FXGuide reports on the closure of Fuel VFX in Australia and Matte World Digital in California. Sad news. While the exact reasons for the closures are unknown, an article alludes to something I’ve written before about the Aussie VFX industry:
The post-production, digital and visual effects (PDV) rebate was doubled to 30 per cent just over a year ago however the high value of the Australian dollar has continued to make business difficult.
I’ve pointed this out before:
I wrote in a post a few months ago that even though a 15% subsidy was offered for US runaway production, the larger subsidies offered by other countries combined with a record rise in the Australian currency has led to a hollowing out of the Aussie film industry
Do a search on Australia on my blog for other similar posts. I think there needs to be a bit a perspective here. While we’ve seen our share of closures in the VFX industry, it pales in comparison to what has been happening in the games industry. Look at the closures that have taken place since 2006, and in 2011 (h/t theReal_Rebel). 2012 has been very brutal.
While there are regrettable closures in a very volatile industry, there are also greenshoots. Here is a list of expansions and openings at facilities that employ VFX professionals in California:
DreamWorks Animation expands in Redwood City:
The approximately 200 artists, animators and software mavens to be hired on top of the 600 already working in Redwood City should feel right at home.
MPC expands in Santa Monica:
MPC Film has opened of a pre-production studio in Santa Monica. Previs supervisor Duane Floch and executive producer Julian Levi head the office, which houses previs artists and a screening room.
From the ashes of Kerner Optical comes 32Ten Studios.
Encore expands in Santa Clara:
Encore, a subsidiary of Deluxe Entertainment Services Group, announced the company’s new presence Thursday at Santa Clarita Studios in Valencia. Encore will provide front-end dailies and VFX work for shows shot at the stages or anywhere in the vicinity. The setup will house dailies colorists, data experts, a VFX producer and a team of VFX artists.
ArsenalFX expands in Santa Monica:
The sleek 9000 sq. ft facility is an artist-driven, providing creative color, finishing, titling and visual effects using the Autodesk platform of Flame, Lustre, Smoke and Maya, with Avid, Final Cut and After Effects platforms available as well.
Creature Art and Mechanics Digital launches in San Rafael.
and since many question the future of the VFX industry in the US, there are also expansions in subsidized states in the US:
Toronto based Mr. X is opening a 4000 sq ft studio in New York
Indian company Prime Focus announced earlier this year they will expand a 13,000 sq ft facility
London based MPC announced a 13,000 sq ft facility last year.
Digital Domain opens an animation facility in Florida.
German company Pixomondo opens in Louisiana. As well as others.
Soldier On.
VFX Soldier 
That last bit (expansions in subsidized states) would be really great for artists in the US, if not almost all of these companies would be making negative headlines and causing angry comments on message boards and blogs on a regular basis. The only company I see in this list that seems to provide a decent work environment according to everything I’ve heard and read about them is Mr. X.
Not sure how much currency has to do with it. 1.00 AUD=1.03727 USD. Over in Vancouver… 1.00 CAD=1.00956 USD. Vancouver is booming.
Well the consensus is Prometheus sent them to the wall so maybe we should all thank fox !
they blew all their money on renovating a new office space that cost a ton, in the vain hope they would land more projects. That was more to blame than prometheus and the real reason they had no cash flow. Bad move guys! Live and learn next time round!
Great, vfx artists get shuffled around the world again.
Sharing creativity over crossed wires of creative hierarchies is as expensive as trying to direct a movie by holding one iPhone up to another iPhone.
Only when directors and vfx artist breathe the same air will the best and most profitable ventures unfold making subsidies, currencies, and constant migration far too dilutive, taxing, and eventually just plain irrelevant.
Good riddance – it is a fact that they refused to pay any OT to their employees. Stop shedding tears for sweatshops
Sad though it’s just not the strength of the Aussie dollar. Australia is an expensive place to live and do business. Employers have to pay superannuation, payroll tax and work cover insurance also adding to cost. Income taxes are relatively high compared to the US also A large proportion of the artists are imported adding visa fees and relocation costs to the equation. The 30% PDV rebate is having little or no effect in making the companies more competitive and besides the studio’s keep the rebate money without passing it on.
I work at Encore and although they opened in Santa Clarita
EXCLUSIVELY because they got Vegas and Vegas is being shot in Santa Clarita in the main studios OWNED BY THE FATHER OF A NUKE COMPOSITOR WORKING AT ENCORE, I can guarantee you that they have been laying off a huge number of artists such as Inferno, Nuke and 3DMax/Fusion ones, because Deluxe is restructuring the company. And all this problems started the moment they decided to expand to Santa Clarita. Well done Encore.
Deluxe is restructuring its business model in vfx overall. Santa Clarita has nothing to do with that. I agree that the existence of the location is as you described and keep in mind a big corporation like Deluixe has wheels that turn slowly. This was in the works for a while…
It is obvious there is a great deal of frustration, worry and anger out there. And as you all work out the complexity of issues facing vfx artists, I would like to take a moment to recognize the work. I am sorry to say I do not know the folks at Fuel, but I know the anxiety and dislocation this industry poses.
