Green With Envy… The Decline Of The VFX Industry In A Little Green Square [A Tall Glass of Shame] Feb28

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Green With Envy… The Decline Of The VFX Industry In A Little Green Square [A Tall Glass of Shame]

You may have noticed that this week many people have changed their Facebook and Twitter icons to bright green, representing the green screen we would see if there were no Visual Effects used in film. They are showing support for those involved, and hoping to bring awareness to the growing issues of VFX job loss and the closing of VFX houses within the film industry.

You may have missed it Sunday as the media didn’t seem to be covering it, but there was a protest just a few hundred feet away from the Oscars ceremony that was touting the genius and celebrating the creations of this very angry industry. The protest was calling for action on such things as outsourcing, tax incentive job loss, and the lack of a union in the VFX industry.

Over the last few months, gaming and film VFX studios have seen major layoffs. Just this month, Rhythm and Hues, the studio that received Visual Effects Oscars for BabeThe Golden Compass, and, on Sunday, Ang Lee’s Life of Pi, declared that it plans to file for bankruptcy. And, Pixomondo, the German VFX house that won a Visual Effects Oscar for Hugo, announced it would be closing its London and Detroit operations.

At a time when so many people are already out of work and less projects are being produced to begin with, it is looking like potentially the roughest year yet for those in the film industry. Lack of work is not only an issue affecting the VFX industry, but it has hit the entertainment industry as a whole, so many are stepping up in support, as well as to vent their own frustrations around these issues.

How did we get here? Let’s break it down…

If you look at Hollywood’s top-grossing movies AvatarTitanicThe Avengers, SpidermanHarry Potter etc. they’re all movies that depend heavily on visual effects. Visual effects are, by their nature, a very expensive business. They require extremely long hours from highly skilled artists, computer technicians and coordinators. They require cutting-edge hardware and software, not to mention all the time and money poured into research and development. And, while movie studios will allot a sizable portion of their budget to visual effects, VFX houses are frequently working for a fixed fee and will never see the financial profits from these high-grossing films.

The first problem we see when we look at this issue, is the problem of subsidies. VFX studios, and their artists here in Los Angeles, have had to contend with film subsidies throughout the US and abroad. Some governments and states will offer to subsidize some of the cost of making a film, on the condition that the studios move their film production to that region and use local workers in their work force. VFX houses have moved their production (on their dimes) to British Columbia, New Zealand, Detroit and all over the world to chase these subsidies, taking a gamble on steady work in those regions and moving VFX jobs out of Los Angeles.

These subsidies spread to other areas of the film as well, making it potentially cheaper for the entire film to be produced, designed, shot and edited away from Los Angeles. I have worked on a few films that have moved out of state purely to chase these subsidies and in turn I have lost my position to someone in another city who either has a cheaper rate (albeit less experience), or a paycheck funded purely by these “kickback economics” the states have set up. While I’m happy there is work to be had for even a little while on such projects, it is hard to see the entire production move to a foreign city to save a few bucks.

Often the budget may look good on paper, but in practice these films can go far over that projected budget when other factors are taken into consideration. Take for instance a film that was projected to save nearly 16 million dollars by shooting out of state, all the subsidies assisted in paying for local labor hires as well as tax incentives to kick back a certain amount spent within state. Add up all the money they then had to spend to bring skilled labor to that state when things didn’t go as planned, materials that had to be purchased and shipped due to lack of availability, unplanned issues regarding weather (unlike the nearly predictable weather here in LA) which changed the shooting schedule dramatically, as well as myriad other costs associated with setting up an infrastructure where there wasn’t one before. You now have spent WAY more money as a production than you had originally planned.

FYI: After the shoot, this film ended up going over its original budget by approximately 5 million dollars, meaning their 16 million dollar savings turned into a 5 million dollar loss. Way to “save” some cash and take jobs away from the local economy studio execs! In the end the Studios want what looks good on paper. This way at least it looks like the execs and producers were trying to save a dime when the shit hits the fan. This is an issue that has been happening in Hollywood since the late 90s, and if you look around today, it is a vastly different landscape in this business when it comes to availability of jobs. More and more productions are at least splitting their time between foreign locales just to save a buck or two.

The city of Los Angeles recently took a new step towards ending the decline of film production locally. The LA City Council decided last week to waive permit fees for all TV pilot productions moving forward, as well as their first year of filming here in the city. The council also announced plans to cap a tax charged to broadcast companies, and to develop tax credits for video game manufacturers. They hope to also approach Sacramento with a statewide plan to increase incentives here in California and keep more productions in the state. I hate to be a tad selfish here, as work is work no matter where it goes, but my fingers are crossed that this helps things, and that future legislation assists in the industry planting more roots here and less elsewhere.

