Burn It Down and Start Again: The VFX Industry’s Reckoning

This week, we’re talking about the ongoing reckoning in the VFX industry. With yet another major player shutting down, it’s clear that the traditional studio model is broken. But amidst the bad news, there’s a silver lining—one that points toward a better future for VFX artists and filmmakers alike.

Technicolor—the legendary post production house behind some of the industry’s biggest projects—has shut its doors, taking with it two VFX giants that it owned; The Moving Picture Company, and The Mill, and leaving thousands of VFX artists unemployed.

This news is equally sad, and unsurprising. VFX studios collapsing under their own weight is practically tradition at this point. In my time working in film, I’ve seen so many go under, like Digital Domain (Titanic, Tron: Legacy, Benjamin Button), Asylum (Pirates of the Caribbean, Terminator Salvation), Cafe FX (Pan’s Labyrinth, Sin City), ESC (Created specifically for The Matrix sequels), just to name some of the bigger ones. Countless small and mid sized studios have died over the same time period

Simple: VFX has never been a stable business model. Clients want more, budgets keep getting squeezed, and artists get caught in the grind. The key reasons are:

• Industry Disruption – VFX has been in crisis for nearly 2 years now, as a result of the last round of writers and actors strikes, and it’s not the first time that that’s happened. Since VFX companies work on tiny margins of profit, it’s very rare that there’s enough in the bank to survive an extended period without much work. Luckily, things are starting to improve again, but just too late for Technicolor.
• Fixed-price contracts – They bid on projects but if the workload increases, they don’t get paid extra. This isn’t industry standard, but production houses with power (e.g Marvel) can force them through
• Studios demand more for less – Hollywood squeezes VFX companies to deliver top-tier work for shrinking budgets. Combine that with fixed-price contracts, and you’re in for a world of hurt
• Tax incentives create instability – Work moves to wherever the latest government subsidy is, forcing studios to chase locations. If a government stops offering a certain subsidy, or another country offers a better one, all VFX work can literally hop from one company to the other, like a Hollywood version of musical chairs.
• Loss leading projects – There’s a temptation to over invest on large projects for the work that that will bring in in the future. For example, Rhythm and Hues created amazing VFX for “Life of Pi”, and won an Oscar for it. But they didn’t have enough money left to survive until the next big project, and collapsed. If you want to see how much the world outside of VFX cares about this, look what happened when they tried to address the problem in their Oscar speech! (Trigger warning – it’s incredibly painful viewing)
• Delayed payments – Big studios often delay paying VFX vendors, making it hard for companies to survive.
• Globalisation – With studios looking to cut costs, more work is being outsourced to India and China, where labor is cheaper. This has been standard practice for many years (and something that Disney also did in their 2D golden age), but was generally for more low-skilled tasks. However, those countries now have an abundance of VFX talent in all areas.

I’ve seen some new outlets blaming AI for affecting VFX. Regular readers will know how much I experiment with AI, to see what it has to bring to the table. As far as VFX and filmmaking goes, I currently think that’s “quite a lot”. But it’s not taking jobs yet, and hasn’t found much footing in professional VFX, since it’s currently difficult to direct and gives results that look impressive but couldn’t pass technical quality control checks the streamers and production houses demand.

I’ve always had a great fondness for the VFX industry, since it gave me a career and allowed me to work on amazing films. But once I understood it, I felt like it needed to get burned down and rebuilt from the ground up.

It’s been a decade since I left working for large VFX companies precisely because I thought that this way of working is mad. It’s not just bad business, it’s anti-creative – you don’t need thousands of artists to do great work, and that’s what I set out to prove with Screenclay FX, my VFX company, and then Shoot First, teaching the methods that we created at Screenclay.

Many years (and many closed VFX houses later), I believe that more firmly than ever. For too long, VFX has been built on rigid pipelines that break work into tiny, repetitive tasks. When you’re spreading tiny margins of profit over huge teams of artists, in an industry that doesn’t respect their output, you’re asking for failure. If the industry moves toward a model where fewer people do more meaningful work, it will put power back in the hands of creators rather than just big corporations.

You can see the signs of that happening if you look for them. The animated film Flow was made entirely using Blender, by a small team in Latvia, and it’s nominated for an Oscar this year.

I do feel for all the artists (including many of my friends) that have been affected by Technicolor’s collapse, but I think in the long run, we’ll end up with a leaner, more nimble film industry, and that’s exactly what Shoot First was created to serve.