Where the industry stands: The Visual Effects Crisis in Entertainment

Many viewers of Sunday night's telecast were probably unaware that just outside the ceremony a group of visual effects artists and personnel were picketing the event to raise awareness of their plight. Just recently one of LA's largest and oldest visual effects studios filed for bankruptcy, laying off (Initially) close to 200 employees in the process. The company was Rhythm and Hues, the studio responsible for the visual effects imagery for the film "Life of Pi". Luckily several VFX studios in Los Angles have taken up the slack by providing employment for many of R and H's furloughed artists and staff. Because it is such a rarified occupation, most feature film artists have a difficult time of finding employment in a field whose ranks are closing rapidly. Quite frequently, these artists are forced to find work outside the United States, usually Vancouver British Columbia or England. In the late 90's when Peter Jackson was expanding his digital effects company WETA to tackle the effects work for his Lord of the Rings trilogy, he was forced to recruit talent from the States due to the lack of trained personnel in New Zealand. Now the scales have tipped in his favor. With multiple Oscar wins for his Trilogy, King Kong and Avatar, Weta is one of the largest and busiest effects firms in the industry. It has the support of Jackson and other filmmakers such as James Cameron but it also has support of the studios.  The lack of experienced digital personnel down under is a lot less rare now. If you look at the history of many digital vendor firms, the ones with the strongest half life seem to be the ones supported by filmmakers who feed them with work. If the filmmaker is powerful and successful enough, the studios seem willing to go along. ILM and WETA survive the lean times because they have successful filmmakers backing them up.

Another business model that seems to work are with digital houses that produce their own intellectual property. These companies would be PIXAR animation studios and  BLUE SKY in Ct on the East coast.  They mainly concentrate on creating feature length animated films for families that they produce internally in conjunction with the major studios (In PIXAR's case , Disney) that distribute their product. They manage to flourish because they share in the profits.  In addition, PIXAR and WETA develop their own digital effects software which they license out to other effects firms. PIXAR's  Renderman software is considered one of the industry's top CGI rendering software on the market.

The ultimate solution to this crisis seems to be adaptability. The studios will need to adapt as much as the vendors will. Both want to make a profit. But the only way to truly make money in this competitive often cutthroat industry is to own (or at least partial own) what you produce. Most visual effects companies do not have any profit participation in what they produce. Perhaps a new business model is necessary. In exchange for massive discounts, perhaps vfx studios should offer profit sharing on high profile vfx projects thats would normally be quite costly.  Another solution would be to work with the vfx software companies to offer development deals in utilizing software on their films. In exchange they would field test and promote the use of software.

Additionally VFX companies may want to consider moving away from proprietary software locks that prevents studios  from moving or sharing costly shots to other companies so the productions can save money.

Ultimately , its up to the vendors as to how much control they are willing to relinquish. Most company's have a very weak pulse at the moment and favors are often forgotten quickly by studio heads so underbidding as a gesture seems self defeating.

Looking at the massive amount of profits these big effects films make it's quite possible there's room for profit for everyone. The question is will greed drive the industry, or will innovation.