VFX companies continue to fall

[Update: 3/29/2013 See this article for a link of some of the companies that have gone out of business
Creative Cow VFX at a Crossroads 
and from Reddit
]

Last year we saw a few VFX companies close their doors (The Orphanage, Illusion Arts, Pacific Title, etc)

We're now seeing a few more, or in the case of Image Movers, a planned closing.

Image Movers
There are a number of ex-ILM people there and at 450 people it is not a small group.

Core Pictures I was in discussions of taking a project there a year or two ago.

It's always painful to see VFX companies close their doors, both from knowing artists and friends will be out of work and knowing how fragile the VFX eco system really is. Having owned and operated a VFX company myself (Dream Quest) it's tough to make it work financially. The pressure is always on from the studios and producers to work as cheap as possible yet VFX require specialized equipment and artists. It's also tough to have projects flow smoothly and keeping all artists busy. That means there will be times of no money so any budget you make will have to take that into account. It's not extra profit, it's covering expenses. With a small shop the owners can skip pay themselves for a certain period but for larger shops it can be impossible to cover the costs without some deep pockets.

Between the recession, out sourcing and short term fixes at higher levels, this is a bad time for VFX companies and artists.

Disney bought Image movers and now that new management is at Disney they want to get rid of Image Movers.
A large VFX company takes time and money to get going. It has a high operating cost. A studio or company has to be willing to accept that going in or there will be trouble. Disney did the same thing after they acquired Dream Quest and turned it into The Secret Lab. They closed it down after it was up and running.

Unfortunately outsiders rarely understand VFX and what it's about. Sure you need to make money to keep operating but some companies are looking for huge profits instantly. Studios and producers have this thinking that VFX are expensive because all these VFX companies are holding them hostage and making huge profits. Welcome to reality. VFX has not been a huge profit area.

Many studios had their own VFX departments in the golden age of movie making. Those were closed down when the studios sold off their backlots to make money in the short term. Star Wars and Close Encounters both required the productions to set up their own VFX groups from scratch. These were meant to only operate on these specific projects respectfully. With the success of Star Wars, George Lucas was able to keep ILM as such and could afford to set it up again in Northern California for his own projects. Apogee was the spinoff of some of the people from ILM. Many of the Close Encounters team went on to Buck Rogers and then on to Star Trek: The Motion Picture.

The studios always claim to have no money but it's not unusual for a studio to make million dollar changes to a production on a whim or creative impulse. In some case they're focused on the short term improvements and less on the long term. (See the Jay Leno issue the last few months) Sometimes the new group at a studio wants to make sure none of the projects of the previous group remain. They might not want a success that could have been created by the people they're replacing. This means in many cases they will cancel projects that are in development, even though the projects may be great and make a lot of money for the studio.

What many of us tend to think of as 'no brainer' decisions tend to be the hardest decisions to make for many businesses. I've seen this repeated time after time.

VFX have been making great strides the last few year and enabling filmmakers to create just about anything imaginable. Both the artist skill sets and the technology are making this possible. More people are trying to enter this field than ever before. The Visual Effects Society is getting larger and making improvements.
Just about every movie coming out has some VFX, no matter how small.

So the movie industry had the biggest year ever last year yet the studios are reluctant to produce anything beyond franchise tent-pole movies. The general public is going to the movies more in this recession but the banks are reluctant to loan any money to studios and filmmakers. The studios want not only more and bigger VFX but they also want them for 1/2 the price in 1/2 the time as the last project.

Welcome to VFX H*ll.

(I didn’t want to end this on a negative note. I still have high hopes for VFX and VFX artists but we’re certainly going through a rough patch here with a lot of conflicting forces at play. Lets hope for some good news soon.)

[Update: 9/12/2012 There have been a number of other vfx companies closed down since this was originally posted a couple of years ago. Just in the last 2 weeks alone we've seen the closure of Matte World, Fuel, Digital Domain's Florida facility and a restructure and sale of Digital Domain]

[Update: 2/16/2013 R&H, one the largest vsual effects companies in the US (who did Life of Pi and a number of other well known projects) has field for chapter 11 and laid off 200-300 people. (Who weren't paid) ]

[Update: 3/29/2013 See this article for a link of some of the companies that have gone out of business
Creative Cow VFX at a Crossroads
and from Reddit
]

Related:
Check the right side of the blog for lists of posts related to the industry under "VFX INDUSTRY - STATE OF THE INDUSTRY"

Pass Me A Nail - Problems of the vfx industry
Using the Nail - Possible solutions
VFX Business Models
Working directly for the studios
Visual Effects Service - The Big Picture

Bad Visual Effects Business practices
Oh, What a Mess We're In!