The Miracle of Visual Effects, will it continue?

The Miracle of Visual Effects, will it continue?

If you had told people years ago that you could create a fake tiger with a key role as a real tiger in a film seen around the world, they would have thought you were crazy. Of course they’d say “I’d certainly be able to tell the difference of a fake tiger compared to a real tiger”. And not just look like a real tiger but act like a real tiger. Yet that is what happened. Millions of people viewed Life of Pi and had no idea almost all tiger and animal shots were hand done. I say hand done because people animated those. People painted the tiger texture. People set the fur. Not computers. The computer is a useful tool but it’s the people behind the computers that do the real work. Buy a room of computers and see how many shots they produce on their own. You don’t credit your computer for writing your report for you.

And not just the tiger, the entire ocean was added. The entire sky was added. We see miracles all the time on the screen these days but most people take it for granted. 

First image is what the visual effects crew start with

Second image is the finished image with CG tiger, ocean, sky added

First image is what the visual effects crew start with

Second image is the finished image with computer graphic tiger

Photo illustration by Todd Vaziri 

from his With and Without Rhythm & Hues post 

Visual effects are everywhere

Many films you see couldn’t have been made if it weren’t for visual effects. Would the worldwide audience pay $10 to see a rowboat in a pool with a man in a tiger suite? Could the filmmakers have shot it on a real rowboat on the real ocean with a real tiger? Any attempt to do so would have been tragic. We gave the opportunities to the filmmakers to make whatever they can imagine, whatever the story calls for and they make hundreds of millions of dollars, yet they complain about the cost.

Alice in Wonderland

Alice in Wonderland

All films up for this year for the Best Picture Oscar had visual effects. Everyone of them. Agro was able to show Iran. They were able to show trucks and a jet on a runway. They were able to create and manipulate a burning flag. Zero Dark Thirty used visual effects to create Afghanistan, flying special copters and other shots. Most of the visual effects you never noticed, that’s why you’re wondering where they were in Silver Lining playback or Amour. And most slip by visual effects artists as unnoticed as well. That’s how good we have become as artists and how far we have pushed our tools and skills.

And it’s not just these films. Almost all films out of Hollywood have visual effects. Most independent films use visual effects. Whether it’s a period film or a buddy comedy it uses visual effects somewhere. The work of visual effects professionals and our art form is everywhere. It permeates most moving media today to a far greater extent than people realize. 

Lincoln

(paraphrased comment)

The Proposal

Ted

Down with Love

Most images provided via beforevfx tumbler 

Many more examples there

Those CG animated films viewed around the world use animators, compositors, lighters and other visual effects workers. 

Once, Game of Thrones and any fantasy and science fiction television show uses them of course. And many regular shows use them.  Boardwalk Empire, Breaking Bad, Bones etc all have used visual effects.  Many backgrounds are put into scenes you had no idea were done. 
Stargate Studios Virtual Backlot Reel 2012 from Stargate Studios on Vimeo.

Virtual Backlot Demo : New York from Stargate Studios on Vimeo.

You know how much airbrushing there is in the world of magazines? Now think of movies and television in that light. How many commercials do you see that have visual effects? How many music videos have visual effects?

[Update 2/26/2014 


This Is What Movies Would Look Like Without Visual Effects  ]

And it’s not just today. Quite a few films in the past used visual effects extensively. Gone with the Wind, King Kong, WWII films, Charlie Chaplin used visual effects in his film Gold Rush. 

Clip of VFX artist, Craig Barron from Criterion Gold Rush release  for more info

Those videos games from your iPhone to your Xbox use modelers, texture artists and animators.

To all the visual effects haters out there: you've already seen thousands of shots that simply passed you by and you had no idea.

The studios and filmmakers have become addicted to the work we do. It’s impossible for them not to use them. Even if it’s just to go in to a film image and change something. The audience has gotten addicted to them as well. They expect to see the spectacular in a tent pole movie. They expect no holds barred in showing them what they need to see to tell the story.

How much money has been saved on productions by using visual effects? A lot!  Even the ability to shoot on a stage or different location for television saves an amazing amount of money.

Gone

Now imagine what would happen if there were no more visual effects. What if all visual effects artists stopped tomorrow, put down their computer pens and said, enough is enough. Workers on films, television, commercials, animation, video games, etc. 

Everything. 

Stopped.

Entertainment content companies, studios and filmmakers would be in deep trouble if that were to happen. They’d have very little content that wasn’t touched by visual effects artists. 

How much international business would My Dinner with Andre make on the Imax screen? How many variations on Honey Boo Boo would people around the world be willing to drive to the movie theaters and pay $10 to see? How many people would want to see 2 hours of the 'before' footage shown above? How many people would be willing to play Pong and not the latest and greatest graphic game?

So why are we in this mess?

Because studios push and push and push the visual effects companies. They try so hard to squeeze every penny out of the visual effects companies and workers that they try everything they can. They lobby and get huge subsidies from states and countries to pay them, the studios, to make movies there. It’s not to the taxpayers benefit in those locations. And it's decimating the visual effects industry and that short sightedness is going to bite them.

They pit visual effects companies against each other. They let change requests pile up without stop. They squeeze the amount of time to do the work. All of this pushing has resulted in a number of visual effects companies going out of business and forced visual effects artists to be unemployed or migrant workers moving from one country to the next, all so that a penny can be saved. Workers are overworked. Many with no overtime or benefits.

And now they have pushed so hard that they have left the visual effects industry in a very fragile state. The very thing that is used in all of their content. The thing that allows them to make their impossible movies. The thing that saves them money. The thing that is used in all of their profitable tent pole movies. And if they push much more they may find it starts to collapse much faster and harder than they expect. They may find that the level of visual effects they’ve been experiencing the last decade will be gone.

How will they do their films if the companies collapse and the experienced artists bail out of the industry? How long will they have to delay their films while waiting for an opening at the remaining visual effects company?

There’s a need to make this industry sustainable but the studios act like a paper company clearing huge forests without realizing they themselves will soon be left without the substance of their existence. This has the makings of killing the Golden Goose upon which they rely so heavily.

Visual Effects Worker

All this pushing has finally woken a sleeping giant. The visual effects workers. Year after year of dealing with this type of situation and the workers are getting tired of it. They work and work and produce fantastic results, which in turn makes the studios hundreds of millions of dollars. These artists make the impossible possible and allow for profits on things that couldn’t have been done without their talent and hard work. They’re tired of having no respect and for being treated as they have been. And they have begun to unite with a passion that is growing. Even visual effects workers in India are getting weary. I don't think studios want to have headlines like Apple did with Foxconn but that's where it's being pushed to. If studios and companies don’t change the artists will start making the changes for them.

What can be done?

1. Studios and filmmakers should realize what a gift visual effects has provided them. Visual effects has allowed impossible stories to be told. Visual effects have helped draw worldwide audiences to every media platform. Visual effects provide a power and finesse that has not been seen before. This has a huge impact on the creative freedom at the same time providing huge returns in the box office.

