DD’s Shady Deal & Forming The Trade Organization

Last Friday night news came through of a new owner taking over Digital Domain. Variety’s David S. Cohen has an excellent report on this bizarre deal.

Digital Domain’s new CEO is an investment banker who admits having no film of VFX experience. Interestingly enough he admits the problem caused by subsidies and dubiously claims he will lobby for larger subsidies in California to help save jobs.

As I pointed out to the VES, California’s Governor Jerry Brown has called film subsidies a “losing strategy” and as Variety points out:

It seems unless California passes subsidies, or foreign subsidies are either removed or offset, it appears most of DD’s feature vfx production will decamp for better-incentivized climes.

Last week the law firm behind our feasibility study attended the State of the VFX Industry panel at Siggraph. It was well attended and nearly all the questions were for the law firm and their conclusion that US trade courts would allow a tariff to offset the distortion caused by VFX subsidies. Variety, The Hollywood Reporter, StudioDaily, and Animation World Network. Scott Squires also has a good write up on why something must be done.

One of the next steps is actually the most challenging in my opinion: establishing support from the domestic VFX industry by creating a trade organization. Our law firm is helping to establish this with individuals and companies that we have reached out to. This will be an organization where members and companies that support it can be confidential and anonymous too. However I hope this trade organization can and will be an organization to help fix and advance other interests such as standards for payment and bidding.

One of the challenges of previous attempts to form a trade organization has been the need to have facilities publicly support a it. The fear is studios will avoid working with them or, like ILM and Imageworks, are owned by studios themselves. According to our law firm’s study, that will probably be disregarded:

In evaluating support at the company level, both management and workers are considered to speak for the company. If companies oppose the petition, but are related to (e.g., co-owned with) subsidized producers subject to the investigation, Commerce will disregard their opposition unless they can demonstrate that their opposition is based on their interests as domestic producers and not driven by their overseas interests.

That other U.S. industries (including upstream suppliers and downstream consumers) are injured, or benefit from, the subsidies generally is not relevant – it is the effect on, and support of, the U.S. industry producing the “like product” to the subsidized imports that matters.

and as Variety points out we may already be gaining support:

An exec from one of those studio-owned vfx companies told Variety after the meeting “I wouldn’t oppose that.”

Soldier On.

58 Responses to DD’s Shady Deal & Forming The Trade Organization

  1. Lisa McNamara says:

    I think, at the heart of it, the VFX companies (whoever is left, that is) will have to stop regarding one another as strictly the competition and realize that it’s in the collective best interest of the industry to participate in a trade association. I know that seems obvious, but lowballing to land a big project has been endemic to the industry for decades…as has plundering artists from other facilities and generally paying lip service to collaboration while doing nothing to foster it in an honest and meaningful way.

    It’ll be interesting to see if the industry can band together to save itself, or if the old competitive ways once again prevent any kind of cooperative action.

    • compgirl says:

      A union is the only option left to gain leverage. The trade association met once I believe in secret with Mr Ross and that was it. At Siggraph our leaders in this spelled it out with the attorneys they’ve hired. Step one is to get the jobs back to LA through a tariff to defeat the subsidies, step two is to organize that talent.

      Only then when the industry heals from the artists up will the shops be healthy enough to look at each other as survivors.

      It’s has been and always will be about the artists, not about the pipeline or the producers or the HR people.

      • Lisa McNamara says:

        No one’s ever said that it’s “about…the pipeline or the producers or the HR people.” I think the general consensus is that having the artists unionized is ideal. But you first have to get the people who employ artists to take a united stand to defeat the subsidies. And getting those people to all come to the table in a spirit of cooperation is key to that crucial first step.

      • jackadullboy says:

        I think the hope of the Trade Association first is the idealistic position.

        It seems facilities/employers have insufficient motivation to cooperate, (in other words, the situation has not yet become sufficiently dire In their view to inject any sense of urgency). The frogs are continuing bathe as the water temperature gradually rises…

        The situation ‘is’ sufficiently dire for artists (long hours, job insecurity, lack of portable benefits, yada, yada). The personal consequences of inaction are far more immediate and tangible, so the onus is us to organize regardless.

