VFX World Wide Pi Talk

Last night was a great visual effects event.  Visual Effects World Wide Town Hall - Pi Day. A great many people worked incredibly hard to pull this off in the time available. (Big thank you to all of them)
We had abut 250 in Los Angeles where the event was held (Gnomon) and interconnected to New Zealand, the San Francisco Bay Area, Vancouver and Austin.

I touched on this yesterday and here's the website with more info of the things going on. See vfxsoldier and links on upper right for additional info.

Below is the script notes I started with for my talk. I wasn't able to cover everything in the time provided and since I was free speaking most of it, I probably lost a few things along the way.  

I've posted a link to the YouTube of the talks and discussions at the end.  (And thanks for all the great responses and feedback. Let's keep the discussions going and lets implement some solutions ).

Suggested music for reading
Eye of the Tiger    by Survivor
Waiting on the world to change     by Jon Mayer
Changes    by David Bowie
A change is going to come    by Sam Cooke

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I’m Scott Squires, started on Close Encounters, started up and ran Dream Quest for a few years, was at ILM for 20 years and I run the Effects Corner blog.

I am a VES Board member but today I’m speaking as an individual,

This event is aimed at all VFX professional worldwide. Film, TV, Commercials, and similar art forms

Each year we as the vfx community pushes the boundaries of what we can do. We develop the art, skills and technology to do more and more. This last year we have seen incredible work. Our efforts have allowed filmmakers to tell any story. We have made the impossible, possible. We are involved in not only most Hollywood films but also almost every form of moving image content. All films that were up for best picture this year used visual effects. The studios are reaping large benefits from our talents. We should be celebrating instead we find ourselves scrambling for coins in the gutter.

We have allowed visual effects to NOT be considered for creativity, collaborative and quality. We have allowed the discussion to simply become a decision of costs.

Films do not hire the key creative’s based on how inexpensive they are.

With the bankruptcies of R&H and DD and closing of other companies I the last 6 months, it’s clear that our industry is out of balance.

Major Problems

Subsidies
These are basically government funded corporate subsidies for select industries in select areas. Politicians are controlling who wins and who loses. The evolution of companies is no longer based on creativity, collaboration, quality and efficiencies. No matter how great a company is they can’t compete with a 50% or more discount funded by the deep pockets of governments. Subsidies do not create jobs, they simply move them. VFX companies are forced to setup expensive branches in locations with subsidies. The vfx professional is now forced to move from place to place like a migrant worker. We still work in offices and the moves are only based on these politics.

The taxpayers in those areas are paying a high price. Louisiana recently discovered that they make less than 16 cents for every dollar spent, even factoring the intangibles and the multiplier effect. No unbiased report I’ve seen has shown any benefits to the taxpayers in those areas.

Building an industry based on subsidies means building it on a house of cards, ready to collapse when the subsides go away. And they will go away. The subsidies are one of the next bubbles to pop. They are temporarily. Film subsidies require constant feeding.

Another location will provide better subsidies or your subsidies will go away. The BC film industry is seeing that with work now going to Ontario and Quebec. UK companies are now setting up branches in Montreal.

If tomorrow Antarctica announced a 70% subsidy, the studios would be on the phone to all vfx companies and the vfx companies would be scrambling to setup in Antarctica and requiring many employees to pickup and move if they expect to keep working. 6 Months later a small island in the pacific will offer more and the cycle will repeat itself. This is ridiculous and as insane as it sounds. Yet this is what is happening. You can see a time lapse version playing out in the US. Michigan was top dog a short while ago. They are no longer top dog and now have shutters studios and businesses simply because they falsely believed they were building an industry.

Everyone in visual effects is affected by the subsidies.

Too much competition
The amount of visual effects in films and other entertainment has exploded in recent years. But there is still too much competition. The subsidies have caused a distortion in evolution. Companies are trying to get a small profit from the projects. The companies have no leverage due to this imbalance. Large companies, even in subsidize areas, are underbidding the actual cost of the projects. Anybody with common sense can see that doing projects in the red will end in the company going out of business.

