Film Subsidy Bubbles

Film Subsidy Bubbles
Dangers to those in the subsidized areas even if they may not be aware of it.

Someone on an email group questions why subsidies for visual effects were bad and why would we want to do away with "Our subsidies".

First off they're not our subsidies. The film studios are the ones who lobbied for them. They're the ones who profit from them. Not the vfx companies, not you, the vfx worker, and not the taxpayers.

All the vfx companies obtain by moving to subsidized areas is the 'opportunity' to bid on a project. Same competition. Same need to submit a bid the studios will accept.

Subsidies aren't what fund visual effects. World wide demand is what fuels visual effects. The studios make the films for a global market and most of their profits come from visual effects films. If they wish to make tent pole films they will continue to make films with visual effects. Reduction or elimination of subsidies would not cause visual effects work to disappear. What it would do is hopefully instill some basic management and planning of the visual effects to tell stories rather than abusive and excess amount of wasteful work.

What the studios gain from subsidies is someone (the taxpayers) who will cover a sizable cost of the film. This reduces their risk and allows them to make more profits, sooner. Thanks to the generosity of unsuspecting taxpayers.

Bubbles
It's useful to think of subsidies as what they are, economic bubbles. Those who cannot remember the past are condemned to repeat it.

Housing bubble - Banks were practically giving away home mortgages with no down payments. There was so much profit to be made some bank loan officers were forging documents. There was so much profit to be made people were rushing to become contractors and real estate agents. Many were investing their life savings on a sure thing so they bought houses to 'flip'.

Things were going great until they weren't. The housing bubble popped and was one of the main causes of the world wide recession in 2008 which we will continue to struggle with for years, perhaps decades. People were wiped out out. Even those not involved in the housing market saw their house values, retirement funds and their investments drop like a rock. Unemployment skyrocketed and hundreds of thousands of homes were foreclosed, many of them illegally.

But don't worry about the banks. They're doing just fine. They made huge profits on reselling the loans and on the foreclosures. They even got mountains of money from the government.

Tech bubble - A few years earlier there was the tech or internet bubble. People were betting their life savings on this new internet thing. Startups were happening in every other house. People were rushing to be web designers. The gold rush was on. Until it wasn't. When it all imploded many lost their life's savings.

But don't worry about the banks or rich, they got in on the IPOs of the best companies. They'd be laughing their way to the bank if they weren't already sitting there.

Silver mines - In the 1800's there were a few silver mines where silver was discovered. And almost overnight towns would spring up complete with saloons, stores and churches. People moved across the country to feed on the potential money. They either became miners or sold to the miners. And then the mine would run dry and it would all stop. Many of these towns turned into ghost towns as people fled to the next place. The entire economy for them was built around the silver mines. People lost their savings and moved on.

But don't worry about the banks or the owners of the mines, they did ok.

And if you had asked any of those people involved the day before those bubbles popped, the people would have told you everything was great. They all thought it would continue. Until it didn't.

Not creating an industry 
The film lobbyists and others who would make a profit from them, convinced the politicians of Michigan that it was in their best interest to build stages. Because they would be an ongoing profit center and employ over 6000 people. After all, they were creating an entire new industry there. And the politicians in their infinite wisdom backed the cost of building the stages (and the bonds required) by using the pension funds of the police, firefighters, teachers and others.

Then they learned the hard lesson that they weren't really creating an industry. They were simply leasing it at a high cost for a very short time. They were simply paying studios to come to their location on a film by film basis. And the studios would only bring films if they provided higher and higher amounts of cash every year. They had to compete with other countries and states and the ones to win film projects were the ones who outbid others and gave the studios more free money. Both the 'winners' and the losers were losers.

Many don't seem to see the downside of subsidies, especially if they're in a subsidized area. And just like the other bubbles, these people think everything will continue to be great.

Real World Example
Let's do a review of how this works and why it's not great for those working there. In this example I'll use Vancouver but it could be anywhere in the world.

Vancouver in the days before subsidies had their share of film production. Vancouver was a city and had a number of scenic locations for shooting (ocean, harbor, mountains, forests, city streets, snow, etc) There was some work from both Canada and the US. The lower exchange rate encouraged some projects to shoot there as well. If the subsidies never happened the  film production in that area would continue to grow at a rate that matched demand. The industry would be as stable as any production hub can be. Most of those who had film jobs would likely remain reasonably employed.

When the subsidies were created in that area they created a huge pull for all productions, especially those on the west coast. Many projects went to Vancouver along with a number of the below the line jobs. According to some of the SaveBCFilm people, over 20,000 now depend on the film industry. Many of these couldn't be filled because they had not evolved over time to the new size. This was simply a politician pulling switch. That required bringing in workers from all over the world. That required training many locals in film production.

Many jobs were lost in Los Angeles and surrounding areas, places that had evolved over the last 100 years and had maintained a certain balance. Because this was where the studios with the money were located. This is where most of the writers, directors and producers made their homes. So this eco system that had developed was being drained not due to lack of demand but simply by politics.

Dangers
And in the meantime Vancouver continued to balloon. VFX companies from the US and even the UK were forced to set up shops due to the demand for this free money from the studios. This in turn required many working in the US and other countries to now move to Vancouver to continue working. The original intent for many of these film subsidies is to create more jobs for locals but in many cases the jobs are filled by foreigners. The clamor for more people and the lure of money also tends to bring out the 'for profit' schools to start pumping out even more students. So these graduates join the work force of a local industry that is already expanded beyond what it can support naturally. This while other areas are experiencing high jobless rates simply because the jobs have moved. No new jobs were created. Simply the shifting of existing jobs in most cases.

And we see this same pattern repeat itself around the world in other countries, regions and states. And the same people pushing for these in one area are in fact the same source of the funding and lobbying to push all other areas, each competing against the other but all ultimately working for the same small set of clients.

The people working in film and visual effects in areas with subsidies have now become dependent on the subsidies. They have become dependent on government handouts or welfare in a sense. The government ends up covering a sizable amount of their labor costs. And these subsidies must increase on a yearly basis and must out spend other areas competing for the same exact work.

Now you have thousands of people who's private industry jobs are in the hands of local politicians. A very large portion of the film industry (individuals, vendors, stages, sub-contractors, etc) in those areas has now expanded beyond what it would support naturally if there were no subsidies. This puts those areas in a very dangerous and fragile position. The entire structure could collapse at any moment since the politicians could pull the support, the only thing holding all of it up.

Film production and visual effects has always had ebb and flow of work so that makes it difficult but places with subsidies have additional factors to consider. If a subsidized area reduces their subsidies due to change in politics, then it will all fall down. The taxpayers in these areas won't always be so ignorant of what it's actually costing them. One day they will realize they're seeing the Emperors New Clothes re-enacted with their money. And the other thing these subsidized areas have to worry about is another location out bidding them by providing even more free money. They're competing against other locations and if they lose, they may lose big time.

Vancouver, BC has seen this in action just in the last year. Ontario and Quebec started offering more incentives and the work to Vancouver slowed down and the work in these other areas increased. Those in Vancouver also fail to see the irony when they cry foul over the subsidies when a large percentage of the work they had was based on themselves outbidding in the subsidies war. And as in all wars, there are losers.

And Vancouver and their SaveBCFilm had no control of these other political groups in other locations since they were competing with them. They had no control over their own local industry since they had built it on fictional and temporary support. They had not built a self sustaining industry with it's own content creation but rather a simple service industry greatly dependent on the good graces of local politicians (receiving money from the studio lobbyists) rather than business and talent.

And we see this repeat itself all the time. Michigan loses to Louisiana. State or area X loses to area y because of a shift in subsidies. The amount of work remains the same, it's only question is where it will go and this is now controlled by government payouts than by any other selection criteria.