2. Studios and filmmakers should start thinking about the sustainability of the visual effects industry for which they rely on. Squeezing it more will produce nothing but dust. Constantly moving it around the world will not gain them what they desire. They're already exceeded the limits and are now seeing diminishing returns.

3. The studios and filmmakers need to embrace visual effects as part of the process. As a necessary part of the process and acknowledge it may be the reason the film can be made.

4. The studios and filmmakers can start treating visual effects as another department with key creative’s. It’s not a black box to be ignored. Visual effects is not a commodity.

5. Studios and filmmakers can work with the visual effects supervisors and producers to design the most bang for their buck. Visual effects can be designed for budget limits from the start. Visual effects artists can push the films beyond imagination.

6. Studios need to put in an effort to control post expenses from their side. They need someone to oversee post-production like they do during production. Decisions need to be made in a timely manner and endless tweaks and changes need to be controlled. Live action doesn't do infinite takes, why should it be necessary with visual effects? Studios might be surprised just how much that step alone could save them on visual effects.

7. Studios and visual effects companies need to work together to shore up the visual effects industry. They need to work together to find a new business model that works for both. They need to start thinking long term, not just this project.

8. Studios and visual effects companies need to acknowledge that ultimately they have people working for them. Those numbers on your spreadsheet are people. It’s their talents and hard work that makes any of this possible. We’re not technicians. We’re artists and craftspeople.

9. Visual effects companies need to act professional and stop underbidding and chasing the work. That's costing them and the industry. That's one of the reasons we are where we are. They need to operate as real businesses. They need to be able to say No at times.

10. Visual effects companies need to adhere to the actual labor laws. If they can’t do the work without breaking the law or treating their workers badly, then they need to re-evaluate what they're doing.

Related:
Visual Effects are inexpensive
The Value of Visual Effects

Variety article by David Cohen: Is the vfx biz in India tricking artists into working for free?
Shows some of what we as visual effects workers are up against. This will be getting worse as studios continue their assault.

Oh, the mess we’re in!

Oh, the mess we’re in!

The visual effects industry is still having problems and they’re getting worse. R&H looks like they're filling for Chapter 11. Why do companies have to underbid and close? Why are artists losing jobs without notice? If visual effects is helping to create most of the successful films of all time, why do we have so little leverage? Why do companies and artists have so little control over what’s happening?

Let’s take a look at the basics of business, which may provide some insights.

Law of Supply and Demand

If you have 12 people who want to buy a house in a particular neighborhood but there are only 3 houses for sale, that’s a sellers market. There is more demand than there is supply. The few homes will likely sell for their asking price or even higher. The buyers know that others are interested as well and if they wish to buy the house they have to be prepared to pay at least the asking price. Frequently there are multiple offers such that the house is sold to the highest offer. This is great for the seller who will make money.

           

Now if you had the opposite situation, 12 houses for sale and only 3 potential buyers, that’s a buyers market. Each homeowner who wants to sell their house knows that they may be stuck with their house for months longer if they don’t sell. Buyers will negotiate - there’s a house down the street almost as nice for a lot less. They will offer less than the asking price because they know the seller has few options. Many sellers will trim their price even before posting so they can try to make sure to sell their house. This reduces their potential profits and the price may be less than the homeowner paid for the house years earlier. They are losing money due to the amount of competition and because they know it will cost them even more if they have to hold onto it for another year.

The same principle of supply and demand is involved with many business and personal decisions. If something is rare then it’s likely to get top dollar when sold. If something is very common it will likely get a base price or less. Workers with specific skills or experiences that are rare will more likely be paid more than someone who fills a role that can be easily filled.

Balance and market size

If 10 car washes are built in a town of 1000 people then it’s likely all of the car washes will have difficulty making money. The car washes will try to lower their rates so they can at least get more customers but many of the car washes will lower their rates as well. And the rates will continue to go down in a desperate attempt to get more customers. They’re like fish out of water gasping for ‘air’. All the car washes will suffer. One by one the car washes will close. The one that remains open may do so because of location, quality, and deeper pockets of its owner or any combination of reasons.

If it’s a town of 100,000 people then there will be a corresponding number of car washes it would support. The size of market and the number of customers will drive the number of businesses that fulfill that specific type of business.  Anyone interested in starting a business has to first determine the size of the market and how much competition there already is. This has to be in the business plan and is used to get investors or to get a business loan from a bank. It would be difficult to find investors or a bank willing to put money into a business that is unlikely to be able to support itself. In the case of the car washes the investors and bank would likely refuse more car washes after the first or second have been built. They know the odds of getting their money back are nil if there isn’t a large enough market.

Free market evolution

With any new industry there is usually a rush by a large number of companies trying to take the lead. As the industry matures many companies will fall to the side. Some will merge and some will purchase other companies. At some point they will likely reach a balance. Over time some companies may come and go dependent on the health of the industry, how well the companies keep pace with their market place and where they sit. In most industries there are only so many companies and in many cases this number is relatively small. Now there may be some regional or local companies and there may be some niche market companies but by and large the industries tend to be dominated by a few companies. There are not 10,000 film studios. There are not 10,000 car manufactures. There are not 10,000 frozen foods companies or airlines or car rental companies or hotel chains. There may be 3 or there may be 12 but there certainly won’t big huge numbers. And while these companies are competitive they don’t need to underbid or run in the red for months at a time. They have a certain amount of leverage and have found their balance. Evolution is a combination of many things and if the market doesn’t support as many companies as they are in that particular business, then many will fold until the correct number of companies exists. It’s a painful process. If an industry has a large market place with too few companies, where these companies can not keep pace with the demand, then someone will step in to fill that gap using money from investors or other sources.

Visual Effects

Just how large of market is visual effects? Sure there are visual effects in most films now. There’s also television, commercials, video games etc. but let’s focus on films. The studios are now either making very expensive movies or very small movies with a gap in-between. They can only release so many films a year since they know that there are only so many theaters and so many viewers. Audiences only have so much free time and are overwhelmed with options to see and do already (television, video games, internet, sports, etc). A film has only a few short windows to make their profits (theater, DVD, Pay per View, etc). Sure they are in a library for the studio and continue to make some money but the studio want to do everything they can to make profits as soon as possible.

In the US there are 250-350 or so films released theatrically a year as I recall. How many would be considered visual effects films? No matter what the number is, not all visual effects companies are working at full capacity. Many are likely to have a hard time finding much work and others are only working at ½ capacity.

Given this there’s likely too much visual effects capacity in the world. There are at least 8 very large visual effects companies and dozens or more medium size visual effects companies. All of these companies vying for a relatively small amount of work. And even a portion of this work may already be assigned to specific companies. Weta will be doing all the Hobbit movies. ILM will most likely be doing Star Wars related movies. Just like the UK was pre-destined to do the Harry Potter films due to the incentives.  This results in companies all trying to underbid the other or at least cut their margins to the bone. In this scenario it’s a buyers market so the studios have all the control and the companies have very little control.

