Are people still reading this thing? Well, It’s been a year since I’ve posted on this blog and after the end of the ADAPT effort I took a long hiatus. As disappointed as I was, the post-VFX life has been great. New opportunities, I got a home, and even fooled a wonderful woman to spend the rest of her life with me. Maybe I’ll write about it some time if you’re bored.
Anyways, I figured I’d come back if there was something interesting to write about and this week there was some big news:
In my view this is terrible news for DWA as we know it.
Everyone has always known that at some point DreamWorks would have to continue without Katzenberg but who would replace him and garner similar success? This was a CEO who heavily invested his time and belief in DWA products while also being a world player: He commanded the presence of Presidents and Prime Ministers.
Under JK, DreamWorks achieved what every VFX facility would consider the gold standard: A profitable stand-alone studio that owns intellectual property and produces high quality animated films with it’s own digital production unit. However what we’ve witnessed is that isn’t enough for Wall Street’s insatiable appetite for monster profits.
For a short time, it seemed everything was going to be okay with Hasbro potentially buying DWA but instead Comcast, which already has an animation division with Chris Meledandri’s Illumination Entertainment, has agreed to purchase DWA for $4 billion. This is a huge success for Katzenberg and he deserves it. However for the employees at DWA it’s a vastly different story because Comcast will subscribe to Mellandri’s feature animation production model and not the production model of Katzenberg.
The End-to-End Production Model
In my view, Katzenberg generally subscribes to a relatively successful production model in feature film CG-animation that is shared by John Lasseter at Disney and Pixar: I’d call it the “end-to-end” animation model where from the storyboard to the final comp the whole production pipeline is generally housed under one roof. The employees are treated very well with good salaries, generally longer term contracts and with some having union benefits. The management team can clearly see what works and what doesn’t and adjust accordingly. The problem is adjustments can be like turning a huge ship which can lead to overflowing budgets if you’re not looking ahead.
The Outsourcing Production Model
Another model is the traditional outsourcing model that many of you love to talk about. This is where pre-production is done by animation veterans in the US and sent to CG productions facilities in Asia like India and China where labor costs are very low. This blog has documented the results. Rhythm and Hues which went through bankruptcy a few years ago was a pioneer in being one of the first VFX facilities to send work to low labor costs locations in Asia like India. Digital Domain emerged from bankruptcy to be purchased by Indian and Chinese companies. Years later there has yet to be a satellite production office in Asia. Most recently Sony Pictures Imageworks closed their India office and the Sony hack revealed internal memos which basically validated my prediction.
It’s worth mentioning that when I worked for DreamWorks they started a division in India. I remember JK saying that they would produce their first film completely in India called “Monkeys in Mumbai”. It never happened. DreamWorks opened another production partnership in China called Oriental DreamWorks but the main reason for this isn’t for low labor costs (in fact from what I’ve been told not much work gets done there. edit: I meant working on US features, ODW is working on content for Chinese audiences), the strategy here is to have DreamWorks films designated as co-productions to allow easy access to that market.
The Subsidized Production Model
So the final model is the one that I believe Comcast will subscribe to: The subsidized production model. This is the model that Comcast will adopt from it’s leading animation producer Chris Meledandri. It’s the same model former Imageworks exec Bob Osher adopted and one that many other VFX facilities have been forced to adopt: Move your production to locations where the government offers huge amounts of free taxpayer money.
Imageworks along with many VFX facilities have moved their productions to British Columbia where the government pays producers 60% of the salaries of employees who are residents. Chris Meledandri benefitted heavily from subsidies in Connecticut where taxpayers there have paid millions of BlueSky production costs. Meledandri’s productions in France under Illumination Entertainment have received huge taxpayer subsidies there. He’s admitted that without those subsidies he would have not been able to make successful animated films.
So is there a possibility of DreamWorks moving production to subsidized locations like France?
Well it kind of already is except it’s in French-Canada where Montreal-based Mikros Animation is making Captain Underpants. I believe Meledandri and Comcast will become quickly attracted to this prospect and probably purchase a vendor in a subsidized location like Canada and make it something like DreamWorks Canada and you’ll see a very quick bleed to either move or replace employees to get that free government cheese.
So what does this all mean for an employee at the Glendale campus?
Ironically one of my post-vfx career experiences was dealing with a similar situation. After I left VFX I went to work for one of the top consulting firms Booz & Co. for about two years. It was great but then the company was acquired for a billion dollars by the 32-billion dollar accounting firm PwC. Immediately what happened was an abrupt and noticeable exodus of executive talent within Booz. A buy-and-hold period of a year is established to prepare for the integration into the larger company where retention bonuses and all kinds of positive assurances are given to current employees to make sure they complete work on current projects. Then day zero (or ground zero) arrives and everything you were told turns out to be not true. People get fired left and right and people who have absolutely no idea of what they’re doing or know who you are are making decisions where you are left wondering if you’re next.
I moved on to greener pastures but in my view I see the exact same thing happening at DreamWorks. The first bad sign is Katzenberg leaving. That gives Comcast no resistance to do what it intends to do no matter how stupid or costly it is. I know the Kool-Aid can be very potent at DWA and if I were you I would be completely skeptical of any terms of transition directed at any of you. A buy-and-hold period of about a year has been established so you have between now and “ground zero day” to pack your parachute. If ground zero day arrives and your safe great, if not, at least you are prepared. Given the landscape of VFX and CG animation production these days you might want to begin looking at the option to move to Canada, New Zealand, or the UK if you are interested in pursuing a career in VFX and animation. I’ve already heard about various senior DWA colleagues who have moved to Canada. If you’re interested in learning on how to transition out of the industry, check out this podcast I did a few months ago.
A few years ago we demonstrated in front of DWA when President Obama gave a speech there. We hoped to bring light to our effort to mitigate the effect of subsidies in the industry and the permanent cycle of worker displacement. Unfortunately we just didn’t have gas in the tank. I really felt we could have prevented what is about to happen but we couldn’t convince enough of you to support us. I wish you all the best. If it’s possible all I ask is that you kindly forward me the recipe to my favorite DreamWorks commisary dish: Firecracker Chicken.
Oh. and don’t forget to Soldier On.