Mainstream Media Focuses In On Film Subsidy Race

This Monday I’ll be launching the crowdfunding campaign to end VFX subsidies. The timing is coincidentally quite good given a fair number of articles on the subsidy issue in the mainstream media.

The NY Times did a series of articles with lots of data covering subsidies in the United States.  The final piece covers the subsidy race in the film industry with the focus on Michigan and New York. FilmworksLA’s Adrian Macdonald is featured in the video piece as one of the interviewees.

Bloomberg published a piece by Joe Karaganis called “Kill the Hobbit Subsidies to Save Regular Earth” which points out the enormous sacrifices New Zealand is making for the film industry:

How much taxpayer money can Warner Bros. demand from the government of New Zealand to keep production there (rather than, say, in Australia or the Czech Republic)? That answer turns out to be about $120 million, plus the revision of New Zealand’s labor laws to forbid collective bargaining among film-production contractors, plus the passage of three-strikes Internet-disconnection laws for online copyright infringement, plus enthusiastic and, it turns out, illegal cooperation in the shutdown of the pirate-friendly digital storage site Megaupload and the arrest of its owner, Kim Dotcom.

Joe Karaganis has more on his site which gives this blog an honorable mention.

The Huffington Post has an article on the issue too:

The state tax credits for film production are pure lunacy from a policy perspective. For those not familiar with this boondoggle, it is basically the states pandering after film production by handing out free money to anyone that will produce a film in their state, although the cost is always kept off the expenditure ledger through the back door of tax credits. But a tax credit is no less an expenditure than a direct payment of hard cash.

Last July I was able to submit my concerns to the European Commission as they sought public consultation in an effort to potentially limit subsidies in Europe. Their proposal which was met with protest was pushed to next quarter:

Big-budget Hollywood productions are being targeted by the EC, which has blamed them for fueling the subsidy race and grabbing a large share of coin. “As the amounts of aid for major international productions can be very high, the Commission will (…) ensure that competition takes place primarily on the basis of quality and price, rather than on the basis of state aid,” stated the EC in its latest draft of the Cinema Communication.

Meanwhile the UK and Ireland are speeding up on subsidies. Just to give you an example of how absurd the “cultural test” films need to pass to get the UK subsidy, a recent report revealed Captain America, which was made by a US studio, was able to be classified as a British Film so it could take advantage of $USD 30 million in subsidies.

In Canada, Marky Mark of the so-called Funky Bunch is begging the Canadian government to keep giving him free money.

Soldier On.

49 Responses to Mainstream Media Focuses In On Film Subsidy Race

  1. sss says:

    “Kill the Hobbit Subsidies to Save Regular Earth”. Pfff. You don’t have my axe.

    • Clikin' Bandido says:

      It’s ok. She/He has ours. 🙂

      Soldier on!

      • boiler says:

        this way you just split up the artists in american and non-american.

      • sk says:

        You’ll simply lose the work to China, India and Eastern Europe where the price of life and labour is cheaper and therefore the cost of doing VFX will be more competitive. If you think that somehow, US based studios are just ‘better’ and that will allow you to get the industry back on US soil, think again. Factories such as the ones where Apple products are made are making use of very skilled engineers with skills that only really come out of China these days. These countries also have very smart and skilled workforce as well as the cheap unqualified one. Subsidies are helping the rest of the world get some work also, not just the cheapest countries in terms of Labour and Living.

  2. Mr Reality says:

    you sir are an idiot

  3. Mr Reality says:

    so you do realise that with no sibsidies there will be less work right?

    Why you ask.

    Studios have a budget each year they can spend. With no subsidies that funds goes into fewer films a year so less work . Economics 101.

    Why do you think people wait for the holiday sales when there 1000 dollars will buy the TV and Bluray rather than pay full price and only get the TV.

    • Dave Rand says:

      Global demand for digital imagery is growing rapidly (Games, Films, Design, Marketing, and Education. So are markets. China, even India’s middle class is larger than all of North America. The supply will grow to meet this demand, Market socialism has never produced growth that rivals that of a truly free market. This is an historical and economic fact.

