Dear Hollywood: Fix VFX, It Will Fix the Movie Biz for You (Guest Blog)

Dear Hollywood: Fix VFX, It Will Fix the Movie Biz for You (Guest Blog)

VFX artists are middle class workers who are losing their livelihoods to foreign tax subsidies

If you really don't want to think about the business and money side of things, this piece isn't for you. But I'd caution you: You probably have money in the movie industry. If you've got an IRA or a 401k or a pension, some of your money is probably in Hollywood. Maybe you should take this seriously.

Personally, I'd like to be writing pieces about the craft and promise of digital motion pictures. I went to NYU Film School. I worked directly with Terrence Malick for two years on “The Tree of Life.” I worked on “Iron Man” too. Believe me, I'd love to be waxing poetic and philosophical about all of it. But that would be a luxury at this point.

We need to be adults. We need to talk about what is actually going on and what it means. So if you want to go read a bunch of sophomoric fluff about how to best collaborate with directors and execute their intent through VFX, there are other pieces to read.

Blunt Instruments

What's different today, versus yesterday, is that the domestic VFX industry has been forced to wield a very blunt instrument. It's called a countervailing duty (CVD). I am not a lawyer. Much less an international-trade lawyer. You should get real legal advice from real lawyers. But I can do my best to explain it.

Recently it has come to light, that not only is a CVD case coming, but that the MPAA themselves may have already set the most important legal precedent for the case's success. They seem to have made it clear that digital assets, like VFX shots, can be subject to a CVD.

Further, a new 501(c)(6) organization, ADAPT, has sprung up to officially bring the case. They've hired a law firm and it is their research that brought the afore mentioned precedent to light.

Also read: Oscars: Visual Effects Workers Rally Outside Academy Awards, Protesting Tax Subsidies, Job Losses

What's particularly of note is what the MPAA then did. They blinked. Then they turned their head to look in that direction. Then they tried to litigate the matter in the press with a poor argument that would seem to already be refuted by the research done by ADAPT's lawyers earlier last year. The lawyers can do the real arguing in court. What's important, is that the MPAA showed their cards. They are clearly terrified. They don't issue panicked and poorly constructed legal arguments in industry mags usually. Clearly, they are concerned.

But what is a CVD? What happens if the case is won? In summary, the CVD is a reverse subsidy. It is a tax levied on subsidized goods that are imported into a country. It is a device meant to discipline countries that directly subsidize industries in a way that harms those industries in other countries.

CVDs are not really meant to be paid. They are meant to forcibly re-level a playing field so everyone can actually compete in an open market, without governments trying to tilt the field.

The Democrat likes a CVD because it raises the floor when it comes to doing business, which can raise salaries and quality of life. The Republican likes it because it disciplines a market that's being distorted by government handouts.

The Democrat can be made wary of a CVD because people in subsidized areas get hurt when the subsidies are disciplined. The Republican can be made wary of a CVD because a duty is a tax, and a tax can never be a solution in libertarian (neo-fiscal-conservative) doctrine.

Also read: ‘Noah’ VFX Firm Loses a Bundle on Biblical Epic (Exclusive)

The jaded semi-intellectual will tell you that multi-national corporations will find ways around a CVD like they do everything else. But in truth, a CVD is a very blunt and broad instrument. There are a lot of people going to jail for trying to circumvent CVDs. Again, one should really seek the advice of international-trade lawyers to understand just how powerful a tool a CVD is.

So why do you care about a CVD on visual-effects (VFX?) What's it going to do to studio profits really?

Studio Profits and VFX Subsidies

Actual public numbers on this kind of thing really don't seem to exist. They're proprietary. They're simply not available or reported. However, with my simple (but somewhat privileged) knowledge of the industry, I can estimate some rather important figures.

By my estimate, somewhere between 1/6th and 1/3rd of Hollywood's yearly production budget is spent on VFX. Right now, Hollywood is getting a huge amount of international and state government subsidy dollars from that work. They have been for years. It's one of the few ways they've been able to keep the feature film industry from completely tanking.

As an investor, you see those subsidies every year when the big multi- nationals report. When they talk about their feature-film divisions and they report a slim profit, it's because the subsidies are baked into the balance-sheet pushing them barely into the black. And likewise, when they report a slim loss, it's only slim because those subsidies are part of the balance sheet, pushing back toward the black. If you took the subsidies out, you'd see those yearly reports all move in the direction of the red.

Also read: Rhythm & Hues Attorney: ‘It Was Just the Perfect Storm’

How much red? Again, my estimate is that between 1/6th and 1/3rd of Hollywood's production budget goes to VFX. So lets take a meager $120 million movie. Let's pin the VFX budget at $30 million, in the middle of my range.

Because it's 2014 and this movie is on the cheaper side, that VFX budget is being spent entirely in Vancouver. The studio simply will not sign a VFX contract with a VFX vendor company in any other location for this film, because they demand their subsidies. You'll see why when we finish the math. The subsidy comes in the form of tax credits, which can be sold in a thriving tax credit market in British Columbia.

They are awarded at a rate of 58.4 percent on each dollar spent on qualifying labor. Most VFX bids and contracts consist of about 50 percent labor. These days, the studio forces the vendor to guarantee the credits. So, if for some reason a government audit results in less qualifying labor expenditure than originally in the contract, the vendor must pay the difference to the studio out of their pockets.

Therefore, on our $30 million VFX budget, we get back 58.4 percent of half the budget. That's $8.76 million. We don't have nearly that amount of tax liability in British Columbia. We'll take a little off the top of that theoretical number in the form of fees and such as we sell it through brokers. So let's say it rounds out to $8.5 million by the time it hits the corporate balance sheet as real money and is put up against the original budget. You could argue we won't get that good of a deal on the credits. But I assure you, the studios are not going to take a huge loss on them.

That's roughly 7.1 percent of the overall production budget coming back to us as a government subsidy. But of course the second huge part of the feature film business is marketing. A gross simplification is that the marketing budget of a film is about equal to its production budget. So overall, once the film is produced and marketed, the subsidy that comes back onto the balance sheet from the VFX budget comes to about 3.55 percent of overall expenditure on the movie and its advertising.

When the feature film division reports slim profits or losses of about 5-10 percent, you can see how big a deal those subsidies actually are to the profitability of feature film divisions. It would appear a feature film division reporting about 3.55 percent profit would be breaking even without the VFX subsidies pumping them up. And a feature film division that reports it's breaking even would be taking about a 3.55 percent loss without the VFX subsidies helping them out. There is some overhead associated with a feature film division. But you can be assured that they try to structure those divisions such that it's almost all project costs and very little overhead.

If you follow feature film profits year to year, you know that despite huge box-office, profits are slim or nonexistent of late. Paramount was busy beating its chest the end of last year over a 5.5 percent profit margin or more over the past three years at the end of 2013. Sony doesn't seem to report its film separate from its television but “Pictures” seems to have made about 6.5 percent in 2013. It's well understood that TV is making more money than film these days. So it's probably safe to say that film is at best making 6.5 percent profit for Sony. And really, it's probably not making that. The roughly 3.55 percent in profits from the subsidy on VFX is huge for them as well. As it is for all of them.

So if the CVD is levied, and those subsidies go away, you're going to see it on the balance sheets. It could be the difference between being in the black or the red year to year. And in turn, it can be a big deal with regard to the stock price. It's just math. And I think you can see how fiddling with the numbers isn't going to change it all that much. It's big because it is big. And perhaps that's why the MPAA so uncharacteristically flinched.

But that's just the subsidies on the VFX. What about the rest?

