Here's the way the visual effects industry goes:
1) Big Fat Conglomerate puts most of the work on its new, $200 million effects-laden blockbuster out for bid.
2) Effects houses from far and wide bid on the project, busily low-balling one another.
3) BFC picks the cheapest price among the houses, gives a few high-end "money shots" to a prestigious effects studio in San Francisco, and hands off wire removal and other mundane chores to Mumbai, India (which is even cheaper!)
4) Management of Low-Ball Effx House discovers that it is seriously in the red doing the work and will have to look for suitors with money if it wants to keep its doors open. (As an interim measure, it cuts staff salaries and benefits) ...
Versions of this scenario have been happening with metronomic regularity for years. Variety had the basic storyline just yesterday:
Digital Domain, the Venice, Calif.-based visual effects shop ... is scheduled to be in court Wednesday for opening arguments in a wrongful termination suit by the company's former prexy, Christian Bradley "Brad" Call.
Call alleges the company pressured him to falsify the company's financials to attract investors ...
...[D]documents reveal that the company, founded in 1993 by Scott Ross, helmer James Cameron and creature wiz Stan Winston, has never turned a profit despite having a thriving commercials division for much of its existence to supplement its feature work ...
But weep not for Digital Domain. Per the article, current management strongly implies that everything is really good now. (And if you believe that, then call me quick, because I've got some prime real estate out in Lancaster I'm willing to sell you.)
There's a reason that the major entertainment companies got into the effects business and then (except for Sony) quickly got out again. The profit margins just weren't there.
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So what is the solution to this cycle? It can be assumed BFC will go with the lowest bidder, so why not make the lowest bid higher? A major issue is the FX houses low balling each other and undervaluing their services (then taking it out on their staff).
Just like working 80 hrs a week for the same pay as 40 hrs hurts an employee's perceived value, bidding a job for less than it costs to make hurts the value of the FX house. And then BFC assumes that is how much it will cost to make the next film and the cycle begins again.
So if it costs more to make visual effects than what most houses bid for, why can't the houses work together to start the bid higher? Or would BFC just outsource all work then (then quality suffers and they understand how much good FX is really worth)?
Yes, realistically there will always be a renegade house which bids for a loss. And if all other FX houses raise their prices and are underbid by said house, then they lose jobs and close down while said house hires the newly-jobless at slave wages. So maybe the solution is to stop supporting renegade house.
Just like Steve's favorite line is to "STOP WORKING UNPAID OVERTIME", maybe the new line should be "STOP WORKING FOR HOUSES WHICH UNDERVAULES YOUR WORK AND PUNISH YOU WHEN THEY GO INTO THE RED"
Easier said than done when you have to put food on your family's table. But if we just sit around and bitch about the cycle and don't try to fix it then we are still stuck in it...
You almost got the business model right. Step 3 should read, "BFC gives majority of work to EFX house to company which producer/director/vfxsup has previously worked for/with."
I can't tell you how many times I listened to the reports about work bid on in which they said, "this work will be given to studio A because the VFX Sup use to work there," or, "the director only ever uses studio B".
Yes, realistically there will always be a renegade house which bids for a loss ... ...
It's not just the renegade house. It's the more established studios that think they've built a margin into the bid and then find out ... when they are deep in the project and the producer has demanded tweaks, redoes and all the rest, that whattayaknow! they are taking a bath.
"STOP WORKING FOR HOUSES WHICH UNDERVAULES YOUR WORK AND PUNISH YOU WHEN THEY GO INTO THE RED"
I'll get right on it, circulate the memo.
it happens all the time and it will continue to happen because the BFC doesn't care if it puts the small studios out of business as long as they got their show done for the lowest cost and moved on.
it is a business built on relationships and if you have a good relationship with the filmmakers you will stand on the best ground of all.
Nothign will hange until the vfx companies conduct themselves as a business and not like a speculative venture witht he client, i.e. hoping the client will bring more work. I can't tell you how much has changed in the last 15 years, where vfx hosues are treated like avid suites, where the most trivial changes are asked for after the shot is complete. So much additional work is not charged for, and there is no structure. Add to that a transient crew that needs to ramp up on a custom pipeline only to be tossed out three months later after they are actually up to speed. 12 hour days, 6 day weeks for months on end and one is supposed to be productive. its not smart on any level, except for the production companies that have us fight for work then bleed us dry. Welcome to the Wallstreet, folks. don't let the Hawaiian shirt and flip flops fool ya.
I remember after "Titanic" one of DD's senior producers did a pres here on the effects. During the Q&A an audience member, noting that she kept mentioning the young ages of her crew, asked if there was a place for anyone over 30 in VFX.
She replied that she didn't think anyone over 30 would be able to keep up. Which seemed particularly egregious since she was obviously WAY over 30 herself.
The scary thing is when fx houses attempt to make a film and impose a pipeline that works fine for fx onto an animated feature--a fundementally flawed concept. They are not the same, and it has yet to work as some think/wish it would. Animated features and fx work are not the same. Nor is live action and animated features.
A year or so ago, Digital Domain tried to go public. They wanted to issue an IPO, but there were no takers, so they pulled the IPO. Investors realized that Digital Domain has never told a story--and they were right to be concerned. DD doesn't own it's work, and they've not created content. Turning that ship around is very difficult, but can be done. But they do need to toss the notion that they can just overlay their fx pipeline onto a script. Won't work, never will.
