Deluxe Entertainment “Currently Vulnerable To Default”

If you work at Stereo D, Method Studios, Encore Hollywood, or Iloura (list updated per comments below) you may have been aware about some recent news concerning parent company Deluxe Entertainment’s credit rating being downgraded by Standard & Poors:

The $605 million of loans to Deluxe Entertainment Services Group Inc., which Perelman controls through his MacAndrews & Forbes Holdings Inc., were quoted at 88 cents on the dollar Aug. 26, according to Markit. That compared with an average of about 98.3 cents for the broader market. Last week, Standard & Poor’s took the rare step of cutting Deluxe’s credit rating three steps, to a level that implies the production company is “currently vulnerable” to default.

In 2011 Deluxe made big news with some major acquisitions making it one of the largest global post production companies. Since then the company’s credit rating has continued to fluctuate. In February the company’s credit rating was upgraded after an injection of cash from a new loan (register to view). What makes this latest downgrade troubling according to Standard & Poors is that the current situation may lead to another injection of equity from Deluxe’s holding company (run by billionaire Ron Perelman) which could trigger more downgrades and riskier loans:

We view the company’s financial risk profile as “highly leveraged,” reflecting the company’s high leverage and high capital expenditures. Given the operational underperformance, we expect the company to generate negative discretionary cash flow in excess of $25 million in 2014 and 2015. As a result, it has minimal flexibility to ease pressure on its covenant compliance. The company’s private equity shareholder, MacAndrews & Forbes, can provide an equity cure for a maximum of two of four trailing quarterly periods and no more than five fiscal quarters during the term of the agreement. We believe Deluxe’s covenant pressures may be ongoing, necessitating an equity cure potentially this September, absent a covenant amendment or recapitalization.

Soldier On.

UPDATE: Method Studios President comments below

98 Responses to Deluxe Entertainment “Currently Vulnerable To Default”

  1. Yannick says:

    I really hope Method and all the subsidiaries will make it through.

  2. Josh says:

    This may signal an end to Donut Fridays at Encore. Sad times.

  3. chrisoconnelldotnet says:

    *sigh* How come everyone always lists Stereo D last? We’re probably the only consistently profitable thing in this equasion.

  4. Post Dude says:

    It’s interesting that this news story is being ignored by Variety, Hollywood Reporter and Deadline.com. Plus it was pulled from Bloomberg. Anyone venture to guess why?

  5. Paul says:

    Avatar 2,3,4..and 5 and 6 and 7 maybe 8 will save the day so rejoice!

  6. Matt says:

    Yeah, like Weta is in good shape, hahahaha.

  7. Gregory says:

    Deluxe has some great companies, the rubbish will be closed and the good ones sold off.

    Method and iLoura will Soldier On!!

    • vfxmafia says:

      @ greg…

      I dont think you understand the severity….

      I bet they close the LA office and move operations to Vancouver to get subsidy money…..just like Imageworks did…….

      • vfxmafia says:

        If Method goes down….who is left in Los Angeles? Be Dreamworks and thats it………nothing but commercial houses left. No?

      • remember… THEY ( Method) don’t get the subsidy money. The $tudios get the subsidy money. If they move to Vancouver (and I think you are right, they will) they (Method) gets the privilege of bidding on the films ( and they will have to compete and beat other VFX Studios bids, who are probably underbidding) and then if they get the work, given the current business model, they will most likely lose $$ on the work that could make hundreds of millions of $$$$ for the folks that are receiving the subsidies….

        Screwey, eh?

      • vfxmafia says:

        @Scott…

        Well….to be fair. Method is not the most functional and efficient environment. I havn’t worked there in years but Method has been doing only one movie per year on average……. and then only like 100-300 shots. Movies like Divergent, CLash of the Titans, and Cloud Atlas aren’t gonna keep the lights on to keep a core staff….

        My impression years ago was how the hell are they keeping 300 people staffed at that Santa Monica building….? (with another group in Van) with one movie a year and just commercials. My conclusion then was Deluxe was just throwing money at it…….

        No one should be surprised by losses or even a company wide failure………if your familiar with them.

      • vfxmafia says:

        Doesn’t Method do drug testing as well? (such a whacky company)

      • fair game says:

        @vfxmafia: Method does a lot more than one movie a year (you can check imdb yourself) and the commercials / finishing are probably a lot more lucrative than you think.

      • No Offence says:

        @vfxmafia

        You almost spread more roomers then you do actual facts. I would suggest that if you haven’t been at a company in many years, or haven’t ever worked there, I wouldn’t speak as a voice of knowledge.
        Things do change very fast in this industry, which I know you know. Being that Method is just about the only game left in town (LA) they seem to be doing a lot of work. They also picked up a number of new artist in the last year, while most other places are shutting their doors.

        I know drug testing might sounds “Crazy” or “Wackey” for Californias, but maybe if everyone wasn’t c0ked out durring the 90’s and early 2000, there would be money in the coffers of these companies, and maybe some good business decisions would have been made, and we wouldn’t be in this problem we are now. So yeah being that they are once again one of the only games in town(LA) maybe they are on to something. Yes their Coorporate hub isn’t doing well, but then who’s is really.

