London’s visual effects sector is moving into production as it seeks to balance work on Hollywood movies with the growing demand from local indies for effects on a shoestring.

The big shops such as Framestore, Cinesite, MPC and Double Negative have boomed on the back of Harry Potter, Batman and their ilk. But the key Brit vfx players also recognize the need to cultivate more flexible relationships with British producers, to fill the gaps between the blockbusters and give them more ownership of the images they create.

Framestore has taken the boldest step by co-financing a select few low-budget Brit pics from CinemaNX and Generator Entertainment as well as producing its first animated movie (see sidebar, page A12).

“We’re gingerly putting our toes in the water and exploring the world of independent cinema to see if there’s a role for us there,” says Framestore’s Steve Norris. “The box of tricks that had been in possession of the few is becoming more available to everybody. A lot of stuff is going to be more usable for lower-budget filmmakers — the question is whether they can step up to the creative challenge.”

Cinesite, whose recent work includes “Bedtime Stories,” “Beverly Hills Chihuahua” and “Prince of Persia” for Disney, has also started developing its own inhouse projects, including a pilot for a stop-motion kids TV series.

“We are historically known as a visual effects services house, but for the future we want to get into content. That can help out during the tough periods,” says managing director Antony Hunt.

Hunt says he turns down a lot of producers looking for free vfx in return for a stake in their films. But he is open to exploring cut-price deals on interesting indie projects, such as sci-fi drama “Moon,” the feature directing debut of David Bowie’s son Duncan Jones.

“We’re not doing it for the money, but because the script was good,” Hunt says. “‘Moon’ is a great example of us helping a U.K. producer to use vfx for the right reasons, to open up their film. We made sure we covered our costs, and it’s a fantastic way to give junior staff a chance to be mentored on work. Independent producers sometimes think they will never be able to use our resource, but if the right project comes along at the right time, it can fill a gap, or look good on our showreel, or prompt an R&D project. So they should always pick up the phone and inquire — where there’s a will, there’s a way.”

Double Negative delivered spectacular vfx on a tight budget for Recorded Picture Co.’s $12 million “Franklyn,” and MPC is providing the digital trickery for Ealing’s “A Picture of Dorian Gray.” “The film has a very limited vfx budget and wouldn’t normally be able to walk in the door of somewhere like MPC, but they weren’t busy after ‘Narnia’ so they were willing to cut a deal,” says one London vfx insider.

The smaller London shops, which don’t get the big studio contracts, rely on such indie work for their bread and butter.

Post houses LipSync, Molinare and VTR, which offer vfx work alongside their other digital services, have started putting up production coin as a way of securing business. LipSync set up its own production arm about 18 months ago and has since backed a dozen indie films, including “How to Lose Friends and Alienate People” and “Dean Spanley.”

“At the time, the post industry was quite sluggish, so we decided to take a considered position in some films to see how it worked out,” says LipSync’s managing director Alasdair MacCuish. “We only put the last 5%-10% of the budget, and we never put in more than a third of the amount the film will spend on post with us, so we’re only gambling our margins.”

Simon Frame, head of production at vfx boutique Men From Mars, regards investing in production as “absolute lunacy.” He argues that flexibility is the key to providing high-end effects on a tight budget, as Men From Mars did for “Mutant Chronicles.” “It’s a $70 million movie made for

$22 million,” he says. “They would have preferred to spend

$25 million at Cinesite or Framestore like ‘Harry Potter’ does, but they couldn’t afford it. We said we could do it if they gave us a lot of time, so we did 1,500 shots in a year and a half.”

Men From Mars was sold earlier this year to Indian group Pixion. Frame believes that the future lies in spreading such indie work between London, with its high-end skills, and Mumbai, with its high-volume capacity.