Broken business model
The visual effects business model is a fixed bid. A fixed bid for a creative process that starts as simply vague writings and has a fixed deadline. We are the only industry in the world that operates this way for a process with so many unknowns and so many changes, large and small. Construction requires blueprints and selections. Any changes are billed and deadlines are extended. The fixed bid is an insane way to work and results in companies going out of business. And it should be pointed out that when these companies go out of business they leave a trail of unpaid workers. Because at the end of the day the workers bear the brunt of all of this. It’s not the studios or the companies.

Massive Overtime
Unions fought and won to help make a 40-hour week standard. Most countries have a maximum allowable number of hours a person can work. The Fair Trade Association that Apple, HP and other companies belong to that covers China and other countries has a cap of 60 hours. In visual effects many of us start at this number of hours and increase from there. As vfx professional we’ve already exceeded what both many countries and associations allow. In there UK they have a maximum hours of 48. But vfx workers are required to sign a waver when they start.  As overtime goes up, productivity goes down. There are now health studies clearly showing the impact to workers health when worked over 50 hours. Why on earth are we working the hours we’re working.

Unpaid overtime
Many putting in these hours are doing so unpaid. Many vfx companies are breaking labor laws by misclassifying people, making workers exempt from overtime and other questionable activities. In Vancouver they are classifying people as technicians to get around overtime laws. In the UK there are no requirements for overtime rates so many are simply given a standard day pay, if anything at all.

Health Care
This is the only US centric problem I will mention. Health care here is very expensive. Each new company you work for requires 3 months before coverage. If you work shorter than that then you will have to buy your own. That is one of the reasons why all other film crewmembers are union members, including writers and directors. Because they offer continuous benefits as crewmembers move between projects.

Problem Summary
There are plenty of other problems but we need to focus on these first.

The visual effects industry is like large ship that’s burning, sinking and headed towards a waterfall. It would make a great movie but we are all on it. All of us. There are some on the ship that see no problems, some that simply want to hold on and hope for the best or hope that someone else will come to the rescue, others argue about which to fix first and of course there are plenty that just complain without solutions.

Solutions
So lets talk about the possible solutions

Subsidies
Vxfsoldier has started a legal team looking at the issue of subsidies under the World Trade Organization, which technically lists these as illegal under their guidelines. But beyond this there is little we as individuals can do solve this problem due to the politics and the deep pockets of lobbyists.

Making our own content
Many have suggested that vfx companies make their own content. That this would provide an alternate revenue stream that would help cover costs. But being a content company is a different business than being a vfx service company.  Some vfx companies have attempted this with varied degrees of success. It is certainly worth exploring but bare in mind large amounts of money have to be obtained and invested. It would require companies to invest large sums themselves to create the concepts, hire writers and directors as necessary. And even once this has been done there is no guarantee of success. Even the large animation studios are not always successful at doing so. If your company was successful in create such content, would you even bother being a vfx service anymore? Especially if the vfx business was still broken.

Residuals and royalties
The other notion is that vfx company’s share back ends participation. Perhaps even the workers. If you think getting more credits is hard, try to get a valid back end. There are some vfx companies that have done so with varying success. But this usually requires the vfx company to bankroll a certain amount of their own production for which they require deep pockets. And what happens if these projects are unsuccessful or make no return on investment. How deep are the pockets of the companies, especially since they work on very low profits currently.

Keep in mind people such as writers get residuals based on their union coverage. Most film crews get residuals in the form of health and benefit fund payments. When you buy a DVD a certain % goes into that fund. So again, vfx workers are the odd man out with no participation in the profits of the projects.

Working for the studios
The studios could simply employ vfx workers directly, just like they do film crews. This is the way it used to be done. There would be a direct connection between decisions the director makes and the cost, just like there is for the rest of the movie. This isn’t as far-fetched or as impossible as it sounds. There would be some benefits to workers and could be an advantage to the studios and directors as well if it were done right. But the vfx companies today offer the studios the ability to take all risks over themselves and the vfx companies also offer doing the work below costs. Hard to convince a studio to do their own when others are more eager to fund their projects and take on the risks.