The CVD is a dangerous precedent for feature film profits

It's potentially worse than what I just described. I just estimated and isolated the profits from the subsidies on the VFX work. But in truth, you have a bigger problem. VFX are not the only digital assets that could have CVDs levied against them. The precedent opens up the film industry to quite a few other CVD cases by nearly ever local union for every craft in every location.

The remaining 5/6th to 2/3rds of the production budget is usually subsidized under the same laws and programs. It's just at different rates of return.

But they're calculated against most of the budget rather than just the VFX budget. In some parts of Canada, they're calculated against all expenditures, not just labor. So the contribution to the balance sheet is huge.

The remaining subsides are not something I think I can calculate effectively. But they're already baked in to the balance sheet. They're part of the yearly financial reports already. They have been for years.

These subsidies are the reason there are so many films and TV shows shooting in Vancouver and London these days. If the studios weren't getting these subsidies, their reporting would look quite different. Their stock prices would likely be different as well.

Obviously, the remaining physical film distribution market is easily assessed duties when the film goes through customs. It seems digital distribution isn't a way to get around a CVD for broader film production work. Digital cinema masters (DCMs) and digital projection packages (DCPs) are digital assets as well. If the rest of the industry sees VFX succeed in getting a CVD levied, there's very little keeping them from attempting the same thing against the whole film.

Again, I'd suggest you get the advice of a real international-trade lawyer as to if the VFX CVD case has merit, and if the precedent could result in further CVD cases.

Why is VFX doing this to us? That's my retirement money!

If you go back, you'll see that I said the domestic VFX industry was “forced” to wield the CVD. They're not doing it to hurt the country or the film business that they love working in. But you went after them and hurt them, badly. They have rights. They are defending themselves.

You did it to yourself. Are you angry with me because I said it's your fault? Let me explain.

The VFX industry classically has operated in premium markets (locations) because it has been premium content. Just like actors flood to LA and NY to be in the premium acting market, VFX artists and technicians have flooded to LA and NY to be in the premium VFX market. Hollywood needed its VFX done in Hollywood. NY advertising needed its commercial VFX done in NY.

However, VFX has a completely different kind of schedule and working situation compared to traditional production. Production usually has long pre-production and prep cycles, and long post-production cycles. The location specific subsidies which are often focused on principal photography (the movie shoot), only effect core production people so much.

They do complain about it though. J.J. Abrams famously did so with regard to the new Star Wars films, which are to be shot in London. Make no mistake about it. Yes, there is some historical precedent to shooting Star Wars in London. But it's definitely there for the subsidies this time. It'd probably be shot in New Zealand or Vancouver were it not for the newly upped UK subsides. Just take a look at the public arm-twisting that surrounded “The Hobbit” films, or the new “Avatar” films, to see that kind of thing going on in New Zealand.

When a production moves to a location, it's temporary. It may be inconvenient for the director, producers and actors to be out of the country for some number of months, but they are coming back home when they are done. And the next movie they're on won't ship out for some time. Also, production usually covers the costs of housing when they travel. So they're not paying double-rent when they travel with the production. A lot of above-the-line talent is well… rich. They can handle it.

In VFX, unless you are one of the lucky few to be working directly for the production company and moving with the production, you are working for a VFX vendor company. You only work on a movie during post- production. And when you are done, you either move directly onto another movie that's entering post-production, or you are let go (and need to get on another one ASAP). When this was all done in LA and NY, it wasn't a big deal. You had already decided to move to the mecca of filmmaking. New Yorkers used to whine (myself included) about getting too little feature film VFX work, but things were stable for a good VFX worker.

They could work year round and make a good middle class life. They could possibly get married and have kids. And those kids could go to school and grow up. The hours were ridiculous and overtime often was rarely paid. But that's a different gripe.

I myself was expecting to enter the NY commercial VFX market upon finishing my master's degree (MS). Instead, I was “noticed” and brought to LA to do feature film work. They paid my airfare and for a while they put me up in a local hotel. Things were different back then. It was still a premium market. I eventually decided to move to LA permanently and stick with that company for a bit. Essentially, I moved to Hollywood (LA) because I was good enough to make real movies and they'd have me there. But it was my choice. I always knew from day one, that TV and movies were primarily in LA and NY. Every film student knew that going into film-school.

Some exceptional VFX vendor companies managed to establish themselves in Hollywood feature films outside of the LA and NY markets.

Usually they clawed their way up and out of the pack in their own domestic commercial and TV markets. The deal there was the same as it was in LA and NY for the most part. Premium content in premium markets resulted in a reasonable life for people who were good enough to make it in those markets. Meritocracy.

Though I'd point out, there were no shortage of gripes from Hollywood producers and directors about Industrial Light and Magic (ILM) being located in Marin County, far away from LA. ILM lost some work along the way to their “remote” location. But it's ILM. And they probably don't care. Other companies in more remote locations probably cared a bit more about their disadvantage.

These days though, the technology and methodology has evolved to the point that you can do VFX work anywhere you want, as long as the price is right. The disadvantage to being outside of LA has disappeared.

You'd think that's why VFX in LA has died. But actually, it's not. It's clear that all things being equal, Hollywood would rather be in Hollywood. And further if the work is superior, they're willing to go outside their comfort zone. But all things are not equal. They're not making choices based on merit.

Rather the ability to do VFX for a film anywhere simply makes it easy for subsidies to be used to move VFX jobs to any country or state that's willing to pay. The subsidies are the most powerful force in the market.

They override everything else. It can be done at the drop of a hat. The current strategy to winning contracts, is to be able to pop-up or subcontract a VFX shop wherever you need to, to get the studios their subsidies. The vendor companies aren't thrilled with this. But they have adapted to do it at the company level.

However, as an artist or technician, when subsidies force the work to Vancouver or London or Montreal, you are forced to move there immediately with little or no notice. Further, Vancouver requires you live there for a full year in order to qualify as labor for their tax-credit distribution. So really, you do have to move there. When the next movie decides to do its VFX work in Montreal or Toronto, the VFX vendor company (or another) will open up a shop there. Contracts will be awarded. The work will move.

If you stick with it as a VFX worker, you and your family end up migrant. You end up following someone else's tax credits around the world, full time. I have a lot of friends and colleagues who have been forced to do this. None of them wanted to do it. Kids are taken out of their schools. Homes are sold. I have one friend who finally got their US citizenship and was then forced to move to Canada within the year, with the whole family in tow. VFX workers are not rich people. They are below-the-line middle-class people. They can't keep doing this.

Since the British Columbia provincial government has become savvy and required residency of a year or more, they probably won't even be given the option of moving in the future. Other subsidized areas will figure that part out and do the same. In that situation it makes more sense to hire existing residents. If the vendor moves their workers, they lose eligible workers in the first location and it could take a year for them to be eligible in the second. That's why you see VFX vendor companies opening shops in Montreal these days and staffing up with residents.

Depending on how things go, if they can't move staff and get tax- credits, they'll likely just fire in one location while hiring residents in the other. No waiting for residency. Quality and experience is secondary to subsidy money. The migrant VFX worker problem was bad enough. If it continues this way, every time a tax credit moves VFX work, it's career ending for the workers.

In LA, this already happened. The tax subsidies in LA are too small to compete and Hollywood has all but abandoned the city as far as VFX is concerned. In NY, the tax subsides were significant enough to draw some work. But this year, they capped the VFX subsidy at $7 million. So I'd expect to see that temporary respite ended soon. You saw Marvel make a sweetheart deal for an individual production in NY recently. They needed a deal to make sure they got their subsidy money, and were not subject to losing out to the caps and other technicalities. It extends the respite a bit. But it also shows that without the individual project deal, those jobs wouldn't be in NY.

