How the Oscars proved Hollywood is killing the VFX industry

While ABC showed viewers the glitz and glamor of Sunday night's Academy Awards from the red carpet and inside the Dolby Theater, across the street there was a very different show going on. Members of the visual effects (VFX) industry gathered on Hollywood Boulevard to raise awareness about the financial hardships faced by VFX houses, and the people who work to make our movies more beautiful. You might have heard something about it during the Oscars — if you could make it out over the Jaws music.

Top image via Before VFX.

Over the last few months, gaming and film VFX studios have seen major layoffs (a redditor on r/Games compiled a handy list of recent layoffs). Just this month, Rhythm and Hues, the studio that received Visual Effects Oscars for Babe, The Golden Compass, and, most recently, Ang Lee's Life of Pi, declared that it plans to file for bankruptcy, and Pixomondo, the German VFX house that won a Visual Effects Oscar for Hugo, announced it would be shuttering its London and Detroit operations.

Yet, as HitFix notes in their excellent editorial on the problem, if you look at Hollywood's top-grossing movies — Avatar, Titanic, The Avengers, Harry Potter and the Deathly Hallows – Part 2 — they're all movies that depend heavily on visual effects. So how have we ended up here? Well, visual effects are, by their nature, a very expensive business. They require long hours from highly skilled artists, computer scientists, and coordinators. They require cutting-edge hardware and software, not to mention all the time and money poured into research and development. And, while movie studios will allot a sizable portion of their budget to visual effects, VFX houses are frequently working for a fixed fee and don't see the financial profits from these high-grossing films.

VFX studios have also had to contend with the problem of foreign film subsidies. Some governments will offer to subsidize some of the cost of making a film, on the condition that studios move their film production to that government's region. VFX houses have moved their production to British Columbia, New Zealand, and all over the world to chase these subsidies, taking a gamble on steady work in those regions and moving VFX jobs out of Los Angeles.

These factors in part have left far too many of these studios with extremely thin profit margins, with VFX houses living paycheck to paycheck and sometimes using new work to cover old bills. While talking to Pro Video Coalition, former Industrial Light and Magic general manager and Digital Domain founder Scott Ross described it this way: "VFX companies currently are effectively funding feature films while accepting a thin profit margin, to a meaningful degree." (Digital Domain also recently declared bankruptcy.) At Sunday's protest, many in the VFX community were calling for an end to foreign film subsidies and for profit-sharing — as well as looking to raise awareness that while Life of Pi was being honored for its technical splendor, one of the studios responsible for that splendor is in dire straits.

And then there was the moment when Life of Pi won the Oscar for Best Visual Effects, which managed to overheat many in the community's already boiling blood:

Bill Westenhofer, a VFX supervisor for Rhythm & Hues, delivered his acceptance speech, but just as he began to thank all of the VFX folks who worked so hard on the film and highlight R&H's financial woes, the Jaws music played to usher him offstage, and eventually his mic was cut off. Now everyone who went over their allotted time got the Jaws music, but SF Gate notes that just 43 seconds elapsed between the time the winner was announced and when Westenhofer got the Jaws music, and 112 seconds between the announcement and the mic turn-off. Compare that to the 131 seconds spent on the Avengers cast setting up and announcing the award, and 158 seconds on Ang Lee's Best Director speech, with nary a minor chord sounded. On a day when the VFX community was asking for respect, many took this as a slap in the face.

Lee's Best Director speech, in which he failed to thank the VFX team or mention Rhythm & Hues also attracted significant ire. It didn't help that when Lee was asked about the Rhythm & Hues bankruptcy last week, he said, "I would like it to be cheaper and not a tough business." In response, the VFX community issued An Open Letter to Ang Lee, noting the many reasons the VFX industry is an expensive one and asking directors to pay attention to the financial conditions in which these VFX houses are attempting to survive.

You may have noticed that this week, many folks have changed their Facebook and Twitter icons to bright green, representing the blank green screen that would exist without visual effects. The blog Before VFX shows images of what movie scenes looked like before the effects were added in. They're all hoping to bring greater awareness to this situation and perhaps change the way movie studios and VFX houses do business.

Huge thanks to Marc, Katie, Ed, the Masked Animator, Mark, Steve, and all the other impassioned readers who sent us links to help us better understand this issue.