Why am I NOT surprised about Digital Domain's shenanigans...
After all, they're known to take liberties with working visas as well....
Low-Ball Effx House will probably "staff" up using mostly freelancers as independent contractors, offering them zero benefits (less to cut!). As a bonus since these contractors do not fall under payroll they will get not be paid weekly or bi-weekly as required for employees, they will be paid when Low-Ball Effx House feels like it.
What I don't understand is why the vfx industry has not evolved to be in the same position as any other major participant on feature films, which would be to get points on the films AS A RULE. We can't stop companies from underbidding each other, the problem is once you win the bid, and then overspend to make the effects look decent with the hopes that the client will come back again, there's no way to get the money back except for using the money from your next project to pay for your last one. Points would allow companies, large and small, to feel invested in the film, and in the work.
By 'points' we assume you mean residuals. And you're right, every other workforce in the entertainment industry get residuals. Actors, writers, directors, editors, cinematographers, grips, and gaffers. But they're all unionized.
"Points" aren't quite residuals, but basically the same idea. Points are percentages of what the movie actually makes at the boxoffice.
The unfortunate reality for the seasoned artist working in effects or animation today is that the film schools have been pumping out so much talent and the technology has gotten so accessible that the job market within the US is flooded both with freelance artists and effects/animation businesses. Anybody with Daddy's credit card can head down to the Mac store and set up an effects company in about an hour. Then there is the international pool which is now accessible to anyone looking to get work done cheap.
The unfortunate reality for the businesses (low-ball or not) is that filmmaker, studio, and network client expectations have been going up and up and up, while what they are willing to pay is going down down down. At the same time artists rates have stayed basically consistent over the last 10 years. The business owners are in the middle getting squeezed and nobody, nobody is making any money. Look at all the places that have closed recently. RIP PacTitle.
Net result; the day of the facility is nearly over, unless you are one of the huge studio oriented effects houses that do create their own content. Any business in the service effects or animation business is forced to take on huge risks for fixed rates that have been battled down through hyper-aggressive bidding wars.
Service businesses sending work out to off-site artists wherever they are for flat fees is probably the best thing to have come up out of all of this for everyone. It can be great for artists who want to work at home and be with their families, with the flip side that they will have cover their own benefits. For the business owners, subbing out the work on the same flat rate deals they have to take means they can finally share the risk with someone. At the end of the day, talent and quality of service will determine who survives.
Back end points sound great, but who would ever share them except a rogue sympathetic independently wealthy filmmaker.
Its a brave new world. We gotta look forward cause there's no going back.
I've been in this biz for over 25 years, starting in practical work and transitioning to digital about 12 years ago. So, from my seat in this wracket, it's always been an ever changing landscape. Companies rise and fall. Trends keep coming and going.
What seems to be hurting the US VFX industry today is the rise in foriegn tax incentives. It widens the bid gap so far that studios can't justify keeping their show in the country. The recent credit crunch is killing greenlights for bigger shows. That's the industry killer today. It's a major threat.
And with states like California virtually bankrupt I don't expect those film incentives to happen any time soon in the state.
well part of this problem is that we the artists have no protection, no one to go to bat for us when we're treated badly and low-balled ourselves. Which is why I think the VFX industry should unionize. Yea the top rates might drop some, but the lower rates would come up, the offering of healthcare would be more standardized and we'd have more protection in the event we're given the *wink *wink that "you should really stay tonight and work, but sorry we can't pay you OT".
Anonymous said...
"Low-Ball Effx House will probably "staff" up using mostly freelancers as independent contractors, offering them zero benefits (less to cut!). As a bonus since these contractors do not fall under payroll they will get not be paid weekly or bi-weekly as required for employees, they will be paid when Low-Ball Effx House feels like it."
This is actually a potentially good solution for all. Paying "off site" workers means significantly lower overhead for companies/studios. That means lower prices to the studios (which hopefully translates into more work FROM the studios) AND more money into the artists pockets. Then, yes, some of that $$ will need to go to health insurance, retirement funds, etc.
Not to mention the "quality of life" that comes (for some!) by working from home...
"This is actually a potentially good solution for all. Paying "off site" workers means significantly lower overhead for companies/studios...Not to mention the "quality of life" that comes (for some!) by working from home..."
I agree wholeheartedly. This is a fantastic solution.
However, there is one huge massive significant drawback to this...keeping quality and continuity up becomes damn near impossible.
When artists are working from home scattered around the 4 corners of the earth, keeping all those people together with the director's vision and making each shot work with the next when one guy is in Canada and another guy is in Brazil...is extremely hard to do.
You do the best you can, but quality and continuuity seem to always be the first thing that gives in this scenario.
In order for this to ultimately work as a rock solid option and business model...some groundbreaking remote technology has to be created.
Until then, achieving top notch quality from this is a pipedream.
Digital Domain did get points on Titanic. It was ground breaking at the time and was negotiated by Steve Fredericks, its then COO who was willing to go head to head with the studio. They wanted more work and weren't willing to pay (said they were over budget). He said, no pay, no work and then said he would settle for a combination of pay and points and they agreed. DD made out really well on that one. Unfortunately for DD, Fredericks left a couple of years later and their business discipline went down the tubes.
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