... Rhythm & Hues must find a buyer by mid-March if it is going to recover out of Chapter 11, the company said in a court filing this week. The El Segundo-based effects studio ... tapped Houlihan Lokey two weeks ago to help with a sale as it continued to operate in the short term.
Out of 80 entities contacted by the firm, at least 16 have signed nondisclosure agreements and commenced due diligence ahead of a sale hearing proposed for March 19. But according to court documents, the $17 million DIP loan from Universal and Fox and additional $4.9 million from Legendary allocated toward projects for each respective studio will run out by mid-month. If a buyer is not found by then, Rhythm & Hues says it will be unable to offset overhead costs and maintain staff necessary to secure and execute new work. ...
Employees not getting paid (or fed?) is old stuff for many scarred veterans working in visual effects. The company tanks, the paychecks bounce, and you clean out your cubicle and move on.
I was talking today with an IA staffer who makes his living organizing and negotiating. He said:
The visual effects industry is shaking out. I think it will end up like production coordinators on live-action shoots, where one guy has the truck and rents the equipment and hires crew. And the studio pays him.
That's how the visual effects industry will be: One guy with the software and hardware, hiring the crew to do the digital effects. The houses will be gone. It will be studios directly paying coordinators and crews. ..
Well, his guess is as good as anybody's. I tend to think it won't be so simple. There will be different models, and corporate conglomerates will use different approaches, depending on the size and complexity of the movies and their accompanying effects.
Handing responsibility to some effects wrangler might work on mid-level productions with a limited number of scenes needing work, but for big ticket blockbusters with wall-to-wall effects and hard release dates, it's going to take large staffs working lots of hours.
The conglomerates will move work to Vancouver or Montreal where subsidies are abundant and they can keep tabs on the crew, but they won't be shipping their high-budget darlings to some vfx sub-contractor in Mumbai, because face it: Diz Co. won't be willing to risk the worldwide holiday rollout of Star Wars X with an Indian sub-contractor who can't deliver elements on time.
No matter how you slice it, visual effects for high-end movies aren't going to become cheap or simple because Robert Iger or Sumner Redstone wills it to be so. The only way to ultimately control costs is have directors who know what they want, own the ability to communicate their desires to the effects staff before principal photography, and understand that fifteen do-overs of exploding rocket ships or rampaging space aliens will cause effects budgets to balloon ... regardless of how generous state subsidies are.