>The studio was the latest casualty of a trend that’s been plaguing the VFX industry in recent years: an outflow of work to countries with better tax incentives
Seems like the failures aren't just caused by the free market.
One can argue that tax jurisdictions compete with each other in a market. Which is a good thing, as it helps put an upper bound on how aggressive a jurisdiction can get before capital starts fleeing.
But of course this picture is missing one of the key mechanisms of a truly free market -- there's no market pricing of the market participants themselves. You can't buy out a government that's acting foolishly.
It's a refundable credit, meaning that the government will reimburse the company for VFX work above and beyond its tax liabilities. How is this "tax jurisdictions competing" and not a direct government subsidy?
http://www.bcfm.ca/faq/#pstc4
Govt subsidies are (in theory) an investment; you invest money in X so that you can make more money (or value) from Y.
In that sense, for example, there's a train of thought that if creating VFX in the USA becomes untenable then its move to other countries may drag money with it, then know how, then creative talent, then innovation, then production, then the entire industry and then it associated power for cultural dominance.
The entire sequence can be debated and argued and nitpicked to death (and I don't know enough about it to even try), but the underlying idea is valid.
Even the underlying idea (essentially mercantilism) is questionable.
While it can clearly benefit certain special interests (hence its popularity), it simply cannot benefit a whole society on net. Rather than repeat the whole argument, I'll just cite Adam Smith (a guy who was much more moderate than often portrayed by modern partisans), who showed in no uncertain terms that subsidies and tariffs make a nation poorer.
Did you read the article? Your response seems to be an all purpose response ignoring the specific circumstances that distinguish this specific case the general case.
What is funny is that VFX costs have been going DOWN
Today, I can do professional VFX in a "cheap" computer (of course, you want to shoot for the high end), together with software easily acquirable.
Compare that to the beginnings of ILM for example.
This smells much more of bad business plans + companies tolerating studio's abuse (payment delays, overstaffing to meet deadlines, etc)
" In order to compete, VFX houses in Southern California have to charge way less, leading to slim-to-none profit margins"
Aah there you go. The absurd of housing prices (and everything) in California. Like you need to be close to your customer in this times of internet and FedEx, you can set shop in Seattle maybe and cut your costs
It's artist time that is expensive - even render time is cheap in comparison. VFX houses are happy to spend loads of money on renderfarms and wait 12 hours a frame, but it's mainly artist time that costs money.
Software cost only has a small influence in the general picture, although the Indian and Chinese VFX companies using unlicensed software gives them even more of an edge than cheap labour by itself does.
Yes, the cost of keeping HW up to date is non-negligible, even if it is a small part of the costs.
That 12h per frame has remained more or less constant for the past years, they'd rather have more details than speed it up =) (I suppose modern hardware can render Toy Story today in real time and even more)
But the cost of artists reflect the cost of where they live, pick a less expensive city in the US and you can probably match UK/New Zealand
Of course, it can't be NullPointer, Wyoming but in a bigger area it shouldn't be a problem
I wonder if the constant shifting of VFX houses to new countries and employees coming and going from the field is why we are seeing uneven results in movies? Most special effects-laden movies have a few CGI shots that just look awful. And you would think that VFX would be steadily improving in quality, but while we often see more impressive results in terms of what can be done the accuracy of them isn't always holding up and the realism and reliability isn't improving at the same rate that technology and new techniques are.
This could end up with Hollywood shooting themselves in the foot. Movies are getting more and more CGI, but CGI that breaks the suspension of disbelief can really ruin a movie.
A lot of people complained about the VFX in Wolverine, for instance, but shouldn't the VFX in that have been better than the X-men triology? Well, when you have seventeen different companies doing VFX shots for a movie, you're going to get uneven results. There was some really good VFX in Wolverine, but there was some really bad stuff too, and I'd have to believe the studio going cheap is what led to it.
That's mostly a function of the studios drastically reducing the amount of time given to produce the work, while simultaneously increasing the complexity.
It's fair to say that not all vfx facilities produce the same quality of work. That's a function of many things, but primarily if the facility can charge a higher rate they can afford to employ more experienced staff and put more of them on a project. Same with any business.
However not everyone wants to pay what ILM or Weta are charging.
You can produce work that looks good, as they technically have the features, but the workflow is generally atrocious for open source tools. This means it takes a lot longer to do stuff.
On top of this, the technical limitations of GIMP and Blender are much more limiting than what high-end apps like Nuke/Mari for texture painting (want to do 32k x 32k texture painting at full 32-bit float for RGBA), and things like XSI rending to PRMan or Arnold, kicking around 200GB of geometry at render time.
