Hollywood studios ready to make a movie typically solicit bids from visual effects shops like Rhythm, Digital Domain, Sony Pictures Imageworks, and Industrial Light & Magic (recently acquired by Walt Disney Co. as part of its purchase of Lucasfilm Ltd.), which attempt to complete the job for less than they're paid.
That approach has never generated robust profits.
"A good year for us was a 5% return," said Scott Ross, who co-founded Digital Domain
The business model of putting the effects work for a major motion picture out to bid has been around since the freaking nineties. It's much like throwing chum into a shark tank, much gnoshing and general savagery occur.
Making visual effects a sub-contract jpb separate from the actual shooting of the movie was a recipe for disaster then, and it remains bad news now. Except today you have our fine, entertainment conglomerates gobbling up tax dollars thrown at them from different states and countries, so margins wither away even more if effects work remains in town.
And what happens when the tax payers to the North stage a revolt and the Canadian subsidies disappear? What then?