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Why the visual effects business is failing

Monday, February 11th, 2013 | Posted by Jim Thacker

In a week that has seen DreamWorks “weighing significant layoffs” and Variety report that Rhythm & Hues is to file for bankruptcy, Pro Video Coalition has posted a timely interview with Scott Ross.

In the Q&A, entitled ‘Why is the VFX business failing?’, the Digital Domain co-founder analyses the VFX industry’s current woes, and provides his own ‘magic wand’ solution.

That solution is partly – but crucially, not completely – to get rid of tax subsidies and tax incentives of the kind currently offered by Canada, New Zealand and the UK.

LA versus the world?
Discussions like this often devolve into slanging matches between artists based in Los Angeles and those in the rest of the world – as one poster in a CGTalk discussion thread about the Q&A puts it: “Should South Californians be the only ones in the world legitimately entitled to work in the VFX industry?”

However, an end to subsidies is only one of three changes Ross calls for: the other two being to change the model by which VFX companies are paid, and for the ‘big eight’ international facilities to form a trade body.

Ross also notes that while large VFX companies often take flak from artists for setting up satellite facilities in the favoured tax regime of the day, the main beneficiaries are actually the film production studios.

“Subsidies don’t directly benefit facilities; they spend six or seven-figure budgets to establish remote operations while the studios get the subsidy, and essentially make working in that location a condition of the contract.”

Food for thought, whether you agree with Ross’s solution or not. His analysis of why the major VFX studios haven’t yet formed a trade association, and whether this will change in future, is also worth reading.

Read Pro Video Coalition’s Q&A with Scott Ross

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3 responses to “Why the visual effects business is failing”

  1. Dave G said:

    Keep dreaming. I sympathize with Americans losing once well-paying jobs but the bubble was bound to burst and you can’t complain your way back to competitiveness. Are tax breaks anti-competitive? Yes. Do they happen in tons of industries? Yes, because they create jobs and companies still like money. Will they go away? Not a chance. It costs so much to live in LA that I’ve refused art direction jobs that offered more than twice as much as what I make in Montreal. London and LA can’t compete with a very creative city with lower rent and salaries. Tax breaks are just the carrot.

    1:03 pm on Monday, February 11, 2013

  2. felix balbas said:

    I honestly think the real idea we need to face is that we’re NOT a hollywood service.
    We are becoming more filmmakers than service and we need to act like it.
    If we move around chasing tax-breaks instead of going back to the roots, we’re doomed to continue failing, making the joy of the stock market vultures.
    Reduce overheads, gather in small high-end specialties, participate to film making AS FILMMAKERS, sharing the initial risks, fun and hopes.

    It’s not VFX that is failing, is VFX SERVICE that is long dead: welcome to the VFX-filmmaking era.

    Just my opinion,

    Ask yourselves why previs are flourishing….

    1:08 pm on Monday, February 11, 2013

  3. Meatpuppet said:

    Utah Still has the best tax subsidies in the USA. Move there. Plus the cost of living is cheaper and there are several universities pumping out new wage slave kids every year.

    12:03 am on Tuesday, February 12, 2013

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