The L.A. visual effects industry has had some rough years, marked by the offshoring of work and the bankruptcies of industry-leading firms.

But one local effects shop, Hydraulx, is expanding its L.A. operations. The company’s co-owners moved the firm into new $10 million headquarters in Playa Vista last year and in recent months have also launched a soundstage and equipment rental business at the location, called Hydraulx Filmz.

Greg Strause, who co-owns Hydraulx with his brother Colin, said the expansion fell into place thanks to the large new building and also the millions of dollars of digital filmmaking equipment that the brothers have amassed over the years.

“We’re taking advantage of stuff we bought five years ago – things like lenses – and we’re seeing a return on the investment,” Greg Strause said. “It’s added cash flow for us.”

It’s also a hedge against the vagaries of the effects world, which has become more challenging as work moves from away from Los Angeles to states and foreign territories that offer tax incentive programs for effects work, or countries where wages are lower than in the United States.

The plan is to rent the L.A. production space and equipment for everything from small-budget music videos to studio action movies. The brothers, who are also movie directors and producers, plan to shoot their own material there, too.

Already, the space has been used for projects including “Hercules,” an MGM and Paramount Pictures co-production that stars Dwayne Johnson and is scheduled to be released July 25. The producers of the movie were on deadline and needed 3-D shots of a crowd along with related visual effects within a tight turnaround time of 16 days.

Staying competitive

The expansion comes as the effects industry has consolidated and moved away from Los Angeles.

In the past year, Digital Domain of Venice and Rhythm & Hues of El Segundo were both purchased out of Chapter 11 by Asian firms. Also, Sony Pictures Imageworks announced it is moving its headquarters from Culver City to Vancouver, British Columbia. In an example of large-scale consolidation, Prime Focus World of Hollywood merged last month with Double Negative of London and then announced this month that it will acquire Reliance MediaWorks of Mumbai.

Craig Darian, chief executive at soundstage owner Occidental Entertainment Group Holdings of Hollywood, said the recent expansion of Hydraulx makes sense given the challenges in the effects industry. He also believes doing equipment rentals on top of renting production space is a good move.

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