Thursday 2nd August 2012by Scott Ross
It’s been over a year since the Visual Effects Society has issued their hopeful VES 2.0 letter to the industry. Many on the board of the VES have stated that there is action being taken by various subcommittees within the VES and that this is a difficult issue that needs a great deal of research and a strategic plan. I contend that the time to be effective is quickly slipping through our fingers. I believe that given the structure of the VES, its charter as well as its management and its board of directors, make addressing the issues that the Visual Effects industry face, an impossibility.
The VES is an honorary organization whose charter is to further the art and science of Visual Effects. However, both art and science need to be well funded for those disciplines to exist. Over twenty years ago, I tried starting a visual effects trade association called AVEC ( Association of Visual Effects Creators, French for “with”). Unfortunately because of paranoia, the association never really got off the runway. There were two meetings held but all of the major VFX companies of the day (ILM, BOSS, APOGEE, DreamQuest) were so mistrusting of each other, AVEC quickly became SANS ( French for “without”).
Years later, Tom Atkins had started making some noise about starting a new visual effects community effort, the VES. I was at the time apprehensive about this new organization, fearful that it would not have a business component, which I felt then and now, is the critical issue facing any industry, particularly ours. I mean, without a healthy and vigorous business climate, any industry is doomed. Lo and behold, the VES board at the time did not want the VES to be involved with business issues.
The Visual Effects Society (VES) is a non-profit professional, honorary society, dedicated to advancing the arts, sciences, and applications of visual effects and to improving the welfare of its members by providing professional enrichment and education, fostering community, and promoting industry recognition…
I decided there and then that while I love awards shows and honoring great visual effects, I fully understood that visual effects artists and visual effects facilities needed to make money to continue to make great images. Imagery was the heart of our industry but money was the blood. I decided that the VES while well intentioned was misdirected, and so I withdraw my involvement.
At present, and over the last twenty years or so, the Visual Effects industry has been managed poorly. The companies that support the men and women that create the outstanding and outrageous images that propel box office on all tentpole movies have been unduly taken advantage of. Dozens of visual effects companies have gone bankrupt even after creating incredible value to producers, directors and motion picture studios. Profit margins for visual effects companies have been mostly non-existant even while box office returns on these effects laden films have soared.
Recently Peter Berg (Battleship) has publicly stated that the business to be in is the visual effects business as the lions share of tentpole films budgets goes towards creating visual effects. In the past, I’ve had lots of conversations with directors that feel exactly as Mr. Berg does. It’s hard for a Director or a Producer to understand that even though the visual effects component of a film is by far the largest line item in the budget, that given the cost structure as well as the deal structure of visual effects, there is rarely any money left to fall to the bottom line. I used to get in conversations with Mr. Cameron who constantly challenged the pricing structure of DD. Oftentimes he would be stymied that DD’s fee was far in excess of his fees… and he was the Director, the Producer, the writer, the editor and the cinematographer! Try as I may, he seemed to not understand that the costs against DD’s fees were oftentimes 90-110% of the actual fee. And while I am sure that Jim had expenses as well, they were far less than those of an effects company. Bottom line, Jim could reduce his fee by 50% and still make a profit and still have a back end upside as well. If DD had cut its fees by 50%, we would have easily gone out of business half way through production.
The issues facing the industry are complex and lengthy. Visual Effects Workers face growing problems around benefits, overtime pay, relocation and workload to name but a few. Visual Effects Facilities, given their inability to maintain reasonable profit margins are scrambling to do what they can to stay in business. Those efforts include opening up facilities in low cost markets, chasing the tax incentive and subsidies offered by various governments and cutting labor costs wherever they legally and at times, illegally can. Much of this desperate maneuvering by the VFX facilities have further exacerbated issues facing VFX workers. Yet 18 of the top 20 box office mega hits are laden with VFX. Something here seems unfair and in need of attention.
Given various governments willingness to sponsor the VFX industry through subsidies, the relatively low cost of entry for new VFX companies and the Hollywood Motion Picture Studios pressure to lower the cost of below the line production, the globalization of VFX has truly taken hold.