Imagine for a moment what the industry were to look like if there were only 3 or 4 visual effects companies. It would be a sellers market. More than likely they’d be working close to capacity all the time or at least getting a reasonable stream of projects. They’d be charging what it cost plus profits. They wouldn’t be underbidding. They’d have some leverage with the studios. This is similar to how things were pre-digital. There was much less work but a relatively small number of visual effects companies. Each was getting some work and none was trying to go into debt bidding on a show. Studios would have to ask when the work could be done by.

Un-natural Selection

And this points out the other problem visual effects has suffered from – unnatural selection. Evolution not based simply on free trade, where quality, cost and efficiency would be critical factors, but on politically manipulated trade. The incentives subsidies reward companies in some areas and penalize them in areas without the subsidies. This creates a constantly changing shift of selection. A company even with good quality and excellent efficiency could still fail because they cannot beat 50%+ subsidies. Matching them alone still isn’t enough for the studios. This manipulated market results in some companies in places that shouldn’t have visual effects companies or that would have resulted in smaller companies left to their own natural evolution. I know some people like to avoid talking about subsidies but it has had a major impact on the film business and visual effects. It’s hard to deny that they haven’t.

There’s also been some manipulation by individuals. George Lucas moved ILM to the San Francisco area and made a heavy investment. Peter Jackson setup Weta with a large investment in New Zealand. It’s not like a lot of studios and producers were saying ‘Gosh, we wish there was a large vfx company in New Zealand.’ A large visual effects company would have been unlikely to naturally develop there.

And with the subsidies comes the need for workers and artists. Artists are traveling the world to try to continue to work. And places with subsidies are pumping out more and more students and local workers whose entire career is based on government support and continues to need government support. This leaves others in areas without the magic wand of subsidies high and dry.

Visual effects as a business

All real businesses are designed  and started to make a profit. (With the exception of non-profits.)  Investors would have to have confidence that a company would be able to not only break even but also return profits. Otherwise they have their choice of investing their money into other more profitable businesses or other financial investments. Most start-ups require a business plan with a clear idea how much money they could make based on the size of the market. If a business is doing poorly then investors are likely to want to sell their share of the business or to close the business.

Yet most visual effects companies haven’t been started as real businesses. Visual effects artists started many because they were interested in having their own company. They wanted freedom, control and hoped to earn a living. Most were not started as large profit centers.  Some companies were started by wealthy individuals (George Lucas, Peter Jackson) to provide visual effects for themselves and their friends. The hope was the companies would pay for themselves. And if they turned a real profit all the better but they weren’t started as an investment strategy. Some visual effects companies are owned by post-production companies, film labs and other companies that tolerate a loss because it allows them to offer package deals where they can make up the loss in other areas. Some are funded by wealthy individuals who like to dabble or by companies who hope to sell or advertise a product (computer based). In many cases these are almost like kick starters where there is money donated with no requirement to return a real investment. As DD found out trying to get real investors was a problem and most who bought into the company were sold on the aura of visual effects and the stories of other much more potential markets (medical, military, etc)

If you went on Shark Tank (TV show with wealthy investors) and pitched a visual effects company as an investment they would laugh you out of the room.

If these were all real investors then a number of visual effects companies probably wouldn’t have even been started. And certainly investors would be skittish of investments that were totally dependent on subsides which may or may not continue. And of course they'd see no reason to invest in a company that could go out of business due to subsidies elsewhere, no matter how good the company is. Some would have been closed sooner. Those of us who do this tend to do it for love so we do all we can to keep the companies afloat. A businessperson would not invest in such a situation and would likely try to get out of it and it’s losses. They’d consider real business means of making it work such as merging with another visual effects company.

Pricing tiers

Some businesses set different tiers for themselves to get specific types of customers. There’s the Dollar Store, Target, Macy’s, Nordstrom’s, Neiman Marcus – Even though they might sell some over lapping products each has a different price point, quality level and different clientele. You can eat cheaply at a fast food place or go to a very expensive restaurant. But visual effects has a hard time doing that. Nobody really wants to work on cheaper looking shots. Lower budget films know they have some restrictions but they still want to get footage that looks as good as the large tent pole films.

Amateur hour

In the world of photography there are professionals. They shoot stock photos, weddings, portraits, news and other photos where they get paid. Still cameras have become easier to operate and less expensive so many amateurs have jumped in. Because this is a hobby and not their main profession, the amateur photographers aren’t concerned about making a real profit. They’ll shoot their friends wedding for $100 and costs of the prints. They send their photos into the stock libraries or provide them free to news services. The sales give them a little extra pocket change that’s fun. But they end up reducing the work for professionals, those whose livelihood depends on getting enough income to pay for the equipment and the studios. They don’t have another job that pays them and they don’t have an employer paying their health insurance. Any professional cat photographers are all probably out of work given the glut of cat photos on the web.

There are now people doing motion graphics and visual effects on the side. Some workers are now independent contractors working at home working for the same amount they made but they fail to include overhead or heath care costs so they end up losing and lowering the rates for everyone. Some productions are having students do the work. Students and newcomers are far too frequently eager to work for free. In the end this just reduces income for professionals and produces a downward pull on wages while the studios are pushing downward on the visual effects companies.

Small companies

Some people think the solution is to have a lot of small visual effects companies and do away with the large companies with their large overhead. It’s an attractive and romantic notion for many in visual effects to have their own companies.

Trying to get leverage with a few large companies working on large portions of movies didn’t work so how are dozens of small companies going to have any leverage? The studios would now have a hundred other places to go if you ask for too much or want to bill for changes. Leverage equates to payment, credits and other benefits. If getting the large vfx companies to unite has been impossible, how easy will it be to get 100 smaller ones to unite? If most of the problem boils down to too much capacity then how is simply having many more companies with the same capacity or more going to solve anything?

And while it’s true there is overhead at a large company consider the overhead of dozens of small companies. Each company is likely to have a supervisor and producer or a person(s) fulfilling that roll. Each will need some type of support unless they are doing it all themselves, in which case they aren’t doing visual effects portion full time. What about vfx editing and all the other misc items? Are you reviewing everything simply on your monitor even if it’s for IMAX release? Look at the credits of most movies currently. Many films already have 10-15 companies working on them, even with large companies in the mix. Look at the redundant titles of supervisors and other management positions. And some of those aren’t listed but actually worked on the production. Overhead savings by dozens of companies may not be that much different when it boils down to it. Especially since the studio may have to hire a company or two just to do R&D. The biggest overhead savings is on the down time when a large company has a large permanent staff and a large building(s).

