It’s All California’s Fault!

While VFX professionals were laughing it up to Patton Oswalt at the VES Awards last night, the LA Times released an article as a friendly reminder that armageddon is coming to California:

California’s visual effects industry, which pioneered the use of computers to create and manipulate images in live-action films, is under siege.

VFX Producer Shannon Gans tweeted her reaction:

Article about what business has been like for 2 years in film VFX. Not the entire picture of what is going on.

Indeed, the Times article wrongly implies that the problems in VFX are unique to California.  They are unique to the whole industry for one reason:

The VFX industry subscribes to a shitty business model.

I’ve written that VFX companies in cheap labor areas like China and India go through the same problems here.

The same can be said for more developed countries that offer lucrative government subsidies. In March 2010, Canadian VFX giant CORE closed it’s doors. There have been multiple occaisions of Montreal VFX facilities unable to pay artists as they went out of business. The bad VFX business model knows no borders.

It’s Labor’s Fault!

The article alludes to the price of labor being the problem with many artists in California making $75-$150k a year:

“We have the best artists here in the world,” Grossmann said, “but they are pretty much the most expensive artists in the world.”

However, the price of VFX labor is quite expensive in other countries. I would argue the best artists are at Weta Digital and they are paid some of the highest rates in the industry. At one point during Avatar, Weta was offering artists in the states free flights and free hotel rooms. The job: Finish just one shot on Avatar.

It’s The Subsidies’ Fault!

Of course much of the work is going to NZ because of free government money. What’s crazy is that for all the superb work they do, and the huge government subsidies offered by the NZ government, they almost lost The Hobbit films had they not let WB shake them down for more subsidy money. The same can be said for basically every other vfx market. New Mexico recently contemplated cutting it’s subsidy by more than half. To have your company rely on government rebate money for your clients makes a shitty business model even shittier.

A Confusing Picture

Yet the article mentions that much of the VFX work in California is going to subsidy rich places like London or cheap labor areas like India, but then you read this:

McGuinness of Asylum is relocating to Singapore to head a visual effects operation for London-based company Double Negative Visual Effects.

Well now I’m confused. I thought it was all going to London for the subsidies or India for the cheap labor but Singapore? The 11th most expensive city to live in? Yes ILM is opening a facility there, but they also opened a facility in Los Angeles too. Some say it’s temporary, some say it’s not.

Combine that with ironic news that Indian VFX company Prime Focus is expanding to a 13,300 sq ft facility in expensive New York:

The increased capacity will also allow Prime Focus to double its workforce in NY.

Wait, an Indian VFX company is outsourcing work to New York City?!

Well at least that work is staying away from California right?

Nope. WB VFX producer Chris deFaria mentions how important subsidies are which is why films like Jack the Giant Killer are being filmed in the UK. Yet what wasn’t reported was that WB awarded the VFX work to Digital Domain in California.

Furthermore, even the most outsourced tasks such as rotoscoping have made a huge come back in California. There have been job posts for roto artists in California almost on a daily basis. If it’s so easy to send work overseas to cheaper locations, why are top companies such as ILM and Pixar so busy engaging in collusion to prevent wages rising in California?

A Clearer Picture: The Era Of Big VFX?

So what the hell is happening here? Why are these small to medium sized VFX companies going out of business? Are they just not able to finish work? Maybe. Are the facility owners doing drugs or something? (of course not!! I kid!)

The studios want VFX done fast, good, and cheap. Unfortunately they can only choose two. I was going to write a post about a book called The Visual Effects Producer which gives a good glimpse into the studio side of VFX production.

One revealing paragraph describes an important factor why studio executives prefer large VFX studios over smaller ones: If work can’t be finished, which is often the case, a large facility can be sued for damages while smaller ones usually go bankrupt. Studios love to beat up facilities for their lunch money, they just don’t want to kill them!

The book also describes the importance of artists. Studio VFX producers and supervisors actually ask if the artists who worked on shots for a facility’s demo reel are still employed at the studio. Ain’t that something?

At the end of the day, regardless of cost of labor, subsidies etc, it comes down to quality and talent. The work will go where the talent resides.

Soldier On.


18 Responses to It’s All California’s Fault!

  1. Dave says:

    No joke I was got a freelance fx gig a while back that was outsourced to Thailand back to me in LA.

  2. n says:

    If we’re going to be able to do anything about this, we’re going to have to have a serious conversation about immigration policy. There are great artists out there that producers want to hire but cannot because of H-1B requirements — so they have to go to the expense and trouble of setting up shop overseas just to be able to hire them.