GIMP and Blender can't get anywhere near those use-cases - yes, they're extreme, but those are the things companies like ILM, SPI, Weta, Framestore, etc deal with on a daily basis.
This is good to know. I assumed Blender and GIMP had workflows with comparable efficiency once you got used to them. I've never used the commercial tools.
I don't think it's the technology at all. It's improving all the time and being refined, and people are understanding how to use the technology better.
My theory is that instability in the industry caused by the studios is what's leading to very uneven work. Some of these studios will pay top dollar for big name actors and directors but are willing to have a bunch of random VFX companies from all over the world try to work together to build a coherent vision.
I'm surprised everyone took the economics angle to criticize VFX houses.
There was a time not long ago when Computer Science looked stupid because a programmer in India could do the same software engineering work for 1/3 the pay. I doubt free-market thinking programmers came out of the woodwork to applaud cheap Indian labor.
Besides, as other commenters noted, what is outrageous economically speaking is the $400 million B.C. handout, not cheap labor. That doesn't sound like free market to me.
I think VFX artists just need to unionize. They have the same "real" problem software engineers do, which is this pretentious notion of artist.
Like software engineers, VFX artists aren't professionals or artists. They are given bulk work that requires technical expertise to execute, like a welder, a makeup artist, or a teacher (my grin, it is huge).
To drive home the point, an HN software engineer commenter complained that at the same point in his and his doctor friend's career (about 7 years), the doctor was earning radically more money. Lawyers too, I might add, being real professionals, earn what VFX and software engineers expect to be earning. Nevermind consultants and their enormous bonuses.
A Blackstone consultant can retire at 30, even though your average software engineer or VFX artist could dismiss what the consultant does as "making PowerPoints."
The artists line shows how out of touch VFX artists are with their role in Hollywood.
If VFX artists want to take more ownership, creative and financial, direct features. Don't hire actors. Distribute yourself. It happens, like Neill Blomkamp. You don't have to start Pixar.
This will never happen, for the same reason the video game industry will never unionize. It's a glamour industry where there is absolutely no shortage of starry-eyed dreamers who've been sold more on the ideal of the craft than the reality.
It's hard to unionize when there's a lineup of naive dreamers stretching all the way around the block, all ready to pounce into your seat at the first opportunity.
There are unions for film writers and actors, and for the major sports leagues, which are all clearly glamor industries. Only differences I can think of are:
1) They were unionized in a totally different business climate. Union's a dirty word now.
2) They're all at least about protecting seniority and the established workers, kind of like the criticisms of the teachers unions. There are a lot of circular requirements for the movie unions - only SAG actors can appear in SAG movies, but to join the SAG, you have to have said a line in a SAG film (clearly there are a few loopholes).
The sports unions tend to fleece the younger members - the MLB union doesn't care about the minor leaguers, so a lot are living around the poverty line, NBA players are fine with the fixed draft pay scale because it's more money for them at the expense of players joining the league.
Tech tends to be ageist (moreso than professional sports - think about that for a second) so there's no core of veterans trying to coalesce to protect their position. I don't think it'll ever happen, is what I'm saying.
The difference between programming and VFX is that you don't need to do maintenance programming on the finished result of a VFX project. Once you've rendered a movie scene, that's it: either it looks good, or it looks lousy. Cheaply-built software (from India or otherwise) may look okay, but fall apart under its own weight; visual effects don't have that class of problem (or to the extent they do, it is a much smaller or less-frequent problem).
If American VFX artists successfully unionize and attempt to charge higher prices for VFX work, you can expect to see more outsourcing of labor-intensive VFX to cheaper, nonunion VFX shops, many of which will be outside of the US. (Alternatively, some VFX shops will invest in capital projects - in the form of computer systems - that create quality VFX with fewer but more-productive artists.)
It may in fact suck to be a VFX artist. There is, however, little that you can expect to do to change this, even if you do unionize. If your life as a VFX artist sucks and your pay is low, you may simply have to pay attention to this price signal, exit the industry, and seek employment elsewhere.
Disclaimer. No moral judgement on the situation, the desirability of this situation, or other matters is hereby designated. This post discusses only economic concerns.
I don't think many people working in vfx expect to earn as much as a doctor, lawyer or successful entrepreneur. They would like to be paid a similar rate to other highly qualified technical individuals working in a profitable field.
VFX (also games) artists/developers work far, far harder than the average software engineer. They are often very highly qualified. However they're unlikely to earn as much as an equivalently qualified and experienced software engineer in another, less glamorous field, because the job is perceived as desirable. Hence, greater competition and rates are driven downwards.