The second issue at hand: Movie studios are putting more and more pressure on existing VFX houses to lower their costs while providing more product for the money. With VFX houses essentially living paycheck to paycheck, sometimes using new work payments to cover old bills, they are starting to tread water and many of them have sunk.

With these new demands by the studio to provide more for less money, VFX houses are facing situations in which their staff now has to work tons of overtime to keep up, or they need to bring on more people to finish the jobs they have bid for. Remember, the person who bids the lowest for any given job in the industry is inevitably going to get it. Faced with the option of either no work and no money, or some work and possibly VERY LITTLE money, the VFX houses have bid themselves into a corner where they end up taking a profit loss just to stay working.

Here is where I can’t necessarily blame the studios. The fault lies mainly with the VFX houses internationally all attempting to undercut each others bids and ignoring their bottom line production costs vs. profit margin. The VFX technicians and artists are not to blame here. The naive attitude of the VFX Houses that somehow figure that if they get a bit of work and make a financial trade off for now, eventually the profit will follow is to blame.

If there is one thing I’ve learned in this business, and they should be well aware themselves, it is that when you quote a price or rate to a studio, you will be pigeonholed there forever and have to fight tooth and nail for more down the line. The snowball effect is never ending in this scenario sadly and while many VFX houses close, other cheaper and smaller operations just slide into their places until they, too, can’t turn a profit.

Remember, this isn’t hurting the studios, they have no obligation or incentive to fix the scenario since they just want to save a buck. Sadly these decisions are only really hurting the houses that have set themselves up for financial ruin. Who loses the most in the end? The VFX artists that have invested copious amounts of overtime and in the end will often never see a dime of it.

Third big hurdle here: Every other movie position is unionized to prevent such major issues, except of course for VFX. This means they don’t have much bargaining power here when it comes to having a voice at “the table” or any of the major discussions related to how the industry is managed.

VFX artists do not have any benefits like health or dental, unless they’re provided by a robust VFX house they may be working for, but those gigs are hard to come by. Essentially in the film biz, unless you are union, you are expected to make less, do more, have no benefits and not complain.

That is not to say many unionized positions have it much better in the modern system and economy. As the business of filmmaking has shifted more and more to a PROFIT based venture for studios, with making engaging entertainment becoming less of a concern, the Studios are standing on the top of the pyramid and the wait is on to see how long it will be before those disgruntled workers below stop holding them up.

We are in a system where artists are worried about speaking their minds, because there are hundreds of thirsty young folks out there chomping at the bit to work on a “Big Hollywood Movie!” that could steal their job on a moment’s notice for less pay. The leverage is low for most people in this industry at present. More and more schools are churning out new candidates with no experience and minimum skills in the software needed to do such jobs, and the people wanting to change the system get silenced with the threat of losing their jobs. VFX houses as a whole are too chicken to speak out as well, they only have a handful of options when it comes to big clientele and if they stood up against the big guy they would just be black listed and driven out of business.

The irony was almost unreal on Sunday night during the moment when Life of Pi won the Oscar for Best Visual Effects, which managed to bring to a boil all of the issues already heating up over the last year.

Bill Westenhofer, a VFX supervisor for Rhythm & Hues, delivered his acceptance speech, but just as he began to thank all of the VFX folks who worked on the film and talk about Rhythm & Hues’ financial woes the Jaws music played to usher him off stage. Eventually, and rather quickly, his mic was cut off. The timing he had to accept his award compared with that of the other winners throughout the night was nearly cut in half. Many called foul play here and assumed this was another instance of the Studios trying to silence them. In the end, it was a big slap on the face during a time when he and his industry are at an extreme low point.

The next slap? Lee’s Best Director speech, in which he failed to thank the VFX team or mention Rhythm & Hues when so much of his storytelling was dependent on their team as a whole.

So what is the solution here? I have no idea. A union seems like an interesting idea in theory, but in my experience throughout the films I’ve worked on I’m not sure this would help solve the main issues at hand. Instead, I think it would complicate things in the short term for all involved, but shaking things up when everything is already fucked up isn’t always a bad thing.

Perhaps at the very least, this could spur some frank discussions between the people running these studios and the workers that have toiled away to win the awards they hold in such high esteem. If we end up with a collective agreement that works for all the parties involved, and that includes the myriad workers abroad, it will be a miracle.

Time will tell if this is a blip on the radar of filmmaking, or a history-making shake-up of how things will work from now on. Regardless of the outcome studios will always rely on Visual Effects for at least some of their films, and that demand doesn’t seem to be diminishing. If the studios don’t want to hurt their product in the long run by reducing expenditures and shrinking timelines, they better learn to share their toys…

Perhaps the solution lies somewhere in profit sharing? Studios made billions last year on films featuring VFX work. Whose pockets did should that money really go into if not the companies that support these billion dollar adventures?

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