    Now, you could argue that letting them into the US would create competition for your job — but at least they would be competing on a level playing field of similar benefits, cost of living, and opportunity for representation.

  3. X says:

    This is such a mess.

    Allowing immigration isn’t the answer, it will only be a problem.

    What companies need to do is stop outsourcing and start taking in new hires and college grads, start training and helping raise a pool a talented artists within the country. This can help the states and national economy as well as help set a standard of fairly negotiated wages for Jr., Mid, Sr. level artists. (with union help)

    It’s obviously all about the money, and you can’t get rid of the greed in people. But you can contain the consumption within the boundary of the country.

    After that, then we can deal with state to state tax incentives.

    • VFX Soldier says:

      I think the US should relax it’s immigration policy. The truth is immigrants in the vfx industry usually come here because companies offer the most money which would keep salaries up. Most of them are geniuses.

      The funny thing is many of them are reluctant to come here because of our shitty health insurance system. Luckily the unions provide probably the best health insurance in the nation if not the world.

      • X says:

        Most of them ARE geniuses, that’s the problem. As soon as you target industry jobs upon a certain minority in our country, that leads to issues. I would consider myself pretty intelligent, but I for one, am not a genius and I’m much more artistic than technological, so where does that leave people like myself?

        The reality is, our education system sucks even for VFX, I see some very strong and capable grads from Gnomon, SCAD, Fullsail, etc. But there are even stronger candidates coming from oversees. Mostly though, I see those who are less adequate and need some grooming in the industry. I did when I first started as did most people I know in the industry. Being that, yes, introducing more foreign employees may keep salaries up, but only for those who are setting a standard of genius aptitude toward the software, script writing, programming, etc. After enough technology, there will be no more need for employees except those who can write the code anyway.

        That’s pretty much the equivalent of fixing our economy with a cultural ‘blood’ transfusion. Without sacrificing all the Jr-Mid level artists with a speedy technological advancement, how does that help the industry right now?

  4. Robert says:

    how can the studios complain about artist’s salaries when the pictures gross millions of dollars. Most artists can’t even afford to buy a house in the city they work in. I say raise the artist salaries or give us royalties!

    • X says:

      Oh no, you’re obviously mistaken Robert. That would require some corporate pig or actor to give up one of their four Ferraris, and that fourth Ferrari is the most important one!

      • Shootsy says:

        I remember listening to some Ferrari guy on the radio, he was saying that more than 1/2 of the said brand’s customers have an average of, get this…10 Ferraris! Ahahah!

        Also the last assployer who told me that $18/h was too much for my work – 2d/3d and what not – lives in a 4000sq/f $2.5Mil house with his wife and 2 kids. Ahahah NOT!

  5. Mike says:

    Soldier’s on the right track, but he doesn’t go far enough. The article’s all about money and subsidies and tax breaks. That’s not why people are in the industry. Supposedly, the reason is creativity. As soldier wrote, there are quite a few inconsistencies in the article, which I noticed even before the article was written. The industry needs to take a hard look at itself, and demand, through representation, what the workers deserve: a fair wage, with retirement and health benefits, like every other union worker on a film. The visual effects work isn’t going away, it’s a larger field than ever.

  6. […] previously wrote what Californian VFX shops are going through is no different than what other VFX shops go through. […]

  7. Scott Ross says:

    Let me first applaud VFX soldier for addressing difficult issues in these difficult times.

    While the title of this thread is Help Bring Back Lost VFX Work to the US…. and I clearly can see why this appears to be the issue…the real question should be… Why is the VFX Industry in the State that it Is?, and why are the studios making so much money whilst the VFX studios are closing left and right?

    As I read through this thread, the unfortunate take away is that VFX artists are becoming more and more xenophobic. The truth is plain, we live in a globalized economy, the days of isolationism should be well behind us. And while there are governments that seem to be unfairly changing the rules of fair play and commerce ( this has been happening for decades), the concern should be why are the studios getting so rich whilst the VFX community ( VFX being the very reason why audiences are clambering to the movies) is suffering? I firmly believe that if VFX facilities were healthy and profitable, many of the industry’s concerns would vanish.

    I implore you to focus on the root cause, VFX studios are drowning… there are NO margins and NO room for errors.

    Yes, there are issues with subsidies and non portable benefits and long work hours and the like. But, if the root issue was resolved, the other issues, while still challenging, would become much easier to address.

    It saddens me to see that VFX artists around the globe are now bickering amongst themselves and pointing fingers based upon their native tongue or the country they hail from. Great VFX are done by people of all races, creeds and colors. And the VFX community needs to realize that we, the VFX community are not the enemy. That the VFX community needs to become a community that takes care of each other. Remember in unity there is strength.