Many domestic VFX workers were forced into the worst job market in decades, with skills the rest of the world doesn't understand and doesn't think they need. A lot of people moved to follow the work.

They'll be forced to move again, and again if they are lucky.

Those that are no longer in VFX didn't lose their careers because they were bad at them. They didn't lose their careers because others got better than them. They lost their careers because Hollywood studio executives needed to get subsidy dollars in order for the balance sheet to remain in the black. And the studios have been able to accomplish that by pitting foreign and state governments against one another. LA didn't play ball. So they lost their careers. And if that were actually fair- play, perhaps that would be the end of it. But it's not fair-play.

International trade law allows a CVD case to be brought by the domestic industry because it's not fair-play. They're exercising their rights.

The studio executives are pushing the subsidies because they don't know how to make profits any other way. They are MBAs. They have limited switches to throw and levers to pull. And to the extent that it's working, they seem to feel they are doing their jobs well. If they end up losing the CVD case, they might be proven wrong about that feeling.

That gets us back to you. I said it was your fault. You're probably saying right now: But it's the studio executives fault. It's multi-national corporations. Not me!

Studio executives do what it takes to maximize stock prices and dividends for their investors. That's you. That's your neighbor. That's your uncle. They do it so your 401k, IRA or pension can grow each year. That's their job. The studio executives work for you. If you keep quiet and don't pay attention to what they're doing, it's still your fault.

You enabled them. As an investor you have rights and in-fact you have obligations. You could vote them out. You didn't. In the best case scenario for you, you have not held institutional investors responsible for their decisions on your behalf in these matters. It's still your fault.

Rather than ask why the domestic VFX industry wants to do this to you, you should probably be asking what has happened to the film industry such that it's now completely dependent on international subsidies to be profitable? Who messed up? When did it happen? Why was no-one made aware of this? What has been going on? What are the true risks associated with the feature film industry as it currently exists?

Perhaps the most important question should be: Can this be fixed? After all, it's your retirement money. You own the studio. You can

demand it be fixed. You can demand that these ridiculous and thinly veiled risks be replaced by actual stable profits though good decision making and sustainable solutions. Lets assume for the moment, it's possible to fix it. How?

Eggs

VFX is the goose that laid the golden egg. Actually, it laid two golden eggs. What you are looking for here, is a third golden egg. And if you cook the goose, that isn't going to happen for you.

Egg #1

Since the beginning of cinema, there has been a component to the film market knowns as “the cinema of attractions.”

The earliest example would be cinema itself. At first, walking into a tent and watching a moving-picture was novel. It was an attraction. There was no narrative. There were no movie stars. There were images of far off places and things, brought to your locale and shown to you as a motion-picture, or movie. It was amazing. It was worth the price of admission.

It's easy to think of the barker with his megaphone yelling, “come one, come all, and see the amazing moving-picture machine! It will transport you to wonders far off. Paris! Egypt! All inside this tent!”

Perhaps you believe that was temporary and quaint? That the “cinema of attractions” is long dead?

Does this ring a bell? ”You'll believe a man can fly?” That would be the tagline to “Superman” in 1978.

How about this? ”An adventure 65 million years in the making.” That would be the tagline to “Jurassic Park” in 1993.

Even that little movie I worked on, “Iron Man” had huge bright, shiny attraction in it. It was red and gold (and I can claim I helped design it early on). Don't think for an instant that Jon Favreau didn't understand he was hocking the thing. Why do you think there was so little of it in the movies until the end? He's been teasing you with it.

Those tag lines could flow just as easily from the barker's megaphone as a call to view the bearded lady. The cinema of attractions never died.

And in 1993 going forward in particular, the digital VFX industry turned it into a cash-cow for the film industry.

Even today, “Gravity” features huge, long-take, 3D, digitally animated sequences the likes of which have not been seen before. They are more refined and integrated than the bearded lady. But the fact of the matter is, people pay to see the grandstanding digital effects. Without them, “Gravity” isn't even possible.

Technically, we can make any image we want now. We (the audience) should have matured past the effectiveness of this golden egg. But it still has some life in it. It's still reaping rewards. Your movie industry might have been a wreck long ago without this egg VFX laid for you.

Egg #2

The second egg VFX laid for you is something you probably take for granted. “Jurassic Park” seems have had about 50 or so CGI dinosaur shots in it. Really, the VFX industry was only so big at that point. And the tools that were in use could only handle so much complexity. By today's standards, that work is simplistic. But it required some of the most intelligent and talented people in the world to accomplish it at the time. It could not be mass-produced.

The second golden egg is the egg of scale and scope. Over the years, the VFX industry has expanded its size and its technical abilities to handle anything. Really, anything. Any image you can come up with can be done, and done repeatedly. It may just require more money than you have available.

Does your movie require over 1,400 digital VFX shots? No problem. Does your movie require every background to be replaced? No problem. Does your movie require most of the main cast to be digitally altered or digitally generated? No problem. Need to get rid of your director? Talk to the DGA. That's not our thing. But we work for you.

So if you want us to change the ending, we might be able to do it. Just keep the director off our back if you override him/her. Hey DGA, if you don't like that, consider that we'd be great allies to you. But we can't do that unless we have a guild.

In the past producers, writers and directors had to be very careful about what they tried to produce. Writers needed to re-write scripts to make them able to be shot on budget. Producers needed to talk directors out of certain creative choices that created logistical problems that were impossible to solve. Certain books and screenplays were simply labeled, “un-shootable.” When CGI wasn't really capable of everything, one had to be a judge of what should be done CGI and what should not. For a while, digital VFX wasn't really available for a screwball comedy. There was not enough capacity. Now, they all have them. I spent weeks programming tools to work with LIDAR data for a comedy.

I never saw the movie. I don't know if it was funny. But the VFX got done, LIDAR and all.

The second golden egg VFX laid for you is the scale and scope of work that it has grown to be able to accomplish. Say what you want about the artistic value of the “Transformers” franchise. But it makes a ton of money. If VFX hadn't grown to be able to handle it for you, how would it ever have been made? Would it ever have made the kind of money it did?

Ask yourself: Once “Jurrasic Park” happens, does Hollywood have the option of making money on movies without digital VFX? Can you go back to claymation? Can you go back to painting glass for matte- paintings? Can you avoid needing digital VFX?

An argument could be made that Hollywood should have avoided the dependency. But they didn't. And once the decision was made, the VFX industry delivered the second golden egg that was needed. They grew in scale and scope to be able to do what Hollywood demanded of them.

You got your VFX renaissance where your most profitable movies simply could not have been made without huge amounts of digital VFX. You made a lot of money on it. And had VFX not been able to do this for you, the movie buisiness could have succumbed at that point.

The egg you need

Now obviously things are rough in Hollywood these days. You need something. Because right now, the only way Hollywood is just barely able to keep afloat, is by arm-twisting and beguiling politicos into giving them government subsidies. It's unprecedented. Historically, it's other foreign film-markets that have required the same government subsidies, in order to keep them from being crushed by Hollywood. In a sense, even NY's independent film market needed subsidies to keep from becoming completely untenable.

The knee-jerk reaction has been to eat the goose. Hollywood has spent the better part of the last 7-10 years cooking and eating the VFX goose.

Not just with the subsidies, but by insisting on a fixed-cost contract model. Then by insisting on outsourcing work to low-cost labor markets. Now, by forcing vendors into any subsidized market Hollywood can negotiate/lobby into existence.

However, I think I've argued quite clearly, these subsidies are illusory money. They're risky. Hollywood's profitability cannot be left to the whims of Vancouver's voting body politic. When they wise-up, you are left to the whims of the UK's voting body politic. If the UK wises-up, you are left with New Zealand. Except of course, NZ already bucked once.