That's fair enough really, since most do enjoy the work. Though they'd like to see their friends and family slightly more often.
The problems touched on in the article are that of subsidies and outsourcing. Subsidies have hit the vfx industry in CA pretty hard, no question. However, even if the subsidies were to go away, the studios are addicted to the reliable income that vfx driven films bring. They're also addicted to the low rates offered outside of CA. They'll keep pushing the race to the bottom until they find the place they can get the work done at an acceptable level for the cheapest possible rate. And that's unlikely to be in the US.
"Like software engineers, VFX artists aren't professionals or artists"
Overgeneral statement. You can perhaps make that claim of some VFX jobs, but I'd defy you to say that Bay Raitt, say (one of the main guys who created Gollum) isn't doing artistic work.
3D character modeling, to take just one VFX job, is sculpture. That's been fairly conclusively defined as an artform for a while now.
From what I've been hearing about DD, the problem is terrible management more than anything. The outsourcing looks financially attractive on paper but doesn't actually get the job done (the last 10% taking 90% of the time and all that. sound familiar?), leaving Venice to pick up the pieces after the show is already late and over budget.
But that's inherently a problem with feature film (and especially animation stuff) - even the studios like FOX and Disney only get the profit once DVDs and merchandise have been selling - before then, they've given out millions to finance the production.
DD were pretty stupid trying to do the feature animation thing, and changing their company name a few times has caused them even more financial trouble in terms of having to buy software multiple times for site licenses.
There's always uncertainty that any subcontractor might be just saying they're making progress, only to blow up at the end. But this shouldn't be happening internal to the company.
Hadn't heard that about the software licenses! I thought the naming shenanigans were only the holding company, are you sure that wasn't just from adding licenses for Florida?
Top tier VFX studios in the U.S. not only hire stellar artists but also help guide the direction of the creative be it a commercial or cutscene. It reminds me of the difference between the various times I've worked with Carbon Five/Pivotal Labs vs a significantly cheaper alternative in another country. In that sense, I don't think the top motion graphics studios will all go out of business because of outsourced work, as their high level of creativity, direction, and execution is simply something outsourced work cannot completely replace. Learning how to be a stellar software engineer is more than just learning how to code in a language or two. Likewise, learning how to be a strong VFX creative is more than just learning how to use a few programs.
For the record, the peeps I know in the VFX make just as much money as the average engineer (125k - 250k).
I wonder, if this is just the result of an technology shift. Twenty years ago, one needed highly specialized guys to build star ship models and coordinate a stop motion animation of a space battle, ten years ago one needed for basically the same scene guys with really expensive workstations and Maya licenses. Today one can do very high quality work with free tools on an standard PC. ( And one can easily copy a few GB of rendered scenes to a server half a world away.)
At least my observation is, that quite a few short films ( often as projects from film schools) are getting to a point, where they have really amazing VFX.
This trend is probably accelerated by the more general use of VFX. Someone who specializes in building star ship models can only find work in SF films, but today someone who can render a complex transition for an advertisement uses the same technologies as someone who does 'real' VFX and can consequently transition much easier to real movies.
Sounds like that industry is getting hit by outsourcing, am I reading this right? Does look like articles about software engineering outsourcing a decade ago.
The reality is, if your work can be done by someone else at a lower cost, you're in trouble. Whether that person live in your country or not, has little impact nowadays.
If you stay at the edge, making sure your work cannot yet be done by someone else, then you'll get paid a premium for it.
That's just how things work, basic economics. Don't make taxpayers carry your burden.
Ps: written by someone who saw the impact of outsourcing first hand.
The problem is if you take that argument to its natural conclusion, the only people in the US with jobs in the future will be waiters and baristas. Who will be able to afford what the robots/companies are selling? It's not that simple. There is a delicate balance between livable wage and low operating costs. Ford knew he had to pay his workers enough to be able to afford the cars they were making.
actually if you take that argument to its natural conclusion the only people in the US with jobs would be people who innovate and create new value.
Don't think that waiters and baristas fit in that category. If i was either, i'd be really worried about my prospect, and would probably fall back to organized labor to protect my jobs, because the economic mechanism definitely would not!
Though not a typical business this sounds like a trade issue to me. Governments are subsidizing a product for export to the detriment of other countries.
Perhaps it's time for a large tariff on maple syrup and hockey-pucks?
Failure is a vital part of the market. Failure is the market saying, "This capital can be used more effectively somewhere else."
Failure is _not_ bad. It may be painful but it's necessary.
Think about it, should the govt subsidize every startup so that none fail?