VFX Widgets

Variety’s David S. Cohen has another article about the VFX business:

Suppose you manufacture widgets in Los Angeles, and Walmart decides to carry your widgets. Walmart buys in enormous quantities, so getting your widgets into Walmart is a boon.

But Walmart insists you cut your prices year after year. At some point, you can’t cut any more and keep your L.A. plant open. So you decide to move your manufacturing overseas. Do a Web search on “Walmart” and “hollowed out” — you’ll find plenty of articles describing this effect.

With all due respect I disagree. Didn’t Warner Bros. pay 20% over budget for vfx done in Los Angeles? When they brought on Pixomondo to do the extra work where did that go? There was quite a bit of hiring at Pixomondo here in Los Angeles.

It’s true some vfx work has gone to India and China but I think the only company that really has utilized India is Rhythm & Hues. Imageworks has opened a division there a few years ago yet a huge bulk of their work gets done in Los Angeles. I’ve argued time and time again that the real reason work goes away from California is because of government subsidies.

Even with that advantage, you have scaling issues which Mr. Cohen reported back in 2009:

Some leaders of the visual effects business, both at vfx shops and at studios, are warning there could be a shortage of vfx capacity within a year — a shortage that could drive up costs and even threaten release dates.

London, which has become a world center of vfx due to favorable exchange rates and tax incentives, is booked solid for at least a year, according to multiple sources.

As pics now in production wrap, vfx work slumps, killing off more midsized and small vfx companies. Then a new wave of tentpoles arrive, wanting more and bigger vfx, only to find insufficient capacity to complete them at the breakneck pace — and with the sometimes huge last-minute additions and changes — the majors now favor.

VFX doesn’t scale well, and when it does, the price goes up. I wrote about this on a post about China’s VFX industry:

In addition, the frequent movement of talented people in the industry also causes big problems for many firms.

“It usually costs a company much time and money to train an eligible talent, but he will resign when he gets a better offer from a rival firm,” said Han. “The investment in talent is often followed by disproportionate yield.”

This makes the cost to retain talented people even higher in the industry.

I think the problem is looking at VFX like they are widgets. With a widget you specify exactly how you want it and the parts are assembled and they are all the same. With VFX you have complex shots that require incredible quality at breakneck speeds. The parts are not that easy to break up and you’ll find yourself in a pickle when trying to integrate a shot between different facilities.

Anecdotally, I can tell you one situation where a vfx show made a huge profit. It was all done in LA and with reasonable hours. Now juxtapose that to another show that was able to save money sending work to India but ultimately still going over budget. You would think the executives would have an epiphany when comparing the 2 shows. They didn’t, they went with the expensive outsourcing model and my guess is it’s because everyone is doing what the next guy is doing. We’re all winging it.

Soldier On.

8 Responses to VFX Widgets

  1. skaplan839 says:

    I’ve read the article and my first thoughts fall in line with yours. Mr. Cohen cites a conversation with Jeff Okun where they both agree that the VFX industry has sold itself “too cheap” and there’s no way back.

    Bullshit.

    The race to the bottom is solved by not participating. As we’ve seen, the studios will pay to complete their films. The industry has reached the breaking point between the break-neck schedules and the high-quality product to be delivered. VFX shops need to stop being bullied into cutting their throats for the benefit of the conglomerate. Its been discovered that when its obvious the conglom will suffer because of it, they seem to find the money to get it done. And, that money is not going to India and other points abroad that are considered “cheap” alternatives (all respect to the talented artists there).

    Hmm .. I wonder if there’s a way a vfx studio can justify inflating their costs?? There has to be a reason a vfx studio can go to its conglomerate client and tell them that the effects work they’ve been delivering for years is now going to cost more. Something they can point a finger at and say “Well, we have to pay for this now”.

    I’ll have to think more on it and get back to you.

    Steve Kaplan
    Labor Organizer
    The Animation Guild, Local 839 IATSE
    skaplan@animationguild.org

  2. VFX Soldier says:

    Well Mr. Defaria even states in the article that when they are late in turning work over they pay extra. He seems to imply he is willing to pay to get work done.

    The facilities charge a premium for that kind of work and perhaps that’s why the industry is like the way it is. The bigger money is in the 911 shots and it doesn’t make economical sense to plan and schedule.

  3. occlude says:

    It’s a simple exchange of leverage. When the studio is starting a project and bidding out the work, they have the upper hand.

    When they panic and start making 911 calls because of reshoots, a new sequence, or a vendor failing to deliver on time, the leverage shifts back to the vfx house.

    This back and forth is what keeps us in business. We take losses, or barely get by, on the work up front and make up for it with profits on the back-end doing 911 work.

    VFX houses that specialize in picking up 911 work from larger vendors or studios that require immediate assistance are making out well for themselves while they burn through artists who are willing to work insane hours. These are the “sweatshops” so many of you work at. The owners are amassing profits, and taking huge risks. If they fail to deliver a 911 job, it’s light out, they get sued, never work again, and you don’t get paid.

    It’s a sick cycle, and a bad business model. And people wonder how it got to be this way?! Please! We did it to ourselves…it’s greedy business owners and the willingness of artists to be abused.

    A match made in heaven.

  4. Dave Rand says:

    Cost plus, the other construction model used by construction when there is no blue print, is a valid solution. It forces the decision maker to be present and optimally in the same breathing space as the vfx artists.

    One reason the overseas outsourcing model fails is that it removes this proximity, it removes the communication of personal taste. There’s limitless ways to make a shot look great, but only a narrow range suits the individual taste of the decision maker.

    Proximity saves money. The further you remove the decision maker from the creative process, the more that process costs you.

  5. anon says:

    Maybe you’re right and Dreamworks isn’t that serious about india…
    http://www.google.com/search?hl=en&q=india+walmart

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