Life of Pi without R&H

[agcohn]

So the argument is R&H got 100 MILLION dollars, but still went out of business, so that's the fault of the makers of Life of Pi that paid them the 100 Million? Yea, that make sense.

Again, if the guy that co-founded the Cameron VFX studio wants a piece of the 700 million that Life of Pi made, he should go out and make a movie and risk losing the capital it costs to make it. I don't see him offering to pay back the studios that spent money on VFX for John Carter.

he wants his cake, and to eat it to. he doesn't want to risk anything, but wants to share in the rewards. Pay me a salary, AND give me a piece of the gross, but I'm not going to risk a penny of my money if the thing is a huge flop and loses money. That's ridiculous.

Do we know WHY R&H is going bankrupt even though they got 100 Million? Could it be poor management?

he says there was only a 5% margin. Well 5% of 100 million is 5 million dollars. OMG, I only made 5 million dollars! Boo hoo.

They went bankrupt, because they didn't make enough money to continue functioning. $5 million profit is nothing to a major company employing hundreds of people.

How many people do the reports say R&H had to layoff? 300? $5 Million might employ 300 people for 6 months (and that's only if those people are making around $30K a year... they were undoubtedly making more).

5% profit is not enough for a major company to survive on. The problem is the studios undercutting the VFX companies bids so much, they are literally driving the VFX companies out of business.

 

[Nektonic]

Isn't this just the tip of the iceberg in terms of a larger outsourcing issue that is going to completely take over big scale filmmaking in the coming years? Hollywood now wants a piece of the massive potential Chinese audience. It won't surprise me if in a decade or two, most Hollywood movies end up being thought of equally as to how they play to China, as they play to US and European audiences.

I see that as being the BIG thing that changes movies in the 21st Century. Visual effects outsourcing could very well just be the appetizer to the feast that will be China gobbling up the a large portion of the film industry.

 

[Gillvane]

They went bankrupt, because they didn't make enough money to continue functioning. $5 million profit is nothing to a major company employing hundreds of people.

How many people do the reports say R&H had to layoff? 300? $5 Million might employ 300 people for 6 months (and that's only if those people are making around $30K a year... they were undoubtedly making more).

5% profit is not enough for a major company to survive on. The problem is the studios undercutting the VFX companies bids so much, they are literally driving the VFX companies out of business.

The average grocery store has a 2.5% profit margin.

So far from everything I've read it seems the Life of Pi production paid the going rate for VFX work. The Studio that did the work fell on hard times AFTER Life of Pi, then got jealous that Life of Pi made a boat load of money while they went broke. They felt they deserved a pice of the profits just because they worked on the movie and it was successful. I don't think they do because they did not RISK losing any money if the movie had tanked. That's who reaps the profits, the people that risk the capital in the first place.

It's like me saying I want you to invest in the stock market and give me some of the profits if the stock goes up. But if the stock tanks and you lose everything, oh well that's your problem. Investments dont' work that way. The people putting up the money expect to get paid because they are the ones losing if things go wrong.

 

[agcohn]

The average grocery store has a 2.5% profit margin. It doesn't sound to me like Life of Pi is responsible for R&H going out of business. Sounds like R&H is responsible for R&H going out of business. If they couldnt' get another big movie right away and they wanted to keep 300 people employed, then they obviously couldn't stay in business very long. I don't see any reason to blame that on Ang Lee.

So far from everything I've read it seems the Life of Pi production paid the going rate for VFX work. The Studio that did the work fell on hard times AFTER Life of Pi, then got jealous that Life of Pi made a boat load of money while they went broke. They felt they deserved a pice of the profits just because they worked on the movie and it was successful. I don't think they do because they did not RISK losing any money if the movie had tanked. That's who reaps the profits, the people that risk the capital in the first place.

It's like me saying I want you to invest in the stock market and give me some of the profits if the stock goes up. But if the stock tanks and you lose everything, oh well that's your problem. Investments dont' work that way. The people putting up the money expect to get paid because they are the ones losing if things go wrong.

Rhythm & Hues didn't go bankrupt because of Life of Pi, and I don't think anybody is really trying to argue that. They are using Life of Pi as the example, because it is a high-profile award-winning film that was 90% VFX.

