The economy, outsourcing, and the bottom line in VFX

[hiphopcr]

Hey folks,

I'm wondering what your thoughts are on the state of the VFX industry from an economical standpoint. Technology is better but the industry becomes more and more competitive, with more being required at shorter deadlines and lower budgets.

My career has been affected by the slowdown in the economy, outsourcing, the writer's strike, and shrinking profit margins. And we all know there have been been massive layoffs at various spots throughout the industry.

I've also learned there is a ton of work out there and if we as VFX artists continue evolving our skills we will always find a great project to work on. And with more states and countries offering tax breaks we may find more of those projects outside of Los Angeles.

So how has "the bottom line" affected you?

[Aruna]

The industry has become more and more competitive for sure.. The shorter deadlines and lower budgets mean one thing. That artists don't have to be loyal to one company all the time, and that freelancers and contract artists may end up being the norm, rather than the exception.

Fortunately, I have not experienced the slowdown that you have, just at the moment. Film VFX seems consistent, and if there is upcoming downtime, we are well aware of that ahead of time (usually). The last big thing that affected me was in 2002 with the previous strike, and I was in television. It was a pretty weak year.

I think we'll find that in the future, the companies that stay afloat are the ones with their own properties and bankability (I've mentioned this to close friends and coworkers quite often). Those range from PIXAR/Disney, to PDI/Dreamworks, and now Imageworks Animation. I think we'll see a convergence of film/games even more so, simply because that's one of the only avenues that will make tremendous amounts of money for studios. Check out what Blizzard has been doing. That's a great company with lots of talent and they have numerous revenue streams that continue to make money, even though they don't release a game every year.

I posted a little insight on my site three years ago, about 3D and IMAX. You can see what has happened recently, with Journey 3D and TDK in IMAX (partially shot in that format) to name a few.

http://www.digitalgypsy.com/vfxlog/archives/2005/03/3d-and-imax.php

The thing with feature films, and especially blockbuster features, is that we're still at a point of enjoying the excess. Marvel and DC are getting into the features now, with Ironman, the new Hulk, Wolverine, Watchmen, a possible HBO Preacher deal (I hope they don't fuck it up), a horrible new Punisher film, and countless other comic adaptations. They'll all make some sort of money, and it's a newish genre for filmmakers and producers, so they'll wear that out completely before going further. Some of these films will be done on the cheap in other countries.. Quality may go down, but may not. R&H has companies in India that are producing work, as has ILM. Even judging for this years new Siggraph Asia venue in Singapore this December, visual effects is growing, and who knows at what price studios will finally move away from LA. Clone Wars was done in Singapore.

One thing that won't change is the culture nuances between countries. While compositing and lighting may be outsourced (and already roto and paint!), skills like animation and direction will not, simply because of the cultural differences between animators. Certain mannerisms will pertain better to English audiences than Indian, and vice versa.

If you want me to guess what will happen, here's my take. In the short term, simpler jobs will be outsourced, as we're seeing already, rotoscope and paint. We may see model exported as well, mostly hard surface items; planes, buildings, carriers, cars, etc. Texture paint and matte painting will probably remain local to the film studios, as directors and supervisors will want direct input over their vision. Compositing and lighting will remain local for now, simpler composites and lighting may make their way overseas, but only if the studio is not looking for quality. Quality may come later at the expense of price. There's only so much an artist can do given the amount of time, regardless of money.

For feature film visual effects, for the time being, Los Angeles will be the place to be, with San Francisco being a close second. Vancouver is slowly making its way up there, with numerous television vfx being done there, I can see features slowly making its way, as directors and supervisors become more confident of the Canadian artistry. Toronto and Montreal have its gems in the biz, but after the debacle with Meteor, I don't think even artists would want to work there.

One thing will separate "the men from the boys" is how successful companies will be with their own intellectual property. It seems more and more that this will be the only way for a large company to survive. Once there, they'll have to deal with content distribution, and the appropriate way to reach a large audience and still make revenue. Good luck.

