Collapse of the Hollywood VFX industry

[Gerry]

Saw this story linked to from CGTalk. All the computer FX work is going overseas.

http://www.latimes.com/business/la-fi-ct-v...0,3461953.story

[John Bigboote]

JUST what California needs. If any lesson can be learned from Detroit and the auto business, L.A. will need to fight back by improving quality and lowering costs, working with skeleton crews and lower cost tools... A:M?

[fae_alba]

This speaks of opportunity to me. The biggest issue I see is the high price tag of the operating budgets of California businesses. Move the business to less expensive states, pay a little less. Who here earns $150,000/yr doing animation? Cripes I don't make that much and I have 3 jobs!

 

A:M is up to the challenges of such work, just need the umph to attract the work.

[itsjustme]

VFXSoldier has a blog covering the VFX Industry's many problems.

[robcat2075]

The problem is 99% labor cost rather than software cost.

 

Flash work i used to be employed at for $30 per hour you can now find free lancers in Thailand via the internet who will do it for $3. And they probably do it just fine.

 

I like animation but I'm not interested in doing it for $3/hour.

 

Cutting wages only works in the short term. In the long term it ripples through the economy and everyone is poorer.

 

Tax breaks like Canada does work because they are luring business into Canada. But tax breaks in the US would be just to keep it from leaving. That doesn't get us as much except to subsidize some rich producer's film.

 

 

i don't see a long term solution.

[largento]

I'm sure labor cost is the primary thing, but I was told once that a quote given to a client by a local animation studio included all the Maya workstations involved (even though they were already paid for and were being used on current jobs). That certainly added a chunk of change to the bid.

 

It also wouldn't surprise me if there are some companies in remote places like China and India who don't even bother to pay for their software.

 

Presumably at some point, the economy will even out across the globe. It will be unfortunate for us, though, since that will mean our economy will decline.

[Darkwing]

The problem is 99% labor cost rather than software cost.

 

Flash work i used to be employed at for $30 per hour you can now find free lancers in Thailand via the internet who will do it for $3. And they probably do it just fine.

 

I like animation but I'm not interested in doing it for $3/hour.

 

Cutting wages only works in the short term. In the long term it ripples through the economy and everyone is poorer.

 

Tax breaks like Canada does work because they are luring business into Canada. But tax breaks in the US would be just to keep it from leaving. That doesn't get us as much except to subsidize some rich producer's film.

 

 

i don't see a long term solution.

 

Woot, go us But yeah, it has attracted a lot of big budget stuff in recent years

[fae_alba]

I'm sure labor cost is the primary thing, but I was told once that a quote given to a client by a local animation studio included all the Maya workstations involved (even though they were already paid for and were being used on current jobs). That certainly added a chunk of change to the bid.

 

That is an unethical practice, and the studio deserves to lose the business.

 

It also wouldn't surprise me if there are some companies in remote places like China and India who don't even bother to pay for their software.

 

Presumably at some point, the economy will even out across the globe. It will be unfortunate for us, though, since that will mean our economy will decline.

 

It seems to me that if animation studios are to survive in the U.S. they are going to have to get leaner and much more aggressive in their bids. It can be done, studios just won't make millions of dollars on one job like they used to. Yes labor is expensive in the good ol US of A, but I don't think it is prohibitively so. Building costs, computing costs, utilities all come into play. And California is not the cheapest place in the country to set up shop. Keeping a weather eye on the bottom line of any business is essential, and that includes all expenses, not just labor. I could almost guarantee I could take the expense sheet of any of those studios and worked it enough to keep it afloat. Not bragging, but I've run businesses on a shoestring before, it aint hard, but it is sometimes painful.

[robcat2075]

I think one may survive by cutting costs but someone in the US can never do that as much as someone in Vietnam or India and still prosper.

 

American industries prospered where they had some unique global advantage, such as raw materials, technology or economic conditions.

 

The rest of the world knows how to mine their raw materials now, we don't have much exclusive technology, and the World Wars that left everyone else in rubble are long past.

 

Occasionally a brand like "Pixar" or "Coke" is enough to outdistance otherwise equal competition.

 

When VFX was new and expensive to do only Americans could afford to set up shop to do it, but now that it's cheap to set up Americans can't cut labor enough to compete with someone in Asia using the same equipment, programs and workflow for the same clients. And there are no desired brands in VFX, just results.

 

Something new will have to be invented that for some window of time can only be done in the US.

[Rodney]

(largento @ Feb 3 2011, 07:16 PM)

... I was told once that a quote given to a client by a local animation studio included all the Maya workstations involved (even though they were already paid for and were being used on current jobs). That certainly added a chunk of change to the bid.

 

That is an unethical practice, and the studio deserves to lose the business.

 

 

I doubt it was as simple as that.

 

There is an associated cost with upkeep and maintenance that any studio must factor into their budgets.

Even as a one-man studio you'd need to maintain your computer systems/software and replace what is lost due to wear and tear. This was even more true back when computer capabilities were growing by leaps and bounds in a short space of time and the client required capabilities only contained intop of the line/cutting edge products. As a contractor you have a few choices 1) Pass on the contract to someone else who can absorb the loss, or 2) Charge for the service/infrastructure.

 

If we were to look at this from the standpoint of an A:M subscription I don't think it would be unethical to charge a client for the use of the software used during production. If it takes 5 people to complete the project over the course of one year the contract should factor in at least a portion of those 5 subscriptions to A:M for that year. If other projects are being completed during that time on the same systems then overcharging for this could be considered unethical. In such a case some prorated fee likely should be calculated. The same goes for computer hardware. There are fairly standard business models for prorating these costs.

 

This is no doubt why many studios grow their own VFX subsidiaries. They can recoup a lot of these (wasteful) costs.

There is a point of course where it makes better sense to 'lease' the services and equipment and let someone else (a professional who better understands those areas) worry about costly upkeep and maintenance. Then you don't have to hire and support your own staff for that job.

 

As a small studio or independent contractor you have to pay yourself but you also have to stay in business.

You must consider what fees to properly pass on to your client. If the wear and tear on your scanner will wear it down or break it due to high usage you'll be justified in factoring a maintenance fee into your contract. If the job requires 10 scanners and you've only got one...

 

In the early days of VFX and with the incredibly short shelf lives of computers and software, it wasn't uncommon to see most of it become obsolete by the termination of the project.

[ruscular]

Seems to me toon animation is either booming or hanging on by a thread. certainly less time consuming to draw all item not moving into the scene. But would also means to render your 3D object to toon to match the drawings. Do extra character in the background need to be in 3D? Can the set be render out once and then be a fix background?

 

Then you have another boom of doing it in 3D stereo.

 

My understanding is that we renew all of the tax cut, which include tax break for importing services over seas. Our tax actually go in to rewarding company that take job away from us. Then we also have illegal worker into this country that also compete with our labor cost, and our tax also go toward catching and releasing aliens rather than go after the company that employs them.

 

I think these things need to be address, but the open connection we have by way of technical advancement has force us to be one with everyone.