At a certain point if you break the work in to a lot of small companies are you gaining anything for the studio that the studio can’t get setting it up themselves? If it’s just a few guys/gals in a large room with some computers, stripped of large pipelines and multiple disciplines, couldn’t you set that up in a warehouse and not have to pay profit to each company? As I noted in another post there’s nothing preventing a company from setting up a building all prepped and available for rental with basic pipeline and hardware already in place, just awaiting artists. The studios don’t want to do this since they don’t want the risk. They’d rather have the companies hold all the risk for them and to absorb a certain percentage of the changes and overages. Now there is a company or two that handles indirect management of multiple small to mid-size companies but the problem is they take a slice from the already thin margins and have now added in yet another layer of unnecessary communication.

Truth be told the fewer number of companies involved in a film the more efficient it is. When it’s at one company you have one place responsible and less communication necessary with the client. There’s only one set of management on the team and all people within the company are communicating efficiently using the same pipelines, processes and software. No conversions or modifications necessary.  Same models, same rigs, no need to adapt, no need to share proprietary code, etc. A lot of small companies would mean they’d have to willing to pass interchange all of their models and scripts. It would also mean a lot more communication time as each company has to be communicate and interface with several other companies and the clients.

So why do the studios break up the work so much?

They don’t want to be held ransom by any company so they split up the work because they fear the company taking advantage of them.

They split it up because the schedule is too short to achieve at one place.

They split it up to try to save a small amount on the matte paintings or wire removals or whatever. The added handling of these shots and communications, etc. tend eat up any savings that these less expensive places offered.

Sometimes other companies do offer specialized visual effects that another company may not be able to or not at the same quality level.

Do the studios really want to parcel the work out to a 100 smaller shops? No. It would be like a bad grocery shopping expedition. Drive here. Buy 3 apples. You want  5 so you need to drive to another place to get 2 more. Then you have to stop at the orange store. Next you have to drive to the frozen dinner store. And on and on. Right now one of the concerns studios have when they include small to mid size companies in their group of companies is what happens if the work expands? Because as we know that’s not unusual so the studios have to know if a place can actually ramp up and do more work with little notice. Some smaller shops have a physical limit of space. Some don’t have the work stations or capacity to handle more people.

Too many artists?

Some people have voiced that there are too many artists. That too many people are being educated in visual effects schools and trying to enter the workforce. And that’s why the industry is the way it is. The number of visual effects students is far eclipsed by the number of film students yet the film industry isn’t being destroyed by students. A large part of this is because there is a union for all other film workers (writers, directors, grips, cinematographers, etc) The studio has agreements in place not to simply start hiring anyone off the street. Believe me it would be easy to drive around LA and pick up people who would be more than glad to work for free or to pay to work. But the studios know that if they’re going to invest tens of millions of dollars or more, they don’t have time to teach on the set. They have to be as efficient as possible when shooting and can’t take the chance of problems. They’d rather hire an experienced professional who knows what has to be done and pay them more. They gather a small army of people and each one has a job and has the experience to join in and do what they need to.  Now that means that it is tough for film students to find real work in the field, especially on larger productions. And a large percentage of film students will never find work in the business. Others will pursue the dream for years. It’s a problem for some in visual effects because the companies are under so much pressure to get the prices down. Some managers don’t understand what the studios already know – experienced professionals are the best use of money and trying to save it on inexperienced people is being penny wise and pound foolish. Not that beginners shouldn’t be hired but they will have to start at the beginning and be in small numbers. And that’s why I caution students who are interested in film and visual effects. You have to know the odds and understand you’re going to work very hard to succeed in the specific business.

Summary

Maybe we should start treating visual effects as a real business. Maybe we don’t need more visual effects companies. Maybe we need less. Maybe our business skills and approach should start to match our love of the work. Visual effects companies need to stand up for themselves and take a hard look at their business. Would they be better off merging? Are they simply dragging down the rest of the industry? Maybe all visual effects artists will start to understand the impact and dangers of subsidies.

----David Cohen has a great article in Variety that covers visual effects business issues.
Ailing f/x sector spotlights creaky tentpole foundation

Why is the VFX business failing? Questions for Scott Ross

The Miracle of Visual Effects, will it continue?

Visual Effects Trade Association

At SIGGRAPH John Textor announced he was giving Scott Ross $100,000 to help start a visual effects trade association.

This is probably a good thing.

What is a trade association?
It's a group of companies in a specific industry that organize together to achieve common  goals. The MPAA  is a trade association of motion picture studios that negotiates as a group with the guilds and unions of hollywood. They standardize and provide film ratings. They are also involved in anti-piracy protection.

There's trade associations in quite a few industries. International Dairy Foods Association  covers the nation and Dairy Institute of California is made up of dairy farmers in California.  Because they cover a specific area they then lobby the state or federal government for or  against specific bills that would affect them. Some trade organizations do group advertising as well or set standards for their industry.

TechAmerica is made up of  high tech companies.
Wiki coverage of trade associations 

As you can see these groups are able to leverage their strength in numbers to their advantage. In many ways a trade associate is like a union or guild for companies. The companies pay dues and they are working as an organized group.

Scott Ross originally estimated the association would require $3 million a year to operate. He's since cut that figure in half so the $100,000 he is receiving is seed money. And the company dues will be significant compared to a few hundred dollars most guilds charge their workers. Dues in the trade association could dwarf the cost of a company unionizing.

What could the trade association do?
They could agree on standards and practices such as visual effects bidding forms or even things like model interchange formats. The Association of Independent Commercial producers (AICP)  has standardized bidding forms and bidding processes among other things. Although my understanding now is that this may not have truly benefited the producers in the long run.

They could agree to working conditions for their workers. They could use their strength in numbers to make deals with software or hardware vendors. They could review basic business models and work as an organization with the studios to negotiate common issues.

If there were a visual effects union the trade association could be the ones to negotiate with the union compared to each each company having to do it individually.

What they have to be very careful of
Collusion. This is where companies get together to decide on financial or hiring practices that are illegal. ILM and Pixar colluded to not hire each others animators. That was illegal as per the justice department. They won't be able to set rates or agree to match pricing. Because it's planned as an international association it will have to abide by laws that affect all nations.

What it can't do
The association is currently planned as an international group. You'll notice most trade associations are region based where they can lobby for specific things. With an international group they won't be able to lobby any specific government because that would be detrimental to other members of the association. So that means things like visual effects tax incentives will likely not be addressed or dealt with.

Companies
There will also be a question as to how many companies and what size of companies signup. So far visual effects companies have been reluctant to start a trade association on their own. Will they be willing to join one if someone else starts it? Will it provide a balance for very small companies and the largest visual effects companies? In some ways it can help provide the smaller companies with more leverage but only if that's the leverage the smaller company wants. Will companies who aren't members benefit from the improvements the association makes? Will studios seek out associate member companies or avoid them? Will the the studios take umbrage with companies looking to join the association as some companies do to workers who are looking to join a guild? That all depends on the associations agreed upon agenda. It's also very dependent on which companies and how many are in the association. If all the largest companies are members then there may not be much option for the clients.