With globalization in full swing, the industry seems to have been divided into 2 types of skill sets. The super high end character animation and VFX continue to be produced by facilities in English speaking countries ( US, Great Britain, Australia, New Zealand and Canada). These are the effects that drive the marketing of the current tent pole films. It seems that the major motion picture studio awards these large effects contracts to the likes of ILM, SPI, D Neg, Digital Domain, R&H, WETA, MPC and The Mill. Unfortunately, because of the fear of having to cover the massive overhead that these studios carry, these VFX studios are scarred to death by upsetting the six or so only clients they have. These large VFX houses, given the ongoing cost pressure by the studios, are constantly looking for ways to lower their costs. Each large VFX house is in a competitive bidding situation and the studio/clients take advantage of cross bidding between them. Each VFX company lowering their price, even though they don’t really know what it will cost to produce the effects asked for. This practice, along with the fear of pissing off a major director or one of the major studios generally drives the VFX studio to lose money on their work.
Then there is the other tier of work, the less glamorous work like roto, match moves, compositing, animation effects and the like that seem to be awarded to the lowest bidders. At present, to compete in this world the work needs to be produced by low cost labor. Today, much of this work is moving to third world countries or to government subsidized efforts.
All of the above is the result of the motion picture studios efforts, and understandably so, to reduce costs.
Most of us are aware of the direction our industry is moving. And because it continues to get worse, there is, understandably, discussion about how this might turn around. The VES…. well, let them continue doing what they do, though they’ve shown that they cannot be effective regarding a turnaround. Lately there has been a great deal of conversation around Unions and organizing the VFX labor pool. The reception of a Union however seems to be lukewarm. The Union organization process is daunting and from my point of view, it seems that it will only exacerbate the downward spiral of the industry.
A VFX Union under the auspices of either the IATSE or the IBEW, by their very nature would, even if very successful, only address workers in the US. The Union would have to get enough cards signed showing interest from workers in individual companies. In the case of VFX, that would be a gargantuan effort if even possible. Assuming employees of a given company decided to vote yes on being represented by a Union, what would that do?
Well, the Union would then negotiate a contract with that company governing the ways in which that specific company would compensate its employees. Sounds great, but… having run both Union and non Union companies, I can safely say that a Union shop is more expensive to run than a non Union one. So, the additional costs of running a Union shop will be borne by whom? Remember, the motion picture studio, the client, is constantly applying pressure to LOWER costs. Remember, the Visual Effects Facility has little wiggle room as they have no margins. And finally, international companies without Union contracts, subsidized by their governments or located in countries with very inexpensive labor pools will offer motion picture studios even more attractive alternatives.
The next argument I hear is always an interesting one. Great artistry always wins, China/India doesn’t have the skilled artisans, we do things better and more economically. Well, yes….. for now. It’s only a matter of time before those statements no longer hold water. Don’t believe your own hype. Talent has no borders. Creativity is not an American birthright. The world is becoming smaller, cultures are blending, technology democratizes art.
Is there a solution? If the VES has been unsuccessful and Unions make matters worse, is there any hope?
One of the key issues is to understand that the VFX industry is a global one. While today’s concerns might be varied depending upon one’s geographical location, we must recognize that any solution needs to be a global solution. I believe the core issue, that influences all other issues, is that VFX facilities are not paid appropriately. If there were indeed profit margins, many of the issues such as benefits, work week, residuals, work environment and relocation would be fairly addressed. Additionally, contracts, payment schedules, control of the whims of directors and producers, change orders, turn around time need to be collectively agreed upon by both clients and vendors alike. And finally, the issues regarding tax incentives and subsidies need to be brought to light and the governments that support those subsidies need to be educated and lobbied to understand the long term effect those programs have on the industry as a whole and their particular segment within their borders.
The first step in executing the above is the formation of an International Trade Association. And so here we are again, full cycle yet 20 plus years later. Let’s hope that the powers that be are less paranoid today than back in the 80’s. The time has come to organize.