People are really blaming the studios for trying to cut costs so much that they are literally driving the US VFX industry out of business. Rhythm & Hues is just one of many VFX houses that has gone bankrupt recently, another being Digital Domain. That is 2 of the biggest US VFX houses around that have gone bankrupt.

And it isn't just that the US VFX industry can suck it up and do the work for the rates that Chinese / Indian VFX companies are willing to do it for. It would be illegal for them to pay their employees what Chinese / Indian VFX companies are paying their employees (less than US minimum wage). The janitorial staff at Rhythm & Hues probably made more per year than Indian VFX artists.

 

[refocusedmedia]

Gillvane, did you get kicked out of graphics school or something? Did a VFX artist murder your family? Why do you insist on being as dismissive as possible towards what is a very real and documented problem in the industry?

VFX work is being underbid by cheap foreign companies and -- because the studios (and even other collaborators a la Ang Lee) see these artists as nothing more than data-entry clerks and technicians rather than the creative artists that they are -- it is causing established companies with hundreds of employees to fold. Big Data and Tech is incredibly expensive, and when your film requires 50-90% of it to be CGI and post work you have to budget appropriately. Or you should, at least.. instead the studios are forcing them to take less than they can sustain on in order to work on the films that can bring their company some notoriety and good future work.

How can you not see this as a major issue? You're scoffing at it like its a bunch of entitled whiners looking to pay off their yachts. No offense again, but the fact that freaking DIGITAL DOMAIN went under should really put your claims of "they should go make their own movie!", among others, in perspective.

 

[visugeek]

$5million dollars would employ 300 feature film level artists for 2 months. Some features require 500-1000 artists for a year or more to achieve what the director's vision requires. Throw in a bunch of changes and redos, perhaps a delay in production or the ever hated "re-envisioning of a sequence", and the profit margin can go south pretty quickly. Imagine if half of all groceries were returned to a grocery store two or three times and the store had no choice but to take them back. Their 2.5% profit margin would disappear very quickly.

As a working VFX artist, I've seen clients make changes on the day before delivery to entire sequences, and things get pushed back. The VFX house has to fight with the client to get those changes paid for, and often eats more of the costs than they get paid. I've also seen shot go from very simple to very comples situations that weren't bid for because they weren't part of the "vision" of the creative on the client side at the time the shot or sequence was bid. It can get nasty trying to sort it out some times.

 

[Gillvane]

Rhythm & Hues didn't go bankrupt because of Life of Pi, and I don't think anybody is really trying to argue that. They are using Life of Pi as the example, because it is a high-profile award-winning film that was 90% VFX.

People are really blaming the studios for trying to cut costs so much that they are literally driving the US VFX industry out of business. Rhythm & Hues is just one of many VFX houses that has gone bankrupt recently, another being Digital Domain. That is 2 of the biggest US VFX houses around that have gone bankrupt.

And it isn't just that the US VFX industry can suck it up and do the work for the rates that Chinese / Indian VFX companies are willing to do it for. It would be illegal for them to pay their employees what Chinese / Indian VFX companies are paying their employees (less than US minimum wage). The janitorial staff at Rhythm & Hues probably made more per year than Indian VFX artists.

it's called competition. Many airlines have consolidated and gone out of business. Nobody is saying it's because people arent' willing to pay enough for plane tickets to keep all the airlines employed so all those people have jobs.

 

[Gillvane]

Gillvane, did you get kicked out of graphics school or something? Did a VFX artist murder your family? Why do you insist on being as dismissive as possible towards what is a very real and documented problem in the industry?

VFX work is being underbid by cheap foreign companies and -- because the studios (and even other collaborators a la Ang Lee) see these artists as nothing more than data-entry clerks and technicians rather than the creative artists that they are -- it is causing established companies with hundreds of employees to fold. Big Data and Tech is incredibly expensive, and when your film requires 50-90% of it to be CGI and post work you have to budget appropriately. Or you should, at least.. instead the studios are forcing them to take less than they can sustain on in order to work on the films that can bring their company some notoriety and good future work.

How can you not see this as a major issue? You're scoffing at it like its a bunch of entitled whiners looking to pay off their yachts. No offense again, but the fact that freaking DIGITAL DOMAIN went under should really put your claims of "they should go make their own movie!", among others, in perspective.

