Image credit: Marvel, New Line Cinema, Lionsgate[/caption]

The buzz around the state of the visual effects industry reached a fever pitch this winter when prominent effects house Rhythm & Hues filed for Chapter 11 bankruptcy in mid-February. Further attention was pointed at the men and women who create whole worlds from a blank green canvas during the Oscars, when VFX artists held a protest near the ceremony, which honored Life of Pi – a movie with effects by Rhythm & Hues – with an Academy Award in the visual effects category. The complaint? Movies like The Avengers, The Hunger Games, and The Lord of the Rings trilogy have scored big at the box office, grossing millions, sometimes billions worldwide, but the VFX industry that brought Asgard, Panem and Middle-earth to life doesn't reap the same benefits as the studios.

The movement has spurred supporters to change their Facebook and Twitter profile photos to a green box, representing the green screen that would appear in movies were it not for VFX. Blogs have popped up that feature photos of what movie shots looked like before visual effects turned Andy Serkis into Gollum, before Mark Ruffalo was turned into the Hulk.

And more and more visual effects artists and their colleagues are speaking out about their financial woes and the changes to the business that they want to see. Last Thursday visual effects artists gathered for a meeting dubbed Pi Day VFX Town Hall (the name dually referencing Life of Pi and the March 14 holiday, as well as the artists' frequent call for their "piece of the pi"). Panelists spoke to and took questions from a group of industry members at the Gnomon School of Visual Effects in Los Angeles, and VFX artists from around the world (including Vancouver, B.C., London, San Francisco, Austin, Tex. and New Zealand) connected via Google+ Hangout for the international discussion.

To help sort out the issues at hand in all this, EW talked to several Hollywood visual effects artists as well as with Roland Emmerich, director of visual effects-driven disaster movies Independence Day, GodzillaThe Day After Tomorrow, and 2012, as well as the upcoming White House Down. We also reached out to several other directors of effects-driven films and representatives for major Hollywood studios and for the Directors Guild of America. None returned EW's request for comment for this article.

Just how bad are the financial woes of the visual effects industry?

Rhythm & Hues certainly is not the only VFX house to face financial troubles. Visual effects artist Dave Rand, who currently works for Rhythm & Hues, told EW he has worked at five other VFX companies that have since closed their doors or were saved from bankruptcy when bought by foreign companies, including Centropolis FX, where he worked on The Matrix Reloaded before it closed in 2001, and MediaWorks, where he worked on Journey to the Center of the Earth.

Another once-troubled effects house is Digital Domain, founded by James Cameron. The company was pulled out of bankruptcy last fall when bought by Chinese and Indian companies. Pixomondo, which won an Oscar for its effects in Hugo last year, recently closed facilities in Detroit and London.

Rhythm & Hues has found itself in financial trouble despite working on several films that scored big at the box office, including The Hunger GamesThe Lord of the Rings trilogy, and the first Harry Potter film. The company's work on Life of Pi – previously considered an "unfilmable" book adaptation for its ocean setting and the tiger that shares a lifeboat with Pi – helped propel the movie to a gross of over $593 million at the worldwide box office, well surpassing its reported $120 million budget.

VFX artists have been watching these companies face continued financial problems, but not much call for change has occurred until now.

"I think the visual effects community has been remarkably apathetic for the past decade," said Peter Oberdorfer, a former VFX artist. In 2010 he left the film industry and founded his own digital technology consulting company. He moved on to parallel technologies because he "saw the writing on the wall" as VFX houses' troubles intensified.

That apparent apathy has been steadily dissipating since the news of Rhythm & Hues' bankruptcy broke.

NEXT PAGE: What exactly are visual effects artists saying is wrong with the industry?

Credit: Lewis Jacobs/NBC

What exactly are visual effects artists saying is wrong with the industry?

There isn't a simple answer to that. The VFX artists' movement has been accused of lacking a clear, agreed-upon goal. But there are specific grievances that have expressed:

The migratory life of a visual effects artist:

Though Los Angeles remains the home base of the film industry, production and post-production on movies is being done increasingly outside of Southern California and increasingly outside of the United States. California's program allocates $100 million yearly to the film industry, which many filmmakers say is not enough to compete with New York's annual allocation of $420 million, and states like Louisiana and Georgia that do not cap the amount of tax incentives they offer to filmmakers.

This has many visual effects artists traveling frequently across national borders to pursue the next job opportunity, often living away from their family for the duration of a job or having to repeatedly move their family around. Before taking his current job at Rhythm & Hues, Rand says he worked on Transformers: Dark of the Moon in Vancouver, Canada, where he found himself sitting next to artists from Austria, Germany, Japan, Lebanon, and Russia. Because he's constantly traveling for jobs on different films, he lives out of hotels.

