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Shade VFX Expanding Despite Visual-Effects Industry Troubles

Boutique firm says small size has helped it weather the downturn in the industry

Shade VFX is the rare California-based visual-effects company today that says it is expanding.

The boutique firm relocated to a new facility in Santa Monica this week that doubles the company's space and includes areas that can accommodate greenscreen shoots.

What makes the move notable is that Shade says its business is thriving at a time when other visual-effects companies are teetering on the brink of financial ruin. This spring saw the bankruptcy of Oscar-winning studio Rhythm & Hues, and in recent years more than a half-dozen visual effects companies have folded or filed for Chapter 11 protection.

The cause is a mixture of heightened competition for studio work that is shrinking profit margins, as well as a search on the part of studios for companies located in countries or states that offer tax incentives or subsidies for post-production work. The latter issue has put California-based shops at a competitive disadvantage. 

Yet, Bryan Godwin reports that his company has been busier than usual and is moving so it can potentially increase its 35-person staff to as many as 50 artists. He said Shade's work doubled in the last quarter of 2012. Recent projects include "The Wolverine," "Echo" and HBO's “Behind the Candelabra."

In addition to the new office space, Godwin tapped veteran visual-effects producer Lisa Maher to be the company's new business development executive. She most recently worked at Fuel VFX and Dr. D Studios.

Godwin thinks that Shade's size has helped it. The company employs a small fraction of the roughly 1,400 people employed by Rhythm & Hues before it slid into bankruptcy.

"We’re very fortunate in today’s climate to actually have some good news," Godwin said. "There's been a lot of turmoil with subsidies and bankruptcies, but in our niche of mid-size movies or special sections of bigger movies, there's still work to be had."

Godwin admits that in some cases Shade has been outbid by firms in London or Vancouver that offer tax breaks for studios, but he said that being in California has its advantages. Producers have told him that they prefer being able to meet with artists in person instead of needing to have conference calls with visual-effects teams working in far-flung locations around the globe.

He said he keep abreast of what is happening with tax incentives, but has no plans to open up shops in foreign countries or other states.

"From a personal standpoint, I just think tax incentives are detrimental to the industry," Godwin said. "Opening up foreign branches just leads to diminishing returns and becomes a revenue vampire as you have to shoulder all these extra costs of expanding management. The last thing you want to do is invest in a pop up shop only to be forced to close it in 3 years when the subsidy ends."