I don't understand your sense of entitlement. I'm just talking simple economics, and you see that as hatred. Why? I subscribe to most of Milton Freedman's theories on the free market and I think they work in the current global economy. Economics has nothing to do with hating people in the VFX industry. Pay isn't determined by like, hate, or anything but the market, unless you have a communist or socialist system.

No one is making you be a VFX artist, just like no one is making you be a graphic artist, or painter, or song writer, sculptor, musician, or anything.

if you don't like the market price paid for VFX labor, go do something else. Lot's of people don't get to do the work they'd like to do because it doesn't pay what they want or need. So? If you don't like a production company making 700 million dollars on a movie because you didn't get part of their profits, then go make a movie. Raise the capital and risk it all to make that profit rather than telling them to risk everything and give you the profits while you risk nothing.

I'm a supporter of the free market. If Hollywood needs VFX someone in the market will provide it for what Hollywood is willing to pay. That's the way the free market works. That doesn't have to be you, or R&H, it can be someone else or some other company if you can't or won't do it for a competitive price for whatever reason.

You're mad at countries that subsidize? Your options are to start a trade war with embargoes and tariffs, or subsidize your own labor force. IMO both of those options are more economically damaging than letting the market sort it out.

Strikes to hold Hollywood hostage? I don't support unions. I think they create inefficiency and ultimately in this day nad age of ERISA, Child Labor Laws, Minimum wage laws, overtime laws, OSHA, Disability laws, tort law, anti discrimination laws, etc., etc., the job of the Unions is done now by Government regulation. Unions primarily exist now to make union bosses rich and to extort business. That's why many Airlines went out of business because they were saddled with unions which made them uncompetitive.

I could care less if Digital Domain goes under. They will be replaced by someone else that can do the job for the market price. Just like I wouldn't care if Nike went under because they can't compete with Rebox or Converse. I have no vested interest in any particular company staying in business. Why would I? Why would you? Good businesses will make money and stay in business, bad businesses will go under, as they should. If McDonald's puts Wendy's out of business or vice a versa, so what? That's competition in a free market.

 

[Gillvane]

$5million dollars would employ 300 feature film level artists for 2 months. Some features require 500-1000 artists for a year or more to achieve what the director's vision requires. Throw in a bunch of changes and redos, perhaps a delay in production or the ever hated "re-envisioning of a sequence", and the profit margin can go south pretty quickly. Imagine if half of all groceries were returned to a grocery store two or three times and the store had no choice but to take them back. Their 2.5% profit margin would disappear very quickly.

As a working VFX artist, I've seen clients make changes on the day before delivery to entire sequences, and things get pushed back. The VFX house has to fight with the client to get those changes paid for, and often eats more of the costs than they get paid. I've also seen shot go from very simple to very comples situations that weren't bid for because they weren't part of the "vision" of the creative on the client side at the time the shot or sequence was bid. It can get nasty trying to sort it out some times.

If what you charge isn't enough to keep you in business then you charge more. If the clients won't pay more, then you shouldn't open that business because it's destined to fail and you should do something else. Seems simple enough.

People don't open a restaurant and then say they have to charge 100 bucks for a salad to stay in business and if the customers won't pay that they are bieng used, abused, and ripped off.

Either you can stay in business charging what all the other restaurants do for a salad, or you shouldn't be in the restaurant business. You adjust your practices to the market or you go out of business. You don't adjust the market to what you want to do or make. It doesn't work that way.

 

[OldCorpse]

Just a reminder, folks. Politics is not a topic we should be discussing. Some of these posts are touching on political issues and are against the TOS. So let's not do that - because as soon as you do, there is someone who has the opposite political view and will see it as unfair to leave your post unanswered, and we're off and running discussing politics. Now, I understand that some issues are very hard or impossible to discuss without touching on politics - and I said so in my first post to this thread - but nonetheless we have to limit ourselves. Doing otherwise is going to get this thread locked. Thank you!

