldier has made 2 new topics straight after this comment I guess he hasn’t had time to read this and realise the error of his ways. Good spot fizz!

      • VFX Soldier says:

        I kinda have a fulltime job so I can’t respond to every wrong comment on my blog (although I notice NOBODY responded to Martyn Drake’s comment which is spot on tickety boo.) But since you yearn for my response:

        Do you realize I made the distinction about the animation and games industry at the beginning of the post? It’s a comparison. Are you disputing the UK animation and the games industry numbers that show they are leaving in droves because of no subsidies?

        Whats the source that Sony is “subsidizing” Aardman?

        and the last comment has absolutely no basis in reality at all. The Animation Guild is a union that reps many artists in the TV animation industry. If animation left for South Korea decades ago, why is their membership at a record high?

        I’d love to hear your response cheerleader Jim. RA RA!

      • vfxguy says:

        Just for you, Soldier, I’ve replied to Martyn Drake’s post.

        Please read fizz’s post again, you might learn something.

        I love how you demand sources from him yet will quite happily take a meaningless anecdote as evidence to back up your own argument.

      • VFX Soldier says:

        Please read my post again as I do cite sources:

        The premise of my article is that without subsidies, the animation and games industry leave. Do you agree or disagree?

        These are not anecdotes, theyre facts. Do you agree or disagree?

        “More than three-quarters of Britains 600-plus independent animation firms have either moved already or are considering shifting oversea”

        “Between 2008 and 2010 the UK video games industrys workforce declined by nine per cent. At the same time, annual investment in the UK video games sector has fallen from 458 million to 417 million. Overseas publishers have reduced investment in the UK and refocused their operations overseas.”

    • fizz says:

      The OP’s statement is that Aardman chose to go to Sony for animation services regardless of the financial incentive to base production in the UK, the implication being that if this is the case for Arthur Christmas then without tax relief available for film production then most, if not all, of this type of animation production would leave the UK. My point is that Arthur Christmas is a spurious example that doesn’t support this statement – Aardman were hired by Sony, not the other way around. If anything it is a testament to the strength of UK animation talent as Sony chose Aardman over all other comers and, indeed, had actively pursued partnership with them since the 1990s.

      Of course the production is subsidized out of the money Sony expects to make out of the release! Incidentally, Sony Corp – the parent company of SPE – is still a Japanese company and repatriates its profits to Japan.

      The argument that elimination of international tax relief schemes would cause the work to flood back to the US isn’t supported by recent events. When the WGA went on strike a couple of years ago the studios just found ways to make the same amount of product without needing to sign agreements with the union, neatly reducing their investment at the same time – witness all of the “structured reality” TV shows on your screens. The recent increase in animated content is also due in part to this as the WGA doesn’t hold sway in that domain either. To think that the studios would all say “oh well, I guess we’ll have to spend more money than we did to get our movies made” is simplistic. They’ll just find another way of protecting the bottom line, whether it’s going to places where labor is cheaper or where the exchange rate is more favorable – it’s not like this is a new situation, or did you think that Star Wars was shot in Burbank?

      • fizz says:

        btw: I’m not disputing that animation producers are moving production out of the UK, but the situation is considerably more complex than tax relief alone and has as much to do with the tough commissioning environment in the UK for children’s TV animation as it does anything else. This was recently highlighted in Broadcast Magazine, the article was then strung on by the Independent Newspaper whose journalist clearly found the procedural business side of the original article a bit too difficult and boring to bother including it in their paraphrased version.

        I know less about the state of the UK games industry which still remains the world’s 3rd largest by several metrics. From the research that I’ve seen the total number of people employed world-wide in games is reducing as publishers shift their attention to profitable cheaply-produced casual gaming for mobile devices rather than betting the farm on multi-million dollar Halo-type über games.

  5. I was having a conversation a few weeks ago with a couple from Vancouver. I explained what I used to do for a living and how more work is seemingly going out to Vancouver, Los Angeles, India, China, etc. and perhaps less so to Soho, London as tax subsidies for the film industry were up in the air.