"I think that [incentives have] actually hurt the industry over time," Oberdorfer told EW. "Even in the areas that have temporarily benefited from that, it's a roller coaster because it's all based on temporary giveaways, and it really dislocates the industry over time. In the end it only benefits the studio system and not so much the industry apart from that."

VFX artists in film industries outside of the U.S. are also impacted. As various regions continually compete to create the incentives most alluring to production companies, where jobs are available continually changes. In Canada, Vancouver has recently found many of its post-production jobs moving to Ontario and Quebec, veteran visual effects artist Scott Squires said at last week's Town Hall.

"The subsidies do not create jobs. They just move jobs from one place to another," said Squires, whose work includes such films as Close Encounters of the Third Kind, The Mask and Star Wars: Episode I – The Phantom Menace.

Eric Roth, executive director of the Visual Effects Society (VES), penned an open letter about this issue earlier this month. He wrote that while he wishes there were an easy way to eliminate all subsidies and tax incentives, he'd like to at least see California update its program to be competitive with other states.

Independence Day director Roland Emmerich feels the same way as many visual effects artists: "Every movie I have to go to Canada to shoot. I don't want to go to Canada. I want to do it here in Los Angeles, where I live," he said and, like Roth, called for a more competitive tax incentive in California. "I don't know why California can't get it together."

But an update to California's tax incentive program doesn't appear to be popular among VFX artists active in the movement to change their industry. At the Town Hall meeting, when VES vice chair Mike Chambers brought up the topic of California tax incentives, he was booed by the Los Angeles audience. Many visual effects artists prefer to push for eliminating subsidies all together, worldwide. The blog VFX Soldier has hired a Washington, D.C. law firm (which is working anonymously on the issue) to investigate whether the practice of offering subsidies violates World Trade Organization law.

The fixed-bid business model:

Several VFX artists have highlighted the widely used fixed-bid business model as the source of many VFX houses' woes. Most studios make a deal to pay effects houses, which today usually have a profit margin of about five percent, a pre-specified amount for their work on a film. When the expense ends up going over the estimated cost, visual effects artists say they are not compensated fairly for their work.

Oberdorfer suggests a cost-plus model instead. "That would allow [studios] to realize some of the true overages and costs that they endure in a process where maybe the results are not so well-defined and where there's a lot of risk for the [visual effects houses]," he told EW.

Emmerich acknowledged that underestimation of the time needed for a movie's effects is a problem. He said that artists often need two or three times as long as originally expected for a shot. The deal-making, as a studio and VFX shop agree upon a fixed price for the shop's work on a film, rarely involves any of the individual artists who will be working on the film, he said.

Directors' involvement in the post-production process:

Rand says the post-production process could be streamlined significantly if directors were present for more of the visual effects creation process. Rand compared visual effects artists' work to building a skyscraper without a blueprint. He said he and his colleagues are usually given a basic description of how a completed shot should look. Sometimes they get concept art. Sometimes they don't.

"You build your skyscraper until you've got it pretty much done. Maybe you gotta put the second coat of paint on or something. And the director or the client comes in at looks at it and goes, 'That's not what I want.' And then you have to tear down your skyscraper and start again," Rand explained, adding that most directors stop by a visual effects house to look at completed shots on a VFX-heavy film once a month.

"The director should be looking at it at several levels and signing off on it," he said.

Rito Treviño, lighting artist for Digital Domain, however, has had a different experience with directors he's worked with. How often a client looks at their work varies, Treviño said, but the director typically reviews a visual effects house's work once a week.

"It depends on the client. Some directors like to get more involved," Treviño said, adding that "if their office is just down the street," the director may come to the VFX house more often. "Michael Bay's office is not too far away from Digital Domain. He would tend to show up more often for Transformers projects [than some other directors]."

Of the complaint that directors are not involved enough in VFX artists work, Emmerich said, "I hear this all the time" but pointed out, "When you have 1,200 [effects] shots in a film, as a director, how can you ever, ever talk to every single artist about them all?"

He told EW that during post-production, he is "daily involved in visual effects. Mainly I talk to my in-house team" – the in-house team being the artists he and his visual effects supervisors have hired individually, in addition to commissioning various VFX houses, to work on the film.

Daily communication with the visual effects shops doesn't come until "a later phase – the last two, three months of work" said Emmerich, who has worked with a multitude of VFX shops on his films, including Digital Domain, Industrial Light & Magic, Zoic Studios and Pixomondo.

Emmerich said that much of his communication with VFX shops is done via conference calls, while a computer or TV screen displays the shots being discussed, though he also really enjoys going to the shops to see their work there.

