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Friday
May102013

In Which I Try and Fix the Entire Film Industry

Most every country in the world taxes the value of goods coming into their country from overseas, the US included. There are massive books which detail exactly how much each item should be taxed ( called a duty or tariff when applied to imported goods ). The detail is hilarious and stunning. For example:

Bicycles and other cycles (including delivery tricycles), not motorized:

Bicycles having both wheels not exceeding 63.5 cm in diameter

11%

And it continues. So depending on where a bike is from, how big it’s wheels are, and various other factors, it’s import duty can be anywhere from 0% to 30% of the value of the bike. Most bikes fall into the 11% rate though.

Now, if you want to import a bike into, say, China, their duty is 23%. What this means is a $200 bike made in the US will cost you $250 in China, while a $200 bike made in China will cost you $225 in the US ( yes, I rounded the numbers ). What that also means is that if you figure a way to make the same bike in China for $180, when you import it into the US, it will cost $200, with the duty added in.

Part of the idea of import duties is to make it more expensive to produce goods overseas than it would be to produce them locally. The core of the idea being if it costs $200 to make and sell a bike with a profit, why would you ask a customer to pay $225 for a Chinese bicycle, not even including the added expense of actually physically importing the bike?

Of course, this entire model has gone out the window with three concepts that have overlapped in a nice way to destroy 1st world countries.

First, is cheap transportation. The ability to ship most anything from anywhere to anywhere cheaply by cargo ship is extraordinary. And speed isn’t really an issue either, you can order a customized iPad engraved with your name that will make it from a factory in China to your hands in under 48 hours.

Second, is the rise of Free Trade policies and ideas which have lowered tariffs into most 1st world nations to a very low amount - notice the US rate for a bike is less than half of China’s for importing the average bike. The UK is 15%, still ⅔ of China’s rate. Sometimes it’s far more - http://www.bike-eu.com/Laws-Regulations/EU-Directives/2011/7/Level-Anti-Dumping-Duty-on-Chinese-Bicycle-Imports-Continues-as-485-BIK005087W/

And third is, of course the lower wages and cost of living, as well as lower standard of living, in many of the places where manufacturing has moved.

This last is why you see so many goods stamped with “Made in China”. It’s not a $200 bike with an 11% tariff. It’s $60 with a 11% tariff, that’s then sold for $150. It makes a massive profit for the retailer/importer and still is cheaper than the American made one.

So what does any of this have to do with VFX or films?

Runaway production is a major problem for US creatives. You will have American lead actors and American directors making movies written by Americans, paid for by American corporations produced and post-produced in foreign countries because bribes and kickbacks in the form of tax subsidies artificially lower the cost of doing the work there.

Ironically, the movie studios themselves have made an argument that can solve this problem, and that is in relation to piracy. The MPAA’s own study claims that piracy was costing them $6,100,000,000/year. Regardless of whether or not this is an accurate number is not the point. The very act of claiming it, however, shows the studios put a monetary value on the intellectual property that is a film. Not just the physical medium, but the value of somebody viewing the film.

This company is importing something of value, produced overseas. So I ask, why isn’t it tariffed the same as any other product?

The key factors that lead to work outsourcing are all exacerbated by digital media production, especially VFX. Near instantaneous delivery of material, at incredibly low costs - just the cost of an industrial strength internet connection. No import duties at all, a free trader dream, and low wages - either through lower standards of living, exchange rate imbalance, or tax subsidies.

I humbly suggest the following very reasonable and just equation for taxing films.


T = B * ( ( 0.0001 * S ) * X )


Where the tariff - T, is the Total pre tax incentive Budget multiplied by 0.01% * highest number of US screens concurrently played on within 6 months of release ) times the percentage of the final film produced overseas.

This is a perfectly fair and easy way to stop runaway production, while at the same time alleviating any concerns over stopping access to a foreign film. It covers both outsourcing to third world nations where wages are 1/100th what they are in the States, and against international tax subsidies allowing worker’s wages to be artificially lessened on paper.

How would it work?