So now rather than having a few healthy and stable locations for film and visual effects production, we see the work spread out to many more locations which tends to make each location weaker. Rather than a large eco system that is self sustaining, these are smaller systems which are not self sustaining. With so many new areas developing there is more competition for the exact same amount of work. And there are new areas announcing film incentives almost on a weekly basis. These areas are all fighting for anything and everything. Those jobs that were 'created' in those locations may evaporate at any time since film production is starting anew with each film and not as a permanent industry. And one thing is for sure, the work is constantly in flux and shifting around the world. No place is safe or permanent. Those on top today will likely be on the bottom tomorrow.

Awareness
And because these areas have all been expanded beyond their self supporting means, they're all in danger of popping. And so eager are they to keep the work they are willing to keep outbidding others. Those who have moved there, those who trained there, those building their own businesses there and all of those working there are in a very precarious position and yet fail to notice their local industry is supported by the least reliable support. A politician. Like those in other bubbles, they fail to notice the dangers until it happens. It obvious to those on the outside but those riding the bubble fail to see it or simply prefer not to consider the reality.

And who is pushing for subsidies in all of these cases? The studios, the only ones who gain in the end from any of these and the ones who play each location off the other. But don't worry about the studios. They'll be just fine. They'll just move to the next place after your area pops.

What's happening in LA could easily happen to Vancouver, London or any other film location. And not only is it possible to happen, it will happen at some point. There's no magic that protects your area. Studios eager to make money in the short term have no allegiances since the subsidies have merely turned the discussion into a cost issue.

No problem
There are those who think that that's the way it is now and that we should get over it. They don't see any problem moving every 3-6 months like migrant workers. They see no issue with being treated as a commoditized migrant worker and they feel the best workers will win out. Sorry for being the bearer of bad news but that's not how it will play out. Just because you're willing to move doesn't mean that you can move. Many subsidies are dependent on locals (residents who have been in a location for over a year, file income taxes there, etc) and so when given a choice between you and someone who can fulfill their subsidizing criteria, your 'qualifications' may not be enough to counter the need for a subsidized worker. Some countries are difficult to get working visas and so even if work is available and you have great qualifications, you likely won't be hired. And don't forget that each area has been expanding and expanding already. There already is an excess of visual effects and film workers due to subsidies. As the work continues to shift based on subsidies you may find yourself shut out from working, regardless of your qualifications, experience, skill level or talent. Then you might consider why subsidies aren't the best for the industry and the people who work in it. Rather than being based on  quality, efficiency and cost criteria,  subsidies are only based on which politician will provide the most money.

Summary
Many of these locations that have subsidies would continue to do work after the subsidies go away. They have now built up infrastructures and experienced and talented people. It won't be as much work but it will be more stable and more long term.

Ultimately that's what we're striving for. A healthy and stable industry where quality, efficiencies and other factors are the deciding criteria on where a production does their work. These are all in the hands of the companies and the workers in those locations. Right now your local industry is in the hands of a 3rd party that you have no control over - the politicians. That may be good for the studios but that is no good for those of us working in the business.

Related Posts
Visual Effects Tax Incentives / Subsidies
Risk and subsidies
The Impact of Visual Effects Subsidies

Visual Effects Professionals United

Visual Effects Professionals United

[Update: 4-12-2013 I've adjusted the page a bit.

The VES has a project in process and one of those has to do with the workforce. I've been tasked with trying to gather feedback from professionals about their wants and needs. Since I had already written and posted this I thought it was right in line.

I'm hoping to also do a survey in the next week.
Please take this survey regarding your working conditions
(I plan to wrap the survey during 1st week of May so be sure to fill it out now)

[Survey has been done and the results are here: Visual Effects Working Conditions Survey ]

[I've included some comments at the end of this post from some of the survey results already.]

PLEASE contribute your thoughts. People keep asking what's supposed to happen next and why isn't someone doing something. Now it's your turn to do something. Submit your ideas and thoughts.

Thanks.]


As individuals in the visual effects industry each one of us has very little control over our work experience. The choice is to talk to management and hope they will be willing to make changes or to quit and hopefully find another company that has similar views of work and life as you do.

Most companies are driven by profits and they’re driven even more these days by squeezing workers and vendors as much as possible. The visual effects companies are put in difficult situations by the studios, which in turn puts pressure on the workers to accept less than ideal working conditions.

Even when management may be trying to balance profits and worker experience, new management or an adjustment of business conditions may change that for the worse.

At this point there are visual effects professionals around the world doing great work, each of us connected by the work that we do and the love of what we do. We’re a global community. You can certainly extend that out to cover as much as you consider. (film, TV, commercials, animation, video games, motion graphics, etc)

Goal
What we need to do is unite in some form so we can work together to help stabilize and improve the visual effects industry.

One aspect of that is to come up with a work experience document. This would include working conditions and a code of conduct for workers and companies. This would make sure there is a minimum working base for all visual effects workers, including yourself, around the world. This would help to make sure no professionals have to deal with poor working conditions. This would mean if you have to go work half way around the world you won’t find yourself working under poor working conditions.

Many companies may already be doing most of these things and others may be doing very few of them.

Here’s my proposal
Consider what you would think is important at work that could be used as a basis of employment around the world. Post your notes in the comments or form groups with others from work or through the internet.

Let’s compile the list and have a group refine it and put it into written form that the majority agree on.

So what’s the purpose of this?

This would provide a goal or target of what we as professionals would like to achieve when all the current possible solutions are explored and implemented.

This document could be starting point and could reduce the research and exploration time required by some of the potential groups.

If / when there is a visual effects trade association then this could be used as a guideline for what we would expect from the companies and studios involved.

If / when there are visual effects unions, this could be used as a guideline for what we would expect from the union. Existing unions could review and see how it fits into their current structure. These are items of interest to visual effects professionals.

This would be a guide for any visual effects company about what they should be providing if they wish to retain the best workers.

Companies could volunteer to sign on to the guideline if they adhere to it. These companies would be posted on a list on the internet so workers would know which companies support this measure. Those who support it would likely get more higher level work applicants. And they would be monitored in case the company did not follow through on the guidelines.

This would provide a guideline for critiquing or rating a visual effects company on places like thevfxwatchers.com.  There's also glassdoor

Workers at a given company could consider going as a united group to their employer and discussing the differences and what could be done to accomplish the list.

You as an individual could discuss with management or include in your deal memo all or part of the guideline.  A deal memo is a written employment agreement that covers your job title, rate, start, end dates and other details. VFX Deal Memo


Global nature
I understand that some countries or areas may not require all of these things but I think we should come up with minimums that can and should be implemented world wide. Even though a country may not have any laws saying the exits must be clearly marked and doors unlocked, I think we should include such specifics. Otherwise if it simply boils down to whatever local labor and safety laws dictate then none of this means anything. Around the world those laws are being broken already.

Simply having a document that  only says follow local labor and safety laws does not accomplish anything.

Examples of some of the items that might be include (these are made up numbers. You’ll want to come up with the values)

Working conditions
Meet or exceed local health and safety laws. (This should not be required but of course companies don’t all comply even when required to. There are still fires and other tragedies around the world that happen due to companies skimping on safety or trying to save $1.)

Temperatures to be at nominal room temps in the work area. (72-80 degrees) (Once again the type of thing you may not consider but even here on the west coast at a large vfx company they have been working at 85 or hotter. Some areas are much worse.)

Ventilation – Reasonable ventilation along with heating and cooling to maintain a room temperature.

Sound – No loud noises. No workers playing any audio above x db.

Drinking water within a reasonable distance (100 feet)

Working restrooms

Ergo working space – specs of basic chair, monitor, etc. To avoid carpal tunnel and other physical ailments.

No smoke or fumes in the workplace.

Meet or exceed local labor laws. (This should not be required but of course companies don’t all comply even what they are required to. Many companies misclassify or avoid existing labor laws.)

Adhere to a timely payment in full on a weekly basis.

