It is probably helpful to recall that it is only since the early 1980's that visual effects has been significant enough to attract government attention. It was Star Wars (1978) that started the process, but it was sometime in the mid-1980's that the scale of the industry started to increase. It was the tsunami of shit that came from the digital take-over of visual effects in the early 1990's that increased the scope of visual effects and trendiness thereof such that this industry was seen as a likely subject of tax exemptions and subsidies to increase and control employment within a national film community. Keep in mind, that at various times over the last 15 years, there have been thousands of people paid roughly $100K / year working in this industry. Perhaps as many as 5-7 thousand people, although this number is not formally known to the best of my knowledge, and it includes to some extent the people who were working in "feature length computer animation" as distinct from visual effects. Thus, the real numbers are probably not as high as suggested here, but are very substantial. We are talking about 1000's of people in the Los Angeles and San Francisco area who have lost their jobs as a result of these subsidies.
So keep in mind as you read about these events that the story did not begin this year, but that all of these events probably have a background and history that I know nothing, or very little, about. Also, we are relying on the popular press to describe these events and so we can be sure that the information is at best incomplete, if not entirely misleading.
All of these events described below have had or will have a very negative impact on the existence and future of visual effects in this country. However, every silver lining has a cloud and in another post in this series, I will go over some of the reasons that these subsidies and tax allowances can be seen in a positive light, as long as you have no intention of working in the field in America or to make a living here. Only a very few people in this country should be expected to work unless they are a visual effects supervisor, if then.
2. The UK Special Effects Industry gets a tax relief plan
From the point of view of a film producer, this is all good. Talking some innocent investor out of their money to help finance a film, especially when they get nothing in return (e.g. no points in the film), is part of the Producer's job. If New Zealand wants to give Mr. Cameron 500 million dollars over 6 years (or whatever the amount will be) why not ?
These events, which all represent long term structural changes to the "free market", means that in the fiercely competitive visual effects industry, any company that lacks one or more of these advantages will not be able to compete. Which is exactly what we see today. Asylum, Rhythm and Hues, VIFX/Video Image, The Orphanage, most of Sony Imageworks not to mention many other smaller companies have gone away. Others, such as Digital Domain and Tippet, are clearly marginal.
ILM is a bit of a mystery to me. They seem to be hanging in there, and of course they have the new Star Wars films from their parent company, Disney.
Here are some conclusions and questions:
1. The collapse of visual effects in this country is a result of structural changes in the international community which are beyond the ability of any company to deal with.
2. This collapse has resulted in the unemployment of thousands of people on the West Coast, some of whom have moved to other industries, some have gotten jobs overseas if they could.
3. You should expect this process to continue with more visual effects companies in this country going out of business or moving overseas.
4. Any discussion of unemployment or the "business model being broken" that does not take into account the primary cause of government subsidies and tax exemptions is worthless.
5. Globalization is just Mercantilism by another name. Our government could do something about this if they cared, but they do not care.
For those of you who believe that there is nothing our country could do to change this situation, please take the time to read any economic history of the last few hundred of years. There are many things that countries can do in these circumstances, if they care to.
1. In the early days of computer animation, many of us were not aware that "computer animation" and "visual effects" were completely different industries. To us it looked nearly the same thing with a tremendous overlap of technologies and skills. Well, yes and no, but mostly no. I will write a post on the issues here at some point. They are not subtle and its an example of how naive some of us were.