      • compgirl says:

        “about…the pipeline or the producers or the HR people.” It is what the vendors are made of basically. Without the artists there would be nothing. That is why this has to start with them. They have the leverage. We can’t and don’t have to wait for the vendors to get their act together. WE can get ours together now, WE can fight the subsidy imbalance ..their help would be nice …but I doubt they’d be open about it. They are welcome, I’m sure, anonymously, as Soldier has outlined in the articles previous to this one.

        This movement started with the artists and it will continue with them. The countervailing tariff is a great start. Initialed by the author of this blog, and artist himself.

      • QT says:

        ??? why say “It’ll be interesting to see if the industry can band together to save itself” in one breath – then: “Step one is to get the jobs back to LA”…

  2. scottross996 says:

    At this point… I’m flabbergasted. You can lead a horse to water….

    • Lisa McNamara says:

      …so it can bite the hand that feeds it…

      • compgirl says:

        WE are the hand that feeds…get it right. I wise man just said at SIGGRAPH , I think it was Mr Ross, Squires, or Rand, “Shooting green screens and writing dumb scrips s the easy part.”

      • Lisa McNamara says:

        It was a joke. But what’s no joke is that as long as the artists work for what you call “the vendors,” organizing still isn’t going to keep you employed.

        Lookit: it’s not an “us and them” situation. It’s a two-pronged approach. Artists AND “the vendors” each need to participate in solving the problem.

      • jackadullboy says:

        Unfortunately it is the vendors who don’t realize our interests are convergent, otherwise they would be interested in forming a trade assoc. It would appear Artists need to force the issue.. Nothing left to lose.

      • compgirl says:

        Never said it was us against them…what I said was we don’t have to wait for them..big difference there…waiting has gotten us no where. One of the speakers, ROSS I think had some slides about who’s our Savior? IATSE, VES, VFX Soldier….then there was a mirror presented… Makes sense to me, cause It’s us. I know it was Rand who had up these slides on people who make things happen, people who watch things happen, people who talk about what should happen, and people who say “WHAT HAPPENED?” They’ve got my donation towards the countervail tariff, and my signature on a rep card for the guild.

      • skaplan839 says:

        The VFX Shops, out of fear, or greed, or stupidity .. are not interested in helping. Scott continues to try to change their view, and bless him for it.

        There are other ways of getting them to think collectively. Those involve both the formation of this organization as well as unionization from the artists.

      • scathie says:

        If the subsidies ended what would happen to our local visual effects industry?

        If you raised taxes, what would happen to the local visual effects industry? If you increased the value of the dollar by 100% what would happen to the local visual effects industry? If you provided state sponsored health care what would happen to the local visual effects industry?

        The “renting an industry” is getting tired and boring. Name another industry that isn’t “rented”.

        Truth is that it’s not 1990 anymore and all the complaining in the world won’t change it. People can do this stuff anywhere now, it isn’t rocket science.

      • Look at the big picture says:

        scathie: If a meteor were to fall from the sky and destroy your city what would happen to your local VFX industry?

        That scenario is about as relevant as your hypotheticals. Taxes in California aren’t going up 60% and the dollar isn’t going up 100%. Both of those scenarios would require near catastrophic economic upheavals to occur before being possible in which case the taxes and value of the dollar would be the least of our worries.

        By next year California will have a form of state sponsored healthcare but I don’t expect it to have much impact on California’s VFX industry. It’s silly to think it would. If all that was required to shuffle jobs from the US to Canada was the existence of a national healthcare system Canada would have taken all of the jobs decades ago.

        You, like nearly everyone else, understands that the VFX jobs have only moved because of subsidies. Not healthcare, not exchange rates, not giant rocks falling from the sky, but targeted subsidies focused on a specific industry.

        Not amount of exaggerated rationalizations or poor understanding of economics will change the fact that the jobs will leave the very instant the subsidies end. And you know that.