    Their response: So THAT’s why it’s so expensive to live in Vancouver – our tax dollars are being used to subsidise the film industry..

    • vfxguy says:

      Im not sure I see your point Martyn. Are you saying that property prices in Vancouver are high because of film industry subsidies? And you’re basing this on one conversation with two Vancouver residents who, by their own admission, know nothing about the driving forces behind the local property market?

      • VFX Soldier says:

        Are you denying that their tax dollars are not used to subsidize the film industry? If California engaged in a program of the same size as BC it would amount to $2 Billion a year! That money has to come from somewhere. The tax dollars also have to be spent to subsidize healthcare, higher education, winter olympics…

    • fizz says:

      There’s no reduction in the amount of work being done in London and there is no threat to the UK tax relief for productions with budgets above $80million. All the big four are taking on staff like there’s no tomorrow with projected sales growth of around 10% year-on-year. There’s just more VFX work around, full stop.

      I can’t comment on Vancouver – I only work in LA and London.

      • LA Boy in BC says:

        All VFX Soldier does is spout off about how much money the Province of BC pays out without regard to what that payout BRINGS IN. That’s the info Soldier always omits. I pay more in taxes to BC than BC pays to the US Producer who gets the rebate from hiring me. And I spend the rest of my salary from that US Producer here in BC. My job is highly skilled, has little environmental impact and I get paid enough that I don’t have to commute long distances in a car like many low skilled jobs in Vancouver.

        The residency qualifications to be a good spend in BC in place to protect abuse and the subsidy is labour based only and tightly audited. You just can’t pick up a crew and move it to BC for a project and send them packing when it’s complete like other subsidy programs. BC’s program builds infrastructure.

        Unlike NZ or London, we are also not a world away from Los Angeles spenders, and our ability to collaborate with Hollywood in the same time zone is a huge competitive advantage.

        And US States routinely compete for jobs with tax credits and other infrastructure incentives in other industries. Check out some of the incentives in California and LA: http://www.losangelesworks.org/resources/incentive-by-zone.cfm

  6. Pah – WordPress failed miserably to send me follow-up replies. Apologies.

    No.

    First of all it was all quite tongue in cheek on both sides, but I’m sure governments have to find something to make up the shortfall in lost tax revenue – temporarily at least – until the benefits of having the film made (or at it’s it’s components, VFX/post or otherwise) start to pay off.

    One thing springs to mind is that film units shooting in and around London always seem to utilise the police to act as crowd control/cordon. Well, who is paying for the police? Not the film company at any rate – at least not all of that bill. I remember walking near Selfridges with my wife once and was stopped by the police who were guarding a film shoot. I was livid that this was coming out of taxes. I still don’t know which film it was, or which film company it was that had this protection – but it wasn’t particularly nice having to reroute because of a bloody film shoot.

    • fizz says:

      I don’t know who told you that policing for movie shoots in the UK comes out of taxes but it’s flat out wrong. The cops you see policing location shoots in London are paid for directly by the production, all at overtime rates. The police only supply cops if they’re not being used for something else, so they’re all staff who would otherwise be off duty – you need to have one cop for every so many crew members. If there aren’t enough available then you either have to reduce your unit size or cancel the shoot.

      There is one exception to this which is shooting in one of the London parks that has its own parks police station. Sometimes they’ll bear some of the cost as they’d be there anyway. In all cases you have to provide toilet and catering facilities for the law enforcement.

  7. Ed says:

    Obviously the financial benefits and employment created by the productions outweigh the cost of the tax dollars spent on refunding the subsidy. Are you telling me that these governments create these programs so they can take a loss? Probably not.

    • VFX Soldier says:

      Do you have a source for that information?

      There are pleny of studies that suggest the return on money spent to lure US Studio projects garner little if any return.

      Most pro studies are funded by film commissions lobbied by the MPAA

  8. video animation for business

    What If UK Film Subsidies Didn’t Exist? | VFX Soldier

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