[girlcompositor]

I don't really feel I've been affected. I mean some of what Aruna says is true, yes stuff like roto/paint has gone overseas, but it's also come back. For a long time there we were always hearing how Rhythm does their roto/paint all over seas, and the has been a resurgence at Rhythm to hire bgPrep artists back on in studio. That's how I first got hired to Rhythm over a year ago.

Also, I think a lot of people who work outside the US, glorify working here in Los Angeles, and those artists who are trained and hired at studios in other countries always seem to want to work in Los Angeles. They see this as much better for their careers. We're competing just as much on the home front as overseas. I know a lot of international artists who I work with everyday. That's me going out on a limb, and although it ups the competition it keeps a lot of very talented individuals from all over the world working in Los Angeles.

The last thing I want to say is that there are some directors who really have a hands on approach and want to be able to show up to a studio that's in town to see what's going on. That's something foreign studios can't offer. Where ever the visual effects work is going, the film industry/ directors are staying in LA. It can be very challenging to deal with work with people who are working on a different time than you are. This adds to the delay in getting things accomplished.

The beauty of keeping all the artists together in house is an artist being able to go to another artist and say "Hey... this is what I'm doing, this is what I need/" Obviously this is something that also get placed through coordinators, but I can't talk up the need to actually discuss something in person with someone.

Even being a roto artist at dd and talk online/over the phone with another artist in house about what they need on their shot, can sometimes get confusing, and someone can misunderstand what someone else wants. The best elimination of this problem is to go over and see what they are seeing and talk in person. I think that will help keep things here for a bit. I think sometimes things go overseas, but the quality of work sometimes isn't the same, and sometimes it has to come back and be fixed by someone else. I think that has a lot to do that training might not be as great in other countries as it is here, and access to resources.

PS Aruna, you should know better a lot of times Paint is harder than Comp. I don't count it as a "simpler" job. :P

[Aruna]

I
PS Aruna, you should know better a lot of times Paint is harder than Comp. I don't count it as a "simpler" job. :P

When I say simpler, it's to mean something that doesn't have to be overseen as stringently as comp or light or rigging or animation. When you want something painted out, you just say, 'paint out that wire rig' or 'remove that lightpost'. While it may be exceedingly difficult to remove, it doesn't require as much re-direction after the initial request (hopefully). If all goes well, all you get back is a version of a fixed plate with that wire rig removed.

[girlcompositor]

Oh that's true... Comp is a lot more "do 50 things and I want this and this and that," than paint.

[Yossarian!]

I'm glad the feature vfx world is going strong, because commercials certainly aren't...

[Akiva]

The last thing I want to say is that there are some directors who really have a hands on approach and want to be able to show up to a studio that's in town to see what's going on. That's something foreign studios can't offer. Where ever the visual effects work is going, the film industry/ directors are staying in LA. It can be very challenging to deal with work with people who are working on a different time than you are. This adds to the delay in getting things accomplished.

The beauty of keeping all the artists together in house is an artist being able to go to another artist and say "Hey... this is what I'm doing, this is what I need/" Obviously this is something that also get placed through coordinators, but I can't talk up the need to actually discuss something in person with someone.



Unfortunately (well, for you west coasters that is) this is not a true as in the past. Yes, many directors want to be hands on with their vfx work so as to communicate their vision in a faster and more accurate manner, but this doesn't mean being based in LA. Working out of Wellington i've seen a number of directors set up house in the city to be closer to the vfx. It's easier for them to come to us than vice versa. And from what i've seen, this trend is gaining speed. And why not, who wouldn't want to go live somewhere else for a year or two while working? I know thats why most of us kiwi foreigners travel to your fair shores. ;)

[Aruna]

Akiva, that's a good point. I totally forgot about other areas that are booming that still do blockbuster vfx work; Europe, Australia, New Zealand... Out of curiosity, since you're down there, do you find that you work mostly with foreigners? What is the local talent split for companies down there? I curious as to whether there is a majority of freelance/contract down there.

