×
You will be redirected back to your article in seconds

Foreign Incentives Help Crush Once-Booming F/X Biz in U.S.

While L.A.'s visual effects business may not be entirely lifeless, it's certainly bleeding out

At the recent Siggraph conference in Anaheim, there were not one but two panels on the state of the vfx industry. Word on the street was that feature effects production is dead in L.A., so at times those sessions felt like a public inquest into a murder.

While the city’s vfx business may not be entirely lifeless, it’s certainly bleeding out. It was severely wounded by several factors: failure to organize when it could; globalization; low labor costs abroad; and most of all, foreign subsidies. Chances are it will survive only as a much-weakened remnant.

It’s easy to blame the invisible hand of the market and the creative destruction that is capitalism. But markets are influenced by government policies both abroad and at home.

Overseas, government tax incentives and subsidies have distorted the playing field, propping up companies that wouldn’t have been able to compete without government help and imposing strains on American firms whose governments don’t offer the same support.

At home, decades of economic policy influenced by acolytes of Ayn Rand’s fantasy novels — from Alan Greenspan to Paul Ryan — produced booms, bubbles and busts that delivered high unemployment and record corporate profits — a perfect climate for reducing the clout of labor and workers.

SEE ALSO: Where in the World Will the New ‘Star Wars’ Films Shoot?

Visual effects is the one key piece of filmed-entertainment production that operates under the Randian free-for-all that those economic sages prescribe for America’s greater prosperity. Until around 10 years ago, vfx artists and their skills were relatively scarce, so their jobs tended to be permanent and lucrative. When IATSE tried to organize Sony Imageworks in the boom years, almost none of the company’s employees voted to unionize. That mindset held across the industry — and proved short-sighted. The major studios never had to become guild signatories for visual effects artists as they are for actors, directors and other specialties. They remained free to use f/x made anywhere, under any working conditions. And so they do. As a result, downwardly mobile SoCal vfx artists — the canary in the coal mine for the rest of L.A.’s production pros — are learning to their terror just how much they have in common with laid-off machinists in Milwaukee.

L.A. vfx companies and artists were once protected by the high barriers of entry to their field. But those barriers fell, and then government subsidies abroad set the Los Angeles vfx industry on a path to ruin. With the help of local incentives, New Zealand-based Weta Digital produced the award-winning vfx for New Line’s “Lord of the Rings” trilogy. New Line’s parent, Warner Bros., took its tentpole movie vfx work to the U.K. to cash in on local incentives. Warner’s spending built London into the global capital for vfx in just a few years.

SEE ALSO: L.A. Mayor Declares State of ‘Emergency’ as Movie, TV Production Flees Hollywood

Other territories enacted their own tax incentives. Some repealed them after they proved to be of no benefit to the local economy, but studio lobbyists always seem to be able to find pols who can be seduced by the promise of high-tech jobs with a sheen of Hollywood glamour.

One of the two Siggraph panels focused on unionization, the other on the idea of using World Trade Organization treaties to impose duties on vfx created abroad and “imported” back into the U.S. Both paths appear slow, perilous and uncertain, but feature vfx pros in Hollywood know the prize is already lost, and winning it back will take time, toil and sweat.

(Pictured: New Zealand taxpayers helped pay for vfx for “The Lord of the Rings.”)

More Biz

  • Colin Kaepernick Kneel

    Colin Kaepernick, Eric Reid Reach Settlement With NFL

    Colin Kaepernick and Eric Reid, two football players who alleged the National Football League colluded to oust them from the game after they started kneeling in protest of racial inequality during the playing of the national anthem, have reached a settlement in the matter, according to a statement from the sports organization and lawyers representing [...]

  • R. Kelly

    R. Kelly Could Be in ‘Big Trouble’ Over Alleged New Sex Tape, Attorney Says

    Strong allegations of sexual misconduct have followed R. Kelly for 25 years, but the singer has always managed to slip free. Yet reports that a videotape of him sexually assaulting an underage girl, combined with the outcry surrounding the Lifetime documentary “Surviving R. Kelly,” means that public sentiment, at the very least, is definitely not [...]

  • Christian Bale as Dick Cheney in

    New Media Residuals and Feature Films Contribute to Spike in Writers' Pay

    The outlook for members of the Writers Guild of America has brightened — even amid pervasive uncertainty in the entertainment industry. According to the most recent report to WGA West members, earnings surged 2.8% to $1.41 billion in 2017, thanks mostly to gains in feature films and new-media residuals. Total covered earnings for WGA West [...]

  • Joe Dante Gremlins

    Hollywood Execs Seek Licensing Deals at the New York Toy Fair

    On Feb. 16 more than 30,000 studio executives, buyers and toy company reps will gather in Manhattan for the annual Toy Fair New York, all vying for market share and trying to snag the latest hot trend in a fast-changing industry. Those working the film side of the business will focus much of their attention [...]

  • Lady Gaga Bradley Cooper A Star

    Universal Music Group Fuels 11.3% Rise in Vivendi's 2018 Revenues

    Vivendi’s revenues were up 11.3% to €13.93 billion ($15.7 billion) in 2018, powered by Universal Music Group, which delivered such hits as the “A Star Is Born” soundtrack and Drake’s new album. UMG’s revenues climbed by 10% to €6 billion ($6.8 billion) compared to 2017. On top of the “A Star Is Born” soundtrack, the [...]

  • The Blacklist 100th Episode

    'The Blacklist' EP Sues for Wrongful Termination

    A former executive producer of the NBC show “The Blacklist” has filed suit against Sony, alleging he was fired after being wrongfully blamed for a workplace scuffle. Michael Watkins is a veteran TV director and cinematographer. He was an executive producer for several seasons of “The Blacklist,” the NBC crime show starring James Spader. According [...]

  • TV set livingroom

    Studios Sue Omniverse in TV Streaming Crackdown

    The major studios filed a copyright infringement suit against Omniverse One World Television on Thursday, as they continue to crack down on illicit streaming services. Omniverse provides packages of TV channels to various streaming providers, including SkyStream TV, Flixon TV, and HD Homerun. Jason DeMeo, the head of the company, asserted in an interview with [...]

More From Our Brands

Access exclusive content