Former ILM General Manager and Digital Domain Founder Scott Ross recently gave a speech about the VFX industry. I’ve written posts agreeing and disagreeing with Mr. Ross and this post will be no different.
VFX Trade Union
“A trade association has to be put together … where there are certain rules and stipulations in the ways that (for instance) cancelation charges happen and the way people get paid,” he told The Hollywood Reporter. “There needs to be standards and practices put into effect that deals with financial considerations. Obviously there are issues of price fixing and I’m not suggesting that at all. But there are so many things that can be done in a trade association where the studios I think will sit up and take notice.”
I’m all for this. What’s killing the industry is how the vfx industry bids against other facilities for work the same way construction companies do. The difference is construction companies bid off of a blue print.
There are no blue prints when it comes to VFX and changes are made all throughout the process which can kill any kind of planning for a facility profits. Dave Rand has suggested that facilities should get rid of the bidding model and go to a cost-plus model.
A VFX Labor Union
“The problem is we are looking at competing in places where there are no unions. But if (a union) increase the cost of doing business and increases cost to the facilities, who is going to bear that cost? I will tell you that the motion picture studios, in my opinion, will not. They are trying to maximize profitability.”
I disagree. I could take that exact same sentence and replace the word “union” with “trade organization” and make the same argument. Is it not prudent to believe that the trade organization will bring facilities profits by indirectly costing the studios more through standards and practices?
“(US) facility owners are looking for ways to pull their heads above water so they too are opening facilities where there are tax credits, subsidies or a lower cost of labor. … To me, doing that is swimming to the bottom.”
“It’s not a fair playing field for the U.S. companies,” he said. “(Many US VFX companies) are doing everything possible to set up facilities wherever there are tax incentives and a cheap labor pool. I think they are setting themselves up for failure.”
You know where I stand on the issues of subsidies. I think things will get interesting when a big big facility goes down. The is that it’ll be enough to rattle the cages of execs at other big facilities to finally respond to Scott Ross. However we are a long way from that: Scott Ross isn’t even mentioned on Digital Domain’s website.
Do VFX Executives Have An Incentive To Change?
I have to wonder if execs at the big facilities even care because it seems there really isn’t an incentive for them to fix the problem. Some VFX execs want to make the studios as happy as possible to secure their future in a potential studio position.
In another example, take a look at Digital Domain’s executives. They’re always interesting to look at because they are trying to go public and have to realease a financial statement that includes executive pay. You can search for it here: http://www.sec.gov/edgar/searchedgar/webusers.htm
Here is executive compensation in 2010:
In 2007 total executive compensation and severence was about $5 million. In 2010 that amount when up almost 30% to $6.5 million. This was with less executives and while the company was experiencing operating losses and still paying out 10% bonuses.
Now I’m not at all against these compensation packages. If a executive, janitor, or whomever has good talent, or a good lawyer, or union that negotiates a great salary more power to them.
My point is that it’s hard for VFX execs to change and make the right decision when the current failing system rewards them more even when things get worse.
The status quo will continue until we all collectively say HELL NO.