[Akiva]

Higher level there are definitely alot of foreigners, but more entry/mid level a lot more kiwis (and australians since we don't need visa's to work in each others country) can be found. The talent base within our own country is still a little thin since weta is a large facility and needs to compete on a global level but they are aware of the need to have a strong local base and try to train up locals who are passionate and hard working.

And freelance rules down here in my experience. I've only ever worked freelance till the job im in now... But its almost in name only as they work for the same company for years.

[mkolars]

Hi guys,

very interesting to read about the 'rest of the world' and reflected opinions of you all.
For me as hybrid (being a westener, married to Chinese and working for a succesfull
western vfx setup) i must say, 'yes that's true' and 'yes that's not true' in saying most
of the easier work just will be outsourced to countries with a low wage. For China at least
i have witnessed the rise of a very talented workforce just with the lack of opportunities
to practice their skill-sets. And India might be more IT minded and most Chinese have a solid
fine art background. Stereotypes or true ??

Point of all of this is market consolidation and like the before mentioned shrinking margins, i mean running a vfx house from a producer's point of view ws never meant to make any money, this budget was already spent to pay-off the production company, director, producer, wardrobe, workshops, etc. in the end there are the effects guys...i mean we
have to live with this.....

But what i can see is that more and more major studios are outsourcing simply because the cost-savings are huge and we as westerners shouldn't blame them, it is not their mistakes that our costs of workforce and sometimes stupid union regulations are just hindering a cost-effective and viable business model. And about exploitation in 'poor' countries like China (which is not really a poor country having the most billionairs in the world, one of them a real-estate tycoon with a 16 billion USD fortune) i really don't want start to express my opinion here in this forum, since a lot of people who have no clue about the 'real' China just
complaining most about 'human rights, taiwan and Ohhh... especially Tibet' without having ever visited those places) i have been to all those place talking with real people living there and then someone is allowed to express their opinions, but not from listening to biased western stories from news-agencies who need a exciting headline !! That's bull...t)

Sorry, to come back to the topic: I am German and felt the move to Eastern countries like Czech, Rumania and Bulgaria. A lot of blockbusters are been shot there and sometimes even posted, more and more Hollywood productions were done there and our vfx market dried up, even though Germany is one of the big co-investors in Hollywood. That's called globalization, you like it or not...

And to end this discussion, yes it will happen again and i met Mr. John Hues a couple of days ago and he is planning to open a studio with 600 animators here in mainland China, simply because it is one of the biggest markets in the world and it will have the most modern multi-plex system setup in the world until 2020 (according to the China Film Group) and one point please take into consideration: Who said that the stuff done here has to attract audiences in the West or have to please us...we are not any more the center of the universe, that has changed dramatically and we all can hope that we are not begging for jobs in the future...

We have been warned from our grandparents long time ago that we should be aware of the "Yellow Danger" but we all felt so confident in believing that everything would be fine (just another brainwash from our governments) and now we realize that there will be another world order...just one sentence, Bush had to come because he needs money from China...which has one of the biggest foreign currency (USD) reserves in the world and since Irak the US is in debth he has now to be friendly to China and Saudi Arabia ( but also because of his good relationships with several Chinese leaders and his previous job long time ago here in China...)

Why i am writing here is to state that a lot of work will be done here at a same level like Tippett, Asylum, Luma and others...be careful in believing that Chinese are the roto-paint slaves, this time is over and i have people on my hand from Sony Pictures, ILM, Disney and many others who come back from the US and meet opportunities we are just dreaming of...money here not a problem, the China Film Group just setup a backlot for 293m USD and is not shy to bring in top-talent from everywhere to boost the industry, WHY you guys think i am here, because of drinking tea ?? of course not... If you want be recognized in the future than you have to be here !!!

