Production Summit 2010: Navigating tomorrow’s business models
Debra Kaufman
Issue: November 1, 2010

Production Summit 2010: Navigating tomorrow’s business models

The demise of middle-budget movies, the push for more, better, cheaper effects, and the outsourcing of the VFX business are just three of the challenges facing visual effects houses in 2010. On October 23, at the Ritz Carlton in Marina del Rey, CA, several hundred VFX practitioners from around the country and around the world gathered together for the annual VES Production Summit to ponder the future of the industry and their place in it. 

Bill Mechanic, producer and CEO of Pandemonium Films, was the keynote speaker. Featured speakers were Dr. Richard Terrile, NASA/JPL astronomer and evolutionary computational designer, and Jeff Miller, president of worldwide post production and operations at The Walt Disney Studios. 

Four panels dealt with different aspects of doing business in the 21st century: “Does it come with wheels? How pushing the on-set tech envelope affects your business,” “It’s so cool! How an ‘Aha’ moment offers new business,” “Tomorrow’s production renaissance: adapting to ever-changing roles,” and “The Madonna approach: The only constant is change.”

Mechanic neatly encapsulated some of the issues surrounding visual effects and animation today. “The movies are getting bigger and getting worse,” he said, to resounding applause. “They’re wasting everyone’s talent. Everything is an icon, and no one gives a shit about characters or stories.”

In addition, Mechanic noted that a dartboard with concentric circles would have tent poles at the center. “Big isn’t an inherent flaw,” he said. “But it’s the only movie people wanted to make. Movies are marketing-driven, and as marketing costs increase, you can’t spend that on films that aren’t going to gross a lot of money.” He then pointed the finger at studios executives. “No one who runs a studio today knows anything about how movies are made,” he said. “If you don’t understand the business, you can make stupid decisions even if you’re smart.”

Looking at adapting to ever-changing roles, the panel moderated by industry journalist Carolyn Giardina and featuring cinematographer/director James Cressanthis, ASC; Legacy Effects co-owner/VFX supervisor Shane Mahan; founder/visual effects producer of The Creative-Cartel Jenny Fulle; production designer/visual effects supervisor Robert Stromberg; and Reel FX Creative Studios CEO Ed Jones talked about how their own careers have grown, shifted, and changed over the years. 

“Thinking outside the box, people will find opportunities,” said Fulle. What about salaries? “Our salaries got to a really comfortable place, and in big facilities, we had good benefits,” she said. “But we work in a cyclical business, and we’re coming out of a slower cycle.” (See the November issue of CGW for a Viewpoint column by Fulle on navigating the financial hurdles in creating visual effects.) 

The business has fundamentally changed, added Fulle. “It’s not that the studios won’t want to spend on tent poles,” she said, “they won’t want to spend the same prices.” More than one panelist agreed, saying that because there are “a lot of people willing to do VFX for a lot less,” everyone has to adapt to less money and fewer perks. 

“Salaries won’t grow,” said Jones. “Everyone will have to live with what we’ve got, and hope we make better movies.”

Panelists largely agreed that stereoscopic 3D is here to stay, but with caveats. “It’s thrown on the wall to see if it’ll stick,” said Cressanthis. “It’s not analyzed if the story is enhanced by 3D.” Mahan agreed that he enjoys 3D “when it’s a spectacle.” “I don’t know if I want to see a drama in 3D, and we’re working on some now classified as dramas,” he added. 

Moderated by Variety reporter/features editor David S. Cohen, panelists ILM/Skywalker Sound president/GM Lynwen Brennan; Rainmaker CEO Warren Franklin; Prime Focus visual effects worldwide president Michael Fink; Twentieth Century Fox EVP John Kilkenny; Digital Domain CEO Cliff Plumer, and Framestore CEO/co-founder William Sargent talked about what visual effects companies need to do in the next five years to remain leaders in the field.

Franklin spoke about how his company has shifted toward creating its own content as well as offering services. “Our mission is how to be creative storytellers in all parts of our business and be partners, [and] not a client/vendor relationship,” he said. Plumer agreed, saying, “We need to be more diversified in our business.” 

“It’s been a vendor-driven business,” Plumer said. “Ideally, we’d like to get to a place where we can be true partners and benefit from the success.”

Kilkenny noted that the old saw “better, faster, cheaper, choose two” has become “choose one.” “Let’s not drive the costs so low that effects companies go out of business,” he said. “If only one company is left, they’ll charge whatever they want.” He noted that he gets volume discounts because he handles so many movies. “It’s easier to get a discount on $1 million than $100,000,” he said.

Fink added that his company is working hard to create a seamless global pipeline, but outsourcing for inexpensive artists isn’t the solution. “Expensive artists are very productive,” he said. “If you don’t pay for the good artists, they cost twice as much.” 

Plumer pointed out that VFX companies used to be the post production business — but no more. “We’re involved from the beginning to the end,” he said. “We have to manage resources and talent.”

How well do studios understand what visual effects artists actually do? “They realize that you can’t push a button and have a chipmunk come out,” said Kilkenny. “The biggest pressure I have is that the line item for VFX can be one-third of the budget. When a line-item producer has problems, he looks to the largest item to try to take something out. But the VFX industry is now looked upon creatively. We go through a script with a vendor, and when we see that a particular sequence isn’t worth $3 million, we work with them to reorganize and get the director what he wants for a price the studio wants to pay. Management is welcoming VFX creative input.” 

But it’s still a tough time to be a VFX house, admits Kilkenny. “The bigger companies are taking the work that used to go to smaller companies, and it’s putting the smaller companies out of business,” he said. “There’s a certain amount of work that is easier VFX work than others, and that work makes the larger profit margin. The larger vendors are taking that work to keep the cash flow going. If I sent it to a smaller place because I got an unbelievable deal, the larger companies are stuck with the harder work that has the smallest profit margin.”

Kilkenny concluded: “We have to find a way to keep everyone happy. I don’t want anyone to go out of business. It lessens my choices and makes for less competition.” 

The consensus: Training the talent, building relationships with studios, and being flexible are the keys to surviving in the next five years.

Click here for a look at VES president Jeff Okun’s views on the state of the visual effects industry.

Debra Kaufman is a freelance writer for numerous entertainment industry publications. She also writes about content for mobile devices at She can be reached at .