The Going Stays Rough for California VFX Houses

CafeFX going on hiatus is just another example of how the state of California sits by and watches a great and green business fade into the sunset.

After hearing that CafeFX had gone on hiatus, I started perusing the visual effects news on the net and came across Canada’s Rainmaker’s first quarter report for this year. Here’s the link: http://www.marketwatch.com/story/rainmaker-reports-results-for-the-three.... Down several paragraphs from the top is this one:

“On February 3, 2010, the provincial government announced increases to the existing production service tax credits and the existing digital and visual effects credit. These changes will apply to productions with principal photography or key animation that begin after February 28, 2010. The changes are an increase in the production services tax credit from 25% to 33% of eligible labour. The digital animation or Visual Effects tax credit will increase from 15% to 17.5% of eligible labour. The qualified BC labour expenditures cap increased to 60% from 48% of production costs. There will also be a new BC Interactive Digital Media tax credit for video game development of 17.5% of qualifying BC labour costs, which will apply to production beginning after September 1, 2010.”

This isn’t any big news but I felt that it was important that we know the specific parameters of the incentives currently in place. A 60% kick-back on labor is pretty significant and darn insurmountable if a company wishes to remain in business here in Los Angeles.

In another article http://www.encoremagazine.com.au/iron-man-vfx-not-eligible-for-pdv-2535 post production folks in Australia are trying to move their 15% kick-back incentive to include productions costing as little as half a million dollars (AU) down from five million dollars (AU). Although this article states that this is not yet a reality indeed it is a reality http://www.awn.com/news/television/australia-slashes-post-digital-and-vi.... Despite this fact there are rumors that some of the larger houses down under are also feeling the pressures of the times.

As medium and large size American visual effects houses stumble and fall the state of California sits by and watches a great and green business fade into the sunset.

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