Oh and about the exploitation many of my friends argued many times with me and the poor inhuman treatment of Asian workforce, i just say: "In Germany i worked my ass off, 6 days 15 hours sometimes per day and nobody took care whether i was tired, sick, unmotivated or something else !!" Honestly what is the difference in those countries, NULL, ZERO the same thing..we are replacable variables, other people make the money on our shoulders...

And democracy !! HA !! Is it not a little bit jaleousy in realising that a totalitarian regime might be the better model for a countrie's economy, and sorry i have never ever met so many depressed Americans in the US like last year...can we change it, NO, you can't...could
have voted against Bush, YES, BUT it didn't help at all....the point is that we think we are free but we are not...if you don't have CASH you will be treated like shit in the West, that's the truth and that's why so many people get nuts...

In China you live in grace even you suffer from poverty, and why is it necessary to let you know what happens in the US, Tschad or somewhere else...is it important for you ??, can yo change something ??, of course NOT... got the point, what are our values really worth ??...in the West we are dictated by money in CHina you will be dictated by the government, the end result is almost the same, either rich or poor (or arrested or death penalized, OK that's another story)

Soory it went too political already, but i just want to express my point of view and i don't want argue against other opinions, there is always "the good, bad and the ugly side" of things...

Point is that our unions and somewhat stupid work regulations are mostly a big hindress to achieve a more cost effective and viable business model for producers and they naturally search for other opportunities here in Asia where things are still more flexible and bendable than in the West where everything is rigid and completely constrained.

I was the ex-GM of a well known American studio setup here in Beijing and i should know what i am talking about, at least i have enough background knowledge who of the Warner's, Walden's is in bed with China Film Group and who is washing who's money, or do you still believe that the money is from spin-off merchandising upfront, of course not...there is a lot of dirty money ready for laundry in big features...

Its about money and don't get crazy if your next project is going to India or China, beleive me in the long run, we are not able to compete with them...why?? simple, we don't have this kind of financial backing or don't come up now with: "But we still have better quality products in the West..." Are you 100% sure, or do you just listen to everyone else's opinion...

Comments appreciated...

[Nightstalker]

Hi guys,

very interesting to read about the 'rest of the world' and reflected opinions of you all.
For me as hybrid (being a westener, married to Chinese and working for a succesfull
western vfx setup) i must say, 'yes that's true' and 'yes that's not true' in saying most
of the easier work just will be outsourced to countries with a low wage. For China at least
i have witnessed the rise of a very talented workforce just with the lack of opportunities
to practice their skill-sets. And India might be more IT minded and most Chinese have a solid
fine art background. Stereotypes or true ??

Point of all of this is market consolidation and like the before mentioned shrinking margins, i mean running a vfx house from a producer's point of view ws never meant to make any money, this budget was already spent to pay-off the production company, director, producer, wardrobe, workshops, etc. in the end there are the effects guys...i mean we
have to live with this.....

But what i can see is that more and more major studios are outsourcing simply because the cost-savings are huge and we as westerners shouldn't blame them, it is not their mistakes that our costs of workforce and sometimes stupid union regulations are just hindering a cost-effective and viable business model. And about exploitation in 'poor' countries like China (which is not really a poor country having the most billionairs in the world, one of them a real-estate tycoon with a 16 billion USD fortune) i really don't want start to express my opinion here in this forum, since a lot of people who have no clue about the 'real' China just
complaining most about 'human rights, taiwan and Ohhh... especially Tibet' without having ever visited those places) i have been to all those place talking with real people living there and then someone is allowed to express their opinions, but not from listening to biased western stories from news-agencies who need a exciting headline !! That's bull...t)

Sorry, to come back to the topic: I am German and felt the move to Eastern countries like Czech, Rumania and Bulgaria. A lot of blockbusters are been shot there and sometimes even posted, more and more Hollywood productions were done there and our vfx market dried up, even though Germany is one of the big co-investors in Hollywood. That's called globalization, you like it or not...

