On the surface, it would appear there’s a gold rush going on among the major studios these days, every bit as feverish as the 3D and VistaVision boom nearly half a century ago. The elusive payloads being mined are com-puter graphics imagery (CG) software designers, 3D animation artists, and miniature- and model-makers from every corner of the industry. Come the millennium, gold-fever Hollywood-style means owning your own visual-effects house, whether it’s acquiring an established independent, or starting a unit from the ground up.
So what’s the downside in the rush to stake a claim? The cost of getting into special effects totally overwhelms the slim profits a house typically generates. Add to that the enormous bucks paid for talent and technology, and the ruck becomes paying premium prices for top-flight outside vendors like ILM or Digital Domain, or dive into the effects waters and risk a potential bath. Of course, with a marketplace that equates big-budget features with amusement park thrill rides, the water has never looked so tempting.
With recent effects-intensive films like “Babe,” “Toy Story” and “Forrest Gump” generating entire franchises, and garnering Oscars to boot, and such blockbusters as “ID4,” Twister” and “Mission: Impossible” leading the ’96 B.O. pack, the industry is tripping over itself to keep pace. Four of the major entertainment conglomerates, Time-Warner, the Walt Disney Co., 20th Century Fox and Sony Pictures Entertainment, have purchased or initiated vis-ual effects divisions within the last few years, some already attempting to rival such established independents as ILM and Digital Domain. Fledgling mini-studio DreamWorks SKG is also jumping into the fray with a 40% own-ership of Pacific Data Images.
Observes Abdi Sami, executive VP of Dream Quest Images, independent since 1979 and purchased by Disney in May 1996, “In the last few years, the demand for these complicated digital effects films has totally overwhelmed the industry’s ability to keep pace. In Disney’s case, they did not want to wait to see a return on their money — set-ting up computer stations, hiring digital artists, etc. Buying Dream Quest put six of their films straight into our pipeline, which I’m sure was a very attractive option for them.”
According to Sami, the marriage of a big studio, with all its attendant red tape, and an independent effects house used to working for hire, can be a potentially tricky one. “There is a unique culture within an effects studio,” Sami remarks. “Leaving a solid management team in place, and respecting methods already proven successful, are two big reasons why we went ahead with the acquisition.”
The other, of course, was money. As in many other industries, Hollywood being no exception, the winds of consolidation are often triggered by hard financial times. The cost of labor-intensive digital work, as well as the speed of innovation, has made it tough for most companies to stay afloat. The deep-pockets of, say, a 20th Century Fox, gives the independent the much-needed capital infusion to survive the inevitable crunch. Fox recently acquired a majority interest in VIFX, which is led by Richard Hollander, formerly of Robert Abel and Associates, and a current member of the Digital Imaging Technology Subcommittee that makes recommendations for scientific and technical Academy Awards.
But if a buy-out is a lifesaver for an indie house, what’s really in it for the studios, particularly in the short run? Typically, a better understanding, and tighter rein, of budgetary concerns in their feature films. Plus the warm afterglow of potential Academy Awards — Dream Quest has received two in its 17-year history, for “Total Recall” and “The Abyss,” as well as a nomination for “The Mask.” But conventional wisdom deems the prospect of an income-producing venture unlikely.
As Tim Sarnoff, senior VP of Warner Digital Studios, observes, “With the long lead times for features — 18 months sometimes — it’s hard for an effects house to create a solid business plan. Add to that the cost of updating computer systems, and it becomes a very tough place to turn a profit.” In Time-Warner’s case, plans to buy an existing house were discouraged in favor of developing a division internally. As Sarnoff notes, “the aim was to protect our studio’s feature film division, as far as getting the effects we want on demand and not relying on outside vendors, as well as giving us the ability to develop proprietary software for future projects.”
Of course nowadays the studios may be the only ones with enough money to even sustain an effects house. One well-placed studio exec attributes the soaring costs to just keeping the highly paid digital artists and programmers content. With such high-profile companies like Pixar and ILM based up north, a good portion of the coveted industry talent would be hard-pressed to relocated to Burbank or Culver City unless given generous economic incentive. Couple that with a general shortage of trained talent in both the U.S. and overseas, and you have an industry where the cream of the labor crop can command big bucks. Still in all, the majors seem keen to overlook a potential money pit when faced with the kinds of returns effects-driven films bring in.
The bigger players aside, what will become of the visual effects industry during this new studio-led charge? Peter Takeuchi, executive producer of Film Projects at Rhythm & Hues (winner of last year’s visual effects Oscar for its 3D work on “Babe”) describes his company as “having a solid base in CGI commercial work, as well as an upsurge in theme park attraction jobs to keep our income flowing.”
“Visual effects has broken down into three broad categories,” says Takeuchi, who formerly worked at both ILM and Digital Domain, “2D work like split screen, blue screen comps and wire removals; traditional work like modeling and motion control photography; and the third area, which is the most complex and the one we’re concentrating on, 3D computer animation.”
Following its Academy Award-winning feature debut, Rhythm & Hues has made no secret of its wish to produce its own CGI feature film, using Disney’s alliance with Pixar on “Toy Story,” or DreamWorks and PDI as models. Independents such as Rhythm & Hues desiring to create their own CGI characters, end up looking to the studios for a more efficient model of doing business.
“Everyone is striving to nest their effects work within a content-creating environment,” remarks Ken Williams, senior VP of Sony Pictures Imageworks. “That’s because the real payoff in this business comes when you can harmonize the creative and technical capabilities of visual effects with the creation of CGI characters, whether they be photo-real, stylized or cartoon, and pass them down the chain of revenue. 3D character animation is one of the highest levels of artistic expression right now, as well as the brass ring in terms of commercial potential.”
The first of the major studios to initiate an effects division, experimenting with electronic storyboarding back in 1992, Sony’s Imageworks looks to be leading the charge with the recent addition of Ken Ralston, a five-time Oscar winner and former Visual Effects Supervisor at ILM. Of course the fervor with which the studios have embraced the effects industry relies on securing high-profile Academy Award-winning or nominated veterans like Ralston, or in Warner Digital’s case, Michael Fink, who was nominated for “Batman Returns.”
For all the riches to be mined in the current gold rush, there are, as Peter Takeuchi describes, “a limited number of people with heavy digital production experience.” Or as Imagework’s Williams astutely observes, “these individuals are essential in order to mentor the next generation of technical and creative stars.”
Of course no matter who is at the helm, the studios have already made a big commitment to ride the visual effects wave. For the first time in decades, Oscar honorees may work for the same companies who fill up your local multiplex with product; exactly the type of gold strike everyone in Hollywood wants to hit.