Post-production supervision
A director is given so many days to shoot live action. The producer, line producer and 1st AD all encourage and guide the director to shoot their moving in the allotted time. They have to shoot so many setups a day to meet their schedule. A director is less likely to do 100 takes or change their mind after shooting a setup or ask for a lot of reshoots because they have a limited time and they have others who keep them on track. Once into post-production there is no one working with the director to keep them on track. Because the vfx is done by an outside company that may not charge for all changes and overages, the changes continue. As these changes continue workers work more overtime and the company loses more money. If the studios had a strong post-production person and treated visual effects more like live action that would stop,

Global working conditions
Just like the Fair Trade Associations and other organizations mandate a specific code of conduct for companies; there could be a code of conduct for vfx companies to adhere to if they wished. Those who do so would be clearly listed and overtime and health benefits would be clearly defined. Should a company break any of these guidelines they would be off the list. All companies on the list would be required not to subcontract to others not on the list. And the studios could not plead ignorance.

Trade association
A trade association would be made up of vfx companies. By organizing they create a unified front, with numbers comes strength and leverage. Just like a union. Companies in the trade association couldn’t agree on pricing but they could establish standards and also define their business models. The goal of a trade association is to do what’s best for the companies involved. The film studios have their own trade association for negotiating with the unions as well as take care of issues affecting all of the studios.

The VES hosted a few meetings with some companies and Scott Ross has been trying for years to get companies on board. The larger companies and those in subsidies areas have been reluctant to even discuss the possibilities. But the vfx protest that many of you were involved in has seemed to make a bit of an impression. Scott Ross will be discussing the trade association tonight.

VFX Guild
A guild and union are one and the same. As mentioned almost all others involved in the film industry are covered under guilds. Writers, directors, production designers, cinematographers, actors, etc. Please don’t stereotype unions by what you have heard 2nd hand. And please don’t bother bringing up false notions of the auto industry. The German auto industry is doing just fine with a union work force.

The union provides protection for the worker. As an individual you have very little control at your workplace. The company could drop everyone’s pay without notice. They can do things to skirt around the labor laws. A company may not pay you for a few weeks and simply say that they will pay you soon. (Dave Rand can discuss this aspect) All of this is even more possible at a time of large unemployment. You have no say over your situation. You either keep working or you quit. Those are your two options.

The guilds goal is to do what is best for workers. Workers are involved in the management of the guild and are involved in determining what is critical. The guild sets up basic working conditions and they set minimums. Everyone is still allowed to do their own negotiating higher as they choose.

And guilds are not only here in the U.S. There are in a lot of countries including Canada, UK, New Zealand and even India. China is one of the few places where unions are not allowed by law.

Solutions summary
So those are many of the potential solutions. None of these will fix all of the problems. We have different members on the panel that can discuss different aspects of some of these possible solutions. And if other have better solutions please submit them.

Workers POV
Since this is a town hall event primarily for the workers let’s take a look at the solutions they can be involved with.

From my perspective a VFX trade association would be a very good thing and help build a more sustainable business model. I would suggest to all workers to ask management if they have an interest in a trade association and would be willing to meet about one. If not, why not?

We as workers don’t control the politicians, we don’t control the studios and we don’t control the companies so lets look at the options that are left.

1. Do nothing. Hold on and simply hope you don’t end up unemployed and/or half way around the working next year.

2. Quit the business. Some have already done so and more are more making plans.

3. Unionize. We now have a large group of motivated workers around the world.  We’ve changed our Facebook images but how do we put that into real results? For real change to take affect we will have to truly be organized in a contractual form.

I know some people say they want working conditions, they want to be paid the hours they work, they want collective bargaining to get continuous benefits but they don’t want a union. The problem is you’ve just described a union. Here in the US there are specific laws and regulations. To do those things you have to be a union otherwise you’re an organization that submits petitions in the hopes someone may read it.

Ideally a union would be global but given the range of laws in each country that’s not possible. The best option is a per country union that can be loosely connected.

Some say they wish to start a union from scratch. How much time will that take to get through all governmental approvals, to get acknowledgement from companies, studios and other unions? And in the end what do you have gained?

Now there will be those that say a union will be too expensive, that the companies can’t handle it. That all work tomorrow will go to China or the cheapest place this week.  It does the union no good to create a large added cost to the companies, which cause the companies to fail. The unions would negotiate with the companies to develop a reasonable solution for both sides.

And remember, I’m not just talking here in the US. If you wish some protection as a worker you should consider joining a union. Canada, UK, etc all have the option to unionize as well. I think that once one area unionizes the others would be more interested in following.

