Australian studio behind Lego Movie joins B.C.’s exploding VFX trade (Financial Post)
Posted by Nordicity on May 29, 2015

Australian studio behind Lego Movie joins B.C.’s exploding VFX trade

Catherine McIntyre, Special to Financial Post | May 29, 2015 3:57 PM ET

In an industry where time is money, a 15-hour time difference can be costly.

That’s one of the reasons Animal Logic, the Sydney, Australia-based digital effects studio responsible for bringing The Matrix and The Lego Movie to life, is opening shop in Vancouver, where it’s in the same time zone as Hollywood and there’s talent and opportunity in spades.

The move follows the smash success of the animated kid flick The Lego Movie, which, on a US$60 million budget, grossed over US$450 million in 2014 for Warner Bros Pictures. Warner Bros. has since locked in Animal Logic for three more animated features to be produced out of the B.C. studio, starting with The Lego Movie Sequel, scheduled for 2018.

It’s a far cry from 1991, when AL started doing VFX for the advertising industry as a 10-person mom-and-pop shop. In 1996, the company branched out into features, from Warner Bros.’ Happy Feet to Legend of the Guardians: The Owls of Ga’Hoole.

Along the way, “we’ve had many great Canadian artists coming to Animal Logic [in Sydney] to work over the years,” says Zareh Nalbandian, co-founder and CEO of the company. “Vancouver stood out to us because of the incredible growth in artists and technicians, and just generally in terms of talented crew in the digital industries over the last five years.”

VFX is dominating film. The top 10 films of 2014, for example, is chalk full of titles like X-Men: Days of Future Past, Transformers: Age of Extinction, and Captain America: The Winter Soldier. According to Warren Franklin, an independent producer and president of Vancouver’s Visual Effects Society, visual effects eat up an increasing proportion – roughly 20 per cent – of movie budgets.

“Even a film you may not think of as a visual effects film, like The Theory of Everything or The Imitation Game, all have visual effects in them,” Franklin says.

Animal Logic, whose 45,000-square-foot space will open in September and plans to employ 300 people, mainly from Vancouver, to start production early 2016, joins the big-time animation and digital effects studios flocking to the region. In the last year alone, Sony Pictures Imageworks and George Lucas’ s Industrial Light & Magic (ILM) both opened permanent studios, joining Digital Domain and Gener8 Digital Media Corp – to name a few – which have contributed to the $1.4 billion film and television business in British Columbia, according to the film and media agency, Creative BC.

Tadhg Dunlop is 11-years-old and, like a lot of kids his age, he loves Lego. He loves its nuances, how the different pieces fit with the different sets, and he loves shopping for Lego, alone, with the permission of his parents.

While it’s a bonus not having to deal with the 15-hour time difference between L.A. and Sydney, which makes meetings and phone calls with Hollywood colleagues challenging, the three-film deal provided the stable funding to make the B.C. move feasible for AL. “Of course, there’s the great government support [in Canada] on offer,” Nalbandian adds.

In 2003, the province introduced the Digital Animation or Visual Effects tax credit (DAVE) – a 15 per cent break on production costs, which increased to 17.5 per cent in 2010. In this year’s budget, B.C. announced it would extend DAVE to cover post-production costs. Coupled with the federal government’s credit of up to 16 per cent, Nalbandian says the  move to Vancouver is “a no-brainer.”

Provincial tax credits in Ontario and Quebec are even larger — 18 and 37.5 per cent respectively — but Vancouver’s talent pool and proximity to L.A. have long created an irresistible magnet for savvy producers.

Franklin, who worked with ILM and other studios in the U.S., before moving to Vancouver in 2005, says: “The industry was small but I could see the talent coming out of Canada for visual graphics – it’s pretty important to the whole industry.”

The weaker Canadian currency attracted foreign producers in the early days. “Canada was a cheaper place to go,” says Franklin. “Once that levelled a little bit, then the tax incentives kicked in and it’s still a very financially viable proposition for the studios to work up here.”

A 2014 snapshot of Canada’s film and television industry shows that foreign productions in Canada increased 4.9 per cent from the previous year, according to a report from strategy consulting firm Nordicity. The Canadian dollar in 2014 was also the lowest it had been in three years — something the report speculates helped attract out-of-country producers.

The industry was small but I could see the talent coming out of Canada for visual graphics

In this year’s Ontario budget, for instance, the government cut its tax credit by 2 per cent, suggesting the lower Canadian dollar is making Ontario an increasingly attractive location. But Peter Lyman, a digital media analyst and senior partner with Nordicity, says the government may have overestimated the power of the Canadian dollar. “There’s not a straight-line connection between the level of the dollar and production,” says Lyman.

Vulnerability to the whims of government does not deter Nalbandian, who says that Animal Logic plans on staying in Vancouver after fulfilling its current WB contract. “Our commitment is for a permanent long-term second animation studio mirroring what we do in Australia.”