Correct classification of workers. (ie. not classifying workers in a way that causes them to lose government protections, to avoid overtime payments and taxes. Independent contractors, ‘staff’, ‘flat’,‘salaried’,’managers’,technicians, etc)

No unpaid interns doing production work.

No unpaid students doing production work.

Food break every 6 hours for ½ hr minimum.

15 minute break every 3 hours.

No paying to work, including paying for training.

Clear deal memo for all workers specifying pay, hours, start and end dates, etc.

No withholding of training fees, moving fees, etc.

Work shall be non-abusive (we are professionals)
No screaming
No bullying
No sexual harassment
No beatings

All hours worked (approved or requested) shall be paid by the company.

Overtime
Overtime will be paid at x rate above 8 hours, y rate above 12 hours.
(Yes, I understand that not all countries have such laws or rates in place. Let’s either try to get in some reasonable minimums or at least make this section variable with different grade levels. Grade A for the company if it complies. B if it only does for x. F if it provides no compensation for overtime.)

Ability to turn down overtime work without dismissal or retribution.

 x hours notice before being assign overtime.

Cap of x hours in a day, y hours in a week.

Turnaround time
Minimum of 12 hours from time of checking out before starting to work again.

Health care
If the local government does not supply health care coverage then the company will provide x minimum.


We can't put in things like permanent jobs.
Lets focus on the real issues.
For now let's not deal with wages themselves, let's focus on the working experience.


Please feel free to add in the comments or as I stated groups in different areas could start developing a defined list of what they feel is important. This could be an item to discuss at one of the vfx townhall meetings in the future. If a group wants to take this and run with it so much the better.

What are the things that are important to you and that all vfx professionals should have in their workplace?

What are the things you feel are missing from your workplace?

What are your hot button issues?
Not being paid OT?
Too much OT?
Not having demo material?
Being misclassified?
Forced to travel?
etc.



and write up specifics in the comments below (click on Comments link if you don't see a list of comments). You can do so anonymously.  I'm hoping to get survey results and feedback by May 1 or soon there after.

If you have ideas beyond just the workers that applies to the whole industry then consider posting comments on the  What's The Solution? post

Here's the original post about this concept:
Global VFX Workers

References
Reference for what might be included beyond what might be obvious would be to review local labor laws to see what they mandate. California Labor Laws example  World wide list of labor laws

The various film unions contracts provide good guidelines for what should be included. Many non-union productions and writers still adhere to union guidelines even when they themselves are not.
Animation Guild contracts  Film union contracts

The various organizations that deal with worker rights world wide provide a good reference.

FLA - Fair Labor Association

FLA Code of Conduct

FLA Complete code and benchmarks

Frame of reference:

FLA is in use by HP and Apple in China and other locations.

Here's their HOURS OF WORK section:
"Employers shall not require workers to work more than the regular and overtime hours allowed by the law of the country where the workers are employed. The regular work week shall not exceed 48 hours. Employers shall allow workers at least 24 consecutive hours of rest in every seven-day period. All overtime work shall be consensual. Employers shall not request overtime on a regular basis and shall compensate all overtime work at a premium rate. Other than in exceptional circumstances, the sum of regular and overtime hours in a week shall not exceed 60 hours."

"Calculation Basis for Overtime Payments

5. Employers shall compensate workers for all hours worked. 

1. C.7.1  The factory shall comply with all applicable laws, regulations and procedures governing the payment of premium rates for work on holidays, rest days, and 
   overtime. 
2. C.7.2  Employees shall be compensated for overtime hours at such premium rate as is 
   legally required in the producing country. 

C.7.2.1 In those countries where there is no legally established overtime
premium, employees shall be compensated for overtime hours at the prevailing industry premium rate or at the internationally recognized overtime rate, whichever is higher.
C.7.3 Employers shall not set production targets, piecework, or any other incentive or production system at such a level that the payment for overtime work performed is less than the premium pay required by law or the FLA Workplace Code.

8. C.8  Overtime Wage Awareness 
   Workers shall be informed, orally and in writing, in language(s) spoken by workers about overtime wage rates prior to undertaking overtime."

"Forced Overtime
The imposition of overtime where workers are unable to leave the work premises constitutes forced labor. "

[ Think of it- 60 hrs maximum in most of the world as defined by some of the largest companies.]

EICC - Electronic Industry Citizenship Coalition

EICC Code of Conduct

"Working Hours

1. Studies of business practices clearly link worker strain to reduced productivity, increased turnover and increased injury and illness. Workweeks are not to exceed the maximum set by local law. Further, a workweek should not be more than 60 hours per week, including overtime, except in emergency or unusual situations. Workers shall be allowed at least one day off per seven-day week. 
2. 4)  Wages and Benefits 
   Compensation paid to workers shall comply with all applicable wage laws, including those relating to minimum wages, overtime hours and legally mandated benefits. In compliance with local laws, workers shall be compensated for overtime at pay rates greater than regular hourly rates. Deductions from wages as a disciplinary measure shall not be permitted. The basis on which workers are being paid is to be provided in a timely manner via pay stub or similar documentation. "

Visual Effects Society Bill of Rights
VES Bill of Rights


Ergonomics and safety (see computer)

Apple Code of Conduct  (imagine if companies and studios had to follow some of these)

Overtime around the world

Kronos report on Overtime violations


"Paul DeCamp, national chair, wage and hour practice, Jackson Lewis LLP, and former Administrator of the U.S. Department of Labor's Wage and Hour Division
"Seeing that significant numbers of employees around the world believe their employers have violated overtime laws should serve as a wake-up call to employers everywhere. If your employees perceive that you are out of compliance, you are at risk for a wage-and-hour lawsuit which can be incredibly costly even if you are ultimately found to be in compliance. Investment in wage and hour compliance should be seen as part of risk management for any smart business."


For Trade Association reference
Kansas Code of Ethics for Certified Arborists

"14. I will not compete with another arborist on the basis of charges for work by underbidding through reduction of his quoted fee after being informed of the fee quoted by a competitor."

Google the topic of interest and you'll find plenty of information.



Related Posts
Global VFX Workers
Overtime

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.

Bad Visual Effects Business Practices

Bad Visual Effects Business Practices

[ This posts covers specific bad business practices of visual effects companies.
If you're interested in the problems of the visual effects industry check these posts:

VFX Service - The Big Picture

Pass me a nail

Oh, the mess we're in!

Risk and subsidies  ]

It seems a few times a year we hear of another visual effects company going out of business or on the brink. Every few weeks there is news of massive overtime on a visual effects project and almost just as likely the news that those putting in the time were not paid for the overtime. The visual effects business has gotten more and more out of balance in the last decade. While the amount of visual effects has skyrocketed and the profit from these types of films has likewise skyrocketed (49 out of 50 top box office films were reliant on the use of visual effects), the life of many visual effects artists has become more difficult. And trying to keep a visual effects company running has become more difficult as well.

Our creative skills and technology have freed us to create extraordinary images but the business aspects are dragging us down.

Some of the key problems include compressed post-production schedules that require overtime from the start just to complete the work on time, never ending changes from clients until the film is in theaters, film incentives shifting where and why work is awarded and increased competition from more visual effects companies.

Many of these issues are out of the direct hands of the vfx companies. However some are simply problems the companies create themselves, in some cases related to the above problems and in other cases simply due to management decisions.

I've worked directly for studios, I've worked for visual effects companies and I've started and ran my own visual effects company for a few years. None of these are easy.

Business aspects

Visual effects is not widget making. Nor is it a consistent service based on a vast number of potential clients. In these types of businesses there are fluctuations but they're normally slower changes. Visual effects is project based where a single project could occupy the entire company or a significant portion of it. The work comes in sporadically and results in a feast or famine situation for the visual effects companies and their artists.

