Stereo D plans expansion into Canada

July 31, 2014 4:30 PM PT

Stereo D, a Burbank visual effects company, plans to move a significant portion of its workforce north of the border.

The company, which specializes in the conversion of movies to a 3-D format, told employees this morning that the studio is planning to open an office in Toronto and that the workers had until next month to decide whether they wanted to relocate.

Stereo D will keep its Burbank headquarters but with a smaller crew, said William Sherak, the company’s president, referring to Toronto.

“It’s a great artists city that has a huge film business,” Sherak said of Toronto in an interview.

Although plans have not been finalized, the Toronto office is expected to open in November and employ about 100 workers. Stereo D employs more than 300.

Sherak said there were no plans for layoffs.

Toronto and Vancouver remain popular destinations for production and post-production services because of generous tax breaks offered to filmmakers.

“It’s a huge advantage,” Sherak said of the tax credits available in Toronto.

The move marks the latest setback for California’s struggling visual effects industry that has had an increasingly difficult time competing with companies in Canada, the UK and India that benefit from tax credits or cheaper labor to produce visual effects at a lower cost.

In May, Sony Pictures Imageworks, the visual effects arm of Sony Pictures, moved its L.A. headquarters to Vancouver to take advantage of tax breaks offered there.

The outsourcing has caused many visual effects workers to live a migratory existence.

Stereo D, which is owned by Deluxe Entertainment Services Group, was co-founded in 2009 by Sherak, son of the late Tom Sherak, former president of the Academy of Motion Picture Arts and Sciences and Los Angeles film czar who championed keeping production in California.

The company’s high-profile projects have included “Titanic 3D,” “The Avengers,” “Captain America” and most recently “Jurassic Park 3D.” The company recently added offices in London and Sydney, Australia.

More than half a dozen California companies have shut their doors or filed for bankruptcy in recent years because of growing global competition. The parent company of Venice-based Digital Domain, co-founded by director James Cameron, filed for bankruptcy protection in 2012.

Digital Domain was subsequently acquired by Chinese film and TV company Galloping Horse and Reliance MediaWorks, the post-production company that is part of the Indian conglomerate Reliance ADA.

Another prominent local effects firm, Oscar-winning Rhythm and Hues, also filed for bankruptcy protection a year later and was sold to an affiliate of Prana Studios, a Los Angeles animation and effects company.

Currently, big budget films that rely heavily on visual effects are excluded from California’s film and TV tax credit program. The state Senate is expected to vote next month on a bill to expand the program.

“I hope that one day sooner rather than later California can offer a competitive advantage,” Sherak said. “I would be the first in line.”

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