        “Insanity is doing the same thing, over and over again, but expecting different results.”
        I hear VFX artist say this all the time..Yet….

      • pookyjuice says:

        @NoOffence…
        The drug testing theydo there now is not for the reasons you think.
        https://vfxsoldier.wordpress.com/2012/08/10/drug-usage-in-the-vfx-industry/

      • No Offence says:

        Yeah I wasn’t Saying that the reason it happened was because they thought it would “clean things up” I was more saying that a “drugless” facility might be the reason they are doing better, and Maybe drug testing isn’t so “Wacky”. I know I’ve seen huge difference in how a company is run when Owners have been forced into Sobriety.

      • graveson says:

        Yeah but coke has always been an integral part of the deal for ad agency folk in the suites. Not sure if any commercials company would really get sniffy about the dim but cute flame guy and ad-agency cougar account executive finishing off a few lines of coke then banging like banshees on the suite sofa, behind the ‘do not disturb’ sign hanging on the door. Still seems to be part of the commercials business model.

      • vfxmafia says:

        @no offense…

        hey cheif…how am I spreading rumors?

        I happen to say i am not surprised after working for method a few years back (sharing a first hand personal experience)…..that the company could be a more efficient…..and am not surprised that company is imploding after reaching 5 x its debt ratio on the stock market…after witnessing a few danger signs first hand.

        When i was there I watched the artist next to me wait for a computer that never showed up from IT. Around 4:30 PM the artist was so outraged at sitting there for 6 hours at his empty desk……..he left 2 hours early. And no one from production even noticed. I would have to catagorize that as inefficient and wasteful…..

        I also would add that i know alot of Method guys (all X-Asylum and X-DD)……..who are some of the best guys in the business……and the parent companies debt ratio is no reflection of their quality work.

        Since leaving….I get all types of reports from people who work there…(about warning signs if you will) including forced vacations because they are having problems with payroll…..toxic political workplace……and having a 4 story building in heart of the most expensive real estate in Los Angeles in Santa Monica….but they are too cheap to afford parking for their crew…..

        (and i didn’t even have to mention the former coked up supervisor).

  8. Ended says:

    Was RGH a part of this? I heard Burbank was closing down.

  9. Gregory says:

    The company’s revenue fell 8 percent in the first half of the year while earnings before interest, taxes, depreciation and amortization declined 32 percent, according to an Aug. 21 S&P report. Deluxe is within 3 percent of falling out of compliance with a leverage stipulation that forbids it from having total net debt exceed Ebitda by 4.6 times, S&P said. That requirement becomes a more stringent 4.35 times on March 31.

    http://www.bloomberg.com/news/2014-08-29/perelman-faces-setback-after-deluxe-rating-cut-to-ccc.html

  10. adeluxetoilet says:

    Kendall & Werner this is for you

    Karma is a bitch

  11. Marc Weigert says:

    Ok guys, l think it’s time to stop this rumor mill. Let me present the facts, and only the facts:

    This year, 2014, will be the best year for Method EVER. Method has been steadily climbing up the ladder over the past years in terms of revenue, profit and quality plus complexity of our work. That was why I was excited to join the company as its president 2 months ago.

    About half of our business is feature film VFX, and half is commercial VFX, finishing and design. That mix allows us to deal with the fluctuations in the business that we all know about. Now let me address some of the comments here:

    We’re NOT closing the LA office and moving to Vancouver. Quite the opposite – we WILL be moving in 6 weeks – together with Company 3 – into a brand new, custom built 65,000 sf facility in Santa Monica. That alone should show a very clear commitment to our Los Angeles location.
    The LA studio is doing very well. We’re currently 300+ employees, of which 190 are staff. We have worked on 5 movies this year in LA, and 12 feature films worldwide (some of which we were the primary vendor on, like “Maze Runner”). We do plan on expanding in Vancouver as well, but not at the expense of LA.

    Method Studios is part of Deluxe Creative Services, led by CEO Stefan Sonnenfeld. Creative Services, with its business units Efilm, Company3 and Beast, are also doing very well.

    Encore has tripled in size over the last 4 years, and this year will also be the best year ever for them.

    Regarding Deluxe in general, I have gotten personal assurance from MacAndrews&Forbes (the holding company of Deluxe), that they will continue to invest into Creative Services. Besides that, it is important to understand that Deluxe is a private, and not publicly traded company. Shareholders in private companies manage the capital structure for a private company based on many factors, and it’s not always possible – nor is it relevant – to dissect these for public consumption or scrutiny.

    Rather than carrying on with speculation, please feel free to contact myself or Stefan Sonnenfeld if you’re interested in getting the real story. In the meantime, we’ll happily move forward into the future of our companies.

    • vfxmafia says:

      @ Marc

      I was really glad to hear that you took over the company a few months back. Thanks for the company update.

      • Marc Weigert says:

        Thanks! I have a passion for this industry and I’m constantly inspired by the work that is created by all these amazing artists. I really want us all to succeed and help to visually tell great stories.

      • vfxmafia says:

        @ Marc

        I actually had the privilege of working for you and Volker Engel a long time ago. It was one of the best memories of my VFX career. I really look forward to what you do with Method. I wish you the best.