      • sk says:

        How is enforcing no subsidies not Socialist? Isn’t the whole idea of free-market that any country can do whatever is necessary to attract work? Such as offer cheap labour or alternatively tax-breaks when the cost of living in said country isn’t competitive enough? Maybe america should offer subsidies on job-creating endeavours too?

      • Mr Reality says:

        sorry but all of that work you list is not the well paid work that most here are pining for. Generally people here are complaining about the tentpole vfx movies going off shore due to subsidies even though I dispute the whole its “our industry” claim.

        So I still stand by my claim that without subsidies we will se a drop im mainstream tentpole vfx movies as they will not have the available funds to produce them.

    • I think you should take Econ 101 again. The number of studio features made each year has been on the decline for most of the past decade….a period in which the availability of free film money from film incentives has skyrocketed.

  4. sss says:

    Also it means that the studios more able to underbid everyone else will end up being located in places where life/labour is cheaper. This might just send all the work to eastern Europe, China and India.
    Ending the subsidies war will not end the underbidding war.

  5. Dave Rand says:

    The capitalism of these highly profitable American studios should not require foreign market socialism for their VFX vendors to survive. No citizen would enjoy seeing their job walk across the ocean or any border because some foreigin politician decided to break a World Trade Agreement and steal an industry from its home with their governments money. As this applies to our industry: it’s an agreement designed to prevent foreign politicians from lining their pockets whiile getting taxpayers to finance higly profitable films. This is providing “only a race the bottom” and preventing proper competition for growth of the WORLD’s film markets. This is not free trade. This is mostly benefiting a small group of American studios. Their leverage has perpetuated a grip on content, distribution, and the ridiculous business model VFX shops are forced to work under: bidding without a blueprint and chasing foreign tax dollars, which carry no real payout for the shops, until they dwindle and die or get sold off to foreign investors who have no idea what they are doing. Soldier has pointed this out repeatedly providing plenty of backup here on these pages. If you live by the subsidy you will die by the subsidy. This massive leverage imbalance has us chasing our subsidized tails, while running from one bankruptcy to the next. All the while the beauty of our visual art goes on to make hundred’s of millions of dollars for a tiny minority of creative people on the planet. Great story telling should be as global as the talent, and under the control of no one. Great story telling needs to stay close to the source or the “set” and those sets should exist everywhere and have an outlet to everyone. We are not on the path to that now. I’m tired of watching this creative dust bowl form, it will eventually swallow the very studios it’s born from.. I’m tired of being on version 100 because the projects have become so disconnected from their creators. I’m tired of listening to a director on a transmission out of a squawk box once a month. I’m tired of living out of storage lockers and in hotels. I’m tired of watching great creative endeavors go bankrupt while paying for the wildly profitable movies they create. You have my pledge for $1,000 on Monday.

  6. vfxguy says:

    The thing, Soldier, is that if by some miracle your legal petition actually gets anywhere, all that you will accomplish is accelerating the decline of the US VFX industry.

    I don’t expect you to change your mind, let alone come up with a coherent counter-argument. I’m just putting this here so as I can say I told you so.

    • VFX_Boom says:

      Should we all be waiting with giddy anticipation for………….

      Where you offer deep insight on the state of things? It sounds like it won’t be “Boring”, and have lots of “I told you so” to keep us on our toes.

      If you can’t offer anything helpful, or even constructive, why bother adding anything at all?

      We’re all in it together, at the end of the day.

    • Alexl says:

      So you disagreed and attacked vfxsoldier, fine.
      Now, what ideas do you have? Can you offer a better alternative and constructive ideas to vfxsoldier or dave rand? Thus far, I’ve only seen you attacked, but offer no alternative.

      • boiler says:

        how about a petition for a union ? artists sign with real name. if enough people have guts to sign, maybe VES or celeb. like scott ross can take lead, start crowd founding for union etc. if some people sign, more will follow (like snowball system)

        much better than small nobody-lawyer company try sue all country in the world !