  3. Andreas Jablonka says:

    I assume the law firm would prefer this panel of representatives to be made up of more execs and owners of shops rather than artists. I’m totally down putting my name in the hat for representing us but who am I in the big scheme of things. Nobody. Yes we we all vfx soldiers but they need the Vfx generals.

    • VFK_Reckoning says:

      That’s for sure. Shop owners and execs need to get off their high horses and help out this industry. They are going to have to take the chance, because there might not be another.

    • Ymir says:

      I bet if more vfx execs, vfx producers, vfx supervisors, HR and recruiters jobs fell under the the subsidies and they, too, had to relocate to the same places they’re requiring us lowly artists to move to, we’d see some real action pretty fast on this!

      • QT says:

        what’s wrong with living in Vancouver or London or New York? A lot of us live in these cities just fine.

      • Andreas Jablonka says:

        yes but for how long? have you moved to vancouver? maybe you did 3 years ago and now you are asked to move again to montreal. and then to timbuktu.its not the where its the constant change of your life they require.

      • Ymir says:

        Nothing wrong with the cities themselves. I’m sure living in them is just fine, for those that want to. But for those who don’t wish to be relocated because they already have homes and families established where their job used to be before being ‘bought’, it’s kind of a problem.

      • QT says:

        ‘where their job used to be before being ‘bought’’ – this line is so old! Why do people live in the past – VFX is not just about LA. A lot of people have to move for work in every industry. It’s also offensive to people who don’t live in LA and work in the industry to say that the only reason other places get the work is because it’s ‘bought’. Industries change and develop.

      • minoton says:

        1.) Where was the majority of work produced pre-subsidies?
        2.) Where is the majority of the work produced post-subsidies?
        The line being old or ‘offensive’ doesn’t make it any less true.
        Talent is a worldwide resource. And localities have created their own markets, perfect examples are Derek Meddings, Gerry Anderson, and Aardman in the U.K. But the fact that ILM, Pixar, Sony Imageworks, Method, ScanlineVFX, Digital Domain, et. al. are U.S. based companies opening offices in locations such as Vancouver, and admit they are doing so because of subsidy related reasons, shows that as offensive as it may be to you, is fact.
        There is a quick and easy answer to such ‘offensive’ statements: If you are in one of these locations, campaign and lobby your local government to end such subsidies. If what you say is true, you have nothing to lose, and millions of tax dollars to gain.

      • minoton says:

        BTW, Ymir is now user name minoton. Changed user names to avoid someone else posting as me, as has happened in the past. I’m quite capable of getting myself into trouble and need no one’s help in that area. 🙂

      • John S says:

        “Where was the majority of work produced pre-subsidies?”

        What nonsense. Look at the tax rates in California. They’re nothing. You want to end “subsidies” as you call tax rebates? Fine. Then California and the US most increase their low tax rates, which are their subsidies, to match Canada’s.

        Fair is fair.

      • minoton says:

        What’s nonsense is the idea of ‘tax rebate’. How do you rebate more money than taxes that would have been collected in the first place? Are US taxes too low, or are Canada’s just too high? Maybe Canada should just lower their’s across the board rather than picking and choosing industries to be winners and losers? I’m sure there are plenty of industries in Canada wondering why paying hundreds of millions of dollars to American studios is such a great idea rather than spending it on local Canadian businesses.

      • John S says:

        Canada could lower their taxes rates across the board. It’s the exact same thing, they’re just doing it a different way. And when it comes to the “picking winners and losers” comment, that’s just a dumb right-wing talking point. Every government everywhere “picks winners and losers” as you call it, or, as non-assholes say, “setting public policy”.

      • minoton says:

        So now comes the name calling, the emotional fallback of those who realize the facts are against them.

      • Nick says:

        @ minoton-Singapore has a low tax rate of 5%. ILM, Dneg and more shops are opening there. Do you consider their low tax rate a subsidy?