      • adfadf sdfkjsld says:

        That’s what all VFX facilities say until they don’t and payroll is late and then it’s quickly over. No company wants to see the big problem when the elephant is in the room. Always put blame on studio and then boom it’s over.

    • Ron says:

      So why the bad finances?

      • Technically profit isn’t the same thing as cash flow. (Which is why I get tired of hearing “we’re profitable”, because it doesn’t mean what you think it means…) This is also why companies that report a profit can become insolvent. You produce X for $50 and sell it for $100. You are profitable. But meanwhile you owe $200. You cannot meet your debts because you have no cash. To most of us this means you’re not *really* profitable but according to the wacky world of corporate finances you are profitable (you MADE money on your product) but insolvent when you can’t make payments. This is why talk of “profitable” is a red herring.

      • The part that’s reasonably important is here: “The company’s revenue fell 8 percent in the first half of the year while earnings before interest, taxes, depreciation and amortization declined 32 percent, according to an Aug. 21 S&P report. ” Even if that decline means they are still turning a profit, it’s S&Ps prediction that after the rest of the accounting process, when bills come due (expansion, etc) there won’t be enough cash flow to pay the bills. This doesn’t mean they won’t or that they won’t get the cash needed to do it, but it does mean they think they’re close to that scenario. You can easily scare/educate/annoy yourself by Googling “profitable but insolvent”

    • Andreas Jablonka says:

      Hi Marc,
      thank you for this reply! its always good to hear informed statements rather than just hearsay.
      I like that method is still going strong in LA and you are correct the work has gotten better.

      That being said I am not surprised that a vfx company credit rating isnt the best but Im unsure weather it matters much to the film studios as they are the ones who drive profit margins into the ground.

      Im looking forward working with you at method as so many of my collegues express their happiness working with you and Volker.

      danke Marc,

      best,
      Andreas

    • Tom Atkin says:

      Hey Marc,

      Best wishes at Method. Give Volker my best when you next see him. How’s the house in Thailand?

      Tom Atkin

  12. Idiot says:

    VFX soldier shot down with hisbullshit …. BAM. … As emeril would say

  13. Thanks for the post Marc… I wish you and the Method team the best of luck!

  14. Post Dude says:

    Mark – I’ve gotten “personal assurances” before myself… Didn’t always work out quite so well. Hope it all works out for you but don’t get too comfy… This company is burning the cash you are making for them somewhere and they better stop the bleed soon. It also made a very, very poor evaluation of the lifespan of it’s film printing revenue and that is killing them too. Just look at the brand new building on Serrano that now sits empty as you open your new facility in Santa Monica. The bigger the ship, the harder it is to turn.

  15. Paul Carlin says:

    If people were forced to use their real names and not hide behind aliases, this might become a rational and civilized conversation.

    • Image Ghost says:

      Um, VFX Solider used an alias for years until he left the business. And he was pretty rational and civilized. Just sayin.

    • anonymous says:

      More like everyone here would be afraid to talk openly for fear of retaliation.

    • PaulH says:

      Some of you guys (looking at you Paul and many others) have to get over the usage of real names on here or elsewhere. Yes it’s nice when people do. But when there are consequences for just speaking your mind, anonymity is way too powerful a thing to lose. If there were more tolerance for stating one’s opinions, then its another story. Sad to have to say that, living in the US, but freedom is an illusion here.

      • Image Ghost says:

        Freedom in the private sector business world is a two way street. You have the ability to voice your opinion, and others have the ability not to hire you because of it. Nothing will ever change that.

      • William C. says:

        If they don’t hire you, means you were right. And of you were right, it’s not even worth to be hired by companies or people who abuse workers. They should be left out. Ignored!

    • VFXartist says:

      Actually Image Ghost, Having unions help that matter because its a collective voice. A step better than that is a Co-Operative business model where voicing your opinion is part of your job. Democratizing how the job is produced and how the profit is distributed would have saved us a lot of grief in this country.

      for Example, if the employees of Stereo D, scheduled to move from burbank to vancouver this fall, had a say as to whether the business moves to vancouver would save jobs here in the states and Los Angeles

      • jona says:

        Unions having a say as to whether a business moves or not will ultimately end up closing that business. That’s all. And the money will move to another business in the desired location. Unavoidable.

      • huabloato says:

        Yes, I agree with Jona. The union is not a solution, and also again the Union to really work should be global/worldwide and not limited to one country and one company.

        Union plays against the interest of the business in general, and the interest of the business is generally against the general interest of the employee. Business comes first, whether you are affected by it negatively as a worker, but bottom line … even if ends up in taking away the job of 50 people, you might still save 50 saved. Do you prefer to have 50 of your coworkers still having a job, then potentially seeing the union acting in such a way that the owners of the business will give up and close down the the whole facility putting 100 people on the street.

        As I said, the interest of the business are rarely the interest of the workers. That’s a reality you have to accept and deal with. Workers have some times to put themselves into the shoes of their bosses, and understand economics. It’s not only about receiving a pay check. Unfortunately these are never things we think when all goes well, but this reality hit us hard in the face, when things are not going so well.