Nothing signals we’re tired of this and we’re not going to simply wait around for others who may not fix the problem than people joining a union. It sends a strong signal to the vfx companies that a trade association is a good idea. We as union members would be connected to all other film crewmembers.  With numbers comes the strength to do great things.


There are those who want to continue to talk about all of this for the next 2 years. I don’t know about you but I’m tired of talking. In 2 years time our ship will have burnt, sunk and gone over the waterfall.

We need to understand at the end of the day the entertainment companies need what we do. They are dependent on us.

What we need now is unity and courage by everyone. That is the only thing that is preventing us from making positive changes.



FXGuide hasVFX PI coverage.

Related Posts
Pass me a nail
Oh, what a mess we're in!
VFX Business Models

Global VFX Workers

VFX Tax Incentives / Subsidies
Risk and Subsidies

VFX Union, Take 2
VFX Trade Association
Using the nail

Other web related postings
John Parenteau's Thoughts on the VFX Industry
More than 400 VFX artists protest at the Oscars, to highlight the growing problems in the VFX industry after Oscar winning studio, Rhythm & Hues (Life of Pi) recently had to file for bankruptcy

Pi Day

In case you haven't heard the VFX Town Hall on Pi Day is being held 3.14 (Tomorrow as I write this)

It's in Los Angles but there will groups in San Francisco area, Vancouver, New Zealand and elsewhere. There will also be a live stream over youtube.

I will be speaking along with Scott Ross (Trade Association), Steve Kaplan (Unions) , Mike Chambers (VES) and Mariana Acuna (http://davfxchick.blogspot.com). (inadvertently left off Mike Chambers originally)

The state of the industry will be discussed along with possible solutions. There will be an hour of questions and answers. The various town centers on the list will be able to send in questions and discuss amongst themselves. There will be an email or twitter hashmark I believe for others to ask questions. You can also submit or post questions ahead of time. We won't have all the answers but it's time we started to make some things happen. There are interesting meetings and discussions already in progress.

We are hoping to help reach out the global world of all visual effects professionals and hope to implement some concrete steps to solutions in the upcoming weeks and months. 

For details vfxsolidarity website, vxfsolidarity - Facebook (I've spent more time in the last day on Facebook than I have in the last 5 years) 

There are other links and twitter accounts in the upper right that would be useful to follow if you haven't already.

Update 3-15-2013 My talk from Pi Day event. Includes my script and the video

We are artists

We are artists

I was asked in the comments of another post why I didn't care for the term technicians. Aren't there technicians as well as artists doing visual effects? Here's my response that I posted in the comments but some suggested I make it a full post so here it is.
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My term of 'artists' covers all those creating visual effects. I could have substituted the word vfx workers or vfx professionals. Our profession represents a wide mix of artists, craftspeople and technicians, most who deal with some amount of creativity and some amount of technical knowledge. We have programmers, we have engineers, we have IT, and the full range of people to ultimately generate the shots. The entire crew is required to make our final product.

When a director, studio or the press says 'technician' they mean it as a derogatory term. And that's a huge problem for those of us in the industry. It simply allows them to say it's all done by computers. "These technicians just have to hit the right button. They are not bringing any creativity to the process itself."

So when a director meets with their key creatives (cinematographer, production designer, wardrobe designer, composer, etc) to discuss the film and have everyone contribute to the film in a creative way, that may not include the visual effects supervisor. Because they're deemed to be just a technician who manages other technicians. The truth is the visual effects supervisor has developed their own eye and is able to be tremendously creative in terms of both the visual and the visual effects of a film. Especially when they leverage their crew. The experience and knowledge brought to the table is great but some directors are not interested because in their view the entire field of visual effects is not creative.

In their view and view of studios we're merely there to push the button to match their production designs. We're doing paint by number work if you were to ask some studio executives. And because they view us as technicians they view the entire process of visual effects as a commodity. If it simply takes people hitting the right buttons they could hire any visual effects company throughout the world to achieve identical results. They can outsource all the jobs to Timbuktu because, after all, it's just a technical process and they can send someone there for a month to train anyone and they will get the same results. (in their mind)

The studios look at directors, writers, cinematographers, production designers, and others as creative. They are irreplaceable and each will provide a different look. They bring different levels of quality and style to a film. All of those 'creative people have leverage and are being taken seriously by the studios (writers may challenge that to some extent). They do not outsource that work. They may hire someone from another country but it's based much more on quality and what they bring and much less on cost.

