The Biggest Misconception In The VFX Industry?

Everyone knows subsidies are one of the biggest reasons US Studios choose to do VFX work in certain locations.

What could be the biggest misconception in the VFX industry is to think that it’s the facilities we work for that receive government rebate money. According to some that I talk to in the industry, it’s the studios that receive the money, not the facilities.

This was recently verified when I asked Former ILM General Manager and Digital Domain Founder Scott Ross about them. Here is what he said:

How I understand it is…. the studio says I need the budget to be $9….

The VFX studio bids the work in LA and the cost is $9 so the bid is for $10.

The VFX studio bids the work in BC and the cost is $9 so the bid is $10

But if the work takes place in BC, the studio receives a 25% rebate so now the work costs the studio $7.50, even though the work is bid $10.

The good news for the studio is they get $10 work for $7.50

The good news for the VFX facility is they get the work.

The bad news for the VFX facility is….. they get the work, which after change orders,redos, bad management etc., …. They get the shaft.

What about facilities owned and run exclusively in Canada?

It’s the same deal, the US Studio gets that money. That was revealed many months ago in a twitter discussion VFX artist Joe Harkins had with Adam Stern, owner of Canadian facility Artifex Studios. Here is what Mr. Stern tweeted when Harkins wanted to get rid of the subsidies:

@JoeHarkins honestly? maybe, but not sure. so hard to disagree. not like we get subs, they go to studios.

@JoeHarkins so still impossibly difficult to make money as #vfx studio, american or not, never mind profit… or big exec wages!

So think about that for a second.The VFX facilities get none of this rebate money being offered to the studios. The California facilities have to cover the extra costs of opening up a new facility, hiring production overhead, executives, and facility crew. Then they have to purchase all the hardware, software, and furniture. Then they have to pay for lodging, travel, and probably big raises to get key talent to move there.

How much do you think that costs? How about a fucking shitload? We’ve got to be talking millions of dollars. The idea that facilities are moving up there to save money is bogus. They lose money! The US Studios get the big payoff and they didn’t even have to lift a finger.

When you finally realize that you understand why I’m so strongly against this. It’s one thing to be on a path of self destruction, it’s another thing to break out a slip-n-slide drenched in gasoline to see if it will make the ride faster!

Soldier On.


17 Responses to The Biggest Misconception In The VFX Industry?

  1. Conrad says:

    “The bad news for the VFX facility is….. they get the work, which after change orders,redos, bad management etc., …. They get the shaft.”

    How is that any different to a show that is done in California without subsidies? Is US project management that much better than the rest of the world?

    • VFX Soldier says:

      The difference is they can manage to make a profit. With the Canadian subsidies the facilities now has to swallow the cost of opening a new facility.

      Sent from my iPhone

      • Conrad says:

        You seem to be under the impression that the government subsidies are there solely to attract US VFX companies to their shores rather than attract work for their existing local companies. If the overseas studios want to open there to benefit from the work that the subsidies attract then that is up to them.

        If the amount of VFX work that is done around the world today was all being done in California DD, ILM, Sony etc would still have to spend money expanding constantly if they wanted the work.

      • VFX Soldier says:

        I never said that. I said the subsidies are used to attract us film studios.

        That’s a bribe.

      • bob says:

        Your right conrade there is also an effort to get around labor laws, which is why a westerners will be working in China very soon

  2. yeah says:

    I’m quite surprised that after a dozen of articles on subsidies, you only found out about this now.
    I thought it was pretty common knowledge that the facilities weren’t getting any money, just a higher chance of getting the bid because the studios will get a rebate.

    • VFX Soldier says:

      I’ve blogged about that since I started this site. From the people I’ve talked to none of them knew that. They thought their facility gets the rebate money.

      Sent from my iPhone

  3. Me says:

    It’s not always strictly true, sometimes facilities have deals with local governments. I know the New South Wales and Sydney governments were kicking in tons of money (in the form of free facilities) to Dr. D to be there, which (AFAIK) wasn’t a subsidy given to Warner Brothers (though there may have that been also.)

  4. Dave Rand says:

    Free trade is a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs (to imports) or subsidies (to exports).

  5. bob says:

    Also deceiving, profits are being made at vfx houses on the backs of artists.

  6. […] Soldier has an interesting post on his site, here, about how subsidies for VFX go to the […]

  7. […] people make the mistake to think that the facility they work for gets this money. As some facility owners revealed in a post I wrote, they don’t. They are coerced into opening facilities in these subsidized regions just so they can get the […]

  8. […] expensive and its so much easier to send the work to India. The world was supposed to be flat! NOOOOO!! The prophecy was a […]

  9. […] The Biggest Misconception In The #VFX Industry? […]

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