Time
It will be interesting to see how long it takes to build a trade association and come to agreement on key issues. This is likely to be a very time consuming process (at least a year or more).

Comparison
As mentioned a trade association in some ways is like a union or guild for the companies. By organizing together they provide a strength in numbers and solidarity that independent companies don't have. Same thing applies to unions and guilds. They provide a strength in numbers and solidarity to individual workers that they don't have by themselves.

The distinction is a trade organization has  different goals than a guild. The trade organization's goal would be actions that are  beneficial to the companies. A guild's goal is actions beneficial to the workers. More profitable and balanced companies would be good for the visual effects industry as a whole but doesn't necessarily result in benefits for the workers. The trickle down effect does not work. A more profitable company will tend to pass the additional profits on to investors, executive management and possible long term investments. None of this may address hiring and layoff practices and it's unlikely to provide things like continuous health care or limited overtime.

In fact a trade association could make decisions on practices that are detrimental to visual effects artists. (Amount of overtime, overtime pay, employment agreements, etc) Only time will tell how this plays out. If that's the case then individuals who quit specific companies because of certain practices may find that most other companies are now doing the same thing. Individuals have very little power when dealing with a single company and will have much less with an organized group of companies. A trade association may be even more of a reason to look at a guild as a way to keep some balance.

Summary
A visual effects trade association could be a good thing for the visual effects industry if it actually materializes and takes the necessary steps. It won't deal with tax incentives and some of the other ills of the industry. It doesn't  and shouldn't preclude a guild for visual effects artists.

[Update: DD closed operations in Florida and the company has been sold. The $100,000 being offered to help start the Trade Association didn't happen. Scott Ross had obtained a number of yeses and at least a couple of Nos. Not sure how likely it will proceed at this point.]

Digital Domain plans to have paying students make up 30% of workforce

[Update: 9/15/2012 DD has now closed their Florida facility. Some of the classes have been put on hold and certainly students won't be working at the DD facility as planned. But the post is still useful read since it clarifies some of the attempts to take advantage of workers, students and the visual effects industry]


In case you haven’t already been made aware of this Digital Domain (DD) is starting up a school in Florida which is funded by the Florida State government. I won't do a detailed recap here since that's already more than well covered on other sites. And thanks to VXFSoldier from bringing this up.

For more info and to see an extraordinary video: (I urge you to read the comments as well since most commentors make valid points. Check out Dave Rand’s comments as well.)

DD "Free labor is much better than cheap labor"  - VFXSoldier
"Paying to work for free" business model  - VFXSoldier
Questions and Reactions  - VFXSoldier
LA Times on DD Institute  - VFXSoldier
Paying to work for free - Motionographer
CEO brags about exploiting animation students - CartoonBrew
Free labor! - TAG, Animation Guild
Working = money, right? - Canadian Animation Resources

DD will be making money off of the students ($105k tuition) in a for profit school (as other most for profits- turning out more visual effects graduates than there are openings). But the additional kicker is they setup a studio in Florida where 30% of the workforce will be made up of students.

For those who might think that would be good for the students and don’t see the harm:
1. it is against Federal law to have interns and others working for free doing work that is productive (i.e actually paying positions).

2. The reason this is a law because any business could simply staff up with non-paying positions (interns, students, experienced… doesn’t matter). There are enough people hungry for certain types of jobs that would be happy doing them for nothing. Businesses would be more than happy having free labor, even if it meant more poverty. That’s why there are also minimum wage laws. (unfortunately they’re still below the poverty line). In a perfect world businesses would be a balance of making great products or services, making money and treating people fairly. In the real world today the name is greed. In days past a mom and pop store tried to be responsible and to consider the consequences. Today most companies are owned by stock holders and investors who’s one and only focus is squeezing more of a return out of company. The CEOs and others in management fall in line so they can get their slice of the pie too. They take no responsibility for these types of actions and simply blame it on the shareholders.

3. These students are paying a lot of money to work there. So they’re not just working for free, they’re paying to work. Double bonus for Digital Domain to get paid by clients and workers.

4. Once it becomes possible for a visual effects company to staff up to 30% of their labor with students paying to do so, it’s possible for not only other visual effects companies to do so, but any other company to do so.

5. If 30% of the work force are students paying to work, why would companies hire people? Why should they hire you, an experienced visual effects worker, when they can get someone better than free?

6. This leads to the question of where all these graduates will be working. They’ve paid$105,000 to do this and likely taken out loans to do so. They expect to be hired since they’ve be taught specifically in visual effects. DD in Florida will already be staffed up. They have a steady stream of students paying every year so there will be little need for them to hire these graduates.

7. DD can now offer a 30% discount on any work done in Florida. Actually more than a 30% discount since they’re getting money from the students. How will other visual effects companies compete? Why starting their own students paying workforce of course!

In the end this means more imbalanced competion for both companies and workers.
This means lower of rates for all companies and all visual effects workers and actually creates less opportunities for new graduates. The only one to profit from this is DD and only in the short term. Florida will gain little and spent a great deal of tax money that could have been used productively.

To potential students:
There are much cheaper ways to become educated in visual effects if that’s what you want. There are online classes, books, DVD’s, etc. There’s no need to go 10’s of thousands of dollars in debt if all you want is visual effects education. If you want to get a college diploma that’s fine and serves it’s purpose but beware of those offering it.

Getting into visual effects is hard. The visual effects industry is going through some rough transitions currently. Be ready to move elsewhere. No school can guarantee employment.

All that stuff about getting credit on films, etc. - Forget it. These days politicians, CEOs and Hollywood produce far more BS than the world needs. Those of us who have been working for a while have seen far too many examples of unkept promises and sugar coating. Don’t be suckered for these.

The CEO is surprised that more visual effects workers aren’t jumping at the chance to pickup and move to Florida. They’re not jumping because most of us know the drill. The lure of working in another place with an unknown future. Sure, we’ll be more than happy to sell our homes, uproot our family, say goodbye to friends and move. And at the end of that project when they don’t have much work you’re laid off. And without many other visual effects companies in the area you’re forced to return to where you moved from. No thanks.
[Update: 9/10/2012 Unfortunately this came true. The DD studio in Florida has closed down and the workers there were laid off without warning and without severance pay. From what I gather most had moved there from other locations, many selling their homes. These unfortunate workers are now in a location without other similar jobs so they will likely have to move back to where they were or to another location. Moving is not cheap, especially if you have a house of furniture and possessions. And trying to find a new job in this industry is not easy. ]

The CEO actually talks about VFX being a dying industry and is expecting you to work on military or medical projects after graduating. This comes after they’ve sold you on the dream of working on Hollywood movies. Most of us got into visual effects because we wanted to create content and work on films and tv projects. While I applaud the use of visual effects technology to help with medical causes, you should be aware of the distinction. For an animator who wants to bring characters to life it’s a much different job if you’re animating a heart or military aircraft. The CEO makes the mistake that labor is simply a commodity. If you went to school to be a painter of fine art, would you be happy when the school says at the end: “Sorry, there’s not much call for fine artists but there is a large need for house painters. Enjoy it.”