The next time they will be wiser. NY capped their VFX subsidy already.

LA decided not to even play ball in the first place. It seems unlikely that the latest push to get something through the state legislature will succeed. Even if it does, you are then at their whims. And lastly, the CVD case seems serious enough that perhaps its not even up to the voters. The subsidies could be wiped out suddenly and all at once.

What you really need, is for the VFX industry to focus on doing everything that they've already done, but do it cheaper, better and faster.

Yes, there's a certain amount that could probably be trimmed already with some ham-handed cutting. But in truth, you need filmmaking and digital VFX to become one and the same thing. You need the smartest people in Hollywood, who have given you two golden eggs already, to figure out how to fix Hollywood. And you need to MAKE IT WORTH THEIR WHILE to do so.

You need another golden egg. You need VFX to lay it for you because no one else seems ready or able to do so. But you cooked that goose!

You can't un-cook it, can you?

Inverse culinary arts

Last I checked, you can't un-cook fowl. So ends the metaphore.

Hollywood hurt the VFX industry. Hollywood laid them off and scattered them. It has pit worker against worker in international subsidy battles.

But most importantly, as things are currently arranged, there is absolutely no incentive for VFX workers to fix things for you. And THAT is what you need to change.

I have put a lot of thought into the kind of structure and deals that would need to be in place to properly align the VFX industry with Hollywood's needs. And that could probably be another 5,000 or so word piece.

For now, I'll simply leave you with the call to action that starts the boulder rolling down the hill.

You need to buy them in. To do that, the AMPTP needs to pull out a chair at the bargaining table and ask the VFX industry to sit down and negotiate. Just like you negotiate with the Screen Actors Guild (SAG), the Writers Guild and the Directors Guild (DGA).

Last I checked, the CVD case is being brought by a 501(c)(6) organization, which is the same kind of organization as the NFL. You can negotiate with them.

Just in case all this is lost on you

Hollywood, Yes the CVD is leverage against you. If you want to be angry at being forced into negotiations, be angry. But take a good long hard look at where you actually stand right now and ask yourself: Shouldn't we have pulled out that chair a long time ago, before it got to this point?

If your investors take a good look at what has been going on, and you don't un-cook the goose, there's going to be hell to pay.

If for some reason you don't take this advice, and you continue along your current vector, consider this: Do you really want the former-US- domestic-VFX-industry to be out of work and trying to figure out how to beat you in the open market? They are smarter than you are. You're giving them quite a few axes to grind.

I for one, don't work for you anymore. I'm just one. I'm probably not the smartest of them or the most business savvy. If I have put all this together to suggest you act in your own self interests, you don't want to see what I will put together to compete with you in an open market.

If it's not me, it's just one of the others you cast off. I have a friend who does VFX because he found theoretical mathematics at an ivy league school uninteresting. You've got… Brett Ratner? Let's place bets on who's going to figure out the future of entertainment in this century. You are completely restrained by decades of AMPTP guild contracts. We have no such restraints. Unless you'd be willing to put such restraints on us? Hmm.

  • mike

    This article is all over the place and doesn't face the truth of the situation facing Hollywood cinema production.

    Firstly, it does not address the honest reasons why VFX houses go out of business – bad management who acquiesce to fiddling with signed off shots, reshoots etc from the same woefully underquoted original bids. This happens in and outside of Hollywood and will continue to happen because VFX shots are mostly done with computers, its skills which are viewed as ‘cheap and malleable’ by producers and directors, adjusting and redoing shots on the fly until the VFX operators fingers bleed. It's the one guaranteed fast track route to VFX budgets going over. This situation has nothing to do with foreign subsidy and would have happened without them no matter if a films budget came 100% from the coffers of a studio or, as most films are, the monies of several independent entities including studios. So no, the subsidies have nothing to do with bad management.

    The subsidy issue is whining from first tier workers watching their skills being subsumed more cheaply elsewhere and has happened in every industry since the invention of the spinning cotton wheel of the first industrial revolution. It's almost racist in tone – ‘they’ took our jobs except, thanks to globalization and capitalism (which I remind you the US flag waves) ‘they’ needn't have left their country of origin to do so.

    So, it's no use whining ‘it ain't fair'. The most you can do is make sure what you do is a rare skill. Computer VFX skills aren't. Maybe the physical VFX skills of animatronics, motion control, model making and their ilk were too easily thrown away? I doubt George Lucas could do Star Wars ad hoc in an industrial unit by the airport these days. Skills have been lost and replaced too quickly with a skill set that's easily replicated elsewhere in the world with a download of some software, a manual and a cheap course or two.

    You can legislate as much as you like, but lawyers and corporations will always move the goalposts because, at the end of the day, it's their game.

    Welcome to globalization. Remember US of A, you invented it.

    • Scott Squires

      Mike you clearly have not done visual effects or understand anything about visual effects. As much has you like to think vfx are done by computers they are not. And as the article poitns out the work isn't going to cheaper places with cheaper labor. It's going to places jus tax expensive and with workers making similar wages. The difference is the subsidies are covering the costs and making it cheaper, not the actual costs.

      • kyoseki

        Didn't you know? Reading the manual for Maya automatically makes you a world class VFX artist, just like reading the manual for MS Word makes you a world class writer.

        • Ross

          @kyoseki: How the f*ck did you learn? Guaranteed you READ the manual and WATCHED TUTORIALS! >:I That's how we learn! >:I

          • kyoseki

            … and you manage that overnight do you?

            The entire premise of the original post was that these skills are easily replicated, which they're not.

            If they were, the work would already be getting done in locations with cheap labor and that's not the case.

          • Ross

            @kyoseki:disqus If the SKILLS weren't teachable there would be no need for f*cking JUNIORS at companies! These SCHOOLS wouldn't be fooling kids to pay them THOUSANDS of dollars for a bullsh*t degree in VFX if it wasn't teachable! >:I YOu see the wages in Vancouver? THOSE ARE CHEAP! o_O Wages in India, VFX artists trained in USA and CANADA get paid $12 a day! >:I

          • kyoseki

            What was your degree in? Because it sure as hell wasn't English.

            I never said the skills weren't teachable, did I?

            “Easily replicated” and “teachable” aren't the same thing, are they? If they were, degrees in this crap wouldn't take four years and the kids they constantly pump out would know what the hell they're doing.

          • Ross

            Well, those kids are HIRED by companies, so that's proof enough it's a TEACHABLE skill! Work at a lot of these big companies your promotion is dependent on your ability to TEACH your REPLACEMENT! So if you can't simplify what it is you do, you are a LIABILITY, NOT AN ASSET to the Studio! >:I Tutorials online are made by WORKING PROFESSIONALS! As for your analogy of “mastering a paint brush is easy, painting isn't.” Only if you're a sh*tty student! >:I I know many modelers who can barely draw, yet they makes some kick a$$ models! >:I VFX work isn't painting, it's REPLICATING visual targets set by guess what? REAL LIFE FOOTAGE! THAT'S VERY TEACHABLE. And it's an action you can repeat over and over again no matter where you are on the globe! >:I Yeah, I didn't waste my time getting a masturbation degree like “English” majority of people on the planet don't give two sh*ts about proper grammar! As long as you pay me what we agreed upon is the only universal language needed to be comprehended! >:I

          • kyoseki

            Ok, let's keep things simple.

            If this job is just about doing the same thing over and over, why is there even a VFX industry outside of India?

            Even with subsidies, I'm pretty sure BC artists get paid more than $12 a day, so why isn't ALL of the work being done in Mumbai & Hyderabad?