      • businessHasGoneGlobal says:

        Agreed with Jona. Unionization would do the opposite of keeping jobs in a location. Almost all businesses went global decades ago. Please don’t destroy our remaining jobs in LA with a union.

        And, “Democratizing how the job is produced”? In a capitalistic world?

        And BTW VFXSoldier, a fact that could have been easily researched (odd as it was in the news in various publications), Stereo D is not scheduled to move to Vancouver this fall.

  16. huabloato says:

    It’s true about using real names, but it also true about the fact that it is more likely that you will never work in this industry ever again, if you speak up, especially about upper management, under your real name. What I can say of most the managers I came across in my career, is that they generally have a genuine intention to do their best for the company they represent, regardless of whether people who worked with them suffered in a way or another from their decisions.

    As usual, the question is how do you make money in this industry?

    There is a well known reality about the fact that studios do take risks financially, yes indeed, but are generally profitable. If they were not, this would have been in the news a long time ago. But one can argue that making money for them became harder and harder due mainly to the fact that their main sources of revenues changed over the last 10 years (DVD, box-office, etc.) and that they have been unable so far to come up with replacing their old sources of revenues with new ones. It’s particularly striking to see how Hollywood which seems overall to have a certain despise for technology, is unable to properly fight illegal streaming. While it is obviously a difficult problem, it is also obviously hard to know how to fight it, if you don’t really understand or care about computer technology.

    You can always get into the usual blabla “studios take financial risks, they need to retain their profits for the shareholders, but revenues are going down, thereby they need to lower the cost of their productions to remain profit margins steady, etc.”. Believing this is very naive.

    Bottom line: even if a studio makes extraordinary good profits in a fiscal year, if they can find a way to produce a film for even 5% less of its price, they will. All they want, is not spending money, and they will listen to anything you have to say, as long as it comes to saving money, regardless of how much profit the project will generate. It’s all about money and nothing else. And the human dimension behind the business is something decision makers at this level, absolutely don’t care about. It doesn’t matter to them if the industry of film technicians crumble around them.

    Since dozen of VFX companies rely on getting this work and that thousands of artists rely on this to pay their bills, we get into the situation we have now.

    How does a VFX studio make money in this context? And that’s to me they only true valid question.

    While it might be possible if the industry was truly competitive (as in companies fight for work on the basis of the quality of the work they produce and how much they bid for this work), fair business simply can’t exist in a world of abundant subsidies.

    This being said, if you are heading a VFX house, then you get work by opening facilities where the producers tell you to, because that’s where they (the producers) will get the best possible subsidies. The second choice is to send as much as possible of your work to India or China, but retaining a shop in the West so that the clients do not see which part of your films is actually produced in these countries. Some VFX studios have more than 40% of their work produced there. Third option, is for the head of these companies to get together and agree on artificially lowering the wages of their artists, which we know is something that already happened in the US and in Europe.

    What amazes me the most in all this, is that in the US and in Europe, there’s probably about 40 to 50 schools and universities pushing out thousands of artists on the job market.

    So that’s the fourth leverage VFX houses have to make money on. Use kids freshly coming out a school and offering them a wage that is 30% if not less than the average senior wage. If your staff is made up of abut 60 to 70% of these “kids”, you can make substantial savings. Of course, this puts a huge amount of pressure on the senior production staff and is clearly not sustainable on the long run.

    That’s the situation that Marc as well as all other VFX managers have to deal with.

    A very few VFX houses (if actually not only 1) have understood this well and make profits. The others died already or will die soon.

    Something interesting to notice that I keep repeating around me is that studios such as ILM and Weta were never made to make money. They are just tools for world class directors to produce films which are making tons of money. I don’t think Peter Jackson or Georges Lucas ever cared about whether Weta and ILM were turning any profits at all, as it allowed them to make films that no one else could produce, which is one of the important factors of their films big financial success. This idea that you can make money by “selling your services” in today’s world is TOTALLY ludicrous, if you have even the smallest knowledge about modern economics. It pays the bills, eventually, but that’s all. Money is made if you are the distributor of the product and own the IP. PERIOD. Which is why so many VFX house are desperate right now to get into the CG animation business (as co-producers). With that regards, I always found to odd that any private equity firm would be willing to put a buck into “creative industries” as Marc put it. No equity firm in the world I know of would dare returning your phone calls, if you can’t show them your business has any chance in time to make 7% profits. Such studios don’t even develop sellable assets such as IP on either films or technology.

    The problem is, even if you use any of the leverages I listed above, how long will this last? You can do this, but you will be milking the cow to death, ultimately. At the current pace, my best is that the cow will be dead in about 5 to 10 years time.

    We are by no mean building for ourselves a sustainable future. Managers do what they are told to do, because like artists, they need a job and are afraid loosing their 6 figures salary. You can just pray (they should pray and I am sure they do) that it will last long enough that they will retire before their job is made redundant, because in reality all US productions when it comes to VFX will move with absolute certainty where the cost will be the lowest, and this is with no doubt China and India.