I have the distinct privilege of knowing Craig Barron. He is the essence of the word artist, and he has… through lots of difficulty… continued from linear to digital… the gift of matte painting.
More than this, Craig is a genuine man committed to the art of storytelling. He has produced a masterpiece book on matte painting (and probably lost his ass doing it because of the royalty payments for the images)..but, for Craig…doing it… is always… all that counts. Craig served as a really terrific founding board member of VES and was always there even if not asked. Craig has been and currently continues as a member of the Board of Governors of the Academy. In many ways, Craig is a human working archive. He is a truly nice person with the softest artist heart you can find.
It is discomforting seeing what is happening in the industry.
Craig will continue to be a part of the storytelling process, but it worthwhile to take a moment to express pride on behalf of visual effects artists (although I am not one) for one of the GOOD GUYS.
Well said Tom!
Sad to see a good shop like Matte World Digital going down like that. In my younger days, I’ve aspired to work there just to be with such a group of talented artists. It concerns me as I’m trying to set up a small matte painting company here in London. I love the industry but it is cut throat…
Aussies down! 🙂
Both companies failed to expand and adapt to survive.
FuelVFX turned down expansion opportunities to avoid liability associated with taking on more risk. Their lack of capital reserves created volatility.
Craig is undoubtedly a master, but matte painting can be done with such great efficiency that even MWD could no longer survive on that alone. Craig does not seem like the kind of person capable of taking on large capital to expand in an already difficult economy. He is a creative, and that is what people love about him.
Tax incentives and other climate factors are merely circumstantial and should not be too closely examined.
Thats conjecture really, doesnt even pass the sniff test. without the books no one knows: business 101; voluntary/external administration. have a read 😉
“Tax incentives and other climate factors are merely circumstantial and should not be too closely examined”
Really? can you explain that in more detail. vfxsoldier is dedicated to idea that that is the main issue in the industry.
Not conjecture. Anyone can plainly see that both companies chose not to expand or take on Tier 1 work without having a direct in. They made a good move given the economic circumstances and competition that’s already over-saturated.
In my estimation, VFX Soldier does not know anything outside of the artist’s perspective other than what he/she reads and hears from others. You, the artists, are forced to move to work and live where the vendors say, and the businesses are forced to compete.
Businesses make decisions about how to increase their bottom line and create new revenue streams, enter new markets, and compete. Businesses run by creatives typically don’t make agressive decisions unless forced to. History shows this.
Once one company opens pandora’s box of chasing incentives, the rest are forced to follow suit or differentiate themselves in this way: create such a unique service so that they do not become obsolete. MWD had this for many years, a unique service with quality that no-one could touch, even with the best incentives. Things appear to have run their course naturally. It was a great run, and they did amazing work. They should be proud.
@vfxlies
You are make these assumptions; expansion guarantees success & Tier 1 work is won because of the size of the company.
Do you dismiss business relationships and artistic ability of the company?
No. Expansion guarantees the option to succeed when failure is imminent with current infrastructure, most of the time.
Yes. Tier 1 work only goes to big companies that have heavy CG departments and massive infrastructures.We refer to them as “brick and mortar” houses. They have the artists, machines, financial resources, and frankly, the clout to deliver.
ILM charges ILM prices for good reason: guaranteed results.
“You, the artists, are forced to move to work and live where the vendors say, and the businesses are forced to compete.”
Going back to this; can you see any way that artists can be more like the business owners and stay in one area?
Yes. Band together, and stop letting these vendors push you around. You are the work, you control the output, period. Without you movies do not get made. Stop being so agreeable and easy to push around. You all stand alone and isolated, hopeless in the face of great adversaries who control your paychecks. You are fooled into thinking you are replaceable and that you have no real value.
The president of a studio once told me: don’t let anyone else decide your fate, stand up and own it or it will own you.
Good luck.
Thank you.
Well said vfxlies.
http://www.palmbeachpost.com/news/business/shares-in-movie-effects-company-digital-domain-plu/nRPdS/#cmComments
The stock is heavily undervalued and will rebound. Textor is only interested in increasing shareholder’s value, as he should be. It’s his job.
Well said indeed! cheezus! at last some straight talking and a healthy dollop of REALITY… instead of just ‘creatively’ moaning!
[…] VFX Soldier – Fuel VFX, Matte World Digital Go Down […]
And yet in the beginning FreddieWong builds a million dollar enterprise with two people. Go figure.
Owners of fuel closed down to save some money for them. Lol ! , They don’t care about the rest.
When these cases happen, we go back in time to become homosapiens once again, which means (save your ass first) .
can you elaborate on that statement?
Latest :- Fuel VFX liquidated this week. Most will get a pittance of a redundancy which will be paid out from 2010. As thats when the law changed to make sure people got a pay out due to crappy contracts that people had.
Brutal honesty is the initial psychological skill you need in purchase to be a winning player. Karas was born in 1950 at Antypata on the island of Kefalonia, Greece. There is completely no feeling in being otherwise.