      • Andreas jablonka says:

        In order to qualify you need to be a Singapore resident though. It’s not a subsidie as its not just targeted at a specific industry. It’s also not offering refundable tax credits.

      • minoton says:

        @Nick — No, I do not. Low tax rates and government money paid to American studios to relocate work are two entirely different things.

      • QT says:

        Um, no actually they are one and the same. Just two sides to the same coin.

      • Andreas jablonka says:

        You are incorrect. A tax rate is a choice of a country independent of an industry. Also NOT refundable. A subsidie and especially a refundable tax credit geared towards a specific industry is different.

      • minoton says:

        QT, lower tax rates help everyone across the board, all businesses in that locality. Subsidies only help chosen target recipients. And in this case, they’re not even lowering the tax rates of local businesses but going to rich businesses in another country. Why are your tax rates higher than California’s? Where do you think the subsidy money is coming from? Your taxes, funneled through a government ‘middle man’ is going to the American studios. You are paying for your job.

      • Nick says:

        @ minotone-You have a great point about helping out localities but at the end of the day if it’s lower taxes or subsidies what’s the difference to someone who doesn’t have the work? ILM and DNeg are in Singapore for financial reasons not anything else. Whether it’s massive tax breaks or massive payouts or lower exchange rates or all of them combined, it’s always about the dollar. How studios save that money and what path they take to get there is all the same just a different name.

      • minoton says:

        @ Nick, the difference is that the use of subsidies is an artificial manipulation of financial benefit to the studios to relocate work with the idea of benefiting the subsidized location . . . at the detriment of where the studios were previously doing business. Actually it’s to the detriment of the subsidized location as the subsidy amount is never recouped.
        It would be better if the subsidy tax money were being spent locally training local citizens, investing in local businesses and productions as opposed to shifting work, and workers (the cost of which is borne by the fx shops and workers) while lining the pockets of corporate owned American studios. Those are people who truly benefit. As John Knoll pointed out in an interview, it’s an economic war being played out the US effects industry.
        Scott Squires has some very informative blog posts with lots of links backing up why film and vfx subsidies as they are being implemented are bad policy:

        http://effectscorner.blogspot.com/2012/08/visual-effects-tax-incentives.html#.Uf57uxYjD5Q

        http://effectscorner.blogspot.com/2013/07/the-impact-of-visual-effects-subsidies.html#.Uf565xYjD5Q

      • QT says:

        again, same thing. tax incentives, subsidies. Two sides of the same thing and California plays the game too.

      • vfxmafia says:

        Subsidy (noun)
        “A subsidy is a grant or other financial assistance given by one party for the support or development of another”

        Tax incentives or tax breaks are different than a Subsidy. California is NOT subsidizing VFX……or is it giving tax breaks to VFX companies.

      • Dave Rand says:

        Rather than renting an industry It would be better to build your own self-sustaining Industry. Much like buying a home rather than renting an apartment.

        Putting all rationalizations behind, the question you want to ask yourself is …”If the subsidies ended what would happen to our local visual effects industry?”

        The answer is simple: you’d realize you’d built nothing because you had no equity, All’s that was really accomplished was to have kept the Americans in charge, kept their fences up, and kept the newcomers out.

        Therein lies the rub, and therein lies the truth.

      • John S says:

        Well the Americans, along with their MPAA destroyed the Canadian film industry decades ago, so what else do they have left then to take a piece of the pie that’s left?

      • minoton says:

        To quote QT: ” . . . this line is so old! Why do people live in the past . . . “

      • PolarisSoup says:

        The facility execs where I work (and yup its pretty big) don’t seem to be bothered about any of this, they are still ordering the big cars, upsizing their homes, putting little Timmy through private school and booking that next holiday in Barbados. They just see a stream of people willing to work long and hard for very little, I just don’t think they are getting it yet.

    • vfxmafia says:

      The VFX owners dont really have a great track record.

      They….chip away at our rates…. fire us when ever they want….force us to move so they can make more money….ask us to take wage cuts….they cut our health benifits…..and then lay us off …so they don’t have to keep us staff. By this track record…..VFX owners are no friends of labor.

