VES Offers State of Industry Whitepaper

The Visual Effects Society (VES) released The State of the Global VFX Industry 2013, a strategic whitepaper as a blueprint for action, analyzing such issues as the California perspective, growing competition, pricing models, tax incentives, and unionization.

Co-authored by Carl Rosendahl, associate professor at the Entertainment Technology Center at Carnegie Mellon University and former president of PDI/DreamWorks, and Ken Williams, CEO/exec director of the Entertainment Technology Center at USC and co-founder of Sony Pictures Imageworks, here are some of the highlights of the whitepaper:

* The pros and cons of fixed bid pricing model vs. cost-plus and four walling:

“The solution that facilities and studios both cite as successful is a very open and transparent relationship. Facilities need to present very detailed bids, outlining all the assumptions and estimates. Where there are gaps in the specs from the producers, the facility needs to fill those in with their own specific assumptions. These can be in the form of additional artwork, previs, detailed written descriptions, or any other form that will communicate their needs and expectations. The goal is to reduce the unknowns to a manageable and predictable amount while allowing for creative latitude in the process. As the job progresses, the facility is responsible for managing the process. The facility also needs to be firm about negotiating change orders every time there is a change outside of the specifications. The studio in turn needs to respond quickly and decisively to requests from the facility. Open and transparent means that all concerns are shared and addressed in a timely manner, and that facilities are not coerced for favors.”

* Alternate or expanded business models:

” A scenario that came up often in discussions was that of bifurcation and consolidation. In this scenario, companies would consolidate into a small number of large, diversified companies and a larger number of small, specialized companies with little advantage to being in the middle.

“An alternate method for building up production teams specifically for projects was discussed –- “Pop-up” and “Flex” companies were the terms that made sense. Pop-up companies refer to production companies hiring effects crew members for the project, like other film crew members. Flex companies refer to very small independent core teams that expand as necessary for projects.”

* The importance of pre-and post-vis:

“Pre-visualization and post-visualization have proven to clarify the vision of the director. Detailed previs can make bids much more accurate, effectively giving the facility a better blueprint, rather that conceptual artwork, from which to bid. If detailed enough, it can also act as a basis for determining if requested changes are outside of the original contracted work.”

* Trade associations

“Trade associations exist to enable companies, and sometimes individuals, to work together to improve their industries. This can be done through standards and practices, research, lobbying, marketing and PR, or any number of other channels.

“Facility executives were overall supportive of the idea, but also skeptical about how much change it could create. To effectively impact standards and practices, most agreed that it would need to be an international organization, with a majority of companies signing on, and with the major players participating. Without international cooperation, little change could happen.”

* Unions

“Pro-union voices talk about the value of portable benefits (like health insurance and retirement benefits), having representation for overtime pay, fighting misclassification of employees, compelling facilities to follow labor and tax laws, and other workplace issues; having representation for these issues also allows artists to focus on the unique aspects of their work. Others counter that unionization may increase facilities’ costs, making them even less competitive or erasing the narrow profit margins they have. Unionization would not prevent any companies from declaring bankruptcy or shutting down, and in fact may hasten that conclusion for companies nearing the edge. In those situations, however, a union may be able to help terminated employees bargain for unpaid wages due them.”

* Tax incentives:

“Without a crystal ball to predict the future of tax incentives, but knowing that the status quo may remain in place for several years, facilities need to adapt to the reality of tax incentives and how they are used by studios. From the client’s perspective, post production is not location critical (like some live action is), so much of it can be based in the most tax advantageous areas, and in fact this has been proven out many times.”

* Recommendations:

“Developing industry standards and best practices. The working group will convene a series of meetings to create guidelines that set forth new procedures related to external bidding, negotiating and managing of projects and internal best practices related to financial management, communication and production management.”

The VES and its working group will advance this process through continued discussion and development of business guidelines, training program elements and other recommended ideas. In addition, a series of public forums on specific business and career management topics relevant to artists and facilities will be explored as opportunities to continue the public dialogue.

Posted on by Bill Desowitz in 3-D, Animation, Below the Line, Movies, performance capture, previs, Tech, VES, VFX, Virtual Production

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