For feature film work these projects have an end date so there's a big burst of work and then the need to scramble to get another project to keep people busy. Television can be a bit more forgiving since it may continue on for a longer period of time but even here there is uneven work. Commercials tend to be shorter and smaller projects so an individual project may not have the same weight on a company as a feature might.

A company that makes their own product such as an animation studio has more potential flexibility to adjust the workload and try to maintain consistency of work.

Visual effects companies

It's not easy to start and run any business. Visual effects is likely one of the more difficult because of the project based nature and all the other external factors involved. While it's easy for workers to look at management and think running a company would be easy, it is not. Those who try usually find it much more difficult than anticipated. [ I'll cover new companies in a future post].

Visual effects management

Management breaks down to those who are independent of specific projects (general manager, department heads, etc) and those who are assigned a specific project (visual effects supervisor, visual effects producer, etc) These may overlap depending on the company.

I'll cover some of the bad visual effects business practices I've seen (and some I've done myself). It's certainly easy to make mistakes given the pressures to make the business work. And many of these aren't specific to visual effects only but are common across a wide range of businesses.

Management’s purpose

Management’s first step is to get the projects in and to gather a great crew to do the work. Management’s task is to guide the crew and provide the necessary support and tools to do the project with as much quality as efficiently as possible. Yet some in management don’t get this and in fact seem to try to impede the work of the crew.

Sometimes it seems that Scott Adams must have been a visual effects artist. He creates the Dilbert cartoon series and frequently his cartoons seem to be taken from the diary of a visual effects artist. 

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The Work

Most work in visual effects is done on a fixed bid with change orders in theory to allow adjustment to changes. The problem is that even with previs animation the work is seldom spected out in detail and what is requested may differ significantly from what was bid. Creative changes make it a challenge to do the work in the time and budget originally calculated.  Visual effects companies tend to be reluctant to turn in change orders even when they are justified because of the small number of potential clients.

Lack of Honest Communication

Management at the company need to be able communicate clearly with their client and with their artists. This includes listening. If there’s confusion about what a client wants or what the artists need to do then there will be waste. If management refuses to hear what their artists have to say, then that will result in waste and loss of time as well. The company may have restrictions but they need to avoid purposely misleading the client and the artists. Lying about things like payroll is a good way to lose all employees.

Bidding Problems

Bidding is critical.  If a bid is too high then the company may not be awarded the project. If the bid is too low then the company may lose -a significant amount of money.

Inaccurate bids

Sometimes there is little time to do a bid and rough numbers are simply assigned per shot. Sometimes a producer or supervisor may be using figures from a few years earlier. Not including some of the key people also can result in inaccurate bids. It's best to make sure to get accurate bids.

Not getting all the information

The more information the more accurate the bid will be. Lacking specifics of shot length, handle length, boards, previs, schedule, etc. will produce an inaccurate bid.

Incorrect bidding

It's a mistake to calculate in asset costs into a sequence of shots. If a CG model will cost $100,000 to build and will be used in 100 shots it's tempting to simply spread this out over the 100 shots. But if the shots are canceled after the model is built or the number of shots ends up at 10, you've lost money.

Accidently losing a section of the bid is also a problem so be sure to double check.

Not being specific in the bid

Be clear about what the bid includes and what it doesn't include. Which previs, storyboards, script and breakdown is being used should be clearly spelled out to avoid confusion.  Any assumptions need to be documented. The valid period of the bid should be clearly spelled out as well.

Optimistic bids

We tend to be optimistic and bid based on what we would like the work to take, not what it really takes. Bids need to be based on the average worker, not the leads or the best worker. Bids should be compared to an average of similar work from the last year. If your bid for a green screen is 1/2 of what your average green screen took the previous year then you need to face the reality of the bid. Same with roto, animation, etc. Shots will vary with the projects but does the specific project support a much different bid per task? The pressure of getting the project encourages everyone to try to get a low bid but it's   better to be realistic and honest in bidding.

Changing numbers after the bid

In some cases management will 'adjust' the bids before presenting to the client. There may be overhead or markup that wasn't calculated in the initial bid. The problem is when someone starts making guesses and modifies the actual bids. If the animation dept. has bid something for x weeks and management changes it to 1/2 x, who’s responsible for it? How accurate is the bid? If management thinks the bid is too high they should be involved with the bidding or re-evaluate specific sequences with the affected people. Padding the bid is also a problem if the people bidding initially already put in a little flexibility.

Optimistic schedules

Most of the bid is based on the amount of man time involved with each shot. But there will be a linear time to schedule as well and that's easy to be too optimistic on just like the bids themselves. For a given number of crew members, how long will the work actually take from start to finish, knowing the changes and delays that typically happen? What about delivery schedules from the client and time to review? Is there enough time to do it? Will additional artists need to be hired? Will this require insane overtime? If the schedule is too optimistic there will be enormous costs and pressure toward the end of the project.

Underbidding

I'm not talking about underbidding a competitor here. I'm talking about producing and presenting a bid that is lower than the calculated out of pocket estimates. Purposely underbidding a project to get the project knowing full well the company will be losing money. This is called buying a project and the company is in fact helping to fund the project without any investment return possible. This is a losing proposition and causes a race to the bottom. This is one of the biggest problems the visual effects industry faces. This happens to both small companies trying for small projects and the largest companies even in areas with subsidies. I know the difficulty of trying to keep cash coming in for a company and the thinking is that it can be staved off by just getting this one project in with enough cash flow to help cover some of the expenses.

The problem is anyone can under bid at anytime.  If your company lost money purposely on the last project, how do you make up for it? Visual effects is not a commodity and we don't make or sell widgets. Wal-Mart can ask their vendors to sell to them at lower prices because they're buying thousands or millions. If the vendor is making some profit on each product and they have a guaranteed order for a large quantity then it makes sense. A visual effects company cannot make it up in volume.

If your company under bids on this project then there's a good chance another company will underbid you on the next project. After all, another company lost the last project because of your bidding process and now they're in desperate straits. Even if your company isn't underbid your clients now want to get similar low bids on future projects. Without a new project with sizable enough profit to cover itself and the project that lost money, you're hosed.

Companies doing this tend to slip further and further into the red and are simply delaying their collapse. With deep pockets to keep the company afloat that may work for a time but someday someone is going to wonder why they continue to lose money. That’s when the money loss will stop.

There may be times when your company will simply have to trim back according to the amount of work available. We all hate to see people laid off but if this just drives a company out of business and others are losing work, that’s a problem. The thought is to keep the whole company afloat and the desire to retain as many workers as possible but by underbidding you’re pulling the jobs away from other workers at another company, a company that may in fact be trying to make a professional business out of it. You may well doom not only your own company in the long term but other companies and workers in the same business.

Keep in mind it doesn't do the company, the workers or the client any good if the client goes out of business, especially while working on a project. And that's why some clients are reluctant to award to the lowest bidder. It's like other things in life, if the price looks too good to be true, it probably is.

The other problem with underbidding is management is always optimistic the loses can be made up during production. (When has that ever happened?) They are likely to place more pressure on the workers to work faster and to work unpaid overtime and place the blame on the workers rather than management's decision to underbid. Management also tends to try to push the client to buy off on shots before they are done or at a lower quality level. This causes the client to question the quality and to become less trustful of the company.

What starts as a way to keep much of the crew and to lose less money in the short term becomes a long-term loss for both the company and the industry. This devalues the work of the company and their artists and simply forces other companies to trim margins to the edge of bankruptcy. This is unhealthy for an industry.

Separate post on Underbidding VFX

Bad contracts

Contracts take a long time to work out. In some cases the contracts may not be completed until the finish of the production. Most lawyers are paid by the hour and love to drag it out. The contract will be boiler plated and client skewed heavily in their favor with a full team of lawyers. But the company needs some type of legal document (simplified contract, letter of intent, etc) BEFORE it spends a lot of money on hiring people and expanding. There have been many projects that disappeared before they started shooting or partway into production. The company needs to have a contract such that the visual effects company is not holding the bag for its expenses if the project does not complete as planned. The company needs some type of minimum guarantee or penalties should the project stop. The company should have a non-refundable hold fee of some type.