    People would be wrong to believe the situation is the same as when in the 80s people working in traditional animation realized their work was going to Corea and lost their jobs in the US. They thought that by producing quality animation they could still find a niche for themselves. Disney and other studios got only saved because part of their productions went to Asia and CG animation feature films allowed them to produce films that people in the West were ready to pay a good price for to watch in cinemas. China in 20 years time will be as civilized and finely educated with regards to their views on film production as we are in the west now. While offering an incredibly competitive environment, and US studios will have 0 feeling with respect to where the work is produced as long as it is the cheapest possible option.

    My 2 cents on this is that there’s nothing you can do about it, we can strive to survive that way for about 10 more years at most. Many companies will go bust in this period of time, and a few will survive by using the sort of mechanisms I described above.

    Note something interesting, is that in all that, no one actually speak about technology when it comes to how bad VFX houses do. There’s a common trend I noticed in VFX studios which is that most managers have a production/business background. They only understand money but not the technology their company uses to make money and make films. While their would be ways of cutting the cost of their production based on having a more intelligent ways of using technology, they don’t really care, because they don’t understand this part of the business at all. Reality is that that if you tell them you can improve productivity by a better use of technology, 1) it requires an effort (time and investment) 2) you can’t give them any guarantee on how much it will actually cut the production cost down. Thereby, most of these managers look back at you and say “I know that if I lower the wages by 20% I can make lower the bid by 20% and beat my competitors, so why would I even care about using technology to lower the cost when I don’t know if this will work at all and how much it will allow me to save?”. That’s sadly for these people and unbeatable argument. It’s spiral, because the less focused they are on using technology to lowers costs, the more pressure they will have to put on the other leverages, to keep profits steady. Again, that can’t lead anywhere else but to a dead end. Over the last 10/15 I have seen the best engineers/developer leaving the industry to move to Google, “proper” tech companies and video games companies (EA being the biggest). This also made if even more difficult for companies to have a production pipeline that would be really efficient. Simply, their understanding and interest for technology is poor and despicable.

    What really no one talks about (but I guess that’s the main motivation behind VFX soldier) is the HUMAN cost of this. People losing their jobs, drama in families having to move to the other side of the wolrd just to chase this 6 months odd contract, no benefits, etc. It’s currently destroying many people’s lives. At some point, we, collectively, will have to pay for this as well.

    It’s overall a pity we have to be in situation where it’s all about money and where the human element of who we are as a community of people having to work with each other and supporting each other, is trampled.

    • William C. says:

      Thank you, huabloato,
      I give 5 years (or less) not 10 until the big collapse.

    • Paul Carlin says:

      Everyone is entitled to his or her own opinion, and I don’t want to take anything away from that. But what I would like to point out is that most everything I read here is coming from a place of fear. Yes, industries change, and bad things happen to good people. But what are YOU going to do about it?

      Life is short. Come from a place of love… not fear.

      • huabloato says:

        This is very true Paul. Which is why I tried in my post to not focus on people or at least not being negative about people. I have just tried to describe the facts (companies have to make money, how do they make money in the VFX industry), and what are the different strategies a VFX house objectively has, to achieve that goal. I have talked to a number of top managers in the industry, and all told me how difficult they found this industry, regardless of the studio they worked for and regardless of they background, and I am talking about managers from the 5 top VFX studios in the world. They really wished they could have done something else with their lives, and actually a few them tried. So my intention was not to seed the idea of fear a little bit more, but you have to admit about the reality I tried to describe in my post. As I said, many people around me are affected by the evolution of this industry, and from what I see from inside, maybe because I have information about what’s coming next, I can only tell you things will get worse, not any better. The only way things could improve or change was IF the artists were collectively capable of acting together worldwide. However this won’t happen. It’s too hard to reach out to every single one of them and make them have the courage to for example ALL stop working for studios and ask for an agreement between their employer and the studios to be signed, that would involved a commitment on their part to 1) not lower the wages anymore 2) make pressure on the government to strop subsidies 3) being sure studios do not encourage work to be sent to countries when wages are less than a limit we could all agree on. If you don’t this, as I explained, work will go where wages are the cheapest. Have you been to China? Is that really where you want to live with your family for the next 10 years? No offense to the Chinese, it’s a great country, just that we as people in the industry shouldn’t to be told where to live just people the top exec of a studio living comfortably in LA, wants to save 50% of its cost. Sorry, not because he/she wants, but because he/she can.

      • huabloato says:

        And to reply more precisely to your question. What are YOU going to do about it. I have tried believe me, and this got me into a lot of trouble in the industry. I have done more than my share. Unfortunately, people being people, I have seen very little solidarity between people when it came to actually do something about it. So I went on battle and had no one behind me to support me, even though, everyone told each other in the back how much they believed in the need for doing something. Artists are too busy looking for work and you have to be aware that studios in Europe and the US have black lists. When you get black listed you can’t find work any longer. I have also seen many artists being bullied (as well as managers). This is current practice in our “small” industry. So artists keep a very low profile and just accept pretty much every they are told: work conditions, wages, where to work. As for managers, many have a 6 figures salary whether here in the US or elsewhere in Europe, and there are smart enough to know it will be hard for them to get the same lifestyle if they lose this job. They have mortgage to pay as many people. So they don’t move either, as I say most people actually do act under the feeling of FEAR. Fear of their boss, fear of being bullied, fear of being ostracized in this industry. And when you specialized yourself in being an animator for instance, changing industry is incredibly challenging. So because of this, actually no one does anything. They just live in fear and don’t move even the slightest. All people around me I have seen confronting upper management have been fired.

