During Tuesday’s keynote address at SMPTE, Scott Ross likened the glide path for the visual effects industry to that of a helicopter whose rotors have stopped turning and then just falls from the sky.
The former CEO and founder of Digital Domain went on to describe the drastic impact of labor costs, competitive bidding for work and uncertain workflow on a business now plagued by bankruptcies and jammed pipelines. Though many studios rushed in to buy or start their own vfx facilities during the 1990s, Ross believes many have learned what became obvious to him while running Digital Domain.
“It’s very difficult to run these businesses because there frankly isn’t a lot of money to be made,” he said. “And the work don’t mean a thing if it don’t go ca-ching and make some money.”
Studios eager to cash in on the vfx industry may find getting out of that business even more costly than getting into the trade, Ross explained. He went on to note that despite Sony’s efforts to unload Sony Pictures Imageworks for many years, finding a buyer might not be such a boon. It’s possible the depreciation hit from such a sale would be so huge that it could hurt Sony overall because of the amount of the investment already made in the vfx company, Ross speculated.
The former general manager of ILM believes relationships with a studio or filmmaker aren’t enough to keep a facility going over the long haul. Despite Weta’s recent triumphs, Ross doesn’t believe the vfx house will be able to sustain its success once helmer Peter Jackson no longer depends on the company for his vfx-heavy films. At that point, there may not be enough work to prop up the facility because other helmers and studios will shy away from sending their files all the way to New Zealand, Ross explained.
“It’s extremely costly to keep and maintain a creative workforce, develop proprietary software and then compete with other companies for work on jobs that involve creating visuals that have never before been seen onscreen,” he said. “But the ones that have done it have access to distribution like Pixar does through Disney.”
Ross didn’t shy away from weighing in on the question of unionizing vfx workers, which has been hotly debated by industry professionals for several years. While he admitted that many problems for vfx workers need to be addressed, the former vfx house chairman pointed out that no one will want to carry the cost that comes with a union. Studios will continue to push for more work at a lesser cost because they’re focused only on the bottom line.
Ross had a similarly dark prediction for the arc of the 2D to 3D conversion business, which is now emerging as titles like “The Lion King” have proved profitable with a 3D re-release. The same forces will challenge and change this technical work over time, and jobs will ultimately be pulled offshore.
“The technology is important in 2D to 3D conversion but ultimately what you need are people because it takes a lot of actual people to do this work,” Ross said. “The problem is that lower costs of labor are going to motivate studios and facilities to take those jobs out of the U.S., and we’d be fools to think it’s going to be different this time than it was with vfx.”