Screen Daily
article here
UK visual effects facilities are predicting a strong bounce back in VFX business when production resumes after the strikes but it will still take many months for the industry to return to capacity and to rehire the jobs it has hemorrhaged during the stoppages.
The VFX sector – which is home to world leading facilities such as Framestore (Barbie, Wonka), MPC (Napoleon, DogMan), Dneg (Oppenheimer), Cinesite (Aquaman & The Lost Kingdom) through to boutiques like Milk, Union and BlueBolt - has been one of the hardest hit parts of the UK industry during the WGA and SAG-AFTRA strikes.
A survey in August by industry organisation UK Screen Alliance found that four out of every five projects on which facilities were working were in hiatus.
The same survey estimated the UK VFX industry had lost around 40% of jobs - or 4,000 of the 10,000 employed in the sector - since the start of the strikes. Most of these job losses are freelance artists on fixed term contracts.
“Some facilities have managed to carry on with minimal impact while others have had virtually all their work affected and the impact has been devastating,” says Neil Hatton, CEO of UK Screen Alliance. “Everybody in one way or other is making cut backs in their workforce.”
Unlike Covid when the whole of the industry was affected and many companies and individuals were provided with government support, there has been no support this time.
Not surprisingly, UK VFX workers and facilities have been cheered by news that the WGA dispute was resolved this week and that SAG-AFTRA and the Alliance of Motion Picture and Television Producers (AMPTP) are returning to the negotiating table on Monday (October 2).
Reliant on inward investment
All UK VFX facilities operate on a mix of Hollywood and domestic broadcaster work. Some have continued working on European projects and advertising work during the strikes, but this diversity is insufficient to sustain a business which relies so heavily on inward investment.
Major features to halt include Wicked and Speak No Evil for Universal, Disney’s Deadpool 3 and Andor series, Warner Bros and Netflix series The Sandman and Apple TV+’s Silo S2.
“Lay-offs are unavoidable and some are locked in,” Hatton adds. “Because work is not being shot it won’t be in post for the next few months even if the strike is resolved tomorrow.”
“The bigger risk is that freelance crew are largely unsupported and they will bail out of the industry for good,” warns Adrian Bull, CEO at dailies lab Cinelab Film & Digital which worked on Yorgos Lanthimos’ Venice winner Poor Things. “We’re in real danger of not having the crew to support the facilities when the strikes are lifted.”
One VFX facility chief operating officer speaking to Screen off the record said there was no immediate cessation of work when the WGA downed tools in May because streamers and studios had stockpiled scripts in case of a strike But when SAG-AFTRA joined the cause in July, productions ground to a halt.
With nothing being shot there was no turnover to feed editorial let alone VFX. Bids for work were pulled. Facilities were left with the inventory they had in hand.
Tough conversations
“It is a rough time for freelancers and those on short term contracts and permanent staff in some cases,” a managing director of a UK-based VFX facility told Screen. “It is a volatile industry but those who just came through Covid are now hitting this back-to-back and the industry is shaking. The conversations with freelancers [about non-renewal of contracts] are the hardest to have right now.”
London-headquartered Dneg, which won an Academy Award last year for its VFX work on Dune, has let go 70 of its 900 UK workers, and offered the remainder either a 25% pay cut or joining a loan scheme to lower costs.
In a statement supplied to Screen, Dneg said: “Our proposal is designed to allow us to keep more employees on payroll than we could otherwise support. We’re proposing solutions that are designed to sustain jobs and keep as much money as possible in our employees’ pockets during this difficult period, while positioning the company to meet the current economic challenges. [We want to] be ready to get straight back to work on new projects for our clients once this disruption passes.”
The situation looks challenging for the next few months too. The facility managing director told Screen that their company has recently been on full-on delivery mode on shows that shot up to the end of June. “But projects will fall off a cliff in November when there is nothing scheduled that has a substantial VFX budget.”
This vendor expects to have to cut numbers by a third between now and Christmas, mainly by not renewing fixed term contracts. “Every month the strike has gone on adds to the time it will take until things kick back into post. We probably won’t be at full capacity again until June [2024],” they said.
End of the supply chain
Compounding matters, VFX is at the end of the supply chain and at the whim of likely scheduling conflicts. Projects that may have been destined to shoot in the UK before the strike may have to be recast as talent are pulled in a different direction. Some projects are weather dependent so may be put on hold; the UK winter months are historically the least busy period for principal photography.
It will also take time for projects to restart. A delay of 4-6 weeks is expected for preproduction planning, booking lots and locations, and assembling the production team before cameras roll, and a further delay of many weeks before that material filters through to VFX vendors.
When the VFX sector bounce back begins, it will do so very quickly. The facility managing director says: “Every single studio exec has told me that once the dam breaks it will come like a tidal wave. The work is going to start to come fast and furious. As long as you can ride it out there will be ample work for everybody. I know that is not what freelancers want to hear but the message we want to communicate is that we absolutely want you back and we will hire you because we know will be working.”
Cinelab’s Bull agrees with this assessment: “Anyone close to the production cycle like us knows that the moment the strikes are over there’s a good chance we’ll see our revenues pick up again. It will take a while for all productions to get underway but the floodgates will open. But it won’t be until April or May next year when everything is back to normal so we have to carefully manage cashflow in the meantime.”
Anticipation for targeted VFX credit
A timely boost to the sector could arrive later this year in the form of a targeted VFX tax credit which it is hoped will prevent VFX spend on HETV and feature productions being syphoned off-shore.
UK Screen figures suggest that of shows shot in the UK and claiming tax credit here between 2017-2019, £1 billion on VFX was spent overseas.
“VFX doesn’t get the best deal out of the tax incentives that it should,” says Hatton. “There is a built-in anomaly in the tax credits where, if you spend most of your budget on shooting in the UK, it caps out the tax credit for VFX.”
Currently, tax relief is capped once a production has spent 80% of its budget in the UK. Any UK spending beyond 80% receives zero relief. Often this impacts the VFX spending in the UK, a part of the production process which is easily transferred to another territory, where further tax incentives can be claimed.
UK Screen has been pressing the government to make the UK tax credit for VFX more competitive in comparison to other territories, notably Canada and France. Says Hatton: “When the brakes come off after the strike we don’t want to be stuck in a position of second choice. We need to be competitive with those other territories. We must not let them fill up first. Now is the moment to give us an enhanced VFX tax relief.”
The government has acknowledged that the cap has a negative effect on VFX, and said in the March budget that it will consider the case for targeted support for VFX later this year.
Facilities spoken to by Screen agree with the significance and urgency of change. “It would be game-changing for VFX vendors, postproduction facilities and the wider UK filmmaking industry,” says the VFX facility COO.
The facility managing director adds: “Every show has a certain level of VFX but the big budget stuff is what keeps us all going. The big shows chase the tax breaks. This means that while productions shoot in the UK - attracted by the best crews in the world - they get the rebate for VFX in Canada first. That happens time and time again.
“The situation we risk being in is not only a delay while production ramps up but a delay while Canada fills up before the UK can get back to its thriving capacity. It is now more important than ever for the government to lift the cap and let the work stay here.”
Hatton believes there is a “strong possibility” of this happening in the Chancellor’s Autumn Statement. “The clock is ticking. We’ve made our proposals to the Treasury and we know they have been considered but we don’t know their response. It would give the VFX industry the real adrenalin boost it needs to power out of the post-strike period.”
All leading VFX shops in the UK were contacted to comment for this piece.
No comments:
Post a Comment