Those who live in other countries may think this has nothing to do with them. As I’ve said before, we’re all connected at this stage. If there’s a major change in pay or working conditions somewhere in the world regarding visual effects, then it will likely affect you sooner than you think. That 30% discount that DD can now offer is on par with many tax incentives. That alone could shift the balance. 30% of labor that pays to work will cause a downward spiral in pay. And the company you work for and the studios will point that out and say that you will have to follow suit. “After all, we have to remain competitive”. And around it goes.

I urge all visual effects workers to step away from their workstations for a moment and check in with the rest of the world. There’s a lot going on. I know it’s great focusing on what you’re doing but there are large changes in progress throughout the world that will affect you and your future. You can’t simply ignore it all and hope it never affects you.

You should also educate yourself on unions and trade associations. Please don’t fall prey to the stereotypes or the paid for misinformation. There are pros and cons of each of these and you should be aware each has different goals.

Some of the things that are happening to the industry you work in, hopefully doing what you love, should make you angry. It should make you sit up and take notice. If that’s the case, make yourself heard. If you have thoughts, opinions, solutions, make yourself heard. If you know of problems let yourself be heard. The internet and social media has opened up and connected us in ways not possible before.

For those you would like to speak out about what DD is doing in Florida, contact and tell them what you think.

Commissioner of the Florida Department of Education: Commissioner@fldoe.org

Wage & Hour division of the Department Of Labor: http://www.dol.gov/whd/america...

Bonus: Should I work for free chart

Other sites of interest:
ImageWorks artists in support of a better VFX Industry - SPiUnion - info about unions and other things

Game of Aeron Chairs: A song of beer and pixels - tk1099 on vfx unions and movement

Supermodel sets up an Alliance with Bill of Rights and push for health care and better working conditions.
Initial story
Alliance site

In the last few months car washes, sandwich places and now supermodels are either unionizing or creating a group to at least represent them and help improve their situation.
What about us?

VES Visual Effects Bill of Rights – Now what?

VES Visual Effects Bill of Rights – Now what?

By now most of you have heard and hopefully read the VES Bill of Rights. If not check it out here.

This first step was to try to define where we want to go in terms of working experience for visual effects workers worldwide.  The next step is to try to implement what we can and to encourage steps to make it possible. The details are still being worked out. I’m hoping we end up with more concrete approaches and specific working conditions guidelines.

As always if you have input, feedback on the Bill of Rights or have suggestions and solutions, please send email to VES Leadership.  You can post here in addition to emailing if you wish to open it to discussion by all.

The VES Membership meeting is October 20 in Los Angeles and most of the world wide sections can be linked in. The Bill of Rights will be covered. See the VES website for info.

Most people seemed to be positive about the VES making these issues more public and to at least start the ball rolling. As some have pointed out the VES doesn’t have Collective Bargaining, nor is it a union or a trade organization. Yes, that’s true, which can make it tricky but we are the largest organization of visual effects workers. The VES has been in discussions with all 3 groups of players in this industry: studios, visual effect companies and the artists themselves. Hopefully we can help broker some arrangements that will help our industry based on the bill of rights.

A few have suggested it’s a distraction. From what? The VES stand does not preclude a real union or a real trade organization. If anything, the bill of rights should make some issues clearer for everyone. As always I’m hoping by providing information and inspiration here people will join in to help find solutions.

There have been a few that suggest the VES is an elite group made of elite members. The VES is an honorary society. You need to be working in visual effects for 5 years to be a member of the VES and need 2 members to submit letters for you. I don’t think of that as elite. It does mean that VES members are experienced professionals. The main reason the VES has gotten involved in these types of issues is because there are problems in the industry and members were asking the organization to get involved and help find solutions. No other group seemed to be making progress in this area. And the approach for the VES is to try to make solutions apply to all visual effects workers.

IA Union of visual effects artists – The IA would certainly be the natural fit for visual effects workers since they cover most of the crafts in motion pictures, including the camera crew. The IA spent a year ‘researching’ visual effects industry and has now spent almost another year with someone spearheading the effort to unionize the industry. Unfortunately that has yet to result in anything. You would think they would like to get the word out to as many visual effects workers as possible and that they would try to sell the idea of the union with a clear and concise guide of the benefits and costs. They should have also been selling the idea to the visual effects companies as well. But to date most of that hasn’t happened and it hasn’t seemed like the IA has put much into this process. Many visual effects workers have either not heard of the effort or now assume it’s not happening.  For more info on the IA check out their blog here.

Meanwhile the Art Directors Guild (union) has taken a definitive stand to bring in previs artists as part of their union. See their website here.  And the Vancouver IA has a good website and info here. There’s also a movement for the motionographers union.

Will the IA get going or should there be an independent group that forms a new type of union?

David Rand wrote a response to the VES Bill of Rights here.
Dave is correct that the current bidding process is broken. For more info on some of the business models in visual effects check out a previous post here.
To fix this process will require many visual effects companies to get on the same page because ultimately only they can control the situation. Most visual effects companies are very competitive and fiercely independent. The VES has been encouraging the companies to meet and discuss.  Many of the companies are in as much denial about issues as the workers and studios. Those doing well (especially if they’re in a location with tax incentives) see no reason to change. Why should they bother fixing the leaking roof when it’s sunny out? And of course once it’s starts raining it will be too late. The days of milk and honey will not last forever for any location. Scott Ross points out that if 4-5 of the major visual effects companies got together they could lay out some basic guidelines or requirements with their clients.

Currently there’s also been discussion among Indian visual effects workers about their situation that doesn’t sound too far off from the ones in the U.S. As I’ve said before many of these are global issues and do in fact affect you no matter where you are. And they of course make some of the same errors and false ideas as other here do.

1. Unions are only for laborers. We’re artists.
Guess what? The director’s are covered by the DGA (union). The Writers are covered by the WGA (union). The actors are covered by SAG (union). The Cinematographers are covered under the ICG (union). And so on for just about every position in motion pictures except visual effects. Are none of those other people artists? Do you gain anything by being a starving artist? Do you gain anything by not having health care insurance? Do you gain anything by not having a united group of similar artists? Can you change things by yourself and will the company change at your lone request?

2. Unions? Look at what happened to American automobile industry.
Stereotyping everything certain is not a solution nor is ignoring details of history.
Please see this previous post Using the Nail

3. Producing good work is the solution
Producing good work will certainly help you get work but it alone will not guarantee employment nor will it guarantee you fair treatment.