In the end the view that we're technicians automatically reduces our leverage. It diminishes who we are and what we do. We're brushed aside with the notion that it can all be outsourced with no loss in quality. And we lose any sense of respect. And that loss of respect is everywhere in Hollywood and helped to create the situation we're in. That's' why our names are last in the credits. It's why award shows and press junkets typically do not include us.

So yes, we are artists in my eyes and we as an industry have to keep fighting to make it known that we are in fact doing creative work on projects. What we do ultimately is a creative endeavor built with our skill sets and our talents using technology. If it we weren't creative films would look much worse. And if they allow us to participate as the creatives we are, we can make things even better.
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Now that we have developed the technology and skill set to create seamless visual effects with few limits, we need to use push the creative boundaries ourselves.  We need to respect what we do and what we accomplish. We help to create the magic, we help to create the art that is on the screen. And we need our clients to recognize that and to value our creative contribution.  It's the thing that both visual effects artists and companies can use to set themselves apart from others as the technology has allowed leveling of the technical aspects. Just as cinematographers are no longer encumbered by the basics of exposure and paint with light, so can we as individuals and as visual effects artists provide something beyond what the technology is able to provide. The human eye and view point to create something unique.

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.

VES Board Member thoughts

Van Ling, a visual effects artists for many years and a fellow board member at the VES has asked me to publish his open letter.  I've never had a guest blogger post here before but I thought I should make an exception

 -Scott Squires

To my colleagues in the VFX industry:

I wanted to make some observations regarding the recent VES Open Letter, with the understanding that these are solely my opinions as a long-time member of the VFX community who also happens to be a VES Board member, and that I am not speaking on behalf of the Visual Effects Society in any official or unofficial capacity.

I think we as a Society should follow up and clarify, publicly and definitively, a few points that seem to get lost in the initial reactions we see in many articles and posted comments:

1) As a global organization, any push we make for subsidies in California should and must be made IN THE CONTEXT of promoting local incentives for ALL states and nations, and we encourage ALL of our Sections and global members to do the same in their territories by encouraging the hiring of local talent.  What we'd like to try differently is to COMMUNICATE with each other about the process so that we can reach as balanced a system as we can for all.

2) The VES will remain first and foremost THE professional honorary society for the visual effects artform and industry, championing what brings us together, rather than feeding what tears us apart. 

3) The VES will NEVER turn into a union or a trade organization, as it goes against our charter and mandate, but we DO support efforts to create either or both of these entities and would work with them for the betterment of our industry.

4) The VES should be and is dedicated to taking a proactive stance on the business side of VFX moving forward, not only because everyone can clearly see that the artform and its creatives are materially affected by the way the business works (or doesn't work), but because we ARE our membership and our members want us to help them find ways to solve the issues that have a significant impact on their lives and livelihoods.

The VFX community and the VES membership itself are microcosms of the entire entertainment industry, and are comprised of artists and practitioners from every corner, and there are too many entities who try to benefit from pitting us against one another, either on a single production or on a global level; we have to find the common ground if we are going to find solutions, and the strongest commonality we have is our dedication to making stunning visuals that help tell stories and create wonder.  From that shared foundation, we can foster discussion between all levels, from artists to facilities to studios.

To those who consider leaving the Society because it does not serve your needs: doing so is certainly your right, but why not try to get more involved with the Society and help us become an organization that DOES serve your needs as well as the needs of the VFX community as a whole?  I may not agree with everything my fellow members choose to do or espouse, but I believe in the mission of the Society and I think we are better off engaged, listening and talking honestly with one another with respect rather than sniping at each other (online or otherwise) and walking away.  And I know of hundreds of VES members and the three dozen dedicated members of the VES Board, from all corners of the industry, who feel the same way.

So I'd encourage everyone in the VFX community to bring your ideas, your passion, your creativity and your dedication --the same qualities you use to create amazing images-- to bear on finding solutions that can work for all of us, around the world.  We are some of the best problem-solving minds in the entertainment industry, and it's time we apply those minds to the challenges at hand. 

Hope to see you all at the VFX Congress.