            Go on then, enlighten us.

            …. and just TRY telling a director “but that's what would happen in reality” and see how far that gets you.

          • overit

            This fool isn't worth the effort kyoseki, it's quite apparent that he doesn't know anything about our industry. He should probably go back to complaining about people on welfare, child support and how much women rape men.

          • kyoseki

            Oh yeah, WOW, good call.

          • Ross

            Birds of a feather flock together! ENJOY your jerk circle of ignorance!

          • ROSS SUCKS

            Ross you are a giant DOUCHE! I can't believe that people actually engage with you. You need to get laid dude. Then you wouldn't have to troll around looking for fights to pick. AND LAY OFF THE CAPS!!!! AND EXCLAMATION MARKS!!!! YOU ARE THE QUEEN OF INSULTS YOU DOUCHE!!! CONGRATS!!!!

          • Ross

            Here's a napkin, wipe yourself off, dear. :P

          • kyoseki

            Honestly, I think I'd get a more coherent argument out of my sister's West Highland Terrier.

          • ROSS SUCKS

            This guy is just wanting to fight. He can't make a valid argument because he's only interested in insulting people and being a jerk. He's obviously a very lonely and bitter person.

          • Ross

            And you're STILL ignorant! >:I

          • rfk

            Get a job, Ross, and stop posting on the Internet.

          • Ross

            Only fool is YOU for not understanding, software isn't priced at what it used to be, TUTORIALS negate paying THOUSANDS to go to any school! Guaranteed you're an artist that SUCKS and that's why you fear how easy it is for people to learn, no matter their location! >:I GUARANTEED!

          • Ross

            @kyoseki: You answered your own question! Hollywood is a GHOST TOWN. Vancouver is thriving. Vancouver wages are 85 to 75 percent of L.A. wages at best, even WITHOUT subsidies. The tax credit makes those wages EVEN LESS! Are you even THINKING before you ask? o.O Do you even have a portfolio? ‘Cause I can guarantee, from your question, it is NOT a top notch portfolio. Guaranteed! >:I ‘Cause the only people who fear losing a job to another country are people that suck! Especially in the business you're in! If you're good at what you do, you would be a Supervisor overseeing the work of artists GLOBALLY and not worried about losing your job, 'cause your skill would be worth paying a premium for, yet, I don't have to see your portfolio to know you are not one of those TOP TIER performers. You're a cog, burger flipper, who thinks his work isn't worth outsourcing!

          • kyoseki

            Did my computer start switching everything to Swahili and I didn't notice?

            I asked you why the work wasn't already in India and you start gibbering on about Vancouver wages.

            Vancouver artists are still paid more than guys in India, aren't they? So I'll ask you again, why isn't the work already being done in India?

          • Ross

            @kyoseki:disqus It already is being done in India and China. Language and time zone help. Studios set up shop in English speaking countries which offer a lower wage than L.A. artists. Vancouver is in the SAME time zone as L.A. Plus, they tend to work harder than entitled California workers. Despite their pay in London, Vancouver, India, China, those artists work harder than the entitled bunch in California who think no one else can do a similar job.

          • Ross

            @kyoseki:disqus Animation is already being done in Korea, China, India, Phillipines. VFX will follow the SAME course! If it can be outsourced it WILL be outsourced.

          • Ross

            @kyoseki:disqus If you ‘re worried about outsourcing, improve your skills, 'cause most likely, you suck at your craft.

          • kyoseki

            Who said I was worried?

            You're the one who keeps insisting any idiot can pick up a copy of the software, watch a couple of tutorials and start belting out professional grade work.

            If that were actually the case, Vancouver would be as dead as Los Angeles, because all the work would be getting done in India right now by guys who apparently make less per week than we make per hour.

          • Ross

            Definitively insecure, and this gives you away completely as a hack. “You're the one who keeps insisting any idiot can pick up a copy of the software, watch a couple of tutorials and start belting out professional grade work.” <—only a hack would try to refer to someone sitting down to learn in a self-directed manner as an "idiot." A Master of their craft would encourage such initiative. A HACK, like yourself, would not. You are a HACK. Definite HACK. That's why you're very pretentious. I've trained some awesome artists in India. They make $12 a day, they can easily outperform a hack, like you.

          • kyoseki

            Project much? Go on, say “hack” again.

          • Ross

            @kyoseki:disqus send a link to your portfolio, dear. ;) Even veterans at ILM say it best. “We can teach anyone how to do this. They just have to be willing to learn. In our teams we'd rather have a not so talented guy willing to learn rather than a superstar who isn't willing to learn.” Food for thought. ;) Again, VFX is not Astrophysics, and even that can be taught. To think it can't is a sign of a HACK! That's you, dear. HACKS make convoluted the easy, while MASTERS of their craft make simple the complicated. That's how one knows they have mastered, when they can easily teach.

          • kyoseki

            The sign of a hack is that they think they've mastered anything.

          • Ross

            “The sign of a hack is that they think they've mastered anything.” <—-Nah, this is just something HACKS say to JUSTIFY their HACKNESS! :P Just like Fat people blaming big bones for their fatness! :P And read my comment again. A MASTER is able to TEACH. They don't need to address themselves as a master, it will show in their ability to share their knowledge. Only hacks make convoluted the simple, while masters make simple, the convoluted. You're still a hack, dear. And you show it in your comments, consistently. Good luck to you.

          • kyoseki

            The fact is that the guys in India & China who know what they're doing are just as rare as the guys in the US and Canada.

            … and as they get better, they get more expensive, or, more likely, they move to Canada or the UK to get paid a hell of a lot more than they would back home.

          • Ross

            kyoseki Again, ONLY a HACK would refer to numbers as proof of importance. Ever think, that perhaps, there may be a small number of VFX Artists, 'cause it DOESN'T PAY WELL! Take your head out of your a$$! >:I Gee, a degree in Computer Science gets you across international borders a whole lot easier than a VFX art related Degree. >:I They, VFX Artist, have a skill that can be taught quite easily. It's not complicated. The sooner you realize that, the better.

            “as they get better, they get more expensive, or, more likely, they move” <—as they get better the smart ones tend to open their OWN STUDIOS and TEACH and LEARN from their staff! Met a VFX artist who worked in L.A. at Rhythm and Hues, he did that for five years and moved back to India and opened up his own VFX shop! Get a BIGGER piece of the action!

          • Ross

            CHEAP LABOR that knows VFX is PLENTIFUL!! Wire removal, rotoscoping is NOT BRAIN SURGERY! Took me 30 minutes to learn how to do roto! The software these days is VERY intuitive! Modeling, now with ZBRUSH, WOW, put in some time it's not hard to master at all. Retopologizing, texturing, lighting, compositing, ALL TEACHABLE! ALL REPEATABLE GLOBALLY!!!! That was Mike's point! HOW YOU MISSED THAT is BEYOND ME!!! o_O

          • kyoseki

            Mastering a paintbrush is easy, mastering painting is not.

    • Hal Jam

      What's funny is that you think you know what you're talking about.

      • Ross

        ‘Cause he does! What's funny is that you're willfully ignorant at the matter of fact information shared! >:I

        • Hal Jam

          Actually, I'm not. I've worked in visual effects for many years, on many big-budget projects. In fact, since I've worked at most of the biggest VFX companies in the world, and seen my share of them fail firsthand, I think I might have a better idea of the factors involved than you do. When I first started in VFX they always said our jobs would be shipped to China and India. For years and years they said this. But you know what? It never happened, because we're skilled Artist that can't be replaced with a wave of Hollywood's magic wand. What has killed CA jobs? Subsidies alone. It's pretty obvious to anyone who is on the ground in VFX. If the Canadian government can pay 60% of your workers salaries, well… no one can compete with that.

