Cause and effects

The debate over the VFX industry’s future went public at February’s Academy Awards, when hundreds of VFX artists protested near the ceremony venue and Life Of Pi visual effects Oscar winner Bill Westenhofer tried at the winners’ podium - until he was silenced by the music from Jaws - to raise the subject of the effects industry’s financial woes.

Since then, Hollywood’s VFX community, with input from its international counterparts, has been debating ways to escape the financial instability that has caused deteriorating working conditions for artists and pushed two major effects companies - including Life Of Pi lead Rhythm & Hues - into bankruptcy (Rhythm & Hues has since re-emerged under new ownership). The fixes mooted could have implications for the worldwide effects industry.

The most recent proposals come from The State Of The Global VFX Industry 2013, a report commissioned by the Visual Effects Society (VES), an honorary professional group with international membership. In the short term, the report advocates the development of industry standards and best practices as well as business training for VFX professionals and management. Effects industry practices, says the document, “have not evolved and don’t reflect the realities of modern production”.

The report also suggests the adoption of alternative pricing models. Instead of fixed-price bids for effects work, facilities could move to a ‘cost-plus’ model, so they are compensated for changes not covered by an estimate, or a ‘four-walling’ model, where the client pays to use a percentage of a facility for a set period.

‘Non-US facilities are confronting all of the same issues in terms of business organisation and bidding’

Ken Williams, USC’s Entertainment Technology Center

Incentives remain a hot-button issue in the US, since they have helped build effects industries in the UK, Canada, Australia and New Zealand and caused many US facilities to move effects work to overseas branches.

But the US industry is split on how to respond. Many industry professionals call for the elimination of all subsidies to create a level worldwide playing field. VES, meanwhile, has called for an expansion of the California film tax incentive programme to cover effects work as well as production.

There has even been examination of the use of ‘countervailing duties’, World Trade Organization-sanctioned tariffs that would add a duty to subsidised effects work imported into the US.

Probably the most widely supported fix for the US industry’s problems is the idea of a trade association for VFX companies. Past attempts to launch one have failed but at a recent VFX town hall meeting in Los Angeles (with video hookups to San Francisco, Vancouver, London and Wellington in New Zealand) effects-industry executive Scott Ross said, “all of the majors have agreed to investigate the possibility of a trade association”.

Ross, a former head of both Digital Domain and Industrial Light & Magic, suggested a trade association was vital for an industry that caters mainly to the six Hollywood studios. “We have six clients and those clients talk. They have a trade association,” he said.

International dimension

It remains to be seen which, if any, of the fixes proposed actually come about. But any that do are likely to impact effects companies in international markets.

Effects facilities outside the US, suggests Ken Williams, CEO of University of Southern California’s Entertainment Technology Center and co-author of the VES report, are “confronting all of the same issues in terms of business organisation and bidding”.

To have any real leverage, he adds, an effects-industry trade association would need to be international in scope. “If you had a trade association that imposed business practices in the US only,” he says, “the easiest thing to do would be to evade that in non-US territories.”

Williams, who co-founded Sony Pictures Imageworks, says the US industry’s recovery would not be the international industry’s loss.

With more feature films incorporating more effects shots and demand increasing in the television and video game sectors “there has been a geometric if not exponential growth in the scope and scale of the work,” Williams says.

“There is enough growth in the marketplace that the US industry can thrive without having to take it back, so to speak, from overseas.”