Any company left in the lurch from a client pulling out is in a precarious position. They likely have a crew and other expenses and will likely have to let the crew go or reduce it's overhead as much has possible while they scramble to fill the vacated time. What about the people who have moved to work at the company with the understanding of a long project? How will they be compensated?

Companies also need to either make some of the parameters of a contract adjust accordingly or be ready to renegotiate should things change radically. Example: If a company is doing 100 shots and has x credits, what happens when the number of shots quadruple? Is there an increase to number of credits? Do other parameters change?

Companies need to get a real entertainment lawyer to check the contract. Can the project be mentioned during the production? Can it be mentioned after the production? When can material to be shown to new prospective clients? What are the restrictions? Who owns any materials or techniques developed during the project? What about elements from an element shoot? Who owns that material? What are the deadlines and responsibilities if the client doesn't deliver? What are the responsibilities if the company doesn't deliver or meet it's deadlines? What are the specs of delivery from the client and to the client? What type of credits and how many will be provided? All of these details have to be hammered out ahead of time.

Bad payment schedules

With a contract goes a payment schedule. Management needs to determine their expenditures, including their up front costs, and layout the payment schedule. There may have to be a large upfront to cover the cost of new development or ramp up time. Even if the bids are correct, if the client is running late with payments then the company may not be able to make payroll or cover other expenses. What happens if the work is based on milestones of completed work but the client is late to deliver the material by a month? Companies need to be clear on the real payment. Large companies tend to like to pay things on 30-120 days schedules. Even with an interest payment can your company afford to cover all costs for 3-4 months? Unlikely. So make sure the payments are always covering expected costs during the project, not months later.

Not meeting payroll

Not meeting a payroll or not paying your contractors means someone in management likely messed up big time.  Likely they either didn't work out the correct payment schedule or didn't correctly budget and monitor expenses. Don't be surprised if you lose your crew.

Not having business sense

Many people in visual effects management do not come from business backgrounds nor do most have any type of business education. Some say that this is the source of all the problems. But many people with Masters in business lack business common sense and more importantly they don't understand a thing about visual effects. Most business programs and board of directors think of management as interchangeable regardless of the company. That's why you end up with a CEO of a chemical company overseeing a farm equipment company and someone with no food business experience running Hostess. These end up as disasters. These types of people focus completely on the numbers without understanding what they really mean. Without understanding the product, service, industry, employees and clients, management cannot hope to understand what to do.

Many studio executives and producers don’t have official business training but they typically have basic business common sense or have someone on their team who does. Everyone in management should understand the concepts of incoming revenue, expenses, labor costs, capital expenses, overhead, profits, targets, etc.  And no, overhead is not the same as profits. Some management in visual effects companies lack this understanding.

Not knowing costs

Surprisingly some companies don’t know their actual costs. What’s the cost of overhead, what’s the cost of any employee benefits, what are the additional expenses for equipment and what are the true labor costs? Without this most basic knowledge the company will not survive very long.

Not valuing employees

A visual effects company has hardware and software but its single most important asset is the worker. Anybody can buy the hardware and most of the software to set up a company. It's the employees that are the real driving force of a company but many in management forget that. The quality of the artists, their skill and experience when managed properly will determine the quality and the cost/time required to complete the custom visual effects. Not placing a value on them is demeaning to them and the company.

Treating workers poorly

Workers are human beings. Yes, you’re paying them but if you work them 80+ hours of overtime are you treating them as people? If you force an employee to move across country or to another country only to be laid off immediately are you treating them correctly?  It’s easy for accountants to simply look at them as a cost but management has to understand they are people. They are people whose life is controlled by the company. A visual effects artists will be spending more time at work than with their families. You may have required them to leave their families to work at your company. They in effect are sacrificing part of their life for the company. If motivated the artists will be going above and beyond. But does that mean you can kick them to curb without notice? Remember to do unto others as you would have them do to you.

Abusing workers

There are many types of abuse that management may place on their artists. Hopefully their HR department is on top of it and prevents it from happening no matter the type of abuse (including screaming at people, antagonizing people, and obviously being crude).  There may be some types of physical abuse including excessive overtime and not providing enough sleep between working.

I’ve heard some workers in India and other places have been actually beaten. We are professional visual effects artists and all workers should be treated humanely. Any manager who abuses people should not be working at the company. If higher management doesn’t deal with it then they are at fault as well.

Poor working conditions

Here in the US most places have reasonable working conditions but that is not the case everywhere. Companies need to provide reasonable working conditions- providing ergonomic setups to avoid carpel tunnel to having drinking water available and avoiding extreme temperatures.

Placing work above health

Some companies are intolerant of people who are sick when there is a deadline to meet. Some companies work people to the point of exhaustion. It’s only a movie.

Not making the best use of crew

Casting artists for specific tasks is important to try to get the best out people and get the best work out. This requires management to know the artists and their capabilities. Some in management may have small minds that makes it difficult for them to imagine the person in a higher job that they’re better suited for. Some people end up trapped in a job because they’re good at it, not because it’s best for them or the company. Meanwhile those doing worse may be given promotions. Once again the company may lose their best people.

Not motivating

Management should be inspiring artists and motivating artists to do great work. When artists are inspired they will put in 110% and will try to do everything they can to do better. Yet many in management try to do everything they can to reduce the morale of the artists. Any ideas or suggestions are instantly killed. Making processes as difficult to navigate as possible. Requiring enormous paperwork for the smallest thing. Every ‘win’ for the company is likely another notch in loss of morale. (Lopsided contract, forced to work unpaid hours, etc). In the end you’ve reduced people excited by visual effects into worker drones who will be thankful to finish the day and the project. You’ve created workers eager to switch to another company.

Poor hiring practices

When a company consistently hires what they consider ‘poor’ workers, whose fault is that? It’s likely you have a poor evaluation hiring process. Some like to blame the reason is that there is no certification process for visual effects workers but that’s the lazy approach. HR and management have to work together to review job postings. Does the candidate really need a Masters degree? Does the candidate actually need any degree at all? What are the actual requirements and are they clear in the notice? Is management involved in the evaluation of the potential employee? Have you properly evaluated what skills and abilities the person needs?

Providing no training

All companies are a bit different and at least require an orientation. In visual effects there are usually very specific custom software, databases, naming conventions and pipeline. Anyone being hired that hasn’t work at the company recently will need a period of training. If complex proprietary software is critical then there will have to be sufficient training along with evaluation. Simply tossing someone in the deep end is a waste of that person and will simply cost more for the company in the long run.

To increase the skill set and quality of their employees companies can also provide additional training on new software or advanced features. Members of the team can also act as mentors and try to raise the level of others if the company allows for it.

Training can also be helpful to management or anyone who the company wants to promote.

Too little management

At some companies, especially small, new companies there may be too little management. The owner/manager insists on overseeing everything including approving shots, doing the budgets and seeing potential clients. If someone in management is wearing too many hats then it’s likely they aren’t giving sufficient attention to several or all of those areas. Shots may be delayed while the manager is tied up with a client. Artists may run out of work or simply be idling because they have no management who can make decisions in a timely manner. Wasting workers time is one of the biggest expenses there is. Those in management have to learn to delegate properly.

Too much management

This tends to happen at larger companies. A large project or two come in and more layers of management are created. Do these extra layers of management increase the efficiency or do they simply mean more paperwork and people to go through to get things done? Frequently this increased overhead means it’s that much more difficult to get through slim times. This is especially true since many companies tend to hold onto anyone in management even while trimming back on the people doing the hands on work.

Micro managing

Hand holding artists and checking in with them every hour does not make the work go faster. The time they waste with a status report could have been put to use actually working on the shot. Increasing the frequency of interrogations as the deadline nears does nothing but fluster the artist. Hire the right people, be clear in communication when things need to be done, set milestones and reasonable status updates.