4. Working for free
Many starting out in this business thinks that they’ll work for free to prove themselves and then the companies will hire them.  You’ve already devalued yourself when you choose to work for free. Do you think the company that hires free labor will suddenly start paying people what they’re worth and stop the practice of hiring more free labor? Each wave of new workers comes in and is willing to work for free which means those with experience now will either have to continue to work for free or will have to move on. Some visual effects companies are run by people without the passion for visual effects.  Some can’t grasp the simple business solution that by hiring experienced and qualified people, treating them properly and paying them properly, they will have a true business that grows and can increase productivity and profits. Providing a quality product is of value. By simply hiring free labor they have forever tied themselves to the mediocre and will just continue being in a race to be the cheapest provider. And that’s a game that cannot be won. There will always be somewhere else cheaper, either by cost of living or incentives.

5. Working as independent contractors
One of the notions expressed is to be a remote freelancer for a visual effects company in another country.  Why would a visual effects company in another country hire someone directly in another country? What experience would they have had with that person directly? Most of the major films are covered by restrictions and guidelines so images and other movie data aren’t leaked out. Can you set up to qualify? Can you do an entre shot yourself (animation, lighting, composting, roto) or will they be sending just one step of a shot to an independent worker in another country every day or every few hours? If that were to work there will be websites where artist bid on how much to do a shot. The lowest bid would likely get selected. Every independent contractor is now in a race to the bottom themselves.


As always if you have input, feedback on the Bill of Rights or have suggestions and solutions, please send email to VES Leadership.  You can post here in addition to emailing if you wish to open it to discussion by all. Personally I’d prefer suggestions and solutions over complaints and reasons why none of this will work.

Working directly for the studios

Working directly for the studios

Joe Harkin, Dave Rand and David Stripinis have all expressed a potential solution to some of the problems in today’s vfx industry by having vfx artists working directly for the studios on projects.  David Stripinis excellent article goes into more details.

I covered some of this in my VFX Business Models post.

The idealized version goes like this:
If vfx workers were employed directly by the studios that would eliminate some of the potential problems and disconnect going through a vfx company. The vfx workers currently can only interact with the vfx company for working issues but much of the power (including scheduling and changes) is out of the vfx company’s control. If vfx workers were directly employed by the studio then there would be a direct connection in terms of costs and schedules, especially for changes. There would be more incentive to make less changes and to stick to schedules.

Because the workers would be part of production the director would interact with them more and would be able to provide feedback sooner, eliminating waste. These would be creative and schedule wins for the workers. Since most post-production (besides vfx) is still here in California then that would mean that most vfx would remain here as well.  This eliminates the need for U.S. vfx workers to travel to other countries to keep working and earning a living.

If only it were all true.

Yes, there can be some real advantages to having vfx artists work directly for the studios.  And as with everything, there are some disadvantages.  And in some cases it may be a case of “Be careful what you wish for”.

A little background
David covered some of the changes in his article. There were other projects besides Star Wars and Close Encounters (Doug Trumbull, vfx supervisor) which setup a team under production to do visual effects. 2001 and I believe Logan’s Run and many other projects done as the studios were closing up their own vfx departments. I worked on Close Encounters out of high school and was part of setting that up. All of us were paid directly by the studio. I was lucky enough to work in just about every department.

After Star Wars, George Lucas decided having a vfx team was a good thing he set in up ILM in Marin with the intent for himself and his friends to use (Spielberg, Coppola, etc) Others from the original Star Wars team (John Dykstra) setup a vfx company called Apogee at the same location and with some of the same equipment.

After Close Encounter wrapped Universal setup a vfx facility called Universal Hartland to do Buck Rogers (TV and film projects) and Battlestar Galactica (Apogee had done the original work). A number of us went to work there. The vfx for Star Trek: The Motion Picture was setup at Robert Abels, a commercial production company that did very graphical type of work (7UP, etc). Richard Yuricich, the vfx dp on Close Encounters, called myself and a number of others to come work on that project. When it became apparent a commercial production company may not be the most suited for the vfx, Paramount brought in Doug Trumbull. He re-opened the same industrial building used earlier on Close Encounters and added another building.

At the end of Star Trek, I and five others decided to setup our own company, Dream Quest. Seeing short term facilities being setup and dismantled for each project seemed like a waste. We were able to supply vfx for commercials (CBS, Dodge, Timex, etc) , television (V mini series, Space, Amazing Stories, etc) and features (Blue Thunder, Buckaroo Bonzai, etc.) Depending on the project we might bill based on a given rate for animation camera and motion control stage. This was time and material. Or we may bid on the whole project if we felt confident and there were a limited number of options.

There weren’t a lot of vfx projects at that time but we kept reasonably busy. We also did some work for other vfx companies (matte paintings in Caddy Shack for Apogee, floating balls in E.T. for ILM). You might be doing piece meal work but if you were a mid to large size company you would likely be the vfx company doing the whole movie. And there was usually just 1 full vfx supervisor on a film at that time.

In the pre-digital days if you wanted to start a vfx company you need to have some real equipment, hard work and expertise. Stage space, room to build models, motion control system, animation cameras and optical printers weren’t cheap so you had to make a real commitment. VFX companies weren’t the problem for vfx or vfx workers.

The development of digital was the opening of Pandora’s Box. That created an explosion of vfx companies and competition. It also allowed the work to be done anywhere. There had always been some Hollywood work going to the East coast or to London but those were certainly the exceptions. The need to interact and the needs to ship and view film make those options more awkward in pre-digital era. All of this ushered in at the same time as fixed bids were becoming the new normal. Previously the studios might put out the work to bid but this involved the producer and director. In the digital age each studio now has their own vfx producer which are very involved in where the work is likely to go.

And given the size of the projects the shows are frequently broken up and sent to multiple companies. It’s not unusual to have 12-13 companies. The break up is due to having a short time for post, trying to send to the least expensive company for a given task, sending to the best company for a specific task, and/or to not put all of the studios eggs in one basket. Now each company might have their own vfx supervisor, vfx producer, CG supervisor, animation supervisor, coordinators, etc. So this creates a certain amount of redundant overhead and waste. This has led to an explosion in the number of people in these positions since there are now multiple people holding these same positions on each project. The disadvantage is this dilutes the position of visual effects supervisor and some of the other positions. On a feature film there is only one 1st unit cinematographer and possibly a 2nd unit cinematographer who follows the lead of the 1st. When you have multiple vfx supes and others on a film then the studios start to look at all of these people as being interchangeable.

So now we may have come full circle to look at working directly for the production again, either in whole or part.

Previs
Notice the development of Previs follows a similar path. Some previs is done by the vfx companies themselves but there were also a number of freelance previs artists who were hired directly by the production.  In the last few years there have been a number of previs companies setup so the production hires a previs company which in turn hires previs artists. The difference with previs is they normally bill for time and material since it’s clear the number of artists working directly for production.  Will they end up going to more of a fixed bid route like vfx companies or can vfx companies work their way back to become more time and materials companies?

