Under Siege: Special Effects Studios Rise-Up Against Ruthless Industry Exploitation and Outsourcing

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News Posted: Fri, Feb 28 2014 3:06 PM
Over the past 20 years, special effects houses (typically known as VFX studios) have risen from an occasional tool used in science fiction or fantasy movies to a mainstay of the entire industry. The term "VFX" refers to more than the use of Computer Generated Imagery (CGI) -- it also references live-action shots or green screen uses where actors are overlaid with real scenery or backgrounds that are filmed in different locations. Thus, even a movie that takes place in "real life" can rely heavily on VFX.

Given that most Hollywood movies now rely so heavily on VFX, you'd think that VFX studios would be the toast of the town. Instead, they've been under increasingly desperate pressure. Rhythm and Hues, the Oscar-winning studio behind Babe, the Golden Compass, and Life of Pi filed for bankruptcy last year after winning an Oscar for the latter film. Pixmondo, the German studio that won an Oscar for Hugo, was forced to close its London and Detroit branches.


The Avengers' iconic battle for New York looks a bit different than I remember it.

You might think that these closures reflect the box office take for the films in question, but that's not true. What's happened, instead, is that the Hollywood studios have viciously pressed VFX houses -- refusing to pay for multiple renders of a scene, refusing to pay for weeks of overtime, and threatening to use foreign VFX businesses if domestic ones won't compete on contract costs. The problem there is that these same foreign companies are often heavily underwritten by grants from their respective governments.

Hollywood has gone to great lengths to keep this problem under the radar, deliberately cutting off Bill Westenhofer's acceptance speech for the Life of Pi's Oscar in an attempt to silence him. The VFX industry's fight against unfair offshoring of their talent, however, has just gotten an unintentional boost from the unlikeliest source imaginable -- the MPAA.

How The MPAA Handed Artists A Gold Mine

In a recent amicus filing to a court case involving 3D printers, the MPAA strongly argued that goods transmitted digitally as "articles" should be considered to be governed by US trade laws and subject to strong protections against foreign subsidies and unfair pricing. According to the letter, "The use of electronic means to import into the United States infringing articles threatens important domestic industries such as the motion picture and software industries, as well as U.S. consumers and the government at all levels."

In other words, "Just because something is transmitted over the Internet shouldn't mean the US government shouldn't offer strong protections to intellectual property." In a statement to PandoDaily, the MPAA reiterated this position, saying: "“Congress has given the ITC broad authority to protect U.S. industries from unfair acts in importation,” said spokeswoman Kate Bedingfield, adding that if the government doesn’t recognize digital products as imports, “American businesses lose an important protection, which puts them at a significant international disadvantage."

But if that's true, then the work done by VFX studios shouldn't be subject to subsidy-busting, either. At least, that's the hope of the activists who plan to march this Sunday to call attention to the problem. A recent blog post from Nvidia -- it broke while I was writing up this story -- actually highlights the degree to which Hollywood now depends on digital technology, including digital effects studios by highlighting the fact that filmmakers are increasingly moving away from celluloid -- unfortunately, they've done so while simultaneously squeezing the talented individuals that make the transition to an all-digital world possible.
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MCaddick replied on Fri, Feb 28 2014 5:06 PM

The US VFX industry are no different from other industries that have seen their bread and butter slowly eaten away by other companies (many foreign) that can do the same quality work cheaper, faster and more flexibly.

As in those other industries, they HAVE to innovate and compete, not just continue the same old same old because its what they know.

They are not special no matter what they believe. If they can't compete based on quality, speed or price then they don't deserve a seat at the table with those that CAN compete.

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dnw1962 replied on Fri, Feb 28 2014 9:01 PM

I agree with MCaddick for the most part. In addition they can receive no protections for something being created digitally when it has not yet been created. The case mentioned I am not familiar with but digital 3D printers can only make something from a file that has already been created. VFX studios are competing for the contract to do the creation.

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kyoseki replied on Sat, Mar 1 2014 2:32 AM

In that case, the MPAA can't object to movies being sold abroad until they're printed to film (which they never are).

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kyoseki replied on Sat, Mar 1 2014 2:42 AM

Apparently, you have a comprehension problem.

The work is not going to companies that are more innovative or competitive, they're going to companies that are getting subsidized by their local governments.

California companies are competing with subsidies ranging anywhere from 20-25% (UK & New Zealand) to 45% (Quebec).

Places that are so heavily subsidized, California companies are actually forcing their workforce to move to the subsidized locations in order to have their salaries paid for by foreign taxpayers.

The situation is so bad that even places in the UK are asking their employees to move to Canada because Canadian taxpayers will cover even more of their salary than UK taxpayers.

They're the same guys doing the same work for the same company, but you go ahead and keep telling yourself that it's all about US complacency and not about states and countries trying to buy their way into the movie industry.

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kyoseki pretty much nails it. Watch this, learn something:

http://www.youtube.com/watch?v=9lcB9u-9mVE

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vfxinla replied on Sat, Mar 1 2014 5:42 PM

To Joel the writer of this article:

Good summary of the events so far. You made one mistake though.

Your title states that "special effects studios" are fighting the MPAA. Not true, the whole effort has been a grassroots campaign started by vfxsoldier and the vfx community of artists. The vfx companies themselves have done absolutely NOTHING to fight back in any way. They refused to even form their own trade org against the MPAA when Scott Ross tried to get them to cooperate with each other.

So credit to the community, not to the vfx companies.

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kyoseki , its your comprehension seems to be the faulty type.

Its irrelevant how competing companies achieve lower prices, they do it by whatever means are available to them, and film production goes to them instead of the more expensive alternatives.

If the whining companies can't survive without govt subsidies in their swanky inner city locations then they need to relocate to where they can get them and become competitive again. It really is as simple as that.

If your business model is faltering you DON'T just keep on plodding along like everything will revert to and then remain as it once was, you innovate in whatever ways you can including potential relocation and outsourcing.

UK and European based effects houses have great co-operatives (soho for instance) where they bid for contracts as one and farm out the resulting work to the companies within the co-op best able to achieve the end results at the best cost.

US companies on the other hand (as vfxinla states) have a very competitive nature, though this is changing, and have refused to present a unified face to the 'evil' filmmakers who want best bang for their buck in an increasingly risk-adverse industry, no matter who they screw in the process.

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kyoseki replied on Sun, Mar 2 2014 4:21 AM

You're adorable.

Let me guess, London's Soho isn't a swanky inner city location? Because I've worked there, in fact, I started there.

Swanky? Not so much. Inner city? Yep. Unbelievably expensive? You bet your ass.

Los Angeles is half the cost of Soho, I know, I've done both, yet the Soho companies are thriving and oh, would you look at that, they just happen to be heavily subsidized by the UK government, what a stroke of luck!

The business model for VFX companies is broken, no argument from me there, but it's broken on a global scale, everyone gets screwed, but the unsubsidized locations like Los Angeles get screwed the most.

You are literally advocating collusion among America's competitors as a viable alternative to innovation and competition, which was your original point.

... or did you think that "co-operative" meant something else?
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