Note: i’m going to simplify the math here so that it’s easy to grasp, obviously it will become more complicated - especially on labor based tax breaks, but that will provide hard working accountants with work as well.

Let say you have a $200,000,000 film with an $90,000,000 VFX budget. It has a total runtime of 112 minutes, 97 minutes of which are VFX shots. The distribution plan is to release on 3750 US screens.



US Based Production

Production Location: Los Angeles

Production Spend: $110,000,000

VFX Location: San Francisco

VFX Spend: $90,000,000

Tariff: $0

Total Cost: $200,000,000


US/UK Based Production

Production Location: Los Angeles

Production Spend: $110,000,000

VFX Location: London

VFX Spend: $72,000,000 ( $90,000,000 w/ 20% tax break )

Tariff: $64,955,357 ( 32.4% )

Total Cost: $264,955,357


Canadian Based Production

Production Location: Vancouver

Production Spend: $82,500,000 ( $110,000,000 w/ 25% tax break )

VFX Location: Vancouver

VFX Spend: $67,500,500 ( $110,000,000 w/ 25% tax break )

Tariff: $75,000,000 ( 37.5% )

Total Cost: $275,000,000


But - you say, what about all the great foreign films, won’t they never get released here?

Au contraire, mon ami.

Take a film made in Britain that’s actually British - Shawn of the Dead*.

It was made 100% in the UK, by UK actors. It's British characters, in Britain, doing British things. It's also a great film. Budget was $5,000,000, and opened on 607 American screens. Under my plan, it's total tariff would be 6.07%, or $303,500. Opening weekend US box office for Shawn of the Dead? $3,300,000. Total US box office - $13,542,874.

That's a lot of math...

The way the formula works out, it escalates based on not only the budget of a movie, but how wide an appeal it has. If there was a weird Icelandic picture about cod fishing that cost $100,000,000**** but was only shown in the US on one screen because it has, shall we say, limited appeal, it would have a tarrif of $10,000. If you had a $100,000 Icelandic cod fishing movie- much more likely -it would have a tariff of $10.

And you can even add an exemption for any film playing at a film festival.

So, there you go. Make it more expensive to produce big budget, pop entertainment, allow niche films, art house and the like to come through essentially untouched. It doesn’t stop sovereign nations from adopting whatever tax policies they wish. If the UK wants to use taxpayer funds to support the film industry, fine. But have it support the British film industry, not American film corporations. Same for Canada, New Zealand - wherever.

And because the tariff is based on the pre-incentive budget of the film in American dollars, the high salaries of actors, directors , etc will offset the benefits of going to low wage markets.

Similar formulas could be worked out for TV, commercials, video games, etc., the parameters of which should be worked out by people who know more about those industries than I.

This is also important to other industries that can easily be outsourced - programming, accountants, architects. The list is long. The future is in producing things in a digital format, and sliding it around the planet as packets of electrons undercuts a fundamental form or trade regulation.

Now, the ugly truth. This will never happen. The Democrats rely on big money contributions from Hollywood and the Republicans never like anything that raises taxes. But you can do something. Write this suggestion to your congressman and Senators. Talk about protecting jobs.

If they are a Democrat, appeal to the fact that many of these jobs are Union jobs. They’ll like that.

If they are a Republican, remind them that they are protecting “‘Merican jerbs”, and it raises taxes on the lefty Hollywood Elite. They’ll like that.

People may say “Isn’t this protectionist?”

Absolutely. But if the goal is to protect American jobs, then we must, by definition, adopt protectionist actions.


* it’s also French**

**Working Title and StudioCanal produced it***

***okay, technically Working Title is owned by Universal, but they are only in the UK, and make UK films

**** that’s a cost of $313.47/Icelander

Tuesday
Nov132012

Leave VFX?

On an email list I'm on, there was a recent thread about this post: http://blog.juanluis.com/2012/11/270-leave-vfx-please.html

After much discussion, someone made the following comment -

"I'm really getting tired of seeing the super negative rants on this list. Most of the people doing the complaining as far as I can tell are well-paid and consistently employed senior artists at top companies. Reality-check. Appreciate what you have and try to keep some perspective."

