London preps to gain visual effects business

London vfx houses create wizardry

Of all the magic performed by Harry Potter in the past decade, the growth charm cast upon the U.K.’s visual effects sector has been among the most dramatic.

Under the spell of Warner’s boy wizard, a few narrow streets in London’s Soho have become a global capital for film vfx.

With a guaranteed flow of work from the “Potter” franchise, London’s four big post houses — Double Negative, Framestore, the Moving Picture Co. and Cinesite — have been able to develop the capacity and confidence to match the best Hollywood has to offer.

But now Soho’s vfx mavens are facing up to life after “Potter.” In a business of crippling capital costs and tight profit margins, the question is whether they can they sustain their position at the cutting edge without the security of another $200 million episode of CGI-heavy wizardry every year.

“There would be a contraction of our business if there was a contraction of production in the U.K., but there’s no sign of that happening,” argues Framestore CEO William Sargent.

Adds Christian Roberton, MPC’s managing director of film: “There is a challenge, and we’ll rise to it. We have now reached critical mass. In Soho, you can consider us as one large facility broken up between multiple sites. The standard of work here is perceived as being world class, and the California companies are finding it hard to compete with us on cost. At MPC, we already have work booked until March 2013.”

Since the first Potter, the U.K.’s big four have expanded from around 350 staff to 3,000 worldwide — including their operations overseas. Most of these workers are based within a few minutes’ walk of each other in Soho. It’s the greatest concentration of top vfx talent anywhere in the world.

Harry Potter wasn’t solely responsible for this transformation. James Bond, Christopher Nolan and Ridley Scott have also provided a regular supply of high-end work, set to continue with Bond 23, “The Dark Knight Rises” and “Prometheus.”

But it was Potter’s promise of seven (or as it turned out, eight) films, and Warner Bros.’ determination to do as much post-production as possible in the U.K. to take full advantage of tax breaks, that originally gave London’s vfx vendors the courage to make the massive investment in infrastructure, R&D and talent necessary to bring themselves up to the standard of world leaders such as ILM, Digital Domain, Sony Pictures Imageworks and Weta.

One company topper estimates Warner Bros. has spent $150 million on British vfx across the eight Potter films. The franchise has provided nonstop employment for a decade, and triggered a virtuous circle of universities channelling some of their brightest computing and science graduates into the business.

“Two words — ‘credibility’ and ‘capacity’ — sum up the impact of ‘Harry Potter,’ ” Sargent says. “Without ‘Potter,’ we would not have had the growth. Before then, the nature of the U.K. film business gave us no confidence to spend $10 million. But now we can do six, seven or eight major studio movies in London in any 12-month period.”

Double Negative CEO Matt Holben calls the time before the Potter franchise started an “embryonic” time for vfx in London. “We were not even a speck on the horizon to California companies like ILM and Sony Imageworks. They were gods to us. We could only aspire to have the R&D teams and vast resources that they did.”

For the early movies, when London didn’t have the capacity, Warners had to rely heavily on ILM, particularly for the most complex work, such as character animation. But for the last two films, the Potter producers finally felt able to do without ILM entirely.

“It’s a sign that we have reached critical mass that you can now do a whole ‘Harry Potter’ film in this country,” Roberton notes. “Every year we’ve been challenged to raise our game and develop new visual effects. It has given us the confidence to go to the studios and guarantee that we can deliver to the same level as the California houses.”

Potter’s success, combined with the U.K. tax credit, has led Warner Bros. to ramp up its U.K. production, and emboldened other studios such as Disney, Fox, Paramount and Universal to follow suit.

Warner alone, though, has a glut of CGI-laden projects in various stages of production, including “Dark Shadows,” “The Dark Knight Rises,” “Jack the Giant Killer,” “Wrath of the Titans,” “Gravity” and “Sherlock Holmes 2.” The studio’s decision to convert its old “Potter” base at Leavesden into a permanent studio means this flow of work will continue.

“It was after the first three ‘Harry Potter’ films that Hollywood really started taking notice of London,” notes Antony Hunt, managing director of Cinesite. “Warner is not our biggest client now; Disney is.”

Hunt started out at the Mill, which was involved in the first two “Potter” pics but pulled out of film to concentrate on its more profitable commercials arm. Its exit shows that Soho’s rise hasn’t all been smooth sailing. The Mill’s venture-capital owners didn’t have the appetite for film’s high risks and narrow margins.

“The Mill exited at exactly the wrong time,” Hunt says. “If they had dug deep and stuck in there for ‘Prisoner of Azkaban,’ (they would have done well).”

Film vfx is a business that requires deep pockets, strong nerves and a long-term vision. Double Negative and Framestore are both owned by their managers. Cinesite is part of Kodak, and MPC is owned by Technicolor.

“Staying competitive in visual effects gobbles up a huge amount of capital each year,” Hunt says. “We spent over $8 million in the last year alone on internal infrastructure and to attract the best people, to accommodate the continual growth of visual effects and the move into 3D. We’ve doubled in size over the last 18 months.”

“Film is not an easy business to survive in,” Holben agrees. “The margins aren’t great, and we have to work really hard to make sure we have a good spread of projects with rolling delivery dates to iron out the lumpiness that exists in our business model.”

Double Negative has diversified by opening up in Singapore. MPC has set up shop in Bangalore and Vancouver. Framestore has dipped its toe into production, so far without much success, but will continue to invest in one or two projects a year, such as Neil Jordan’s “Graveyard Book.” Cinesite has experimented with developing its own TV shows.

But their main priority is to take advantage of the expanding vfx demands of ever-bigger tentpoles, and to become ever more closely integrated into the creative process.

“Thank God, the major studios don’t see the U.K. as a risk any more,” Hunt says. “Over time, they have seen that, given the opportunity, London can always respond in economies of scale, in price and in quality of work.”

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