So long, L.A.! Foreign-based visual effects houses are responsible for four of the five nominees, from 'Guardians of the Galaxy' to 'Interstellar,' as much of the business has fled the city.

This story first appeared in the Feb. 13 issue of The Hollywood Reporter magazine.

When it comes to hawking its biggest movies to worldwide audiences, Hollywood is quick to sell the whiz-bang appeal of its state-of-art visual effects. But Hollywood itself — at least in geographical terms — can no longer claim to be the home of the VFX industry.

L.A.-based VFX houses have shuttered and VFX artists have been forced to abandon California in droves in search of work in other countries. An industry lobbying group, created to combat VFX flight, has just collapsed. And this year's Oscar nominees bear further witness to the new reality: Four of the five nominees for the visual effects Oscar are primarily the work of VFX houses headquartered abroad.

X-Men mutant Sunspot (Adan Canto) in before and after shots.

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Efforts to counter the trend have come up short. "We've tried various different ways to get our due, from union to trade association efforts trying to bring the VFX industry together," says Scott Ross, a co-founder of Digital Domain. During a Jan. 22 appearance at the Sundance Film Festival, George Lucas, who invented the modern-day visual effects industry with Industrial Light & Magic, said flatly, "Anybody who says they make money in visual effects is lying."

Two years ago, the high-profile implosion of the L.A.-based Rhythm & Hues — it was forced to file for Chapter 11 bankruptcy protection just days before it won an Oscar for Ang Lee's Life of Pi — became a rallying cry, forcing the industry to look at the issues that were rocking the visual effects community. The VFX budget on a major tentpole movie can go as high as $100 million, but faced with those astronomical sums, the studios had started chasing production incentives in Canada, the U.K. and elsewhere that can drive down those costs by 50 percent or more. An uneven playing field was created. And L.A.'s VFX business, unable to bid against foreign-based outfits, largely collapsed. In the wake of Rhythm & Hues’ collapse in 2013, VFX artists staged a demonstration outside the Oscars. Read more VFX Pros Team Up to Advance the Realism of Digital Humans