        So when you ask what do YOU do. I tried from inside and I tried to reach to other people and organizations. I have even put together information for a politician/senator to have all information at hand so that he could actually look into the case and raise the issue at the national level. He listened to me carefully, asked for me to write about it, which I did, and he never followed up. That’s the reality.

        Personally, I left the VFX industry some time ago, and I plan to write a book about my experience. That will be my contribution. But since I still work in the entertainment industry it will be hard for me to use my name, as I know they will find a way to damage my reputation whether I go if I speak about it. So it will have to stay anonymous.

  17. VFXartist says:

    All good comments here.

    However despite all of the uncertainty in our industry, there has never been really the effort, or even just the discussion, of organizing the labor and business components of our industry. We will talk about the technology, art and science, but we expect some invisible hand to take care of the business. Its considered taboo to bring up these issues, ask for accountability, or to state once business upfront, or expect a level of professionalism. And one wonders why the anonymity. The industry has bred out any dissenting voices through its attrition process of employment leaving only those who toe the line of denial, fear and fatalism.

    • huabloato says:

      That is true. But hasn’t people like Scott Ross tried. And on top, he has the courage to use his real name. I believe people like him tried/try. The question is why isn’t it working? They have been discussions but for example when I tried to reach out to other organizations, they never returned my calls or emails. Then as I said in long reply to Paul (apologies for this), artists all agree about the need for doing something, but no one is willing to make a sacrifice especially if they already work. Doing something requires lawyers, being able to move around in the world to meet people, etc. in others words it requires money (to say it crudely). Who has the time and the money to actually defend the industry while we all have to look after a family?

      One complex issues, and I would meet with Paul on this, is that you can get to the artists by agitating the flag of fear and using this to have take action. On top, many artists who feel they have achieved the dream of their lives by working for studios I won’t name (but I have one in mind in particular) won’t even understand your action, and they will actually stand against you. The first good artists that will publicly say your action is rubbish, will put a discredit on your attempt to regulate the industry, and this will be immediately used and amplified by management, to stop you go any further with your action. Doing something requires full support of all artists across the VFX and the animation industry.

  18. hubloato….thanks for the well stated insights. As you have mentioned, I’ve been trying to do something about the “race to the bottom” for over a quarter century, and have consistently failed.

    At this point, after many attempts of forming an International Trade Assoc, and the efforts of Union/Guild discussions…the only hope I see for the VFX industry is the CVD effort of ADAPT. And, the only way ADAPT works is if they raise a goodly sum to pay the law firm.

    So, if you and your friends, really do want to help…. DONATE money to ADAPT at http://www.adaptvfx.org

    it’s our only hope.

    • William C. says:

      The only problem here Scott, is that the artists all around the world look at the ADAPT/CVD movement like it is something american only.
      Let’s take a Canadian artist who is working in Vancouver. has a job, and he is wondering why, as a Canadian, should support ADAPT?
      You have to convince this guy that his support will not affect his job.
      If he pays 500 just to get rid of subsidies, then he will have to move to find a job, once the incentives will end.
      Now, I know for sure that the work in Canada will end up one day, I know for sure that even if you are not blacklisted, after 45 years you are out, unless you are a supervisor and even then, you really have to struggle to find a job.
      After 55 you find yourself in the air!
      I am a blacklisted guy, I don’t find any work since 2012, ( and when I contacted a lawyer , he told me “You’re not Don Quijote”) so I know exactly what hubluato is saying.
      Instead of writing a book, I was thinking to take my resume and describe exactly every single workplace were I’ve been working for the last 15 years. However, most of the companies from my cv, are out of the business.
      I don’t know though, if this is legal, but believe me I plan to do this.
      Vfx morphed into a miserable industry, and I don’t know what could change this.
      This is reflected in most of the movies. Soon the consumer will fed up as well.
      Tell me Scott, do you believe that the situation in which the industry is today, it will last long?
      Better will be to find ways to invest our time in some other new form of entertainment, cause, as someone said last year:
      “They’re going for the gold, but that isn’t going to work forever”

      http://nofilmschool.com/2013/06/will-indie-film-survive-cinemapocalypse

      cheers

      • huabloato says:

        William. I think it doesn’t matter if the companies don’t exist anymore. You should still speak about your experience, however in the most positive way as you can, otherwise it will play against you. So avoid people’s name, just company names, and describe your experience as objectively as you can, and the reasons why these companies disappeared. You might see a pattern there.

        As Paul said, you should try to see things positively. I came to the conclusion that

        1) if you really believe the VFX industry will keep changing, then maybe it’s a smarter move to find a job in another industry

        2) try to find a place, where you feel really happy about the work and feel you can express yourself and be happy, even if that’s at the expense of making half of the money you made before. I am convinced that ultimately if you are happy in your job, even the money will follow, or will come back.