And to end this discussion, yes it will happen again and i met Mr. John Hues a couple of days ago and he is planning to open a studio with 600 animators here in mainland China, simply because it is one of the biggest markets in the world and it will have the most modern multi-plex system setup in the world until 2020 (according to the China Film Group) and one point please take into consideration: Who said that the stuff done here has to attract audiences in the West or have to please us...we are not any more the center of the universe, that has changed dramatically and we all can hope that we are not begging for jobs in the future...

We have been warned from our grandparents long time ago that we should be aware of the "Yellow Danger" but we all felt so confident in believing that everything would be fine (just another brainwash from our governments) and now we realize that there will be another world order...just one sentence, Bush had to come because he needs money from China...which has one of the biggest foreign currency (USD) reserves in the world and since Irak the US is in debth he has now to be friendly to China and Saudi Arabia ( but also because of his good relationships with several Chinese leaders and his previous job long time ago here in China...)

Why i am writing here is to state that a lot of work will be done here at a same level like Tippett, Asylum, Luma and others...be careful in believing that Chinese are the roto-paint slaves, this time is over and i have people on my hand from Sony Pictures, ILM, Disney and many others who come back from the US and meet opportunities we are just dreaming of...money here not a problem, the China Film Group just setup a backlot for 293m USD and is not shy to bring in top-talent from everywhere to boost the industry, WHY you guys think i am here, because of drinking tea ?? of course not... If you want be recognized in the future than you have to be here !!!

Oh and about the exploitation many of my friends argued many times with me and the poor inhuman treatment of Asian workforce, i just say: "In Germany i worked my ass off, 6 days 15 hours sometimes per day and nobody took care whether i was tired, sick, unmotivated or something else !!" Honestly what is the difference in those countries, NULL, ZERO the same thing..we are replacable variables, other people make the money on our shoulders...

And democracy !! HA !! Is it not a little bit jaleousy in realising that a totalitarian regime might be the better model for a countrie's economy, and sorry i have never ever met so many depressed Americans in the US like last year...can we change it, NO, you can't...could
have voted against Bush, YES, BUT it didn't help at all....the point is that we think we are free but we are not...if you don't have CASH you will be treated like shit in the West, that's the truth and that's why so many people get nuts...

In China you live in grace even you suffer from poverty, and why is it necessary to let you know what happens in the US, Tschad or somewhere else...is it important for you ??, can yo change something ??, of course NOT... got the point, what are our values really worth ??...in the West we are dictated by money in CHina you will be dictated by the government, the end result is almost the same, either rich or poor (or arrested or death penalized, OK that's another story)

Soory it went too political already, but i just want to express my point of view and i don't want argue against other opinions, there is always "the good, bad and the ugly side" of things...

Point is that our unions and somewhat stupid work regulations are mostly a big hindress to achieve a more cost effective and viable business model for producers and they naturally search for other opportunities here in Asia where things are still more flexible and bendable than in the West where everything is rigid and completely constrained.

I was the ex-GM of a well known American studio setup here in Beijing and i should know what i am talking about, at least i have enough background knowledge who of the Warner's, Walden's is in bed with China Film Group and who is washing who's money, or do you still believe that the money is from spin-off merchandising upfront, of course not...there is a lot of dirty money ready for laundry in big features...

Its about money and don't get crazy if your next project is going to India or China, beleive me in the long run, we are not able to compete with them...why?? simple, we don't have this kind of financial backing or don't come up now with: "But we still have better quality products in the West..." Are you 100% sure, or do you just listen to everyone else's opinion...

Comments appreciated...


Really good points there, seems like the chinese vfx industry is really gearing itself up, i think its the same in india, south india mostly but then again..its very nascent right now, infrastructure sucks, so does the salary. not to mention the diffrence between creative work and mass produced fx.
i am planning to go to aust or canada to do a diploma in vfx then move to either south east asia or even canada(if i get work there).
After what youve posted china sounds like a good proposition too ;-), Any clues about work visas and entry level payscales there?