Thursday, April 01, 2010

VFX TownHall Meeting thoughts

Here are some random thoughts and ideas regarding some of the issues brought up in the vfx townhall meetings. I heard the original townhall broadcast live and caught the tail end of the next one. I missed the one last night on unions and haven’t kept up on all the twitter/forums so what I’m posting may be redundant or may be 180 from any of those. These are just ideas so don’t hold me to them 5 years from now. (This is turning into a much longer document so I’ll be breaking it up for the postings)

Scott Ross discussed the fact that VFX companies don’t make much profit. I ran Dream Quest for 5 years and can vouch for that. It seems to many outsiders (producers, some studio executives) and some employees that it must be a cash cow because look at the costs being charged. Think of the number working on the project at a company. The number of people there may exceed the number of crewmembers on the live action shoot. And they’re not just working for 45-100 shooting days. So delete all the costs of the employees, including any health care and 401k expenses. Delete the costs of the lease (very expensive in LA, London, etc) Delete the costs of the utilities (special internet, phones, power). Delete all the costs of the workstations and all the software licenses. Once you’ve whittled it away there’s not a lot left. Now the VFX company will build in a profit when possible but at most it would be 35% (much less than 100% markup for many products or other services). And it never stays this way no matter what the company puts in since it’s always squeezed down. End result is more likely 10-20%.

This assumes that you’re making a profit. This business tends to be feast or famine. Look at the last couple of years between the writer’s strike and the actor’s pseudo strike. Some large projects were made but many mid to small projects were stopped. Many times as was discussed by Scott companies will try to get work even if it doesn’t make a profit; even if it doesn’t cover the expenses. When you have a large overhead it’s better to have most of it covered than none of it covered. And that’s just it. Any profit you make at a company has to cover the times when you don’t have any projects. It’s difficult to maintain a consistent volume of work through a company. Even with layoffs there are a number of base expenses that still need to be covered. At Dream Quest it wasn’t unusual for the co-owners to skip salary ourselves so we could continue to pay for the basic staff. Training people and getting them up to speed on a particular company approach takes time and money. When a company lets someone go they will re-incur that cost when they rehire someone when there is work.

That’s why I recommend freelancers or those starting VFX companies have at least enough money to cover 6 months with no income (same advice for most business startups) and to not underestimate the cost of overhead, healthcare, etc when on their own.

Competition for work is high. VFX companies have been sprouting up all over. In addition the cost of doing business and trying to bid completely, Chris deFaria points out if some location (such as England) has a 20% discount there’s little likelihood the companies can compete on price alone.

It was suggest that 30 years ago was the same thing but there were a number of differences. 30 years ago there was ILM, Boss Films, Apogee and Dream Quest as the likely competitors for feature film work. The number of VFX films and the number of shots on a film was much smaller. 200 shots was considered huge. These days many films start at 600 shots and go to over 2000. To enter into the VFX work required you either purchase or build specialty equipment (optical printer, motion control, animation stand, etc) these could run from $10,000 to 80,000 each. The upside is once purchased, that was it. No upgrades or replacement. You also needed a place to put that equipment. Dream Quest started in a 2-car garage. These days a company can start with one guy and a computer at a desk in his/her apartment. Depending on software you might be able to start for as low as $5000. But the other critical factor was there were no subsidies, or at least ones that affected the VFX market. If a studio needed VFX work done at that time it was almost always done here in California. That meant at least there was a level playing field.

As I recall Lee and Jeff suggested people not work at places that didn’t provide very good working environments or that didn’t treat their employees well. That sounds great but the reality is people are likely working at places like that precisely because they don’t have a choice. If there are jobs available at a place down the street you can change jobs. If there are no openings elsewhere or they’re half a world away then it may not be possible to quit or to not take a job, especially if you have a family and house. As individuals I would urge you to discuss the issue with the head of the company. Unfortunately this could get you labeled a troublemaker and increase the likely hood you’ll be laid off sooner and not rehired in the future. You could discuss with fellow employees but unless most of the employees opt to threaten to quit, your quitting a company will not change that companies practices. This is where a union would come in and I would urge those truly interested to take a real part in discussions and whatever is necessary to try to make it better for yourself and other artists. (I.e. sitting on the side complaining is the easiest thing but it’s also the least productive)

Chris suggested that some of the people could work for the art department. Designers, modelers, CG supervisors, etc. One question is are these positions that are available in the art directors guild? And of course this only covers a small number of people in the whole scheme of things. Even if the thought is to make it call it Digital Production does not mean the camera crew will be hiring CG lighters.

2 comments:

  1. great perspective. I've been trying to say the same thing but you said it better. Guilds or unions have no power/leverage b/c the companies have no power/leverage. They can't give much more, altho I think there is way too much waste in the process, some made by the studio and some by the fx companies. There isn't often a concerted effort to optimize artist workflow at most places. It feels more like just push harder. THAT is what can be changed.

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  2. Ivan DeWolfJune 16, 2010

    these realities are available to anybody doing proper due dilligence; it makes it virtually impossible to find an investor to fund a startup VFX shop.

    Lots of amazing teams have never successfully been able to form due to this unfortunate reality.

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