I made a response to this, and some people have urged me to make my response public, here it is, with a little cleaning up:

 

 

Some of us are vocal not for ourselves, but because our position of seniority and comfort allows is to give voice to those that are not in such a position.

I was lucky enough to have gained somewhat of a public profile in our little world of VFX.  I know I'm not everyone's cup if tea, and there are people who disagree or plain don't like me.  But the fact is, I get emails, Twitter messages and the like at least once a month ( it's slowed now that I'm not as public ) that would turn your hair white.

I take those stories to heart. I've spent nearly two decades proving myself a capable VFX artist. I'm now in a position where I CAN speak up and it's not someone on Twitter with 10 followers yelling into the Abyss.  I don't get why my voice is louder than others, but it's a simple statement of fact that it is.

I have a good job at a good facility that affords me a comfortable quality of life. I don't know if this is due to talent, hard work, or plain dumb luck. Probably a combination of all three. Yet I, and others, have endangered their careers and livelihoods by speaking out against things we see as wrong.

You think I say this things only because I'm a contrarian asshole?  Note, I'm not denying my status as a contrarian asshole, simply saying its not the only reason. I need to look at myself in the mirror every day. I hear, and see, what happens to people.

I do not like or endeavour to be, as my mom would say, a Negative Nelly. When I see good, I point it out. If I hear unsubstantiated rumour, I don't just put it out there. But at the same time I can't justify hearing the things I hear, seeing the things I see and then say everything is okay.

It doesn't matter that they aren't happening to me. I see them happening though, and to not give voice to the voiceless when I am afforded the opportunity to do so would be irresponsible on my part.

I do not belittle or have issue with those that act as cheerleaders for our industry. If I saw no hope I might as well put a gun in my mouth. And some of the people who I disagree with on this are the people I respect the most in this industry.

We can, and should, have an open dialog about the problems as we perceive them. Think my perceptions are wrong?

Fine - prove me wrong, and I'm the first to say so.

Friday
Apr062012

A Decision Made

I’m amused I can cause something of a controversy simply by changing my mind about something.

Almost a year ago I wrote a post which got read by a lot of people.  Over 41,000 on this website alone, never mind where it had been copied and reposted in full ( btw - not cool.  Link, don’t repost. ).  In it, I explained how I thought VFX had gotten to the point it was at, and argued the time had come for a change in the way the business of VFX is done.  Since then I’ve slightly altered my views, and I thought I should explain myself.

It’s not that I don’t think the time has come.  I think the time has come and gone.  The boat has sailed.  Elvis has left the building.  Pick your metaphor.

The labor market for VFX has only gotten worse in the past year.  We’ve been given a hard lesson in the danger of subsidies with the closing of Sony Imageworks Albuquerque.  We’ve lost a few small houses in their entirety and at least one of the big ones is in danger of folding.  And of course, Digital Domain went public, it’s CEO touting how free student labor will increase shareholder value and that we’d all be just as happy working on military simulations and medical visualization as cutting edge VFX.

All these things should strengthen, not weaken, the will of VFX artists to do something.  To bring change.  But it hasn’t, and it won’t.  In order to change to happen, you have to present a united front.  You have to stand together.  But the VFX industry can’t stand together because we don’t share common goals.

Many American VFXers want portable healthcare and pensions.  People in Canada, the UK and New Zealand don’t share that cause because they have nationalized healthcare.

Americans also want an end to subsidies.  Again, Canadian, UK, and New Zealand workers don’t want that.  Why would a British VFX artist want to get rid of the one major advantage they have?

Why would they risk having to leave home, move to a different country to find work?

Why would anyone from the EU want to risk work going to a place, unlike the UK, where they would have to apply for a visa and possibly get rejected?

Why would Digital Domain care about the furor over their school, which I’m sure  will be overflowing with applicants?

Why would the studios want to pay more for VFX work?

Why would an actor’s union support a group of people that tears apart one of it’s member’s bid to get an award that would provide more work for everyone in a vain grab for recognition?

They wouldn’t.