      • Paul says:

        It doesn’t require a petition to start a union. Just sign a rep card. Your real name goes on the card (and to the union and/or National Labor Relations Board [NRLB]), while your participation remains anonymous as far as your employer is concerned.

    • vfx artist says:

      I say accelerate it, throw gas on that fire, nuke it from orbit if need be. I want it to end instead of this slow death. If business have to cheat artist out of OT, not bid properly, use payroll schemes like yurcor and misclassify artist; if thats all business can do to stay in business rather than compete on creating a superior product and properly charge for it, then its dead already.

    • craig says:

      Decline of the US industry? That’s a laugh.

      I find it interesting that you challenge vfxsoldier to come up with a “counter-argument” to your claim when you, yourself never actually gave an argument yourself. A claim is not an argument.

      I doubt you could come up with something coherent, anyway.

  7. Oz VFX says:

    @ Solider and Dave Rand,

    I’m an Australian VFX artist, and without subsidies the industry would not survive here. Or it would survive in a very limited form.

    If you successfully challenge the subsidies, in the long term the VFX industry may well rebuild itself everywhere including Australia. But in the short term, the Aussie industry would probably be wiped off the map, putting many hundreds of high end professionals out of work and forcing them to relocate overseas to stay employed on features.

    So a question many people are asking is- why on earth would we support a move that could make our own industry instantly and fatally uncompetitive?

    If you could challenge every subsidy in the world simultaneously, that might be a “fair” way to do it, as no country or state would temporarily enjoy the subsidy advantage whilst others were having it taken away. However if the plan is to challenge subsidies in a way that sees some countries or states lose incentives before others, the result could be to kill the VFX industry in those places, and actually push work into still-subsidized areas at an accelerated rate. You could actually end up contributing to the forced migration and chronic job instability you are so opposed to.

    @ soldier: I think most artists in this industry appreciate, or have appreciated at some point, your blog and your determination to raise awareness of the challenges we all face as VFX artists. We don’t have many voices out there fighting for us that’s for sure.

    At the same time, I think it could be quite critical for you guys to explain a bit more how you see this legal challenge working out. Do you anticipate (if successful) that subsidies will be removed from some areas first? If so which one’s? Do you realize that successfully removing subsidies in one area first would likely obliterate the VFX industry there? Are you prepared to do that? Should you do that?

    Thanks for any response guys. Even if we don’t see eye to eye on this, it’s great to have people out there starting a conversation about the state of global VFX.

    • Dave Rand says:

      A great post, thank you for your intelligent and thoughfull response. At first I was hopefull that subsidies would encourage the building of infrastructure and the attraction of local investment adding to the world’s mix of content. What’s happened instead is more of a one way street and your description ” …putting many hundreds of high end professionals out of work and forcing them to relocate overseas to stay employed on features” could not have described any better exactly what hapened right here to hundreds if not thousands of familes with homes and kids in schools n the United States It’s the main reason actually the World Trade Organization was formed and an agreement was signed by memeber nations. Soldier has posted plenty of links to this on these pages. I understand your position as I’m sure you do ours. We are simply challenging existing agreements. As you are also aware so many things in the United States and the world are being controlled by individuals who have no business being bailed out or getting handouts when the end result is restirciting growth and free trade and ultimately hurting folks like us by limiting who can get a film financed, made, and most importantly distributed. I’m certain that the limited amount of talent globally will have a hard time keeping up with demand once the harnesses are off. Monopolies have always restricted growth and fair play. This is no different, that’s why we all agreed not to do it. The best time to stop a race to the bottom is hopefully before the bottom. The agreements are in place but if no one challenges them, then we continue on a course that we all agreed was the wrong road quite some time ago.

      • Dave Rand says:

        If you interested in reading more about past posts that are far better explanations than I can provide on this topic you can search under “subsidies” or “world trade organization” in the search box above and then the links provided within each topic.

      • craig says:

        Couldn’t agree more. It’s about time we were on the same page.

