Topper says fx firm is 'downsizing not closing'

Last week rumors began to swirl that CafeFX, the highly regarded Santa Maria-based visual effects studio, was shutting down. But topper Jeff Barnes quashed the rumors, telling Daily Variety the company was “downsizing and retooling not closing” and still working on a project.

Barnes has been vocal about the need for California to adopt production incentives like those that lure vfx production to perpetually booked London and rapidly growing Vancouver.

But there are other trends squeezing mid-sized visual effects studios.

On Tuesday, Barnes followed up by email, confirming the company had closed its Santa Monica offices.

“As we all know, the industry in California is experiencing a radical course correction as globalization, commoditization, foreign incentives and the economy continue to challenge our country and our state. Labor costs need to come down, overheads reduced, specializations realized, new partnerships solidified and smarter pipelines implemented.” Barnes went on to say that CafeFX has “reluctantly reduced our headcount” to make those changes.

CafeFX recently did 3D conversion work on “Alice in Wonderland” and Barnes reported 2009 had been a strong year for the company, but said 2010 would be slower.

He declined to name the project they’re working on, other than to call it “very big in terms of exposure. Full CG work.” (Vfx studios, as vendors, typically must wait for the producer or studio to announce they’re on a pic.)

Australia, by contrast, has the kind of incentives Californian companies covet, including some that can reach 40%. Yet even there, mid-sized vfx studios are rethinking their model.

Rising Sun Pictures, like CafeFX, had facilities in two places: Adelaide and Sydney. James Whitlam, executive producer for the Aussie vfx studio, told Daily Variety he saw a trend toward bigger companies.

“There’s a new paradigm the studios seem to be looking at, where medium-sized companies can deliver like the big guys can.” Rising Sun had capacity for about 500 shots a year, many of them on tentpoles including the “Harry Potter” pics. As the company grew, it was awarded larger and more difficult sequences, but it couldn’t meet growing studio demands.

“Being about 100 people, being between small and midsize, was a very dangerous place to be,” he said. “We saw the writing on the wall, so we decided to consolidate our Sydney office into our Adelaide office.”

By doing so, they were able to ramp up capacity to 750-1000 shots a year, with about 200-250 staff and have installed a DI theater.

“We’re really cognizant of not being too big,” he said.

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