 

[FrameFarmMedia]

I say let the big budget sweatshop productions go to India/China. Instead of competing to see who can run a better sweatshop why not become the innovator of these new techniques used then sell that tech to the Rotoscoping/rendering sweatshops. The reality of a global economy is if someone can do the same skill for less your job isn't worth what you thought it was. Being the person with the ability/experience that can't be matched by someone right out of a basic course is what you need. A lot of VFX is factory style on these massive movies. Hell Beasts of the Southern Wild used students and that didn't stop it for an Oscar Nom.

The VFX companies doing well are the ones with a solid comercial based clientele. They have short turnaround projects, they pay well (little risk on the line) and they pay on time as companies have budgets allotted for shorter times. Plus with the shortened turnarounds they are shopping locally for someone they trust to turn it around fast. Not the worry about farming it to someone that can do it for half but take longer. I have a good friend who owns a VFX house and he wouldn't touch movies with a 10 foot pole. Too long, Too many cooks in the kitchen and too big of a drain on resources for the money.

To be relavent you need to have skills that can't be easily farmed out or done by someone with far less education or experience. That goes for every industry in the global economy.

 

[Gillvane]

Just a reminder, folks. Politics is not a topic we should be discussing. Some of these posts are touching on political issues and are against the TOS. So let's not do that - because as soon as you do, there is someone who has the opposite political view and will see it as unfair to leave your post unanswered, and we're off and running discussing politics. Now, I understand that some issues are very hard or impossible to discuss without touching on politics - and I said so in my first post to this thread - but nonetheless we have to limit ourselves. Doing otherwise is going to get this thread locked. Thank you!

Go ahead and lock it then.

 

[visugeek]

Gillvane,

Your oversimplification of and lack of empathy speaks volumes. May you experience clients like VFX companies do and someday put two and two together. Your responses are those of either a student, a fanboy, or someone who has never held a creative position where someone else gets to say yes, that is what I want.

Good luck making your wedding videos.

 

[dustylense]

Gillvane,

Your oversimplification of and lack of empathy speaks volumes. May you experience clients like VFX companies do and someday put two and two together. Your responses are those of either a student, a fanboy, or someone who has never held a creative position where someone else gets to say yes, that is what I want.

Good luck making your wedding videos.

Woooahhhh buddy. Uncalled for. So now I'll step in because that's what I do.

The very fact that Gillvane speaks of Milton Friedman speaks volumes over your attacks on him. I suggest you look up Milton Friedman. All you have to do is type Milt into google to get an education about what Gillvane's stance is. This country, the USA could use a decent dose of Milton right about now.

Look kids, we are in a global economy now and there is NO going back. You get and deserve what you ask for. A free market is what keeps us in check and things affordable. Well, India, China, South America, EU, and many more are now in that market and they are ready to "Subsidize" it. And here many with complain about the price of a Canon C300. We all want it cheap, except when it effects our take. But when you add subsidizing it's a bigger picture.

SO Visugeek? What do you think your market worth is? First, you need to be in demand. Are you? How do you gauge your market worth compared to your geographic market value? Do you think because you live in West Hills CA your market worth is higher than say Baton Rouge? Why is there an exodus of production out of LA? (a link to educate you just incase: http://www.voanews.com/content/tv-and-film-production-leaving-los-angeles/1550520.html). SO tell us Visugeek, what do you think you're worth?

R&H are mad because they didn't get more money, which they obviously got paid under the budget and contract the studio agreed to? So the movie does great and now what, they should get more money? What if the movie was a flop? Guess what, R&H would have got paid the amount they got paid and would have had nothing to worry about in terms of RISK. That is what every business owner faces, RISK! OK R&H, make a deal where you share the profits then. The studios aren't going to sub to you more often than not. And if the movie flops, you're now in a worse position. Go look at R&H's portfolio. Some mighty big productions there. And they're verging bankruptcy? Well to me it speaks of poor management and business judgement. Hey what do you know, that's exactly what the Committee of unsecured creditors stated (probably Warner Bros or somebody). It's a game man. It's called Risk.

R&H is filing BK beacuse Prime Focus out of India and the deal for PF to buy R&H fell though. Now R&H is being sought out by a company in Taiwan. You realize that R&H has been in India for awhile now, right? In fact, they were one of the first to open in India. But it really came down to the subsidies R&H took. They themselves off shored and it bit them in the frickin ASS. This is where responsibility plays part. (Milton Friedman). When you exchange taking responsibility with blame, you will lose at the game of risk. Sounds like R&H made some bad decisions at the top. And now they want to blame, instead of taking responsibly. It's the global economy now and subsidies are the name of the game. Then it's just the fact of David vs. Goliath. R&H has it's history of 25 years. Now there are small houses that can do this work out of a garage.

