Many VFX artists routinely and cynically refer to how their job will eventually be outsourced to a developing country like India or China. I mentioned in a previous post that I feel this argument is routinely made by employers as a boogeyman argument. Hell, if it gets mentioned enough times, it must be true right?
This past weekend was the debut of Alpha And Omega, an animated film developed in the US with the bulk of the VFX work done in India. It was also my choice for the worst animated film of the year.
So how did the film fair? It made $9,106,906 with a rating of 15% on rotten tomatoes with reviews like this:
This film is the worst example yet for the use of 3D to drive up ticket prices. Directors Anthony Bell and Ben Gluck populate some decent looking scenery with Saturday morning cartoon wolves whose manes look more like Swiffer dusters than fur, then take the few concepts written by Chris Denk (“Shark Bait”) and Steve Moore (“Open Season”) and repeat them multiple times. The ‘in memoriam’ end title to Dennis Hopper, whose vocal work here registers his last performance, is an insult to the man.
Ouch. To add insult to injury, the stock of Crest Animation (the Indian company that created the film) tumbled 10% the following Monday. Furthermore, it turns out this film may have been relatively quite expensive to make for an Indian feature:
The film had a budget of around $45 million
According to Nikki Finke, it was $20 million but that could be referring to Crest Animation’s stake in the film as Lionsgate invested 50% into making the film. Regardless, it alludes to something I’ve echoed before that Forbes writer Sramana Mitra prophesied in her article The Coming Death Of Indian Outsourcing . The cost advantage of doing work in India and China is quickly evaporating:
However, the reality is that wages are rising in India. The cost advantage for offshoring to India used to be at least 1:6. Today, it is at best 1:3. Attrition is scary.
India and China are going through massive housing bubbles. Some have said that the housing bubble in China is larger that the Unite States real estate bubble. Incomes need to rise to compensate.
VFX veteran and instructor Steve Wright wrote a very insightful article called The Indian Exodus:
Of course, the obvious advantage of the Indian talent pool is their low cost. You may be interested to hear that they are rapidly losing that advantage. Here’s why; since setting up visual effects in India has become the “hot new thing,” everybody is setting up a visual effects operation there because there is no shortage of investors. There are now more VFX studio workstations than artists. As a result, they are poaching each others’ staff.
I’m reminded of other low budget films created in other countries. Hoodwinked was made in the Philippines for about $17.5M and had an opening weekend of 12.4M. It went on to make 110M worldwide. Why hasn’t there been a rush to make Hoodwinked 2?
Also, who is to say that you can’t make a low budget cg flick in a high priced area like Los Angeles? Battle For Terra was a low budget independent film that has very little box office success. However, it was created by 20 artists (which include Animation Guild President Kevin Koch and Organizer Steve Kaplan) in Los Angeles for a very low budget:
I have a pretty good idea of that budget — I think it was roughly equivalent to what a big studio spends on craft services. I think it was less than one tenth the typical feature animation budget. And that despite paying competitive salaries in Los Angeles.
Of course Battle For Terra looks low budget, but in my opinion it looks much better than Alpha and Omega. It’s priced competitively, and paid LA VFX wages. So who is to say that the only place to make cheap VFX is overseas?
This is why I’m compelled to argue that outsourcing vfx to developing countries is a losing game. The real threat for many in the VFX industry is protectionism engaged by countries like Canada, UK, and New Zealand and states like New Mexico and Michigan that give away public funds to subsidize vfx work in their territories. It’s an illegal practice but from what I’ve been hearing, one very large studio producing a very big film is about to be burned pretty badly by sending subsidized vfx work to a facility that could not finish the bulk of the work the bid for. If and when this happens, it will make some big headlines.