No structure

Some companies operate with very little consistent structure. When artists have multiple ‘bosses’ it becomes confusing whose project is a priority. In some cases artists get conflicting notes even when working on the same project. Management should make clear who’s in charge and what the hieratical of the company is.

Management by crisis

Management may ignore any problems or issues until they turn into a full crisis. At that time management has few options than to try to immediately put the fire out. They may take people off one project and throw them at the problem in hopes of solving it. And as soon as that crisis is over they have another crisis because the project they stole people from is now having problems. Throwing workers and overtime at the problem is not an efficient means of working and certainly just causes stress by everyone at the company.

Management by 3rd graders

Sometimes it feels like some companies are being run by 3rd graders. Rather than professionals making logical, well thought out decisions, management may be making decisions based on everything but. This person didn’t want to work on that project so they’re not going to be assigned this other project. Another artist looked at them sideways so they don’t want to put them on the new project. This artist likes the same football team so they’re going to be assigned a great position. This person is a favorite not because they’re good but because they’re friends. Making management decisions based on petty or unrelated issues is no way to run a company.

Management by rumors

Someone from management once heard one worker say something they thought was about another worker at the company. Or at least they thought his name started with a G. So that worker won’t be assigned a new project. Or maybe they will hold that person back and overlook them for a promotion because they heard from someone who over heard somebody say something to someone else.

Management by randomness

Some companies seem to be making management decisions based on random ideas with no apparent plan. This is especially true when the company doesn’t make some of their decision making transparent. And at times it seems like someone in management is being blackmailed. It’s the only way to explain some of the decisions.

Management with no management skills

Not everyone who works in visual effects is a good potential manager. Before bumping an artist to management, current management has to determine if the person has the skill set to be a manager. Can they work well with people and actually manage them? Not abuse them, but help them? Can they give up their hands on work and spend most of it working out the business and resource issues? 

Management Peter Principle

The Peter Principle is the term for people who have kept being promoted, especially in management, until they reach the level that they’re not competent at or may not have the skills to do it. And frequently those people remain in that level doing incompetent work because both they and the team that promoted them didn’t want to admit it. Rather than using a probation or trial basis like some companies do with new employees, they’re assigned a position with no way to go back down.

No Milestones

Visual effects is a service business. Time is critical. In the contract should be delivery milestones from the client. What needs to be delivered when?  And within the company there have to be milestones. When are the shots due? When is the animation for this shot due? When is the first pass at an R&D project to be done? What are the steps to create the new pipeline and when will each of those steps be finished, reviewed and evaluated? All of these should be clearly communicated so people aren’t guessing or that the time doesn’t pass with without an evaluation.

Having fiefdoms

Departments and groups in companies may have a fiefdom attitude. When the management of that particular department thinks much more about themselves and their department than the company as a whole. They become the gatekeeper to what work is done by the department not based on the big picture but based on their own priorities. Rather than shifting some of the work to another department if that makes sense, they’ll dig their feet in and become even more problematic. Bad management has caused this problem and lets in linger. Frequently you’ll see departments attacking each other or withholding information or assets as they try to be king of their little hill. This infighting simply makes the company more at risk of going out of business.

Answering yes to everything

While answering yes makes for good improv, it’s a terrible method of management. If a client asks you to cut the bid by a million dollars do not say yes immediately. If a client wants to change 500 shots, do not say yes instantly. If a client moves the deadline up a month do not say yes instantly. Small changes happen everyday and are part of the process. Saying yes to minor expected changes isn’t a problem. But saying yet to a major change is a problem.

The client’s first thought: Great!

The client’s second thought:  I knew they overbid. I knew they had extra capacity.

The client’s third thought: I’ll have to remember that.

And they do. You’ve now taught them a bad lesson about the company and provided them will more reason to ask for things in the future. To top it off you may be wrong and that yes may have a bigger impact than expected.

Instead ask to review it with your team overnight (or whatever time frame). You may have forgotten about that bid change you already did. You may not be aware that another project came in. It’s best to sit down with the key people involved and do a reality check. Can these changes be reasonably made given the information you have? What will be the ripple effect on the time and on the costs? Is there an alternative or compromise that can be worked out.

Now when you respond to the client you do know all the facts and have considered the ramifications. Even if you say yes you can say that you struggled to work it out for them and want to provide the best service. The client doesn’t view this as an easy win and will be more confident that you’re taking it seriously rather than suspecting you were simply trying to pull one over on them.

And sometimes you may need to say no. If your company does not have the capacity for an extra 500 shots or there isn’t enough time or resources to make all the changes, the company should discuss with the client. If the company accepts work but is unable to deliver that’s not good for the company or the client.

Not considering other business models

With each new project comes an opportunity to look at an alternate business model (besides fixed bids with possibly change orders). Is it possible to use another model on this particular project that might make sense for the client and company? This is especially true with new technologies and types of projects. Maybe a profit participation approach? Maybe an added time and materials approach?

Not anticipating

Sometimes changes appear from the client out of nowhere. But frequently changes can be anticipated but aren’t. If the company is falling further and further behind schedule don’t be surprised if the client pulls the work and takes it somewhere else. Don’t be surprised if the client wants to put the thumbs down and force the company to work overtime. If the director still isn’t happy with a shot or concept design then they may bring in others to make sure it gets done. Rather than allowing the situation to get to that point the company should be monitoring the situation and anticipating. They should be trying to solve the problem before the client tries to solve it for them. Management should anticipate and make the changes when there is time to do it correctly rather than making a mad dash and wasting a lot of money and overtime.

Not holding client to contract or change orders

Hopefully you’ve spelled out a lot of specifics in the contract including milestones, delivery schedules from the client, file formats, previs, etc. A lot visual effects companies let major issues and big changes pass right by because they don’t want to rock the boat. They simply absorb the changes themselves and hope they don’t total up to too much. One problem is that changes and mistakes will likely continue to be made that the company has to absorb. The other problem is if it’s brought up later the client will have no idea what the company is talking about.

At times there may be reasons not to nickel and dime a client. That’s understandable but it’s best to at least note it to the client so they are aware of it. This is especially true if the client has delayed delivery of materials as outlined in the contract. So if indeed you choose to do a ‘good deed’ they know you have already bent over backwards for them. If the editorial department turns over a jumble of shots on a drive with incorrect counts then flag production that you’re letting this one pass but in the future it will be billed at $x to fix. This will encourage them to fix the problem on their end and be more careful. If not, then they’ll be billed accordingly and can’t act innocent. Money and time tend to be the only language production speaks in terms of 3rd party companies.

If there is a legitimate change or addition then that should be discussed with production. If the camera jammed or a major prop failed on set then production knows there’s a legitimate change order. Do not try to instead bill for another shot or add overtime unrelated to the problem. That’s a good way of irritating a client who would have likely concurred on a valid change order.

Trying to sell unfinished or incorrect shots

Management may try to sell a shot that doesn’t match what the director asked for or may try to sell a shot that’s obviously not finished (or to the correct quality level). This simply irritates the director and causes them to review all shots in even more detail. And the company will have lost any trust the director had in them to follow through. The supervisor and other management needs to get in the same mindset of the director and producer so they will be trusted as a creative collaborator.

Not documenting workers time

And no, this isn’t to be used for punishing workers. Its purpose is to keep accurate records of the length of time every step takes in doing a shot. This is the data that needs to be reviewed during the project to see how it’s comparing to amount of time for each task that was originally budgeted. By tracking actual work hours it becomes much easier to accurately bid future projects.

Not monitoring the schedule and budget

It’s necessary to check the schedule and the amount of money spent throughout the show to make sure things don’t go off the rails. It’s important to use numbers instead of optimistically thinking it’s simply a ramp up issue. Rather than a producer flagging the error at the end of the show or even after the bid has gone over, it’s much better to flag when it’s getting close. This provides an opportunity to make adjustments to the approach.