        3) finally, you can always try to start a career afresh in another country. TV/Commercials/Games/Internet are some examples of media who are in needs of animators, etc. people capable for producing good quality 3D content.

        I agree with you comment about ADAPT. I work in the US right now for a non US company, and I am also concerned about the people I know who are from Canada or Europe. They have a right too, to work. The effort should be global, and not be a solution for one country alone, however I do understand that it’s already hard to do something at the country level, so even harder globally. But maybe not in fact, because if we could make everyone away worldwide of the problems we are having, then we could set something in motion far more effective. If you manage somehow to steep, as the guild of writers did in LA a few years back, the whole production of VFX in the world for as long as you need, then we will have the attention of big studios.

        That’s to me the only method by which we can get some progress made.

      • William C. says:

        Basically option 1 and 2 and 3 means: “If you don’t like, go somewhere else?”
        Eventually we will have to go somewhere else one day.
        “try to find a place, where you feel really happy ..” There is a cemetery very close to where I live.
        But they asked me for money in order to have a happy ans stable “place”.🙂

      • Paul Carlin says:

        >Basically option 1 and 2 and 3 means: “If you don’t like, go somewhere else?”

        Yes. While your version is blunt and to the point, that is what he (and myself) are saying. If you have a firm belief that your job is absolutely miserable and the industry is headed for implosion with no way out, then why on earth would you not pull the rip cord now? Either change your perspective, or bail out while you can. Think long term, not short term.

      • William C. says:

        Much more easy to say than to do. I think there’s a bunch of people willing to change the field, but they don’t have any alternative. Where to go after you spend your last 20 years in front of the screen. it’s hard. I was wondering, And even if I will do something else, I will still be here.
        Paul, I was wondering, do you think this industry, the way it is now, has any chance to survive?

      • the best way in dealing with awful movies… mindless crap.. is to vote w your wallet. Don’t go and see the crap, even if you have a credit!

      • William C. says:

        If you don’t go and see the movie, soon there will be no VFX/crap movies and people from MPC or Framestore/weta and so on..will lose their jobs.
        I, personally see this happening in 3 to max. 5 years from now.
        I, don’t work/watch crap movies. A movie has to woth my 20$ for me to go and watch it. So far, this summer I’ve been at cinema once for a great movie but with no vfx at all (maybe some MP)

  19. btw, it’s a lot easier for me to use my real name…. I don’t make my living in the VFX industry, and frankly don’t care if anyone “blackballs” me.

    • Paul Carlin says:

      |Paul, I was wondering, do you think this industry, the way it is now, has any chance to survive?

      Yes, without a doubt, the VFX industry will survive. Will it look anything like it does today? More than likely, no. This kind of radical upheaval happens all the time in most all industries.

      |Much more easy to say than do.

      That is fear talking. No one is saying to burn all the bridges around you. In fact, the opposite. Look around you and make the most of what you see. Surely there is more to life than roto, sleep, roto. What are you passionate about? Make time to follow it.

    • William C. says:

      Love this:
      “How to emulate the academic workplace and get people to work at a high level of intellectual and emotional intensity for fifty or sixty hours a week for bartenders’ wages or less? Is there any way we can get our employees to swoon over their desks, murmuring “I love what I do” in response to greater workloads and smaller paychecks? How can we get our workers to be like faculty and deny that they work at all? How can we adjust our corporate culture to resemble campus culture, so that our workforce will fall in love with their work too?”
      There is really nothing else to say.

  20. Paul Carlin says:

    If you believe that the DWYL mantra is a conspiracy by billionaire elitists (Oprah, Steve Jobs) to make you work for nothing… I think you are missing the point. Communism sounds real good on paper, but it didn’t really work out so well for those who tried it.

    • William C. says:

      “Do what you love and you’ll never work a day in your life! Before succumbing to the intoxicating warmth of that promise, it’s critical to ask, “Who, exactly, benefits from making work feel like non work?” “Why should workers feel as if they aren’t working when they are?” In masking the very exploitative mechanisms of labor that it fuels, DWYL is, in fact, the most perfect ideological tool of capitalism. If we acknowledged all of our work as work, we could set appropriate limits for it, demanding fair compensation and humane schedules that allow for family and leisure time.

      And if we did that, more of us could get around to doing what it is we really love.”
      I think you referred to this last sentence, when you said : “What are you passionate about? Make time to follow it.”
      And you are absolutely right!
      But I don’t believe it is a conspiracy, no way.
      I think there are some charlatans behind this business that benefits from ignorance and fear of many vfx workers.
      And if you want to name this capitalism, go ahead. Rather, I will call it: SCAM!

  21. Cengizhan says:

    kanka bunları nerden buluyorsunuz merak ediyorum ben ?Google Ban yani saolasın okuyoruz hani çeviriyoruz türkçeye falan.

  22. Gregory says:

    NEW YORK, Sept. 23, 2014 /PRNewswire/ — Deluxe Entertainment Services Group Inc. today announced that it has received a $100 million capital commitment from MacAndrews & Forbes Holdings Inc. to support Deluxe’s transition to a fully digital entertainment services company.

    http://www.prnewswire.com/news-releases/deluxe-entertainment-services-receives-capital-commitment-from-macandrews–forbes-276445291.html

    At a guess $100mill should last 18months, hopefully things will be sorted out.

