The UK’s VFX Industry: In Profile

Guardians of the Galaxy 2: Marvel – VFX by Framestore

Visual Effects, or VFX for short, is the digital manipulation of images to enhance, augment or entirely replace elements of live-action shots in films, TV programmes or commercials. In some cases, entire shots, backgrounds and characters may be computer generated. VFX has become intrinsic in most feature films and many TV dramas

VFX is still a relatively young industry, which has gone through a period of significant growth in volume demand and which is characterised by a constant re-invention of the technology and workflows necessary to create increasingly complex effects. The Harry Potter franchise provided a springboard by which the UK’s VFX sector transformed itself from a cottage industry to what is widely acknowledged as a world-leading centre for visual effects production. London houses six of the world’s largest visual effects companies.

Gravity: VFX by Framestore

UK headquartered companies have won the VFX Oscar on numerous occasions, for Gravity, Interstellar, The Golden Compass, Inception, Ex Machina and The Jungle Book. In the VFX category of the Oscars in 2015, five out of six nominees and the eventual joint winners, Double Negative and Milk VFX, were British companies.

Ex Machina –
Oscar winning VFX from Double Negative and Milk Visual Effects

Whether it is visualising epic super-hero struggles in Guardians of the Galaxy; designing magical creatures for Fantastic Beasts; building vast alien landscapes for The Martian or re-creating convincing period drama environments for Florence Foster Jenkins, The Crown or Suffragette, the UK’s talented VFX workforce has a proven track record of delivering winning results, not just with the awards judges but also with global audiences. Framestore, Double Negative, MPC and Cinesite have long-standing reputations but the demand for VFX for High-End TV series has led to the growth of a new breed of highly agile boutique VFX houses such as Bluebolt, Union, One of Us and Milk.

The Crown – Netflix: VFX by One of Us

In 2014, Industrial Light and Magic who were created the VFX for Star Wars, were encouraged by the UK’s film tax relief and other incentives to create 200 jobs in a new studio in London.

The UK VFX industry competes fiercely and successfully with rival production centres around the world – USA, Canada, Australia, New Zealand, India, South East Asia and the rest of Europe – to secure high volumes of inward investment work (predominantly from the USA) which helps to underpin domestic production as well as delivering significant economic and cultural benefit.

The UK Government supports the VFX sector, and the wider film and television industry, to build on its world-leading status through a combination of production tax incentives and R&D tax reliefs.

In 2014, the thresholds for the UK’s highly flexible Film and High-End TV (HETV) tax credits were lowered allowing inward investment productions to qualify solely based on VFX or other post-production performed in the Britain. This change along with the introduction of the HETV tax relief helped the UK’s VFX sector grow by an estimated 23% in 2015.

The economic value of VFX

In 2018, the British Film Institute analysed VFX as a sector in its own right in its Screen Business Report. (See Appendix 3) UK Screen Alliance was part of the steering group for this report which was based 2016 data.

The BFI’s remit does not extend to commercials so the report cannot truly reflect the whole of the VFX sector, although the figures do contain the best evidence of the size of VFX in the film and TV drama sectors.

The total spending on VFX for film tax relief related work was £223.5m and the HETV tax relief related work was £50.6m. We anticipate that when the HETV figures for subsequent years are calculated, there will be a marked increase because of activity by Netflix and other SVOD clients. There was a small amount of VFX for animation tax relief related work at £1.3m.

VFX for commercials and other non-tax relief related work was estimated at £235.3m (i.e. more than the spend on film VFX).

The total direct spending in VFX was £510.7m

13% of the claims for film tax relief relate to VFX work and 5.6% of the HETV tax credit is also VFX work.

The VFX workforce was 8,140 full time equivalent employees with total labour compensation of £372.3m. The direct economic impact (GVA) was calculated as £426.9m. The productivity of VFX workers was £81,257 of GVA per head which is £19k more than the UK average.

This direct VFX spend creates indirect impact in the supply chain and induced impact through employees spending wages. Furthermore it cascades through the screen sector value chain in film and TV distribution creating additional value. Film & TV content creates spillover value into other sectors such as merchandise and tourism. VFX plays its part in creating that value and so £165m of spillover can also be attributed to VFX.

The total impact reported by the BFI using 2016 data showed that VFX created £1.043 billion of GVA for the UK economy and supported 17,940 jobs.

However this will still be an underestimate as the BFI remit did not extend to analysing the spillover value created from VFX for advertising . The whole point of a commercial is to create value in other sectors (e.g to increase sales of goods and services and to add to brand value)

As yet we have no way of estimating this commercials spillover value but we will be liaising with other bodies in the advertising industry to see if any suitable evidence already exists or can be obtained.

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