          • Ross

            What has killed California jobs is a badly managed State that likes to tax and tax some more! VFX jobs are NOT the only jobs leaving California. Do a little research! That State is F*CKED 'cause it has a Ponzi Scheme running called UNION PENSIONS that it can't pay!

          • dbushik

            You clearly know nothing about what's happening in CA right now. You are just spouting wing-nut nonsense, fear and hatred, none of it based in fact, no matter how many caps you misuse. The only thing mismanaged is your ability to filter out nonsense from reality. BENGHAZI!!!!!111i!!i1!!i!!

          • Ross

            @dbushik:disqus I know this much….YOU need to lose some weight! >:I “Biggest Loser Ranch” is out there in Cali, and a State away in Utah. Good luck, read more! “The only thing mismanaged is your ability to filter out nonsense from reality.” :I

          • Ross

            And another thing. FORTY PERCENT of people on GOVERNMENT ASSISTANCE in all of the USA, live in ONE STATE! CALIFORNIA! It's a TAKER'S STATE. Well, TAKERS gotta take from someone, and those people being taken from, are LEAVING! >:I And as for your 60 percent of the worker's wages…DO MORE RESEARCH on that! >:I Sick of you ignorant f*cks who just parrot mis-information especially when that aspect has been corrected MANY TIMES! >:I

          • adrian mcdonald

            Ross, you are flat wrong on the B.C. Incentive. It's 60%. It's a fact.

          • Ross

            @adrianmcdonald:disqus VFX shop owners in Vancouver DO NOT get 60 percent of their payroll covered by the taxpayers. PLENTY of reports out there confirming that! PLENTY! You own a shop in Vancouver, YOU pay those salaries. You operate like any other business in the area. CRA doesn't give any leeway on that.

          • adrian mcdonald

            @RossTan:disqus, I never said the VFX house gets the 60% wage rebate. The production company gets that money. Name a single report that confirms what you are saying. Seriously, please try. I would direct you to the BCFM, the agency that actually administers the various Provincial Credits in B.C. You can call to confirm, but the information is already on their site. They even have a great credit calculator that will tell you how much you can expect back. And if you are paying for VFX from a resident BC VFX worker, you get 60% cash back. It's not a matter of debate, it's simply a fact. You can concede the point or continue to deny basic factual reality. Bottom line, you are just wrong.

            Feel free to email me. amcdonald AT filmla . com. I would also be happy to put you in touch with the VFX producer on Godzilla (Allen Maris). He is supervising the completion of VFX work (most of it done in BC) and would be happy to confirm the 60% subsidy amount. He told me the other day they actually delayed some work for a few weeks so more BC resident VFX workers were freed up so they could get the 60% rate on as many workers as possible.

            Frankly, if you live in the LA area, I would be happy to arrange a visit to WB to meet with him in-person. Interested?

          • Ross

            No it isn't! RUN A VFX STUDIO there and then talk! >:I

    • hja28

      very well said Mike! I was in the VFX business for 25 years since the late 70's. the VFX companies were always tanking in those days. very bad management. far too much inter-company politics. the VFX budgets in those days were infinitely less than today. yet everything now is easily done on laptops and the VFX budgets are millions of dollars. there are a lot more problems than global competition and tax subsidies. than fan films done on laptops are gorgeous! and they cost nothing to do.

    • Ross

      @mike: WELL SAID! :D WELL SAID!! :D

  • Mark Kochinski

    Sorry, Mike – the article is dead on and one of the best I've read on the subject.

    No matter how well run your business is, or how efficient you are, you will NEVER be able to off-set millions of dollars of free money from taxpayers. Certainly there have been poor business decisions, but none of them are capable of off-setting the numbers we're talking about here.

    Do you think it's the VFX houses that “allow” the endless changes? Those are DEMANDS from the studios – just like the fixed bids are. If you don't kowtow to those demands, you will not even get the work in the first place.

    It's not globalization, it's not capitalism, it's not cheaper labor and it's not unions that are killing Hollywood. It's the availability of free taxpayer money paid directly to the studios.

    • JefferyHaas

      In some circles that is called fascism.

      • Ross

        It's called CORPORATE WELFARE!!!

  • Dave Rand

    20 yrs in the business and moving through 12 vfx shops, on the staff of five that have gone bankrupt I'm looking past subsidies and sophomoric fluff. There's still age old issues at hand. Subsidies are also an oligopic tool to keep the new comers out and the fences up. There's far more to this picture, that can not be discounted.

    The subsidy battle is at hand but the “war” has been going on for much longer and will still be there when the CVD effort pans out or not.

    All of these efforts are additive. Addressing better ways to work, better treatment of artists, improved creative cultures, and profits that can bring studios in power now or those who that are yet to be once they are “allowed in” ….these are completely valid issues going forward as well.

    For California, until there is balance, focus is on jobs as it should be. For the rest of the world ….there's plenty of “fluff” to deal with.

  • fxbeta

    Outstanding article. I hope the right people in Hollywood take notice because it's right on the money.

  • Hebrew producer

    A c areer in VFX is a loser you are workingg a high wire act without a net

  • Lester

    This article is missing the point completely. I have over a decade in the feature film vfx industry and have worked on over a dozen giant blockbuster films. And I'm that thing you hate most, the foreign worker who only has a career because the country I live in has subsidies.

    By continuing down the “sibsidies are bad, only Americans deserve to work in vfx”, you're turning the issue into vfx workers versus vfx workers. When really the issue is studio meddling, expecting redo's done over and over without paying for them. It should be a matter of all vfx houses versus the studios. Not American vfx houses versus international vfx houses.

    As long as we're fighting each other the studios will happily keep getting away with what they're doing, (getting work for free and sending companies broke). So good luck with your campaign, but personally I'm glad the subsidies are in place.

    • DC

      BANG ON!

  • dbushik

    I hope this opens the eyes of some rather privileged and educated people to the plight of people not so privileged who have been suffering through similar employment issues without nearly the solid educations and skill sets to fall back on.

    • Ross

      @dbushik: DAFUQ are you talking about! >:I YOu can have degrees upon degrees and STILL be unemployed! DEGREES don't mean anything unless you're willing to work and persist! >:I Get a job! >:I

      • dbushik

        You're lost if you think a person with a degree faces the same prospects as someone without one. The unemployment rate is halved for people with degrees compared to the overall. Not sure what that has to do with what I was getting at, but just FYI.

        You're also similarly lost if you think “Get a job!” is helpful to anything but your own ego. You're just plain lost in stupid ignorant ideology if you think the problems with unemployment and the economy are based on people's unwillingness to work. That's fantasy land. I'm sure it makes you feel good about yourself and keeps you from thinking empathy is a good idea and from having to go to the trouble to addressing real problems, but it's total fantasy.

        • Ross

          @dbushik:disqus Where do you live? What part of the world? ‘Cause if you're an AMERICAN CITIZEN, an EU CITIZEN, or a CANADIAN CITIZEN, you DO NOT need a degree to get ahead in life. There are MANY jobs that DO NOT require a degree! MANY! Getting a degree in a BULLSH*T course is a sure fire way to the bottom. That's how people can get degrees in non-pragmatic courses (Basket Weaving, Theology, Psychology) and complain they don't have a job, they have a “degree” though! And YES people who have degrees tend to act entitled. They act like they are TOO GOOD to do any job to get by, hence, my point remains, GET A JOB! Only one in fantasy is YOU! Especially if you live in America! If you live anywhere else, getting a degree in Math, Science, Engineering, Technology, will get you a WHOLE lot further come IMMIGRATION time, than a BFA in Art or Psychology.