Not having post mortems

At the end of every project there should be a post mortem to review what worked and what didn’t work. There should be monitoring during the project but post mortems can give you more perspective and a larger vision of what happened. It also allows you to hopefully roll in key changes before the next project gets too far. Post mortems should include the full range of crew members who should be allowed to speak freely about the good and the bad of the production. Everything is a learning experience.

Not knowing legal issues and requirements

Management should be aware of various government rules regarding labor regulations. The HR department especially should be aware of the guidelines but obviously quite a few do not. Certainly California and the US federal government have specific guidelines regarding interns, contractors, overtime pay, breaks, colluding, etc. Around there world there are different requirements but these should be adhered to.

In the US a company can be fined and in some cases may have to pay back pay. The IRS doesn’t take kindly to companies that try to cheat on taxes. Think about what would happen if your company were found to be guilty of not paying people their correct hours or not properly classifying people paying 5 years of back pay for the entire company is not cheap.

This problem includes large companies as well. ILM and Pixar were found to be colluding and restricting hiring and salaries of animators.

Here's some of what employees know
Misclassification

Independent Contractor (Self-Employed) or Employee?

Employers beware: More independent contractor misclassification audits are expected 
U.S. Cracks Down on ‘Contractors’ as a Tax Dodge

Fake time cards

Some companies, including some large ones, provide their employees with filled out time cards, regardless of the number of hours put in. This is illegal at least here in the US. See note about legal issues. In addition to breaking the law you’ve now squandered some of your most important information. Which is how many hours of each task have been done on a shot. How do you know if you’re over budget or under budget? How do you know how accurate bids are? This applies also if you don’t track overtime and the related costs of overtime. A 40 or 50 hour week time card is useless if the person put in 80 hours. You’re now basing future bids on completely false information and still wondering why you’re not making money.

Not keeping a low overhead

The more people on staff, the more management, the larger the support staff and the more building and capital investments a company has, the more overhead the company has. Overhead will burn through money even when the company isn’t working on a project. Any profits able to be squeezed out during a project will be gone quickly if there’s a large overhead. Management needs to think twice before increasing permanent overhead.

Spending money that the company doesn’t have

Counting your chicks before they hatch is a common phrase. Some companies spend all the target profits before the show even starts. The assumption being that the project will go through as planned and it will produce the profits as planned. Wrong. Only spend the money you actually have available.

Not recalculating target profits

The original bid has a certain internal markup for profits. The problem comes when that number is not adjusted during the production. If the company decides to eat the overages on change orders or pass on savings to the client in reduced markup for additional work, then the expected estimated profits need to be adjusted at that time. Some companies are surprised at the end of the production when they don’t make their target profit even though it was obviously changing during production.

Meeting crazy

Some companies love meetings. Many managers spend their days in long drawn out meetings. How many hours are wasted in the meetings? Does everyone need to be there? Make meetings only when it makes sense and keep them short and to the point. There are only so many hours in a day so make them productive.

Not listening to the artists

Since artists are the most important asset a company has it would seem reasonable to listen to them regarding ways to make the process more efficient. Especially since they’re experienced and well versed in the technical details. Yet sadly many companies ignore these resources and instead make decisions based on sales brochures, demos or by faulty spreadsheets.

Pleading poverty

It’s hard for a company to plead poverty and to request people to work unpaid overtime and donate even more hours for the company when management is driving brand new expensive vehicles from their brand new expensive home.

Expensive digs

All the projects I’ve worked on have been done in warehouses or industrial buildings yet some companies spend a lot on expensive buildings and furnishings in the hope of looking impressive. Some commercial clients like to have lavish client rooms but most clients look at an expensive building as something they’re paying for above and beyond what the work costs. And for the actual company it’s another huge expense of overhead.

Not working as hard as artists

When management is putting in 8 hours or less of work and taking extended lunch hours while the rest of the crew is putting in 14+ hours, that’s not good. When management takes a 3-day weekend but insists the crew work all weekend and then berates them on Monday morning, that’s not good.

When the crew has spent months putting in incredible overtime and producing great work they’d like to get a pat on the back. But frequently they get notice that they will be out of work for 6 months or more because sales and management have been unable to get a project. Maybe if sales and management had put in at least part of the work that the crew did, they could have found a solution.

Not understanding overtime

Management is likely to look at overtime as a given. As something that is normal and should be expected. They take on projects where the entire crew is working overtime from the start. And if this aren’t going fast enough or the client has added a number of changes or shots, then the easiest thing from management’s perspective is to increase the number of hours worked. Management and those typically looking at just the numbers think that 12 hours is producing 50% more than 8 hours work. They’re wrong. As the number of hours go up the productivity of workers is going down. The number of mistakes and errors starts rising dramatically the more overtime is put in. Did it really save you any time if you have to do the task twice?

Overtime is also a huge health issue as studies have now shown. Asking people to sacrificing their health for mistakes management has made is a problem. Assuming artists will be able to have the dexterity, creativity and complex thinking after 12 hours staring at a monitor is wrong.

Tied in with overtime is the turnaround time. That’s the time after a worker finishes when they have to report back to work. People have died from long hours and lack of sleep. Providing a cot and allowing 3 hours of turnaround time is not a solution.

There are legal requirements here in California and the US in regard to overtime pay. This increase in hourly wages is to truly compensate the worker and to discourage the company from taking the lazy way out. Misclassifying people as exempt, not reporting the hours, not paying the hours worked and other misdeeds are in fact illegal.  The company could face stiff fines and potential back pay issues if this is not correct.

10 Tricks Employers Use To Cheat Workers Out Of Overtime

Some companies provide a standard day off or standard day of pay. Doing this provides no incentive for the company to avoid working people overtime.

The bottom line is overtime should be avoided. Obviously if it costs the company more money it doesn’t make any sense. It also doesn’t make sense to your clients if you pass it on to them. Maybe the clients and the company should spend more time trying to solve the problems correctly such as anticipating the added work and hiring accordingly. You’ll produce better work more efficiently than working your core artists into the ground.

Business management time and money wasters

Many companies try to recreate their ‘mission statement’ every year. Many bring in outside ‘experts’ to spend days, weeks, months interviewing workers and managers. Groups of artists are brought in for lengthy meetings week after week to try to come up with the solutions and improvements.

Now some thought should be given to making improvements but it’s been my experience that these official processes are simply a waste of time and money.

The results fall into one of the following:

1   1.    Management doesn’t care for the worker or expert suggestions and simply ignore them.

      2.  The report of the ideal process is already what the company does.

      3.  Everyone thinks it’s great but there are many flaws in the plan since the experts didn’t fully understand the process and people end up back into their old habits.

False economy

Many in management try to save pennies while overlooking potential dollars of savings. In some case they cause the loss of major amounts of money. They won’t hire a pipeline engineer because it costs money yet the time it takes everyone on the crew to manually move files, rename them, enter the databases, etc. would easily cover the cost of the engineer and the company could actually be more productive and save money. This is what’s known as a no brainer but management just tends to look at simple numbers and make decisions without considering the implications. Buying graphic cards that are 5 years old because they’re cheaper, going with a slower, inexpensive server because it’s cheaper, hiring inexperienced people because they’re cheaper, etc. All of these short sighted approaches cost the company far more than the saving would have been.

Not fully committing

Sometimes companies do things half way and wonder why it doesn’t work. There was a time when most software used in visual effects had to be custom written. These days the need for full custom apps is less since many applications already exist and many are able to be customized. Certainly the software teams at companies would love to create an elaborate project but software projects, like film projects, typically take longer and cost more than planned. In any case once management decides to go with custom software (apps, pipeline, etc) they need to fully commit. There’s no point to creating custom software if it won’t be maintained and updated. Yet this is what happens to many custom software projects. They break as new OS’s or applications are released. A bug is found. The off the shelf apps surpasses them in a year or two. The company has already sunk in a lot of money so they refuse to switch to another package yet they aren’t willing to have someone add in features that would save everyone on the crew an hour a day.

