Studio's continuing appetite for CGI shots leads to bigger-budgeted pix

They can vaporize cities, mobilize armies of Orcs and show faraway galaxies teeming with life. But there’s one trick Hollywood’s CGI wizards have yet to perfect: slashing the rising cost of special effects from studios’ bloated production budgets.

The end of this year will see CGI-heavy tentpoles “King Kong,” “The Chronicles of Narnia” and “Harry Potter and the Goblet of Fire” duking it out at the B.O.

This summer saw plenty of digital effects in both hits (“Star Wars: Episode III — Revenge of the Sith”) and flops (“Stealth”), but after a tepid summer, the studios are betting digital magic will lure holiday auds in droves.

When computer-generated effects first hit Hollywood in the early 1990s, they were touted as a panacea for fast-rising film budgets.

Digital effects promised a low-cost alternative to expensive models and sets, thus bringing down production budgets.

More than a decade later, the cost of CG has come down dramatically. Effects like the liquefying villain in 1991′s “Terminator 2: Judgment Day” now can be done on a PC with off-the-shelf software.

Yet effects budgets are higher than ever, now approaching $100 million on some of the biggest tentpoles. Studio execs say effects work is the primary factor driving budgets into the $200 million range.

What went wrong? Even though the rule is that computers and software get faster and cheaper every year, falling tech prices can’t keep up with an older Hollywood rule: Studios always want more! more! more!

“Back in the 1980s, 200 shots was a huge show,” says Digital Domain topper Scott Ross, using the typical effects supervisor’s term for a single movie or TV program.”Now it’s ’800 shots? No problem.’ “

Last year’s “I, Robot” had nearly 1,100 shots, most done by DD and Weta Digital. “Stealth” had DD alone doing about 635 shots.

These effects aren’t just an afterthought. In many cases, they’re a key part of the marketing campaign, with “money shots” requested nearly a year in advance to power a trailer.

“You can’t underestimate the marketing component of visual effects,” says Chris DeFaria, senior VP of physical production and special effects at Warner. “When you have something key to communicating a movie, like the wave in ‘The Day After Tomorrow,’ you have to get it done in time for the teaser.”

And filmmakers don’t just want to wow auds with things you could never see in the real world, like a Terminator that splits in half or a dinosaur roaming through a park.

Today, they’re just as likely to want CGI characters that look convincing next to real people, or photorealistic images of people and everyday objects, like a man swinging between buildings or a city being destroyed.

Realistic, familiar objects are much more difficult (and expensive) to create on a computer. If your digital T-Rex’s gait isn’t quite authentic, well, who can tell? But if your CG Clint Eastwood’s squint isn’t exactly right, you have a problem.

For those groundbreaking, realistic touches, studios rely on the big four f/x shops — ILM, Digital Domain, Rhythm & Hues, and Sony Imageworks — to be both craftsmen and innovators.

“We’re in the business of inventing, not manufacturing,” Ross says. “We’re perpetually doing R&D. You have to invent it, and then it’s proprietary.”

Last year, for example, DD was busy on “The Day After Tomorrow,” creating fluid-simulation software to render waves inundating Manhattan.

“Five years later, there will be a commercial package and the mom-and-pop shops can do fluid sim,” he predicts. “But the big four will have moved on.”

The difference between the effects in a midbudget pic and a big-budget tentpole, insiders say, often is trial and error. When budgets are tight, producers take what they can get on the first try. When spending is big and the stakes are high, it can take numerous attempts to perfect something new and difficult. Since the majority of an f/x budget ultimately goes to manpower, costs rise quickly.

Almost to a man, f/x pros complain that filmmakers and studios don’t plan well enough, keep them out of the process too long and waste a lot of money as a result.

But production execs say in return that f/x shops like to make their business a “black box” in which studios don’t know exactly what they’re paying for, and thus are liable to be overcharged.

Regardless of the culprit, both sides agree communication problems often lead to expensive, last-minute work.

Sometimes even a sensible decision to use a cheaper vendor can come back to haunt a studio, says ILM prexy Chrissie England.

“They can go to garage shops, go to 20 different vendors, and maybe they can get 90% of the work done on time at best quality, but there is that 10% that ends up being a 911.”

That type of emergency is the bane of bean counters everywhere, as shops step in at the last minute to rescue a show in trouble.

Sometimes even the big shops get into trouble, too. A major “911″ went out on “The Day After Tomorrow” after helmer Roland Emmerich rejected much of DD’s work.

Several smaller shops were among those that stepped in.

“Any time you have to change something after the fact, it’s way more expensive than when you can plan it in advance,” says Kent Seki, visual effects supervisor at Pixel Liberation Front.

With early demand from marketers and last-minute fixes, f/x shops often find their schedules get compressed with little warning.

Even without changes, they complain that shortened production and post-production schedules are forcing them to do more work in less time.

Tight deadlines are driving personnel costs sky-high as top shops and major projects compete for talented artists and technicians.

The same sort of wage inflation hit the animation business when DreamWorks Animation first set up shop and started raiding Disney. Eventually labor costs came back down, but for a while, skilled animators could make a killing.

But while there are cost problems in the f/x biz, insiders note budgets might be even higher without CGI.

“The definition of what an effect is has expanded dramatically,” he says. “We’re continually using CGI in other departments like sets, wardrobe and make-up. Imagine if we had had to build the entire city in ‘Troy.’ “

In other words, CGI breakthroughs only increase the demand for greater scope and spectacle. So long as studios are relying on effects to wow auds in trailers and keep them buzzing after they leave the theater, it’s going to be tough to contain the costs of CGI.

One f/x exec recalls getting a script for a movie currently in production that simply called for “an effect we’ve never seen before.”

With expectations like that, a $200 million budget may one day seem like a bargain.

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