Van Ling

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PS: my thanks to Scott Squires for giving me a space to say my piece.

Visual effects are inexpensive

Visual effects are inexpensive (relative to other options)

Ang Lee and everyone in Hollywood say visual effects are too expensive. We’ve created the worlds and characters that make their movies possible and the large profits usually associated with them. Yet their thanks to us is to tell us we’re too expensive. They would have loved to get even more profits squeezed out of their latest impossible film that we made possible.

Can you shoot Avatar in 5 days with 5 people total (crew and cast)? Can you shoot any of this years Oscar nominated films in 5 days with 5 people? No. Obviously you cannot. It takes time and people to make these things. Yet they have a huge disconnect when they view visual effects. Doing visual effects is like making a film. It takes time and it takes skilled and talented people. It’s no different. People * time = money. More complexity means more time and people and therefore more money. Sometimes the studios think they can make it cheaper by reducing the time. But this is not a clean and simple formula. As the time goes down for the same level of complexity simply means more overtime (at a higher cost) and more mistakes (more costs).

If you asked the art department to build a city block from scratch and build everything, including the interiors of the buildings, would you be surprised by the cost? Would you blame the art department for being too expensive? No, of course not. That’s a lot of work that involves a lot of materials and workers taking a long time. Now simply change the term ‘art department’ to visual effects. Amazing how that changes their perspective.

And just like an epic spanning several countries and thousands of extras with large sets will take more shooting days and require a larger crew, so too does a more complex visual effects project, yet that simple fact seems to be mystifying to many in the business.

Here’s the secret for why visual effects cost what they do: It takes what it takes. For a visual effects blockbuster it takes hundreds and hundreds of people working months at a time, typically with overtime because the correct amount of time was never budgeted. There are no magic ways to lower that number just like there is no way to lower the number of shooting days and size of a live action crew and still achieve the same results. And for the 1000th time there is no huge mark-up with the visual effects company laughing to the bank. Producers and studios are more than welcome to start and run their own visual effects companies if they see big potential for profits.


Maybe there is a cheaper option than visual effects. Let’s take a look at the options and see how they compare in terms of costs:

Avengers –
Visual effects option:  Have a very large team of skilled artists and craftspeople working for months. Very expensive. (or is it?)

Non-visual effects option:
-The art department will have to construct large special buildings. That will cost a fair bit and take more time than to shoot the movie.
-The art department would have to make all new signs and cover existing signs. Not cheap.
-Everything would have to be perfect on camera to avoid visual effects. No fix-its in post. That will require more shooting time.
-Any stunts would have to be done without visible wires. Any car jumps would have to be done without seeing the ramps. Not a budget item but that’ll put a crimp in the framing of the shots.
-Build a flying aircraft carrier. Not yet doable and so you’d have to wait a long time to make the movies and even then, it’s probably not cheap.
-Destroy a large part of New York.  I know real estate has gone down but probably not cheap.
-Creating a storm in the sky with lighting and all kinds of stuff. Nope, no app for that yet so that’s probably expensive to do.
-Have flying people. Wow, will people even be watching movies by the time this happens? Gotta figure that’s not cheap and the money borrowed for pre-development now will have accumulated quite a bit of interest when finally paid back.
-Creatures coming out of the sky. Government programs have to be advanced and declassified before they can start on bio-creature hybrids. And those flying sled rigs they’re on are so expensive they’re not even listed in Skymall.
-Hulk. See above.
-Same with many of the other characters. Gods, super power heroes, same old problem.

There are plenty more things to add to the list when doing it using the non-visual effects options. But I suspect that it’s already exceeded the visual effects costs a bit.

Gross for Avengers (a film only possible with the help of visual effects): $623,357,910

Hmm, seems like visual effects costs didn’t really make a huge dent in that thank goodness. But still, it wouldn’t have hurt to squeeze out another few million from the visual effects crew, am I right?

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In the end visual effects enables the filmmakers to make films that they couldn’t have. Which in turn allows them to make profits that they wouldn’t have without visual effects. In many cases visual effects may not only be the cheapest option they have, it may be the only option they have. They don't look that expensive when considering the options or non-options as it may be.

Visual effects take time and a large number of skilled artists working very hard.

It’s just arithmetic.