And if the company commits to custom software tools then they have to commit to the additional training required when they bring on new people. Without the training, the tools are worthless. And training means not only teaching but also documenting the tools. Custom software also means that the company has to bring in people earlier so they can be trained and up to speed. This can be a problem when schedules get crushed but has to be taken into account.

Blaming employees

It’s rather common for management to blame the workers for missed deadlines or other problems. It would be better for management to consider what they could do themselves to improve the situation and what they can do in the future to avoid the problems.

Charging employees to work

Not many places do this but some in India and I suspect other locations do. These companies hire inexperienced people then charge to teach them how to do the job they’re being hired to do! Their pay or deposit is withheld until the conditions of this serfdom is completed.

Lopsided contracts

Many companies have contracts where the worker commits to 3 years but the company only commits to 1 year. Some pay for moving costs but then take it out of the pay of the worker they insisted move to their location. There are plenty of atrocious contracts that companies manipulate for their sole benefit and in some cases the management acts as sociopath.

Over expanding

There’s a lot of pressure to expand into other areas. A company that specializes in one thing may try to expand to try to cover everything. There’s also pressure to setup satellite locations where there are subsides or where the workers wages are low. All these steps require more money, time and commitment. The complexity of the company management has now leaped by a magnitude and communication becomes even more problematic. The company now has additional overhead and expenses. If the company tries to over expand, especially if it’s done rapidly, then they could be at considerable risk.

Subcontracting

Subcontracting is not necessarily bad but if it’s forbidden in a contract then you are in fact breaking the contract. The client may choose to look the other way but what other infringements may be happening from either side? And what if they choose that to be a reason to cancel the contract? How much control do you have over the subcontractor and what happens if they can’t deliver? If you are being subcontracted will you in fact be getting credits? Will you be able to advertise it or show it on your reel? Are you giving up on your company brand?

Rewarding the wrong people

Management has a tendency to reward the wrong people. The squeaky wheel gets the grease as they say. The most vocal worker and the one that talks to management the most may be the least productive. Yet it’s not unusual for management to be taken in by this and provide wage increases, promotions and other accolades on these types of people. Meanwhile the person working away in the corner may be the most productive person and yet management fails to reward them. Some of it because if it’s not asked for, management is not eager to acknowledge it. They can save the money for themselves. And in other cases management doesn’t really know their own crew well enough to know who’s productive and who is not. The company may well find themselves losing all their best people simply because they refused to acknowledge or understand who their best people were.

Not considering a Trade Association

Visual effects companies should certainly consider a trade association. There are quite a number of companies experiencing the same issues and the companies have similar goals. By uniting with other companies they could well improve their situation if the association is set up properly. It’s certainly worth taking a meeting and hearing proposals.

Not considering a union

A union does offer benefits for the companies. Providing your workers with better health care for less is one of many reasons workers would want to work at your union company. Having professionals with a clear agreement can also be an advantage.  

Squandering their brand

It takes time for a company to build a brand that represents quality. To build a brand that artists respect and want to work for. That brand is what helps them get projects in from clients and helps to draw the best artists. Yet some companies are more than happy to squander the brand by producing low quality work or treating their workers poorly. Once that happens the brand can disappear very quickly. In this age of the internet and social media you better expect that any dirty laundry will be revealed.

Not considering both short and long term

A company has to consider what they need to do in the short term but in doing so they frequently ignore the long term. And in many cases they may be sabotaging their long term with the decisions they are making today.

Not reviewing artists

It’s worth reviewing artists at the end of each major project. It’s worth reviewing staff artists once a year. If done well a review will help both the artist and the company. The company will have a better idea who to rehire and when. An artist will hopefully get constructive criticism. If the review is done poorly (focusing on one bad incident, overlooking all the accomplishments, etc) then the artists will know what an idiot their manager is. Management should be providing feedback during the project so the worker can improve rather than springing on some flaw that continued throughout the show without a mention. And if management has made a decision not to promote the artists they should be honest with the reasons.

Not considering the impact of incentives

Companies should be considering the impact of any incentives. If they aren’t located in an area with incentives how do they compete with the incentives? Do they need to do things even more efficiently or do they need to consider setting up a satellite company with all it’s issues? If a company does exist in an area with incentives, what’s the plan for when the incentive ends or when another place offers better incentives? That will in fact happen so you’d better plan for it now.

No savings or buffer

When any company starts up the basic guideline is to have at least enough money to cover running 6 months without income. Because it takes time to get going and to get clients and customers the company has to have deep enough pockets to cover getting going. Unfortunately since visual effects is project-by-project service work, the company always has to have a savings surplus to cover the slow times. If a company is living paycheck to paycheck without any tolerance for contingencies then they should expect to be out of business soon. Thin margins, under bidding and no savings are a recipe for disaster.

Not reviewing themselves

A company needs to evaluate how they are doing and what they can do to improve. If a company continues to lose money year after year or is constantly on the edge of filing for bankruptcy, maybe they should simply consider closing their doors. Rather than whittling down paid hours for workers, benefits for workers and causing other companies to be pulled down by your race to the bottom, it may be better for management, crews and the industry to close your doors. That’s a tough one to swallow but if there’s not enough work to support your company, at a certain point it’s better to face that.

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Added updates:

Too many layers of approvals
If a task requires approval by 5 different layers of managers, that's a problem. Each manager will have a different idea of the results required and will likely produce 5 different and conflicting notes or corrections. This just slows down the process and wastes time. Managers should be able to delegate and there should a limited number of layers for approval. Communication should be clear what the desired results are and artists need to be on the same basic page of what the client is interested in seeing.

Company not backing their employees
If the company proposes a supervisor or designer to a client they should be willing to back that person up to the client. If the company instantly withdraws the supervisor or replaces them at the slightest mention from the client then they have made a mistake. The faith in the client is shaken and they wonder if the company is trying to push the 'B team' on their project. After all if the company doesn't have faith in their proposed person, why should the client? And of course the person who was proposed now feels abandoned and let down by the company, even though they may be the perfect fit for the project. The company needs to make a proper evaluation ahead of time and back up their proposed person. There have been more than a few supervisors who left such a company and later achieved great success elsewhere simply because the company was too timid and small minded to see the potential.

Perfecting shots before submitting them
Some managers hold onto shots until they consider them to be perfect. Until everything is done, tweaked and presented as a final. The problem is the client needs to see works in progress in order to make creative decisions. More than a few sequences have been changed or dropped once they had been cut in. All the extra time spent polishing was wasted and now there is too little time to do the changes correctly. Management will have to know the level of completion the director is able to review and help guide them on what needs to be reviewed. (animation timing, composition, look, etc)

Fixation on perfection overrides schedule
In the beginning of any show there will be a limited number of models and shots to review since most are in progress or yet to be started. With little to look at directors and managers will loop these few things over and over again, tweaking the details endlessly. This results in wasting a lot of artists time, too little time toward the end of the production and uneven quality in the shots. It's the last few shots that are rushed through that will stand out and that the audience will remember. All shots need to be reviewed in context and considered usable when it works in that context. 

[Feel free to add additional Bad Visual Effects Business Practices in the comments below. If you work at a company doing many of these, congratulations, you just won at Bingo. The bad news is you're still working there.]

Update: For those interested in what a union can do: VFXUnion 

Other posts worth checking out if you liked this:
VFX Service - The Big Picture
Pass me a nail
Using the nail
VES Bill of Rights - Now What?
Visual Effects Union, Take 2

and the latest
Oh, the mess we're in!

Marty Shindler has some advice for companies (Marty worked at ILM and other VFX companies financial departments)