    • scottsquires says:

      Maybe a better use for local subsidies would be to subsidize local films. Build up a full industry making local films and employ local workers. Better than simply giving the money to foreign studios who only employ a fraction of the crew for a limited time.

      Right now all subsidies are fighting over the few studios and your area may be doing well one year but doing poorly another year simply because your subsidies are giving the studios even more money than someplace else. Nobody ends up willing the subsidies race except the US studios. Maybe if it were local you could control what you make. If it’s good you could export it and earn money world wide from the results.

      • vfx artist says:

        Good point scott. have local money support local services. In this age of youtube, you could subsidize a studio to produce worldwide content for youtube. It create local jobs, fosters creativity and the better content finds its audience. Plus its sustainable because the more successful, the more advert dollars come in from hit numbers and its invested into the same industry.

        The curent system is based on the current ways of making films, which is not the old way fo making movies. Its cooperate all around making product for the lowest common denominator and tends to horde the cash from the subsidies to just a few. Plus its not sustainable…

      • craig says:

        It’s interesting how you start your post: “Maybe a better use for local subsidies…”.

        Ummm…. how about no subsidies? Why is it that so many people believe that government should be in the film industry?

        It’s a shame that some people will never learn that subsidies are a bad thing in general. They distort the market unfairly (unfairly because subsidies use other people’s money i.e. taxes that should be spend on public essentials).

        It’s pretty easy to fool yourself into thinking they are a good idea if you put out of your mind that it is ultimately a government spending hard-working people’s money in a lame effort to hand-pick winners and losers.

        Making the subsidy local is not really much better. Just think of the millions in local money that went to DD in Florida. The taxpayers get sold a dream of being the next “Hollywood” and get suckered into paying for things they never should be spending money on.

        I’m not exactly sure what you mean by “local” films. Do you mean suggest that New Zealand subsidize “local” films that are made just for them? I’m not sure how that would work if we are mainly talking about tent-pole VFX projects.

        Subsidies and tariffs ultimately end in distortion and confusion within an industry with precious few winners in the end. In this case, the winners are the big movie studios. In the case of DD Florida, the winners are… well in that case everybody is just a loser.

    • vfx artist says:

      Oz VFX says:
      “If you successfully challenge the subsidies, in the long term the VFX industry may well rebuild itself everywhere including Australia. But in the short term, the Aussie industry would probably be wiped off the map, putting many hundreds of high end professionals out of work and forcing them to relocate overseas to stay employed on features.”

      Oh you mean like what artist have been going through in los angeles?

  8. boiler says:

    i am not wondering, why there are no serious comments. just posting i sue all film subsidy in the world and telling about detail ? –> you will gets any kind comments.

  9. Hello Kitty says:

    Fortunately no damage is likely to happen…I think just about nothing will happen.

    I want to see some no name US lawyer challenging the Chinese or Singaporean government.

    Good luck, Soldier!

    • Dave Rand says:

      Good point, but maybe we’ll get the attention of this guy. Here’s a clip of him speaking about this very topic. People and politicians love to talk about hollywood, it’s like the Yankees and apple pie.

      • sk says:

        Lol. Yah. Sure you will. Meanwhile Warners and Dreamworks will stand-by and happily watch you push up the price of their next 10 years worth of scheduled, already budgeted for, productions.

      • Dave Rand says:

        Budgets are always a reaction to an ever changing business environment, they don’t dictate it unless fair business practices have been abandoned, as is our case. This also promotes fear of exposure when it’s questioned and pits the down trodden against each other, resulting in name calling while hiding in the shadows. I welcome it as it helps make our point. The worst part is the fear that what we are questioning will ring true to you when eventually it’s your job being hijacked by another state or foreign government.

  10. Hello Kitty says:

    Who is this guy? Sounds like a bully to me.

  11. There is certainly a great deal to learn about this topic.
    I like all the points you’ve made.

  12. says:

    An interesting discussion is definitely worth comment.
    I do believe that you need to publish more on this subject, it may not be a taboo subject but usually people do not
    speak about these topics. To the next! Many thanks!!

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