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 Related posts:
The Miracle of Visual Effects, will it continue?
Value of Visual Effects
Why do visual effects cost so much


There are plenty of other articles on this blog. Look to the right column for more or check out some of the ones below.

• Visual Effects Tax Incentives
• Bad Visual Effects Business Practices
• Oh, what a mess we're in!
• Risk and Subsidies

Risk and subsidies

Risk and subsidies

This post is in response to a comment on the previous post Oh, the mess we’re in! . Blogger is unable to allow long comments so I've made a new post for the response.

Here's the comment:

" Mark said...

Thanks for replying to my comment. You're saying that the risk used to be that the studios would be held to ransom in some way, but now that's changed -- to a risk that the studio will find itself in financial difficulties.

I think it's unlikely that's a new consideration. The risk that the VFX house will be unable to complete the contract for some reason will already feature. Work gets pulled from even high-profile VFX houses which I see as the studio managing this risk in a hands-on way, and I expect they will continue to do so.

I think the reason I'm commenting on your blog is that it (and many others) are reducing the discussion to a simple one of "subsidies have introduced risk to the VFX business." Not acknowledging any existing risk is (to me) an indication that risk management is not high enough on the agenda within a sizable part of the VFX industry."

'I think it's unlikely that's a new consideration.'

Actually  it is. Obviously studios wouldn't award projects in the past to companies that were just starting up or which there were indications they would fail from the get go.

Now there may have been a company or two that closed during a production in the pre-digital days but I can't think of any. But as you can see with R&H, DD, Meteor Studios, etc. that's a real risk now where it wasn't before. And this is as risky of the big companies as the small companies. The risk that a company may not be able to handle shots as desired or they may not be able to handle hundreds of new shots was always there but a company going out of business while working on a project? - That's a new one. Do the studios going to Weta or ILM think that tomorrow they may get a call saying they closed their doors while working on a project? No. And that was the case with almost all vfx companies pre-digital as well. Yet many projects are not done 100% at Weta or ILM. The work is split up among a few companies, not to reduce their risk of going out of business but in an attempt not to have all of their eggs in one basket. And by that I mean the studios don't want to hear about delays or problems or change orders. And they think it's cheaper.

A studio can check the quality of the work the company has done for other films, they can check their budgets, meet with the crew, they can talk to other studios, producers and directors - all of this to assess the risk and quality factor before they sign a contract. But the thing they can't do is check the books of the company and do a true assessment of their financial stability. In the past, they never had to.

Now a studio may pull work from a company and that's aways happened if the company wasn't delivering what was requested in the required time. There have been certainly 911 calls (emergency) when work needed to be shifted or shots were added. But that's a risk that is evaluated before the contract is signed and is monitored by the studio. This is not something they're blindsided with. A company calling them up and saying we're filing for bankruptcy tomorrow (or next week) is a much different thing and a much higher level of risk.

The studios have many risks when they make a film. They take on that risk with their crews and locations.  But vfx is a 3rd party since the studios don't want to take on running their own vfx company (too risky).  The real risk is laid at the doorstep of the vfx company. But the risk for the company is constantly changing by external forces which they have no control over. And in many cases their clients are the ones putting the companies at more risk either directly or indirectly.

'I think the reason I'm commenting on your blog is that it (and many others) are reducing the discussion to a simple one of "subsidies have introduced risk to the VFX business." Not acknowledging any existing risk is (to me) an indication that risk management is not high enough on the agenda within a sizable part of the VFX industry.'

No offense but this sounds like a certain management software company or a studio talking and not someone working in visual effects or visual effects management. Would there be some risk without subsidies?  Yes but they'd likely to be much less.

As pointed out the studios and regions (countries, states) have created a situation where quality and efficiency are lower priority. If it were a true free market then those companies who were doing good work efficiently would be rewarded by more work. They'd be able to make a profit and be on much firmer ground financially.  The companies that did poor work or that were inefficient would see their profits go down and possibly have to close. Studios would be clearly able to see the different levels and know ahead of time what their general risks were. This is natural evolution. Just like in nature the weak ones would be dying off and the strong would survive.