Working for the Studios
Below are some of the advantages and disadvantages for the different groups affected if more vfx work was done directly for the studios. I list a number of items as potential which means it’s possible.  How likely these things happen depend on the studio, director, producer and situation.

Advantages
Studios/Director/Producer
·      Less expensive
  No paying for vfx company profit
  Potentially less overhead (no need to pay for down time or for people/equipment not in use on project)
·      More direct connection to vfx workers
·      Can prioritize and schedule work directly
·      Can setup near studio or other desired location
·      All work focused specifically on their film. No people or equipment being pulled to help on another project.
·      VFX supervisor doesn’t have to ‘sell’ work to director based on pressure from vfx company

Workers
·      Part of production, not just person in a black box (vfx company)
·      Potential to interact with director more
·      Potential for working more efficiently (quicker feedback, less changes)
·      Potential for union coverage (Studios are already union signatories so covering vfx not as big of jump as vfx companies)
·      Employer is both paying the bills and making the profits so it’s a more balanced system. The people you work for have the most to gain from you.
·      Potential for profit participation directly or indirectly (health care funding, etc)
·      More individual branding. Vfx companies tend to push their brand, not their vfx supervisors or other key people.

vfx companies
·      A vfx company could lease out a facility for $x per day/week with profit built in.  Less risk. Studio would cover the most expensive and variable cost, labor.  Direct connection makes the studios responsible for changes, not the vfx company.
·      If the vfx company is simply a lease company then they have potentially less overhead costs during slow times.

Disadvantages
Studios/Director/Producer
·      Time required to setup a facility. Pre-production already tight on most productions.
·      Preplanning required
·      Final vfx cost more of an unknown
·      Would have to hire a vfx production manager or facility manager to actually setup and run the vfx facility. Most vfx supervisors and producers these days don’t have the experience of setting up and running a full facility.  With the short schedule they’re unlikely to have the time even if they had the ability.
·      No historical data on how well a particular team will work (time, money, quality) unless they use same team over multiple projects
·      No long term R&D since this would only be for duration of the project. Longer R&D projects and related benefits would not come to fruition except as 3rd party developers.
·      Who owns the R&D that is developed on a single project? How is that able to be used on other productions?
·      Can’t point finger at vfx company for costs or schedule issues
·      Can’t ignore issues of required overtime

Workers
·      The director may not actually be any more involved. The director is usually busy with editing, sound mixing and other tasks at the same time as vfx are being done. This is the case even more so with tight post-production schedules. Most edit suites are setup at a studio or nice digs in a nice neighborhood. Typically trying to find large square footage to house vfx workers at a low rate means an industrial building elsewhere in town. This can mean 1 ½ hr drive across town in LA traffic. (Note that in London the main vfx companies and much of the editing is done in Soho so this is already convenient.  Property costs must be very high and cause a related rise in overhead costs at such companies.)
·      If you work for a company that is able to keep busy then you may not have to worry about looking for the next project and have little down time. Working for the studio directly would mean you were project to project and be forced to be a full freelancer looking for work after each project ends. And the studio isn’t looking to do another vfx project, they’re looking to do their next film project, which may or may not include vfx.
·      Even though the studios are already union they are much larger companies than vfx companies and could push even harder back to avoid a vfx union. A number of vfx supervisors are in the camera union but the studios don’t recognize this because there is not an official title of VFX Supervisor in the union contract.
·      Even though the studios are now more financially linked to the costs of making changes, the executives and director may feel freer to make changes since there’s no company between them and the people working on the vfx. The vfx company sometimes acts a buffer to some studio demands.
·      Saving money on one aspect is not always the highest priority at a studio.
·      Not all directors want to spend more time working on the details of the vfx and directors vary on the ability to review in progress takes.
·      Nothing prevents the studio from setting up the vfx team anywhere in the world so doesn’t necessarily gain more work balance in LA.  (unless an LA director wanted to truly spend more time working with the vfx team)
·      Vfx are still very labor intensive. Incentives and lower costs elsewhere are still likely to cause the studio to choose to setup a team elsewhere, even if it might not be the most efficient. If the studio spent as much money on editing and sound mixing as they do vfx, those tasks would probably go to less expensive locations as well.
·      If the studio is doing all of the vfx then there will be many vfx company personel that will be out of work including the company vfx supervisors, producers, cg supervisors, etc. since there aren’t enough films to keep all of those people busy.
·      Any type of profit participation is extremely unlikely for vfx workers, except as a form of payment into health care insurance.

vfx companies
·      Any form of additional competition makes it more difficult, especially competing against a team that works at cost.
·      Studios may not be interested in leasing your company
·      Switching to a lease type of setup may not be easy and there’s still the issue of making enough profit to cover the overhead during the time between projects.

Reality
In it’s current form the vfx business model works great for the studios.  They can send a package of storyboards/previs out to multiple companies throughout the world and get back bids.  Since the studios view the vfx as a commodity they can simply pick and choose from a menu.  All the companies they’re bidding have been around for a while and most likely already worked for the studio at one point or another so the studios know what they’re getting.  The studio can simply select based on the balance of quality, speed, size, dependability and costs among other factors. They’re selecting a known quantity in most cases and are able to validate it to anyone else in the studio.

It may cost a bit more to have it done by a third party but it’s also much less risk. That’s why studios prefer sequels and remakes. It’s also much easier to simply turn over footage to a vfx company and let them deal with the details of artists, hardware, software, and other issues, including the complexity of setting up a facility and pipeline originally. Just like when you need to change the oil in your car.  You could do it yourself but you're usually happy to pay someone else to deal with the details and mess rather than hassling with it.

Studios could also setup a longer-term vfx facility to avoid potential waste of starting up another team/facility for each project.  The problem then becomes the overhead and the need for long-term commitment. This has been the same for most studio facilities which usually closed after a small number of projects.

Unless there is a very large compelling reason for studios to do the vfx work employing vfx artists directly, it’s unlikely to change except for specific cases.

More things to think about.

-----
Just a note regarding David's mention of the VES.  There are a range of different people on the VES board, including hands on people who don't manage others. I know most of us are keenly aware of the plight of the average worker since we're usually side by side with them.

Part of the problem is that:
1. People need to volunteer and sign up to be on the board.
2. Enough people have to be aware of the person to be voted on.
These two things make it difficult for random roto and TD's to get on the board. Hopefully members will vote to balance that out.

Note the same issue will likely happen if a vfx union were to form. Best if there were a requirement for a representative from each main category of workers.

The other thing is the VES is not looking at any group (studios/vfx companies) as the enemy.  Each group is trying to do what it thinks is best. All the pieces have to be working together and the VES is trying to find solutions that help balance this out.