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VFX Biz a Barometer of Bigger Debate

As pols ponder outsourcing vs. offshoring, biz is already living the consequences

With the Republicans winding down their confab and Democrats girding for their own party next week, this seems like a good moment to draw a lesson about the presidential campaign from — what else? — the visual effects business.

There was a moment over the summer, you see — before a certain member of the House Science Committee revealed that his grasp of reproductive biology is about on par with an old “Theodoric of York, Medieval Barber” sketch on “SNL” — when President Obama and former Governor Romney traded barbs over “outsourcing” vs. “offshoring.”

Hearing the soundbites, I thought, “Hey! I know something about that.”

And then I thought of the words of Nelson Mandela: “Where you stand depends on where you sit.”

Many visual effects companies are rightly proud of their global pipelines. They have “offshored” work to lower-labor-cost areas such as India, China and Malaysia, and view this as a big step up over “outsourcing,” which they used to do.

Outsourcing to a company in India or China complicates production management, which is a major responsibility of the lead vfx company on a big movie. The lead company doesn’t control the subcontractor’s tools or procedures. The subcontractor needs to turn a profit, at least in theory. And, of course, vfx jobs migrate to a foreign company that keeps its profits at home.

Now most big vfx companies are global. Many have branches in India, Vancouver and/or London. Rhythm & Hues has two locations in India, one in Malaysia. ILM is in Singapore. This lets them put in their own management, procedures, proprietary tools and ensures their own quality standards are met, while taking advantage of the tax incentives and lower costs the foreign location allows.

The clients (that is, the producers and the studio) benefit by getting more consistent vfx at a lower cost. The vfx studio benefits by keeping work and profits within the company. So it’s a win-win, right?

That depends on where you sit.

If your chair is behind an executive’s desk at one of the majors or in the management office at a vfx company, it’s a win. But you’re behind a monitor at a vfx workstation, and that workstation is moving to Hyderabad, it doesn’t matter whether the job is “outsourced” or “offshored,” it’s just as gone.

Rhythm & Hues, which has been a leader in offshoring, has long argued that the cost savings have allowed it to grow the company, and there are actually more jobs in its California HQ than ever. But we’re hearing that the company’s goal is now to increase the portion of its work done abroad from 40% to 60%-80%. (R&H declined to discuss its specific plans but generally denied this.)

So when President Obama talks about Mitt Romney outsourcing jobs during his time at Bain, he’s standing with workers whose jobs have migrated, by whatever corporate mechanism, beyond America’s borders. When Gov. Romney praises offshoring, he’s standing with the executives who saved their companies or boosted shareholder value by cutting costs while maintaining quality — and with the customers who get better, cheaper goods as a result.

I sit at a workstation, creating content. That tells you where I stand. But I don’t think there’s really any way to stop digital vfx and animation production from migrating to lower-cost areas. I have family connections to India, too, and having seen how much misery still haunts the streets of New Delhi, I believe more prosperity abroad is good for the human race.

If it was my job being offshored, though, as has happened to some newspaper jobs in recent years, I think my empathy would be strained to breaking.

And after the Todd Akin incident, aren’t you wondering what junk science is tumbling around the minds of lawmakers on the House Subcommittee on Technology and Innovation? I sure am.

Bits & Bytes:

Doug Trumbull is to be the keynote speaker at SMPTE’s 2012 Symposium: High Frame Rates for Digital Cinema on Oct. 22. SMPTE’s regular tech conference is slated for Oct. 23-25 in Hollywood and will include presentations on 3D, closed captioning, ultra-high-definition television and more.

The keynote speaker for the Visual Effects Society summit on Oct. 13 is to be George T. Whitesides, CEO and president of Virgin Galactic. The VES Summit will be held at the Ritz-Carlton in Marina del Rey.

The 5D Institute will present its transmedia summit, “The City and the Book,” Sept. 20-21 at the George Lucas Building at USC School of Cinematic Arts.

The Hollywood Post Alliance has chosen Gradient Interactive’s previsualization product Sandbox for its Judges Award for Creativity & Innovation in Post Production. Also, the NAB Show has returned as sponsor for the HPA Engineering Excellence Award. The seventh annual HPA Awards are to be presented Nov. 1 at the Skirball Center in Los Angeles.

Previs specialists Persistence of Vision have launched a multimedia content unit, servicing videogames, musicvideos, commercials and webisodes. First projects for the unit include work for Microsoft, Nike and Snail Games.

Final Draft has launched its “Final Draft Writer” app for the iPad. App brings Final Draft’s screenwriting software to the Apple tablet.

The 3D Film Mart, the first co-production market for 3D films in Europe, is to be held Dec. 4-5 in Liege, Belgium. … Sensio has pacted a distribution agreement to present Big Picture Digital Productions’ Imax 3D movies via on-demand rental on streaming 3D VOD service 3DGO! … Sensio has also pacted with with Chinese electronics maker Hisense to include Sensio Hi-Fi 3D in Hisense 3D TVs. … MasterImage 3D has struck a partnership with Truly, a leading maker of displays for portable electronics, to supply autostereo (glasses-free 3D) screens. Truly will use MasterImage technology in mass-produced displays.

Albert Koval has joined Testronic Labs as VP, UltraViolet services and software testing. Koval comes to Testronic from Solekai Systems in San Diego, where he oversaw the company’s UltraViolet business and development of its DECE compliance verification program.

Animal Logic, the Sydney-based vfx and animation studio, has expanded its advertising team with director Simon Robson and vfx supervisor/lead flame artist Jonathan Hairman. … Brickyard VFX co-founder Dave Waller directed “Splendid Splinters,” a 30-second spot for the anniversary of Boston’s Fenway Park.

Technicolor has partnered with SmartJog to expand its digital satellite digital cinema distribution service in Europe. The SmartJog satellite service has more than 1000 sites in nine European territories.

Sony Colorworks performed the color grading for Tri-Star’s “Sparkle.” Digital intermediate colorist John Persichetti worked with director Salim Akil and cinematographer Anastas N. Michos on the project.

Panasonic has announced free downloadable scene files for the P2 HD and AVCAM HD camcorders, to simply changing a camcorder’s look.

Rental equipment and editorial space supplier Pacific Post will integrate FotoKem’s nextLAB software into its editorial offerings. NextLAB is a data management and dailies software solution. Pacific Post will integrate it with Avid editorial systems.

Colorfront is now shipping its on-set dailies system, Express Dailies. Technicolor, Deluxe and Light Iron are among the companies that have already licensed the system.

The Intl. Cinematographers Guild is hosting a master class on “Hyper-Reality: High-Res Digital Cameras Transform Filmmaking” at IBC in Amsterdam on Sunday, Sept. 9. Among the speakers are Steven Poster, Philippe Ros and Lennert Hillege.

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