So again, Visugeek. What are you worth? And how are you going to subsidize? Because R&H themselves off shored because they know YOU are too expensive and there is no way YOU can compete with Canada, India, Taiwan and South Koreas big government subsidies.

Now please, get back to checking out cameras at the rental house while you can. Because those are next to go.

 

[visugeek]

Hey Dusty, he's a big boy, he doesn't need your help to step in kid. He's been pretty abrasive to the VFX community so I returned the favor. Let him defend himself and butt out.

We aren't supposed to be interjecting politics here, so don't. I didn't. His responses to the situation are exactly as I described them, those of a student or fanboy with no skin in the game at any professional level.

A free trade policy is fine so long as there is fair trade. Subsidies aren't fair trade. If you go in for a job interview and offer to pay the HR guy 60 cents on the dollar of your salary as a kickback providing he gives you the job, that is illegal. That is what the subsidies do...literally.

I'm worth what I ask of my clients and employers, and they are happy to pay it. The only time off that I get is when I insist on taking a break because the 60/80+ hour weeks have run me into the ground and I need to recharge, or I want to work on my own projects.

R&H is filing because of studio delays and they have no leverage to demand money for those delays. You obviously have no idea how this business really works and sound like a fan boy as well. Looks like you're about to get busy, June weddings are coming up.

Good luck getting the best man's toast and don't quit you day job.

 

[Inprogress]

Wow, now personal insults are being thrown - not that insults should really matter cause sticks and stones bru. But personal insults does not help one's point of view as seen by others. In the local motorcycle forum I am in, that is when a thread gets moved to the "Religion and Politics" category where people become a lot more abrasive, but still needs to be tackful.

If other countries subsidize their industries (like China is doing to the their auto industries) one must rather then pose a movement for one's own government to start subsidizing an industry cause subsidizing is a way of infrastructure building which helps an economy - see China yet again. That is my opinion anyway coming from someone who isn't in a political position, not a VFX position, or a wedding videographer position. That's a jib that last one.

What I know of the VFX industry especially in the USA is limited to non-exisitent. It does seem that a lot of talented people in poor countries are willing to do the same work at level quality for less than half the price because in that poor country, less than half the price to them means twice the salary in their country in terms of local value to what you will get in your country. In some countries you can get a full plate of food, healthy and wholesome for about $1 US, and in those countries people also have access to global products like cameras and PC's. And when you sit infront of the books looking at the figures, that is when the figures makes sense. In the auto industry there is a saying, as much as we engineers dislike it, "An engineer doesn't run a company, an accountant does." It seems fitting in this VFX industry.

I do hope there is a viable solution for the VFX community in the USA, whether that be a subsidy solution, or smaller companies starting up doing smaller projects, or what have you.

 

[refocusedmedia]

Ya... a quick visit to any professional VFX forum or large filmmaking community and you'll quickly see that views like those of Gillvane's are the minority. I've provided a number of resources in previous posts that inform the situation, and he continues to ignore or reinterpret them in favor of his misguided political rants. Whatever. It obviously has no affect on him or his work, nor does it on mine yet truthfully, so I'm just going to let bygones be bygones.

In other news, the R&H auction went down last night. The winner is supposed to be announced this morning. You can see some tweets from a Variety reporter who attended here:

http://twitter.com/Variety_DSCohen

Also a good source of info here: https://www.facebook.com/VfxSolidarityIntl

http://www.latimes.com/entertainmen...naway-visual-effects-20130324,0,1842816.story

 

[FrameFarmMedia]

Hey Dusty, he's a big boy, he doesn't need your help to step in kid. He's been pretty abrasive to the VFX community so I returned the favor. Let him defend himself and butt out.
You obviously have no idea how this business really works and sound like a fan boy as well. Looks like you're about to get busy,

He isn't being abrasive he is pointing out how a global economy works. You can deny the reality and go extinct or try and find the best way to make a business work within the things you can't change. Globalism has struck every industry and some have smartened up and some have let it run them over. Complaining on the internet and unionization aren't going to be a solution. You should be spending your time lobbying your own government to match subsidies to keep business in your country as that is the only thing you actually have a voice. Canada is looking after its artists and so are the other countries trying to get business and jobs for their citizens. Short of a boycott of movies that have VFX out of country there is no power towards restricting business to a national level. The VFX industry is so small I'd wager it isn't even on the governments radar.

