PARIS — The global economic storm has hit the French vfx and animation studios, leading to a contraction among those companies.

“We were set to work on a number of films that ended up not getting financed,” explains Yann Blondel, vfx supervisor at century-old Eclair Group, whose latest round of big projects included John Travolta starrer “From Paris With Love” and Chris Nahon’s “Blood: The Last Vampire.” “We’ve been on standby on various important international projects.”

In 2008, the top 25 French CG companies grossed 40% of their annual revenues from foreign productions, per Thierry de Segonzac, president of Ficam, France’s national audiovisual and media federation. But that was then.

“This year, the budgets and the number of feature films in production have dropped 50%,” explains Pierre Buffin, founder of leading vfx shingle Buf. “Not only have we been handicapped by the lack of a (film production tax) rebate plan, we’ve also been hurt by the exchange rate.”

So far, well-established vfx companies including Mac Guff, Buf and Mikros Image have been riding out the turmoil. Mac Guff is working on Chris Meledandri’s “Despicable Me”; Buf has been busy with Luc Besson’s “Arthur and the Two Worlds War”; and Mikros Image got to work on Jacques Perrin’s “Oceans.”

But several smaller toon shingles have either gone under, like Sparx Animation (“Igor”), or have merged, like Def2Shoot (“Yona Yona Penguin”), which was bought by Digimage in October 2008.

Per Christian Guillon, prexy and vfx supervisor at L’E.S.T., the market has also suffered from one-stop-shop strategies developed by several large companies. These have been offering low-cost, all-

inclusive packages.

“The cake gets smaller, the margins thinner, and the competition has become ferocious,” Guillon says.

This contraction led Buffin and Mac Guff’s Jacques Bled to launch a joint venture, B-Mac — a lab studio that allows the two companies to handle a film from start to finish. The two giant Gallic labs, Eclair Group and Quinta Communications, have not only been hit by the recession, they’ve also been struggling to step into the digital age.

Eclair Group sold its historic landmark studio in July and has put its development lab GTC and post-production facility Centrimage up for sale.

Quinta’s Duran Duboi arm and Eclair Group have traditionally focused their activity on film lab work in addition to vfx and animation. But in the past couple years, as digital masters have slowly replaced film prints, both companies’ business models have been off balance. And as Eclair topper Thierry Forsans recently pointed out to the French press, “Working with digital masters brings 10 times less revenue than prints and require 10 times less staff.”

Amid this economic downturn, powerful orgs including the Ile de France Film Commission, Film France and Ficam have stepped up to jumpstart the local industry.

The Ile de France Film Commission has been key in promoting the talent of French animators and vfx artists abroad, notably through Parisfx —

Creative Ile de France, its two-day showcase co-created by Francois de Saint-Exupery.

With French helmer Jean-Pierre Jeunet (“Micmacs”) as guest of honor, the event will highlight the latest vfx and toon productions, notably Aton Soumache’s motion-

caption thriller “Prodigies” and upcoming French stereoscopic 3D toons — TeamTO’s “Occho Kochoi” and Pascal Herold’s “Cinderella.”

“In France, we have great creative forces like Luc Besson, Jean-Pierre Jeunet and Jacques Perrin that enable local vfx and animation companies to succeed,” explains Olivier-Rene Veillon, exec director of the Ile de France Film Commission. “But it’s vital for these companies to position themselves on the international market. The French market is a solid base, but it’s not enough.”

Paris-based orgs Film France and Ficam pushed for the 20% tax breaks to apply to toons and live-action films. Now that the plan is up and running, France has a more competitive edge, in line with its British and German neighbors.

The Ile de France Film Commission will present the rebate plan to American industryites in Los Angeles on Nov. 3, along with representatives from Buf, Eclair, Mikros, L’E.S.T., Duran Dubois and Mac Guff.

EuropaCorp’s Luc Besson and Quinta Communications’ prexy Tarak Ben Ammar’s

$42 million megastudio La Cite du Cinema in Seine-Saint-Denis also is expected to draw more international shoots to Gaul.