Are oversea tax-breaks destroying American-based effects companies

With digital visual effects used in almost everything, from commercials, to television, to movies, the effects companies created to produce them has grown here in the United States to meet the demand. Most are small, with some having less than 500 employees. But there is a huge problem in that the large media companies –in particular the studios- that need digital effects for their tentpole films help are farming out those effect work overseas in hopes of getting top quality visuals at a bargain price. So all of the financial troubles these small effects houses are having today is largely the result of competition from companies in countries where tax breaks, subsidies, lack of overtime pay, and state healthcare are giving them a competitive advantage over California-based effects houses.

Sadly, this is nothing new, as major businesses, which seemed more concerned with the bottom line and shareholder value, and have used catch all word of “economics” to justify their reasons for farming out the work overseas. They claim that this keeps costs down so Americans will see and buy the product when in reality, it seems to be really about is making sure the coffers of the studios, the top heavy executives offices, board members and shareholders all are paid highly for doing very little. 

Yes, as always, the frontline worker who does the lion share of the work, busting their hump for Daddy Warbucks, gets screwed. If there was one joke that Seth MacFarlane landed fairly accurately in his tepid act as presenter of the 2013 Oscar was talking about the studios record 2012 year in box office totals, and how “studio accountants have never had to work harder to prove nothing made a profit.”

International Alliance of Theatrical Stage Employees –I.A.T.S.E.- is the labor union that represents about 113,000 technicians, artisans and craftspersons in the entertainment industry, including live theatre, motion picture and television production, and trade shows. On Oscar night, labor organizer Steven Kaplan and about 200 demonstrators went to the streets of Hollywood and Vine to protest the way effects technicians are currently handled.  Kaplan told Variety that “he was concerned about the current fixed-bid business model, the movie industry's pursuit of government subsidies and the pressures on artists to migrate around the world in search of work.” He said that needs to change. "I hope that the world realizes that the visual effects industry is looking for change. I think that's all that can be accomplished today, that the world looks around and sees the visual effects industry is no longer quiet and accepting the conditions they're working under."

Of course, the whole irony of the current situation is that Rhythm and Hues, the effects house who has worked on numerous blockbuster films over its nearly 18 year history recently filed for Chapter 11 Bankruptcy protection, won an Oscar for their work on The Life Pi, the third they’ve picked up since winning in 1995 for Babe (and the German based VFX Group Pixomondo, an Oscar winner for its visual-effects work on Martin Scorcese's Hugo, just this week shut down its operations in London and Detroit, citing the need to cut costs –though the maintain that they’re still in business, as they’ll supply effects work for HBO’s A Game of Thrones). 

A protest over Twitter and Facebook erupted that Sunday night when Bill Westenhofer, accepting the award for Visual Effects for Pi, was cut off by music when he began speaking about Rhythm and Hues woes. Some conspiracy theorist claim it was designed to shut him down, while most likely it was due to the length of the acceptance speech. He did, however, get to tell his story to press after being escorted off stage. “What I was trying to say up there is that it’s at a time when visual effects movies are dominating the box office, but that visual effects companies are struggling. And I wanted to point out that we aren’t technicians. Visual effects is not just a commodity that’s being done by people pushing buttons. We’re artists, and if we don’t find a way to fix the business model, we start to lose the artistry. If anything, Life of Pi shows that we’re artists and not just technicians.”

Later, people started replacing their Twitter and Facebook avatars with a green box, symbolizing that without their artistic talent, effects heavy films are just a bunch of people standing in front of an empty green screen.

Whether this action at the Oscars or the protest on social media websites will change the studios attitudes on the way it spends and sends money to smaller effects houses is unknown at this time, but the battle seems to be just beginning.