The Compounding Challenge of DreamWorks Animation Layoffs

Brutally bad news at DreamWorks Animation coming from Variety, The Hollywood Reporter, TAG blog, Cartoon Brew, and Deadline:

“Sizable” layoffs are coming. It’s just a matter of how many, and when. DreamWorks Animation may cut up to 500 employees in the next few months, sources tell Deadline. That’s potentially 23% of its 2200-strong animators, tech, and support staff, axed in the wake of a flop and key release date changes for Mr. Peabody And Sherman (moved off the 2013 calendar and into 2014) and Me & My Shadow (sent back into development).

This news couldn’t have come at a worse time with the recent distress at various VFX facilities. DWA has been a relatively stable enclave that treated VFX professionals exceptionally well and with that they were able to attain something many of us struggle so hard to have: decent work hours, a house, marriage, children, and dare I say, a life.

A Compounding Challenge

Animation facilities like DreamWorks and Disney have always had their fair share of layoffs. What dampened the blow was usually there was always an ebb and flow between the VFX facilities and animation studios for a laid off artist to find a job. Now the work is available this time but the major problem is that subsidies have forced professionals in the industry to chase their jobs country-to-country, project-to-project.

How does a DWA VFX professional with a home, a partner, and kids pack it all into 2 suitcases and globe trot around the world and afford it? This is why part of the Campaign To End VFX Subsidies was targeted at VFX professionals at animation studios like DreamWorks. While things were good there, many were unknowingly exposed to the huge risk of VFX subsidies.

Importance of Unions

The argument has always been that if VFX facilities had margins like DreamWorks, many of the bad conditions would go away. This is why some advocate that facilities join a trade organization instead of the workers joining a union. I’m an advocate for both and this recent event at DreamWorks is exactly why I argue that the Hollywood industry is so heavily unionized:

Even with huge margins, great conditions, and their own IP, studios will gaps in between projects leading to layoffs.

Luckily for the unionized artists laid off at DreamWorks LA, many of them will be able to keep their health insurance for their families for up to 12-18 months. Unless there is a special provision for the non-unionized artists of DreamWorks PDI, they will lose their health insurance in the first month they are laid off.

A union, trade organization, and a ban on subsidies don’t individually solve all the problems but together they solve the majority of problems.

Other Facilities in Turmoil

Regardless, the situation has recently turned extremely bleak. Late in the year Digital Domain filed and emerged from bankruptcy and just this week we learned that Rhythm & Hues was on the verge of bankruptcy. The other night fellow blogger VFX Law fired off a series of tweets that boldy claimed other facilities were in deep trouble also. Let me be clear that I haven’t been able to verify any of this and I get a lot of emails with various claims that I refuse to put on this blog but the information coming from VFX Law is usually spot on analysis.

Also, I’ll be giving an update on our latest progress in the Campaign to End VFX Subsidies. Be on the look out.

Soldier On.

19 Responses to The Compounding Challenge of DreamWorks Animation Layoffs

  1. dull says:

    Ah come on! The Animation market is crowed and DW need go back 3 movies a year to 2 movies a year. this means layoffs. Every industry have same issue. this has nothing to do with subsidies.

    • VFX Soldier says:

      Didn’t say that. What I said is when the animation studios are slow most of those workers end up at Sony, dd, r+h but because of the subsidies, those companies are forced to do the work elsewhere leaving the the artists with nothing to jump on.

  2. Michael says:

    The PDI employees don’t belong to the union, so they will have the option to go on COBRA and pay out-of-pocket for their continuing healthcare coverage.

    • RH_vfx says:

      Yep, they’ll have the option to pay $400 (or around ~$350) a month for a single, healthy individual. BEST HEALTHCARE IN THE WORLD! (If you’re rich).


      • ed says:

        COBRA is around $700’s per month…but hey “you get to keep your insurance…”

      • Nix says:

        Cobra is not a preset amount for everyone. It is based on how much your employer was paying for you + how much you were paying out of your paycheck + 2% admin fee = cobra cost. Not saying its cheap, just saying it is different for everyone

    • kane says:

      ~$1400/mo for family. That’ll leave you with about $400/mo from your unemployment bennies to cover your rent, food, etc.

      Hopefully you have some savings to survive on until you land your next show.

      • Michael says:

        Unfortunately, this is accurate. And average rents in the SF area are $2700+/mo. Savings don’t last long at that rate which is why I eventually had to move out of the state (and take on many thousands of dollars of moving expense to move my family and possessions; yet another thing to decimate savings).

  3. VFX_Boom says:

    One of the large issues facing DWA right now is the declining sales in the home video (dvd) market. DW has typically made a large amount of their money in this revenue source. But, the home market has evolved much since the first Shrek film. They are facing a similar challenge the record labels faced when MP3 first came onto the scene.

    That coupled with the poor box office of Guardians is proving to be a tough balancing act. And, adding Fox to the mix is not helping I’m sure.

    Let’s all hope DW makes the proper adjustments as soon as they can, and are able to hire back as many folks as possible.

  4. Polyphemus says:

    That big party they threw a few months ago seems a bit short sighted now hasn’t it? Didn’t they fly down the entire PDI studio on jumbo jets to Burbank to celebrate their upcoming releases and work in development?

    It seems like every time they want to push 3 movies out a year, theres story problems, the schedule pushes, and they lay off (I’m sorry “Transition”) people…

    PDI isn’t union? How has that happened? I thought it would be… it would be low hanging fruit for TAG to get them enrolled in the Union.

    Feel really badly for the folks there.

    • andrei gheorghiu says:

      …I do feel bad for all the folks in this bloody industry….If you enjoy this kind of life, then keep going.
      If not – STAND UP!!!

    • skaplan839 says:

      Low hanging fruit? I only wish ..

      Disney is union, has been since the 40s. Is Pixar or now ILM? No. So, when unionized Dreamworks purchased PDI, it became a wholly-owned sub-division that is not included in the unit.

      Not for lack of trying, mind you. We ask every time when the contract is negotiated. Funny, the studio lawyers don’t seem to think its a good idea.

      So, its the usual route. Sign cards, get a majority, all outlined on this page of our site.

  5. John Stantton says:

    ____ isn’t working! How do we fix it?

    VFX Soldier “End Subsidies!”

    Yeah! That’ll alone will fix everything!

  6. El Pumpernikel Escarlet says:

    Looks like a lot more folks from the VFX arena will be joining DW soon. 😦

    • VFX Soldier says:

      Thanks for posting, but that’s a pretty bad article: it essentially argues kfp3 would have saved US jobs if it was made here because it was made here.

      The real reason they are SAYING they are making kfp3 in china is so it can get a coproduction stamp of approval by China ensuring they can distribute the film in china.

      • Ymir says:

        I thought it was encouraging that the issue is getting broader exposure in the media outside of the industry trades. Not that they really care in Gotebo, Okla. 🙂

  7. […] at Nickelodeon Animation voting to join. This despite the fact there were massive layoffs at DreamWorks Animation earlier this year. Most of those union members let go are working at unionized Walt Disney which […]

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