Exec sees no windfall on ‘Titanic’

Digital Domain, the Venice-based visual effects house responsible for the effects work on “Titanic,” won’t be making much, if any, money from the job, according to one of its founding owners, CEO Scott Ross.

Ross also asserted that, contrary to some industry reports, “Titanic” helmer and DD co-owner Cameron will not be profiting directly through billing for post-production cost overruns either.

“When we first bid this show, Digital Domain gave up all profits to help get the movie made,” Ross told Daily Variety.

But sources close to the f/x house said that IBM and Cox Communications, DD’s two investors, were concerned that DD’s margin would be squeezed by the demands of Cameron’s over-budget, over-schedule project.

In fact, an insider said, the exclusive deal that makes DD the effects house for all of helmer James Cameron’s movies has a built-in profit margin, but it is “less than industry standard.”

That’s mixed news for IBM and Cox, the latter of which has already lost plenty on its other Hollywood investment, Rysher Entertainment.

Profit margins are already thin in the f/x industry. But if the company has to take a cut when it works on big movies for its co-owner and principal director, where’s the benefit?

“You do that to establish a relationship with a producer or director,” said Ross, a former president of Industrial Light & Magic, “in order to continue to have projects in the future. Or if the show is so extraordinary that it furthers your technology, or if you are so excited about a show that you just have to do it.”

DD is also counting on Oscar’s gleam to help attract digital talent at a time when every f/x house is competing fiercely for computer artists.

Neither Cox nor IBM could be reached for comment.

Ross also said, “We’re delivering the effects, according to our contract with Fox, within first two weeks of July.”

Ross conceded that additional effects shots have been piled on by Cameron. But those costs would not be shouldered by DD. “For additional work, we’ve had to go back to Fox for more funds,” Ross said.

But the f/x industry is buzzing about the digitally created extras that Cameron has cast in certain scenes in “Titanic.” A clip screened at ShoWest showed a synthespian tumble from the deck of the sinking ship into the cold Atlantic. The word is that DD is making extraordinary strides in this brave and very expensive new world of visual effects.

“They’ve got digital extras just walking around,” said one f/x industry source who had seen some rough footage.

Ross declined to comment on the synthespian effects, except to say, “One of the reasons we’ve decided to take the work was because the technology would put us ahead of the pack.”

That was the case, Ross said, with Cameron’s “The Abyss” at ILM, the film that introduced morphing to the film vocabulary: “We decided not to make any money, in order to establish a relationship with an exciting new filmmaker.”

Ross took that relationship with him when he left ILM to found Digital Domain together with Cameron and animatronics whiz Stan Winston. Cameron owns one-third of the founders’ share of 29.7%. Ross said Cameron receives no salary, no fee and no payments through DD on the “Titanic” job, or through any other work on any movie DD has done to date.

“The idea, of course,” said Ross, “is for the profits to flow through to the shareholders. That hasn’t happened so far.”

Cameron, as an owner, profits from any business that builds the value of his company.

But so do the employees, for whom 12% of the company’s shares are reserved. The arrangement is modeled on Silicon Valley startups that hold onto talent with relatively low salaries by enlisting them in profit-sharing plans that promise to turn vested employees into millionaires once a company goes public.

An IPO is contemplated, said Ross, but the offering is not on the near horizon. The current state of the market would not be conducive to a public offering, in any case.

But Ross and his company won’t go begging. DD boarded the “Titanic” after finishing off “The Fifth Element,” a not inexpensive effects job for Gaumont.

Now Cameron is cutting the film on a fleet of Avid editing systems docked at his home, which is connected to DD through sophisticated high-speed networks. Working with him are editors Conrad Buff and Richard Harris.

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