          • dbushik

            Dude, you are babbling way outside what anyone is actually talking about. Clearly the fever of has overtaken you. You're making a fool of yourself, FYI, and for gods sake give the caps a rest…

          • Ross

            @dbushik:disqus Only one who is jealous is the one who thinks people with degrees are superior in the job market. Total ignorance on your part. Look beyond your niche. Only a loser would try to celebrate “hard times for all.” You're a definite loser.

          • ROSS SUCKS

            hahahaha!!!!!!!!!!!!! Poor jealous little Ross! Probably your best job ever was at McDonalds!!!!!!!!!!! Why don't you go cry to Mommy you little girl!!!!!!!!!!!!!!! Hahahahhahahaha!!!! Loser!!!

          • Ross

            Loser making SIX-FIGURES on my way to SEVEN, b*tch!!!! :D No degree either! :D

          • ROSS SUCKS

            Hahahahahah!!!!!!!!!! Right. Like we believe that. LOSER.

          • Ross

            Don't care what you BELIEVE, dear. It's between me, my accountant and the tax collectors (Government)! :D A party you are NOT invited to! Jealous! :P Here's another napkin. In fact, take the WHOLE BOX! :P

          • ROSS SUCKS

            You know, this is just sad. Ross you are pathetic. What kind of a person attacks and argues with people with such venom just for the sake of entertainment? A PSYCOPATH. That's you Ross. Why don't you just get lost.

          • Ross

            Pointing out a simple truth is an “attack,” in your world? WOW! o_O To be mediocre, that is your life, dear. Grow up! World is changing, keep up or get left behind! :) It's my week off, I'm having fun sharing knowledge. :) take it or leave it. :)

          • ROSS IS A BORE

            I have a feeling that “Ross” is probably a 20 or 21 year old boy, destined to be a virgin for life, has no friends, is mad at the world, and scours any sites he can to fight with strangers for fun. He has nothing better to do and no-one better to do it with. Life is good! Isn't it “Ross”??

          • kyoseki

            Did you graduate high school?

  • Ross

    PRETENTIOUS ARTICLE! A bunch of VFX with NO STORY is a PILE of CONVOLUTED SH*T! >:I VFX are in SUPPORT of the STORY, the ACTORS, remove VFX you STILL have an actor doing a BROADWAY show, making appearances! T.V. shows don't even rely on VFX! They rely on WRITING and ACTING more than anything. You think HBO's “The WIRE” needed any VFX? Get a clue! No one goes to watch movies unless there's a STORY to be watched! Harry Potter, Jurssic Park ALL started as BEST SELLING BOOKS! NO VFX NEEDED! STORIES captivate people, once you hacks realize that you'll actually further your own careers! >:I

    • Hal Jam

      And yet Transformers and The Avengers make over a billion dollars? You might need a clue as to why people go to the movies if you think VFX are not a key component. You think VFX are the biggest part of a movies budget because…? Because why? There must be a reason, Ross? Maybe if you think really really hard you can come up with one?

      • Ross

        @haljam:disqus “Green Lantern,” “Ender's Game,” FULL OF VFX, yet both BOMBED by HUNDREDS of MILLIONS!!!!! >:I Didn't you even read the article? Clearly you DIDN'T 'cause the BIGGEST part of movies budget goes to MARKETING! >:I Read the article and actually understand how the business is run before running your fingers over the keyboard! You worked in VFX for years, yet, reading and comprehending an article of that length is too much for you? If you're any indicator of the type of people that work in VFX in L.A. NO WONDER THE WORK IS LEAVING! Serves you right! Pretentious, arrogant AND IGNORANT! >:I

        • adrian mcdonald

          Green Lantern budget: $200 million. Louisiana taxpayers covered $30 million of cost for WB. Global BO was $219 million.

          Endersgame cost $112 million. Louisiana chipped in $20 million. Worldwide BO was $112 million.

          Neither were financial hits, but hyperbole claiming they “bombed by hundreds of millions” is flat out wrong. Hilarious, but totally false.

          Here is some reality for you: 44 of the 50 highest grossing movies of all time relied on VFX.

          • Ross

            Movies need to make 2-3 TIMES their production budget just to BREAK EVEN!!! The budget production numbers don't even include how much they spend on MARKETING! Tack on another 30-40 percent just for marketing and you'll see why those movies I listed were BOX OFFICE FLOPS! Also keep in mind, EXHIBITORS AND DISTRIBUTORS get a CUT( Movie theaters get a cut from day one of that box office and the longer a movie runs the bigger their take, that's why the frist 3 weeks are crucial for a movie, 'cause that's when the split is 70-30 of box office sales for Studio to Theater the longer a movie plays that switches to 30-70 for the Theater to Studio.) Actually read about this business and how money is made!

          • adrian mcdonald

            See my comment above. I address your points there. And not only do I “actually read” about the business, I also write some of the leading works that are widely read by others to learn about Hollywood.

          • Ross

            No you haven't addressed my points. The MOVIES BOMBED by HUNDREDS of MILLIONS. FILMS overall LOSE MONEY! Even James Cameron pointed this out! DVD sales are NOT BOX OFFICE SALES! >:I T.V. Licensing is NOT BOX OFFICE SALES! >:I I'm focused on the FILMS themselves in the realm of BOX OFFICE! >:I Not LICENSING! >:I Hence, they are BOMBS in the context I'm using them! Your ‘rudimentary” math is SKEWED because you are expanding the CONTEXT to minimize the massive financial loss of these BLOCKBUSTER BOMBS that I've listed!

            High DVD-Blu-Ray sales are NOT guaranteed hence they cannot be taken into account for the theatrical flops!

          • Ross

            “Neither were financial hits, but hyperbole claiming they “bombed by hundreds of millions” is flat out wrong. Hilarious, but totally false.” :I

          • adrian mcdonald

            @RossTan:disqus I do know how the industry works. Google me. I am one of the leading experts on film incentives (globally). My most recent work was the 2013 Feature Film Production Study. I doubt you have read it, but you may have seen it on the news or in the papers (ABC World News Tonight, Fox Business News, BBC, LA Times, New Orleans Times-Picayune, The Hollywood Reporter, Variety, Deadline, Forbes, Good Morning America and most CBS and ABC local news affiliates around the nation).

            Before that, I authored two massive law review articles published by UPenn Journal of Business Law. Both are widely cited in industry trade studies and each has been translated for foreign publication.

            I do know how revenue is split and earned. Naturally, I left out the DVD & Blu-Ray sales totals (which further offset the loss), not to mention syndication deals and licensing agreements (the profits from these revenue streams surpassed the gross from the BO).

            The point of my comment was to correct your very overstated claim that they bombed by “hundreds of millions of dollars”. Empirically, even the rudimentary math disproves such a loss. Were they bombs? Yes. They were bombs. But no, the loss was not in the hundreds of millions of dollars.

            As for the top 50 movies….sure, they also relied on directors and actors and writers and camera operators and set designers and the dozens of other professions that bring movies to life. That said, movies like Avatar, Harry Potter, Transformers, Lord of the Rings and so on would not even exist but for the groundbreaking VFX they employed. Cameron, Jackson, Bay, Cuaron–almost any of the director/producers on these films said that these films simply would not have been possible to produce without the VFX they employed. In some of these films, the most important characters are portrayed as VFX creations. Increasingly, the “actors” on screen are also VFX.