But now you've added in subsidies into the mix. It's no longer evolution based on quality and efficiency. It's evolution based in large part on politics. And those politics change frequently. Companies that would be strong and survive in a free trade market now find that there is no way they can cut costs 50% or more. They find they have to invest $1 million dollar into a satellite branch they don't want and didn't plan for. And companies that wouldn't even exist without subsidies now exist only due to the subsidies. Companies that were small found themselves very big in a short time not because the companies were the best at what they did but because of subsidies.

 Imagine you've got 5 runners in the Olympics and you give some of them motorcycles. Is that fair? Is that a way to truly assess which runner is the best? Are people surprised when the actual runners don't win? Which one would you bet on?

Imagine a restaurant in a town and it's doing well. In fact it's very good and people are coming from other towns. And in another town right next to the first town the city government decides to pay for 50% of all orders at a similar restaurant.  Don't you think that would have an impact on the first restaurant? Almost all of the people from both towns would flock to the one that they could get food for 1/2 price.

 Is there a way for the first restaurant to compete with that? No. There are certain food, labor and building costs that they can't trim. They're not making over 100% markup so it's impossible to cut their prices 50% and still make any money.  What are their choices?
1. Close their doors
2. Try to offer food at the same price. And this will bring back some of the customers but since they're now losing money every month it's simply a matter of when they will close their doors.
3. They can open another restaurant in the town with the discounts. Now they have the extra burden of a duplicate restaurant. They have doubled their building and overhead costs. They've had to hire a manger, hostess and the entire group of chefs and wait staff just for this new place. Do they have enough money to do that? Will that added unexpected cost now make them more at risk of going out of business? Yes is the answer.

Now imagine that another town right next to these two starts offering a 70% discount. Now where does that put the owners of the restaurant? Do they now build a 3rd restaurant in this new town? Do they try to lower their price to match?  And with the more lucrative restaurant business in this new town, there will be more restaurants built by those who haven't done this before. The townspeople have paid their taxes and the town council has decided that offering food coupons is much more important than putting the money into their schools or their decaying bridges. There's no winners here except for the customer.

Are subsidies the only reason for troubles of the visual effects industry? No but it is a major reason. Natural evolution would tend to solve problems of poor management and other flaws by having them go out of business. Is there a risk? As in all of filmmaking, yes. Is the risk of a company running out of money on a project much greater now? Yes. See the restaurant example of options for a company.  None are good. And it's not a question on how good management is at that point, you can't do the work for 1/2 price. And that's whats created the largest risk - closing doors even while working on projects.

And lets not forget when studios do stop or pull projects that creates a huge loss for the companies that was unexpected. As I say, the companies take on a fair bit of risk outside their control. Now they're on even shakier ground. The studio that pulls 1/2 their work can't plead ignorance that they increased the financial burden of the company and increased the risk the company could go out of business. Between these types of actions and the subsidies it's no wonder some companies go out of business.

Related post:
Visual Effects Tax Incentives (aka subsidies)


Here's some more information on subsidies of other industries and the impact they have:

Choosing winners and losers: How government subsidies destroy the free market
Subsidy Insanity
WWF: subsidies destroying industry [PlanetArk]
Coalition of Gulf Shrimp Industries Files Petitions for Relief From Subsidized Shrimp Imports
New Study Reinforces USW Position that Improper Chinese Subsidies Destroy Jobs in American Paper Industry
USA Shrimp Industry Seeks Relief from Subsidized Imports
China subsidizing auto parts exporters: US industry
Solar energy firms 'bankrupted' after subsidies cut
Over Half of All U.S. Tax Subsidies Go to Four Industries. Guess Which Ones?
Germany Subsidizes China To Destroy The German Solar Industry
China Solar Subsidies Pose Dilemma For U.S. Trade
California Backfire: Energy Subsidies Destroy Economy
Put An End To Massive Logging Industry Subsidies in California

Oh, the mess we’re in!

Oh, the mess we’re in!

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

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

Law of Supply and Demand

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

           

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

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

Balance and market size

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

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

Free market evolution

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

Visual Effects

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

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

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

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

Un-natural Selection

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

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

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

Visual effects as a business

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

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

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

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

Pricing tiers

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

Amateur hour

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

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

Small companies

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

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

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

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

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

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

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

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

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

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

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

Too many artists?

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

Summary

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

----David Cohen has a great article in Variety that covers visual effects business issues.
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