    I’m old enough to remember when the studio system fell apart and the motion picture studios no longer had actors and directors under contract. Once that happened, actors started getting paid in a very different way. The age of the powerful talent agencies ensured that the star talent, the talent that used to drive box office, were paid well. Well, those days are over. Stars no longer drive box office, VFX does. The star talent of today’s films… visual effects…. and the VFX facilities, the big 10 drive most of the box office and employ the lions share of VFX artists.

    Yet the studios are still smarting ( and for some reason operating under the old paradigm that stars still make THE difference in successful films) from the days of Michael Ovitz. The CAA’s and the WME’s are as powerful as ever. The studios have learned their lesson and do not want to create another star system and I believe that they are strategically doing what they can to ensure that never happens again. After all, they are running businesses, profitable businesses, and they are acting in a strategic way to ensure that their businesses grow and become more and more profitable.

    The VFX industry, unfortunately does NOT operate as a business. It is a quasi art/technical hobby, but most definitely not a business. Which, to me, is shocking… since it is the driving revenue force behind the multi billion dollar movie business. This is easy to see. The VFX industry has an honorary organization (VES) that celebrates the art and science of visual effects but it does not have a business organization to keep the industry alive. While I’m all for celebrating the likes of Messrs. Dunn and Harryhausen, if you don’t have jobs, can’t make a living, are unfairly treated, lose your families…I for one find it difficult to see how the industry stays alive long enough to honor the likes of Messrs. Muren, Ralston, etc.

    Two weeks ago, I sent out several emails (with multiple follow ups) to the owners of the top 10 VFX companies in the world, asking them to consider the possibilities of funding and forming an international trade association. To date, I have received but a few responses.

    Desperate times calls for courageous actions. I understand that it’s easy for me to take this stand as I have nothing to lose in doing so. I do not have any skin in the game except for my 30 years in the business and a deep passion for an industry that was so much a part of my life. I can understand the hesitation of multi million dollar companies that employ thousands, the men and women that run them and their fear and hesitation of rocking the boat. BUT, if the gestalt is not changed, if the leaders of this industry do not stand up in unison and change the course of events, then VFX will have a very bleak future indeed.

    Thanks.
    S

  8. anon says:

    “…McGuinness of Asylum is relocating to Singapore…”
    Is Singapore reclaiming land to house all the foreign VFX training staff…?
    http://www.atimes.com/atimes/Southeast_Asia/EG31Ae01.html
    Actually the Singaporean benevolent dictatorship is a good fit for Lucas’ THX 1138 vision of a city that subsidises animation slavery with shipping taxes…
    http://theonlinecitizen.com/2010/06/why-course-subsidies-are-a-really-bad-idea/
    http://en.wikipedia.org/wiki/Economy_of_Singapore

  9. anon says:

    In other news, Singapore’s benevolent dictatorship is investing heavily in sex, gambling… (and the VFX industry?)
    With Casinos Set to Open, Singapore Rolls The Dice
    http://www.time.com/time/world/article/0,8599,1963306,00.html
    Singapore’s Huge Bet On Sex And Gambling Is About To Pay Off Big Time
    http://www.businessinsider.com/singapores-huge-bet-on-sex-and-gambling-is-ab-2010-3

  10. […] chagrin of some, it seems that Rising Sun Pictures didn’t get the memo: VFX is supposed to die a blood curdling death in California and go to China and India. I’m sorry to report we are still alive and kicking. It’ll […]

  11. […] problems the VFX industry suffers from are not unique to California. The VFX bidding process has created a march to the bottom and in my opinion, this has been […]

  12. edwardh says:

    I only found this article just now. It’s labor’s fault – yeah right. That’s what they say about ANYTHING really. As long as people aren’t squeezed out like others in e.g. Bangladesh are, greedy morons saying that aren’t going to be satisfied.
    Anybody who knows the business knows that in many places, people are treated like crap anyway. Low wages (especially considering the often unpaid overtime), taking advantage of immigrants and no job security or benefits. Most of the stories about nice salaries and benefits are from quite a few years ago. Right now, it looks to me like visual effects artists are really in need of a union!

  13. Ross says:

    Living in NEW ZEALAND IS NOT CHEAP! Pack of Cigarettes costs $15-$20! And you wonder WHY Weta pays high rates!?? Seriously! If they didn’t people couldn’t afford to live there! Food, accommodation, EXPENSIVE!

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