    • Truth in numbers says:

      My bet is that more than half of the 100M is already spent and this is just to get caught up on previous financial commitments and probably a cash flow squeeze where they are chasing their tales.

      • vfxmafia says:

        @ truth

        Take it from me….(and from some of my previous comments). Its better NOT to speculate or hint at anything that is not confirmed fact. (especially when there was a public statement like the S&P report)

        Lets hope (for all VFX artists) that Method does well.

        Marc Weigart is in charge now, which is a super good thing. Marc and Volker injected ALOT of money into LA over the years when LA was caving in. The movie “2012” fed alot of families back in the day……including RH and DD…….Marc has handled some big shows…..and ran Uncharted for along time.

        This whole thing needs to play out…..without the peanut gallery (despite how bitter and cynical people are right now)……because peoples jobs are in play right now…….

        It might be time for VFXsoldier to make another posting on another subject…….that people can bitch about. Method should be left in peace as company to sort things out.

      • huabloato says:

        @vfxmafia — I wouldn’t disagree with you — the most important is indeed the fact that people’s jobs are at stake. However, if you want the industry to do well, you need to get rid of the managers who are crippling it. As I said to Darin and Truth, it’s not Marc who is at stake here. He has indeed the reputation to understand the industry very well. It’s all the middle men in between who have have not taken the right decisions for so long, and believe me, keep doing the wrong ones. I know so for having some ex-colleagues still working there. They keep protecting people from within because they are connected to some other people who might give the studio work. As long as this how we do business, there’s no way to improve things.

        Jobs are important, but it’s not because a studio goes down that things can get worse. Eventually work will still be around, and therefore another studio will pick up the job.

        This industry needs a serious clean up and some people are responsible for having it in the situation it’s in now. So Method is just pretty symptomatic. If you want to make another thread, may I suggest a few? maybe it’s time to consider how MPC is making money? Maybe it’s time to speak about black lists in studios? Maybe it’s time to speak about how studios in the US and the UK talk to each other to stop some artists to find jobs, and to level down wages? And I have many more ideas…

      • William C. says:

        “Maybe it’s time to speak about black lists in studios? Maybe it’s time to speak about how studios in the US and the UK talk to each other to stop some artists to find jobs, and to level down wages? And I have many more ideas…”
        Sure it is the time to put them on the table. Let’s do some clean up. VFX is way to dirty and packed with charlatans.

    • Truth in numbers says:

      If he business trend is a long term slow down after a few bad quarters MacAndrews & Forbes will spin the off and unload the assets at book value to stop the cash burn.

      • Darin Grant says:

        @vfxmafia

        A person’s performance in one company/situation is no reflection on their performance in another. Having worked at both DD before and during the bankruptcy and having worked at Method, it’s pretty clear to me that some things cannot be saved by the best people with the best intentions.

      • vfxmafia says:

        @Darin

        Im just hoping for the best for Method. I still have alot of friends that are working at Method. I hope this injection of cash can do the trick….for the company.

      • huabloato says:

        @Truth – well the slow down is not the problem here. The problem is that this company has never managed to generate profits other the years when some do — so the question is, can they make money at all? is it because of the nature of the business, because they don’t manage the group properly or is it a combination of both. So why would suddenly Deluxe make profit? How is that going to happen? When? The best for M&F would be to sell the asset before no one wants it anymore. So they properly injected some cash to make it attractive enough to find a buyer.

      • huabloato says:

        @Darin — totally agree but … you are not going to the end of your idea. The fact is that if some people at Method decided to put some managers at the head of the studio, and then fired them off after 1 year, one of the issues in this industry is that managers are actually rarely empowered enough to make the necessary changes to actually make the situation better — companies/studios are crippled with politics, friends-of-friedns who you can’t touch because they are protected by someone else above in the group, that is stopping some manager to take the decisions he/she needs to take. And that’s fundamentally why this industry is doing so poorly right now — among other things, such as the tax credit situation indeed.

      • William C. says:

        @huabloato
        We call them – CLIQUES!. Beside subsidies and fixed wages, the cliques have a wide and strong contribution for what I call : the falling of a dream = vfx!.

      • Darin Grant says:

        @huabloato

        There are many sides to all stories and I’ll stick with @vfxmafia’s hope that the rank and file at Method survive whatever decisions are made at the corporate level to mitigate any issues that the business has with or without cliquey leadership.

  23. randy says:

    Hello
    Have you tried to obtain loans from the bank, but with no success?
    You are in urgent need of money to get out of debt?
    reply to quickcashloan@cheerful.com

  24. condo in punggol

    Deluxe Entertainment “Currently Vulnerable To Default” | VFX Soldier

  25. Jonell Human says:

    Hello there, just become aware of your blog via Google, and located that it is really informative. I am gonna be careful for brussels. I’ll be grateful if you proceed this in future. A lot of folks will be benefited from your writing. Cheers!

  26. nomas says:

    I heard Marc Weigart left Method 2 months ago? Can anyone confirm that?

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