I stood up for what I believe in.  I argued the point in person, over email, and on Twitter.  And I’ve done so with my name attached.   I did it because I genuinely love visual effects.  When it’s done right, it is the most fun, creatively rewarding thing I can imagine doing.  And in return, I’ve been attacked on websites, had threats made against my career by a member of the London VES, and lost at least one friendship over doing so. 

No one can make change come on their own.  I ended that post with this:

Stand together.  Or fall apart.

As an industry, we’ve made our decision.

Thursday
Jan262012

My Ten Favorite Films of 2011

I’m putting up my Ten Favorite FIlms of 2011, with some thoughts on each.  Note these aren’t the ‘best’ films of the year, but rather the ones that I enjoyed the most for whatever reason.  I want a film that is going to make me feel something - fear, excitement, hope, joy, anger.  SOMETHING.  These are the films that did.

 

10. Contagion

If a movie is should be judged on how it affects you, then Steven Soderberg’s virus outbreak film scores high.  I wanted to bathe in Purell after this film.  Because Soderberg  is, well, Soderberg, he’s able to attract a whole lot of “A List” talent to the film, who he promptly begins killing off approximately 10 minutes into the film.  This is a nice bit of cinematic akido that raises the tension of the film.  Normally you think - “Hey, Matt Damon’s character will be fine, otherwise it wouldn’t be played by Matt Damon.”   But here, you never know.

Contagion also had a really great score, so, bonus points there. 

 

9. Margin Call

Another star filled ensemble cast covering 24 hours in the fall of a fictitious Wall Street investment firm.  A remarkably well written script, executed aptly by the director - though some shots felt very “indie with shallow depth of field” in a bad way - was raised by the stellar acting.  I know people are sick to death of the whole Financial Meltdown thing, but this film deserves a watch.

 

8. 50/50

Holy crap I liked a Seth Rogan movie.  But he turns in a wonderful supporting role to Joseph Gordon-Levitt’s amazing performance as a 27 year old diagnosed with cancer.  Will Reiser’s script was on The Black List a few years ago, and I was stunned to see it didn’t get nominated for an Oscar.

 

7. Rise of the Planet of the Apes

Who knew, right?  A lot of people wrote off this movie because it seemed like a studio franchise reboot driven by money, but it turned out to be a pretty strong character driven thriller.  True that character was a computer generated chimp, but I really was rooting for the damn monkey the whole time.  If only this movie had used an actual live human actor instead of James Franco, this film would have moved up the list.

 

6. Crazy, Stupid, Love.

I was expecting a paint by numbers rom-com.  But instead I got a touching, funny film filled with actual characters.  Steve Carell is the perfect actor for this type of role, his restrained comedic performance works perfectly, and the chemistry with Ryan Gosling’s mentor character is amazing.

The movie also has my favorite line of the year - “Seriously? It's like you're Photoshopped.” 

 

5. Mission: Impossible - Ghost Protocol

You take the guy who made two of my favorite movies of all time - The Incredibles and The Iron Giant - give him one of the great leading men of our time, an IMAX camera, and - just for shit’s and giggles - one of the top VFX supervisors in the world.

I’m all in.  Confidently directed, amazing set pieces, great humor that didn’t distract form the action.  It’s rare that a sequel is as good as the original.  Rarer still that it surpasses it.  Unheard of that the fourth entry in a franchise is the best.  It REALLY should have gotten a VFX nomination as well.

 

4. Drive

Ryan Gosling’s second appearance.  This film delivered on every level.  The overwhelming stillness of the vast majority of the film makes the action so much more intense, and the violence so visceral you can unfortunately taste it.  An amazing soundtrack, a great villain in the personage of Albert Brooks, and some of the best violence I’ve ever seen on camera.  I loved this film.

 

3. Moneyball

First Seth Rogan, now Jonah Hill?  But he turns in an amazing performance ( earning him a well deserved Oscar nom ) and holds his own against Robert Redfo- I mean Brad Pitt.  Seriously, Brad Pitt is turning into Redford more and more every year.  The script has some nice Sorkin-ness sprinkled throughout, always a good thing.  The little bit’s of humor and heart, especially with the daughter character, elevate this to a level of greatness I was not expecting.