          • James

            Adrian, thanks for the great explanation. You make a lot of sense and I appreciate your thoroughness. Just a heads up for you – Ross is very confrontational and argumentative. He has been extremely rude and insulting to me personally as well as others, and his sole mission is to be a jackass. You are a class act and maybe after your comment, he will tuck his tail between his legs and go away.

          • adrian mcdonald

            @James thank you for the kind words. And thanks for the heads up. I have read every comment on the thread and did notice Ross was, shall we say, a little overly aggressive most of the time. I also can't decide if he is just messing with us, potentially with the aid of some great alcohol being consumed on his week off (and if he is drinking, I want a bottle of it). Either way, it seems like anyone who is pushing seven figure salary and allegedly “in the know” about the film industry wouldn't be this potentially closed minded. I prefer to expect the best in people rather than the worst. I would love for him to contact me and take me up on my offers.

            Even if it's only one person at a time, engaging even the most belligerent people is still worth it.

          • Ross

            F*ck off! >:I

          • Ross

            A movie needs to make TWO to THREE times it's BUDGET just to break EVEN! 200 million dollars needs to make 400-600 million TO BREAK EVEN! >:I What kind of math are you doing??? Seriously! >:I Your comment gives away your ignorance! >:I The movies I listed BOMBED by HUNDREDS of MILLIONS!!!! Why you think SONY is laying people off right now? Movies that BOMBED are part of that reason! >:I Box office gross of 10 million above production budget of 100 million is a FINANCIAL BOMB! It didn't even break even! >:I

            VFX creations in movies don't exist without story! They support the STORY, not the other way around! That's why a VFX heavy movie with crappy story can STILL BOMB! The VFX Artists STILL get paid either way. Whether the movie is a flop or a hit. A movie is NOT dependent on VFX, yet a movie is dependent on a STORY! VFX are part of the presentation package they are NOT the sole determining factor in a movies success as a lot of these pretentious folks like to think! >:I 100 percent of the top grossing movies had a WRITER, a DIRECTOR, a CINEMATOGRAPHER an ACTOR. You can leave the VFX OUT and STILL have a movie! VFX workers trying to demand a PIECE of the gross product is the same as CRAFTY SERVICES wanting a piece of the profits! >:I INSANE! >:I That's like a carpenter demanding future profits from a building they were contracted to complete! >:I

          • ROSS SUCKS

            Ross you fruit, guess you were told! If only you knew a fraction of what Adrian does. Adrian is a class act, and you a giant turd. Boy do you look silly, little girl.

  • http://www.wecreatebc.com bcvfxandpost

    Good luck getting any CVD passed if US States continue to have similar incentives, whether capped or not. The judge won't bite.

    ADAPT has to prove it represents a large percentage of the domestic VFX industry and that idea is highly suspect at this point. Studios will retaliate against any domestic vfx company owner who appears to be part of this cause, and will make sure they will move the goal posts even further away to ensure their death.

    The issue of whether a digital shot is a product is irrelevant to this argument if items #1&2 above remain true, it is just being played as a scare tactic. Of course a finished digital shot is a product. That was bound to become decided in court at some point as more commerce travels digitally at some point in its lifespan.

    If movies are so unprofitable, what makes you think they will be more profitable by moving VFX work closer to home or levelling the playing field? Your point is not clear. If CVD's are in fact levied, you will force the MBA's to move the goalposts further away, not closer. Fact is they don't give a shit about us workers. We are a line on a spreadsheet. Neither do their investors. If companies can set up shop in BC and London and grow an industry with incentives being utilized, they can do that in other places with exchange rates and lower costs of living in mind.

    On that even playing field you describe, BC actually is 25% cheaper than California if you compare worker rates (look up BC IATSE 891 rates for example compared to LA IATSE) and also add a 10% currency exchange difference. BC now has a mature VFX industry that actually likes living here and most have no desire to live in LA and can offer a 25% advantage even with no subsidies. So they will see little decline in work here even with CVD's based upon 2014 economics.

    BC is actually proud of their incentive program as they use the work that comes into the province as a way to create a cultural identity believe it or not. The US has taken so much Canadian talent over the years the federal government offers foreigners fast tracks to residency here if they contribute to culture. Remember 17% of the tax incentive here in BC is Federal. By giving their workers a chance to work on foreign (not just US) content, it allows their creative people to be able to stay in Canada and earn a living in their craft. When we don't work on foreign content we create indigenous content instead of fleeing to NY, LA or Nashville to earn a living in our craft. Putting a price on your cultural identity is difficult to quantify, especially when the US MPAA has all but wiped out any chance of Canada creating a competitor to the US Studios (research that).

    What you may not see in Hollywood is the changing face of who a VFX worker is in the international arena. Many, many are young, they come from international locations, love film and love adventure. The US doesn't let them in any more to work for the most part too. Travel them from Vancouver to London to Singapore to Montreal and they are stoked (well maybe not Montreal, once they freeze their ass off for a winter they usually want out). They've got 10-15 years of service to the industry before many of them even think about families.

    When the MBA's move those goal posts they will move them further out over time. Places like Eastern Europe (have you seen where a lot of the film scoring work has fled to even without incentives?), then China and India. It may not happen in the next five years, but it will continue to move that way if you end subsidies. The work force to move to these regions to set up shop is in place even if you don't care to. Shit, I don't want to move to India either. I will probably go tend bar in Whistler before I move there.

    There are many postings on the web by people like Dave Rand, Scott Squires and Scott Ross that address other reasons why VFX is a shitty business to be in these days. One is the plight of older, seasoned workers having to migrate but its not the only reason by a long shot. Taking away incentives from the bean counters will not cure the profitability ills of Studios you allude to but I question (remember, these are vertically aligned mega companies and the true profits derived from the development of a Movie IP doesn't always show on the balance sheet for that film. A movie that shows no profits can also spawn successful TV shows, video games, merchandising opportunities, etc.)

    These companies are way more profitable than the numbers you offer above. They just like the handouts. You would too if you had their jobs.

    Anyway, good luck with you quest to give Hollywood MBA's a conscience, a set of balls and morals to boot. After 30 years in this biz I'm not holding my breathe.

    • Ross

      @bcvfxandpost:disqus THANK YOU!!! :D THANK YOU FOR THIS POST! :D Well said, well said! :D

  • rfshunt

    This article is very savvy in some respects, and naive in one very important aspect.

    You do a great job of analyzing the economic warping that the subsidies cause. Where you are being naive is in thinking that studios will see the value in treating VFX artists responsibly – even if it will ultimately benefit their profitability. The money pressures come from too high up where it's all driven by nothing but the short-term profit, bean-counter mentality. Per-shot bidding has shown those MBAs that they can squeeze their vendors, even if they are staffed by third-rate artists, into turning out work that's just good enough. Just good enough is all they are interested in – they don't give a rat's ass about artistry. And the per-shot situation has taken productivity out of the equation.

    VFX artists need a strong guild – nothing else will save your salaries, or your home-life or sanity. A guild is the only thing that can fight back in ways the bean-counters will respond to. Appealing to the studios humanity is futile, you know that already. But neither will appealing to their logic – not when all they think about is this quarter's numbers.

    You mention numerous times that your article would benefit from the expertise of an expert in the law of CVDs – you're right about that. You, all of you, would also benefit from the expertise of skilled labor negotiators. Talk to the other guilds and talk to union organizers. And whatever you do, don't look to the corporations that are screwing you to help you out – they won't

  • DC

    The good news, there are solution to fix the issues. The bad news, it's not up to Hollywood, it's up to us. Everyone is to blame in some way for this mess, and everyone has a part to play in fixing it.

    Dear Hollywood? No.

    Dear Industry, colleagues and myself included. Now that's a start.