For two decades, Vancouver's visual effects industry operated on a reliable model: Hollywood sends the work, BC provides the talent, and the Film Incentive BC (FIBC) tax credit, which covers 35% of eligible labour costs, keeps the sector competitive. That arrangement is now under pressure, prompting studios to seek new strategic directions.
U.S. streamer content spending is projected to fall 8–12% in 2026 as major platforms shift toward margin discipline. For Vancouver's VFX houses—which anchor a sector that generated approximately $3.5 billion in economic activity in 2024–25 and employs more than 35,000 workers—the contraction serves as a catalyst for change.
A growing number of studios are pivoting toward co-production and IP co-ownership deals with European and Korean partners. Unlike traditional service contracts, which offer capped margins and no long-term ownership, these structures allow studios to trade creative and technical labour for equity in the intellectual property, granting them a share of licensing, streaming residuals, and sequel rights.
Korea is an increasingly active partner in this model. The Korea Creative Content Agency (KOCCA) has developed co-production frameworks to facilitate joint IP development. For Vancouver studios, the fit is logical: Korean partners provide IP concepts and Asian distribution, while BC houses contribute production capacity and eligibility for the 35% FIBC credit.
European co-production channels offer similar advantages. Canada's bilateral co-production treaties allow qualifying projects to access both Canadian and European public funding, turning a studio's talent base into a capital asset rather than a billable resource.
While IP co-production still represents a small fraction of Vancouver’s total VFX revenue, the shift is significant for long-term valuation. A studio that owns a catalogue of co-produced IP faces a different risk profile and valuation multiple than one dependent on the U.S. greenlight cycle.
IATSE Local 891 has emphasized the need for structural solutions to stabilize employment, noting that IP co-production offers a revenue base that does not reset between production cycles. Similarly, the Motion Picture Association – Canada has highlighted the diversification imperative, warning that over-dependence on U.S. service work leaves the sector vulnerable to external boardroom decisions.
The transition remains complex. Co-production deals require specialized legal expertise, longer negotiation timelines, and the balance sheet stability to manage deferred revenue. Vancouver has spent two decades building world-class VFX capability; the current market is now testing which studios have the business architecture to convert that capability into ownership.