The only way to make it in a global economy is to offer something someone else can't and for a good portion of the sweatshop labour of VFX like roto work can be done by someone with less education and experience just as well. You have to provide what they can't.

Right now your argument seems to amount to 'Its not fair'. What is your solution to the issue. Hate to break it to you but the U.S. gives subsidies to industry also so zero point in complaining about government subs. Unionizing won't make a difference as it hasn't in the manufacturing sector. If anything its added to companies moving over seas for more flexible regulations. Right or wrong its how it is. You aren't going to re-write global policies so that is a waste of time. And the U.S. gov isn't concerned about VFX artists as they are trying to keep the whole country from driving off a cliff.

June weddings are coming up.
Good luck getting the best man's toast and don't quit you day job.

Wow this is so crass and uncalled for. You are upset because others were pointing out economic theory that wasn't kind to VFX artist but is reality and then go slag on an entire industry of hard working people who are trying to make a business work with lowering margins and more competition then ever with gear access and prices at an all time low. Sounds familiar doesn't it. I would think you would have sympathy towards another area of business that is struggling also. I guess VFX problems are the only ones you expect solidarity on?

And before you crack another joke about me having a good wedding season I don't do weddings (The amount of work to pay off. hell no. much respect though) . A good friend of mine co-owns a VFX house and I have talked to him and he agrees with me. If movies want sweatshop work let them go to the sweatshops. If they are getting the same results how can you really justify wanting to get paid much more. Lots of VFX work that will always stay local and pays much better and on time like commercial work.

 

[Gillvane]

Economics can be part of politics, but discussing the economics of film making does not have to be political. You have to sell your services for more than it costs to produce them or you will go bankrupt. We now live in a global economy and you have to compete globally for services that can be delivered over the internet. That's just Econ 101, no politics involved. I'm talking Economics, not politics. If you don't understand economics and want to discuss the issue emotionally then we won't be able to communicate very effectively. Economics is math. Getting upset about it doesn't change that 2+2=4. It just is, whether you like it, dont' like it, get mad about it, etc.

As far as insults go they don't advance your position. I'm either right or wrong, regardless of who I am. If a physicist with a PHD says the Sun revolves around the Earth and a 5th grader says the Earth revolves around the Sun, who is right? Your credentials don't make you right or wrong, things are what they are regardless of what you do or who you are.

What if I'm a 5th grader taking video classes, or a banker that loans money to studios so they can produce movies? Neither one makes me right or wrong, it is what it is. I would never bash anyone for shooting weddings. If that's what you do, great. I've seen some fantastic wedding footage and there are some wedding shooters that I admire because they are creative and innovative.

 

[Gillvane]

Ya... a quick visit to any professional VFX forum or large filmmaking community and you'll quickly see that views like those of Gillvane's are the minority. I've provided a number of resources in previous posts that inform the situation, and he continues to ignore or reinterpret them in favor of his misguided political rants. Whatever. It obviously has no affect on him or his work, nor does it on mine yet truthfully, so I'm just going to let bygones be bygones.

In other news, the R&H auction went down last night. The winner is supposed to be announced this morning. You can see some tweets from a Variety reporter who attended here:

http://twitter.com/Variety_DSCohen

Also a good source of info here: https://www.facebook.com/VfxSolidarityIntl

http://www.latimes.com/entertainmen...naway-visual-effects-20130324,0,1842816.story

Your attitude is, I showed you this, now you have to agree with me! If you dont' agree with me, it's because you don't understand! No, I understand the issue just fine and I have the same facts you do but I have interpreted them differently.

I am looking at the issue from an economic point of view, and I believe you are looking at the issue from an emotional point of view. That is why we have come to different conclusions after looking at the same facts.