Just a day after assuming office as Mayor of Los Angeles, Eric Garcetti pledged to appoint a film czar to address runaway film and TV production – an issue he describes as a civic ‘emergency’. The stats are quite something. 85% of the nation’s TV episodes were filmed in Los Angeles just a few years ago. Today that figure has nosedived to the low 40s.
Garcetti recently met with a group of agents, producers, location scouts and labor leaders to discuss the ideal person for pushing Sacramento lawmakers to increase tax incentives and streamline the city’s filming regulations. Interestingly, there was no mention of involving anyone from the visual effects industry – an industry in crisis thanks in large part to the problem of runaway production.
Movie studios have seen record box office returns for visual effects films, helping Hollywood make a record $10.8 billion domestically last year. Yet despite demand for dazzling effects on big-budget movies being greater than ever, California’s visual effects industry is struggling to stay afloat.
In the wake of Rhythm & Hues’ troubles – filing for bankruptcy protection just days before receiving the vfxAcademy Award for Life of Pi which amassed more than $500 million in worldwide ticket sales – nearly 500 people representing the visual effects community gathered on Hollywood Boulevard just hours before the Oscars ceremony. They urged the film industry to focus on the economic problems threatening Hollywood’s vfx houses and called for an end to the ‘subsidies war’.
Many leading vfx houses – including Sony Pictures Imageworks, Rhythm & Hues, Industrial Light & Magic and Digital Domain – have opened offices in Vancouver to take advantage of British Columbia’s tax credit for post-production work. This is granted even if the project isn’t shot there. Several US states are also grabbing a larger share of the vfx business, especially New York, which also offers a post-production tax credit.
Many in the vfx community believe that both foreign and US subsidies are harming the industry. A group of California vfx artists have set up a fund to challenge the legality of foreign film subsidies that make it even harder for California’s vfx companies with normally thin margins to compete.
Garcetti claims that 85% of the runaway production problem is about tax credits, but subsidies are just one of the many complex issues facing the vfx industry. Some point the finger at the movie studios for an industry where facilities operate under unsustainable competitive restraints and profit margins. Others point to cheap overseas labor, the commoditization of vfx, or a lack of unionization.
The point is, can California’s vfx community afford to allow the views of studios and production companies to be the only ones heard by Garcetti’s new film czar, especially when it comes to subsidies and business practices? The vfx industry needs to ensure it has the ear of the new czar if it’s to have any hope of turning its fortunes around.