 

2. Warrior

Much like Rise of the Planet of the Apes, a lot of people dismissed this as “Rocky Meets UFC” and wondered why it wasn’t going direct to DVD.  Turns out because it’s a thrilling, heart wrenching drama filled with amazing performances by Tom Hardy, Joel Edgerton, and especially Nick Nolte.  Writer/Director/Producer Gavin O’Connor made one of my favorite sports films of all time - “Miracle” and he does a pretty damn fine job here as well.  The action feels very, very real.  The relationships seem very, very real.  And every time I watch it, I well up, my pulse races and I find myself compelled to root for someone in a fake fight tournament I know the end result of.

See. This. Movie. 

 

1. Senna

If you had told me my #1 movie of the year would be a documentary, I would have called you nuts.  If you said it would be a sports film ( actually, #’s 3, 2, & 1 ) I would have called you crazy.  And if you had said it’d be about a sport I actively think is boring - F1 racing - I would have called the men in the white coats.  But this documentary about someone I had never heard of managed to tell, through the use of archival footage and limited narration, the spellbinding rise and tragic end of Ayrton Senna.  When I saw it at the Everyman cinema here in London, I ordered a beer at the beginning of the movie.  At the end of the film, it sat undrunk beside me.  I was so involved in this story I forgot to even drink the beer in front of me.  I was also crying.  An amazing story, told perfectly.  The fact it didn’t get an Oscar nomination is, in the words of Oscar WIlde, fucking bullshit.

I’m paraphrasing.

 

 

Well, there you have it.  My Ten Favorite Films of 2011.  If you haven’t seen any of them, please do, otherwise you’ll be missing out.

Saturday
Dec312011

The Kubrick

I’d like to introduce you all to The Kubrick.  It’s the new gaming system I’m building, named in honor of Kubrick’s 2001 : A Space Odyssey.  I don’t like the way a lot of gaming computers look, an aesthetic appealing to teenage boys without any design sensibilities, so I’m going to house all of this inside the massive 800D from Corsair.

 

You can see where the name comes from.

Actually, a lot of my components are coming from Corsair.  Having been out of the PC scene for quite a while, I’ve been doing a lot of research and the consensus tends to put Corsair at the top of every ‘Best of’ list, so I’m not worried.

An ASUS Rampage IV Extreme motherboard forms the foundation of the system.  This will allow me to do some fiddling with overclocking fairly easily.  I don’t want to do a full water setup, but I will be using a Corsair H100 to keep the Intel 3960x Sandy Bridge hexacore processor that will be mounted in there cool.

I’m going to start off with 32GB of Dominator GT RAM, in a 4 x 8GB configuration so that I can always add another 32GB without hassle.  I’m going to add the Airflow Pro memory coolers as well, just to make sure all that RAM is being used to it’s best capacity.

Graphics wise, I’m going to try and get my hands on 2 EVGA GTX590 Classifieds, setup in SLI.  Because the cards are dual GPU, it’s like having four cards in there.  I don’t want to play any game on anything less than ‘extreme’ settings for a while.  I’ll also be able to run the system in stereo, should I choose to.

For storage, I’m going to use a Force Series 3 120GB SSD as the system disk, running Windows 7 64bit.  I’ll also install some games to it, anything I plan on playing a lot, like Star Wars: The Old Republic.  Main storage will be on a 2TB Caviar Black from Western Digital.  I’m probably going to mount these in the hot swap bays, but I’m not sure.

Powering all this will be the AX1200 power supply, also from Corsair.  One really nice feature of this for me is the dynamic voltage handling, so I can build it where I am in England, and have it all work right away back in the States.

I might add or swap out some of the fans in the case to increase airflow, but they’ll be simple black fans, not any of the LED nonsense aftermarket fans feature.  I want a nice clean look to The Kubrick, I even chose my optical drive based on it’s clean appearance.  I’m also considering replacing the windowed panel of the 800D with the solid panel available from Corsair’s website, but I won’t be sure until I see how ridiculous the internals look.  Even then, I’m going to wait until I return Stateside permanently.