      Lucasfilm and Pixar conspired “to fix and suppress the compensation of their employees.”

      Be very curious to see what “VFX execs” step up to the plate.

      • skaplan839 says:

        I’d question the tone of your message. While I don’t deny the facts, its also arguable that VFX Shop owners have done this because of the change in the industry. They had to cut wages, deteriorate conditions, misclassify employees, etc .. in order to just get the work.

        I am going to go out on a limb and say that this Trade Organization formed to deal with CVDs will have VFX Shop owners among is members. They will likely want to remain anonymous, but they’ll be there.

      • vfxmafia says:

        Steve,
        Im from NYC so i tend to “Tell it like it is”. Imagine my comments tone in a “Brooklyn” accent …..they sound alot nicer. Lol

        Point taken…I welcome any VFX owner who wants to stabalize the market, reform the bidding process, and would like to have a business model with a mark up more than %5.

    • skaplan839 says:

      Disagree. While you may consider yourself a “nobody”, anyone who wants to be an active part should consider participating in this panel. I have reached out to Solider and asked .. and I’m a “nobody” in the industry.

  4. but says:

    So lets get rid of subsidies is step one. BUT to force all the jobs back to LA we will need be cheaper than our competitors. Do you honestly think LA houses are cheaper than many of those in Vancouver, Montreal, London, Australia.

    With the wage demands, OT, 401k, medical we can never compete with all those countries that will does not need to provide these benefits.

    As many facilities have learned to create great work at far cheaper prices.

    Goodluck I say

    • Ymir says:

      There’s no reason to ‘force’ the work back to L.A. The work will naturally flow (without the manipulative influence of subsidies) to where the talent is. If the work was just going to go to the cheapest location, then it would all be in India and China already, right? The work will follow the talent and the talent will go where they are going to get a decent cost of living wage for the location they live in, OT, 401k, health care benefits, etc. The only reason the locations you mention don’t offer these things is because they don’t have to. They don’t have to because the subsidies already mandate that the work go to those locations.

      • LAskyline says:

        “The work will follow the talent” – the work will go where there is the best balance of talent and price. That’s always been the case. The only exception to that rule was ILM who for years could count on a stream of work from high end movies willing to pay a premium to guarantee a consistent standard delivered on time. But that’s no longer the case with people like Spielberg now working with Framestore, Cameron with Weta, Nolan with Dneg etc, sometimes with subsidies (War Horse, Dark Knight, Avatar) and sometimes without (Lincoln, Man of Steel, Interstellar) – the monopoly on quality at any price has been broken.

    • vfxmafia says:

      If you can’t pay artists basic things like OT and a fair living wage….you won’t attract talent. Programers, Matte painters, good character Modelers, good Compers, and good FX people can’t easily be replaced. In the end it costs you more money with high artist turn around….and countless shot revisions.

      You will wind up with a studio that all it does is 3D conversion and mediocre Roto.

      • fishies says:

        I’d think you’d be surprised what artists are willing to do and accept. Those that have moved canada/australia/new zealand already took worse overtime pay and sometimes to live in higher cost areas with more taxes. Not to mention the workers that work in London in one of the most expensive cities in the world don’t get any overtime pay what so ever, but are expected work OT and whose wages are less than comparable countries.

        Like I said, you’d be surprised what some people will accept. I think some people just can’t or won’t stand up for themselves. For whatever reason (spouse in school/kids/mortgage/new to the industry) people are willing to sell themselves short.

        Which is why I think we need a union. It’s the only way to get a voice out there for those who don’t want to stick up for themselves or their fellows.

  5. LGrossman, Mogul says:

    who the fuck is making my movie while you vfxnerds are blogging? just called balmer. we replace you with xboxes next year. my throbbing tentpole needs money shots! atl-tab motherfucker. close this browser.

    sent from my iphone in my maserati in pacific pallisades.

  6. austin says:

    Looking for ahead to looking at extra within you in a while!? Im normally to running a blog and i truly respect your posts.

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