At last week's Town Hall, Squires suggested creating a post-production position similar to the assistant director's role during production. On set, the AD keeps the director and crew on schedule, constantly reminding them how much time they have for a particular shot, but no such position currently exists for the post-production process.

Rand argues that if studios and visual effects companies were to do away with the fixed-bid business model and use a cost-plus model instead, directors would be more inclined to check in with VFX artists more frequently to prevent situations where "rebuilding that skyscraper" occurs. He hopes that directors can learn to look at an incomplete visual effects shot and provide feedback before the shot is done.

"Sure it takes a little longer to do what we do," Rand said, "but watching paint try is a hell of a lot better than watching money burn."

No union:

Visual effects artists have a guild through the International Alliance of Theatrical Stage Employees (IATSE) and an honorary society in the non-profit Visual Effects Society (VES), but there is no union in the U.S. VFX artists are divided on whether there should be. "Some people say unionize. Some give the argument about how unionization could blacklist a company," Treviño said.

Roth has told The Wrap that VES has no official position on the question of whether to unionize.

Steve Kaplan, labor organizer for IATSE's Animation Guild, has been a vocal supporter of visual effects artists unionization. While he acknowledges that "unionization is not going to fix the industry," he also argues that "it's going to provide a more stable and a more viable workplace for the artists," by better guaranteeing benefits like health insurance, pension, and pay for overtime.

Kaplan also believes that if a majority of VFX shops were to unionize, they could create an alliance that gives them enough leverage to push back against the fixed-bid model. "A fixed-bid business model is a business decision forced upon the visual effects shops by the production entities, so a unionized visual effects shop is still going to be forced to work under those conditions until there is leverage to change it," Kaplan said. "The only way the production companies are going to end a fixed-bid model is if the shops themselves form some kind of alliance and bargain with the producers for their work… The union would encourage the shops to bargain together in what we would call a multi-employer bargaining unit."

Kaplan and Scott Ross, both of whom were on last week's Town Hall panel, are calling for a trade association to be formed among VFX shops. Ross, who co-founded Digital Domain and was previously general manager of ILM, received a standing ovation from the effects artists gathered in Los Angeles following his talk about creating a trade association. He argued that such a group would have the leverage to change the accepted business model, could create bidding templates and standardized contracts, and could provide visual effects artists with a lobby and a public relations team.

But Kaplan and Ross say that in their experience, visual effects houses have for a long time been uninterested in joining forces with their competitors to create this kind of alliance. The first sign that they may come around came this past week, when Ross again emailed several VFX companies worldwide about the issue — some "agreed to investigate the possibility of a trade association," Ross said.

NEXT PAGE: What was that protest at the Oscars?

Image credit: Jeff Heusser via Flickr[/caption]

What was the protest at the Oscars about?

When Rhythm & Hues declared bankruptcy, the Academy Awards ceremony was just around the corner, and VFX artists saw a chance to raise awareness about their grievances with the industry. Rand helped organize a demonstration of a reported 400-some visual effects artists that occurred while Oscar nominees hit the red carpet ahead of the Academy Awards telecast on Feb. 24.

Participants in the march, which began at the intersection of Hollywood Blvd. and Vine St., held signs that read, "Respect for VFX," "Will matte paint for food," "My job was outsourced and all I got was this lousy sign," and, in reference to Rhythm & Hues' work on Life of Pi, "We want a piece of the Pi." Treviño, who was at the protest for two hours before heading back to work at Digital Domain's offices across town, made a sign that read, "Chase talent not subsidies."

What happened to the visual effects artists accepting their Oscar?

While VFX artists protested outside the Dolby Theatre, their colleagues inside took the opportunity to bring the industry's troubles to the millions watching the Oscar telecast at home. When Bill Westenhofer accepted Life of Pi's Oscar for visual effects, he doled out his thanks and then turned his attention to Rhythm & Hues, saying, "We want to thank all the artists who worked on this film for over a year, including Rhythm & Hues. Sadly Rhythm & Hues is suffering severe financial difficulties right now. I urge you all to remember—" and then his mic appeared to cut out.

Outrage from the several in the visual effects industry followed, but Don Mischner, director of the Oscars telecast, says Westenhofer's speech was not cut due to the content of his speech. The orchestra started playing music – a questionable choice, the Jaws theme – to indicate he needed to wrap up his speech before Westenhofer mentioned Rhythm & Hues, while he was thanking his family. Sound on the mic was turned off when he continued to talk after the orchestra had begun playing.

Mischner released a statement responding to accusations that Westenhofer had been cut off for political reasons: "No one ever wants to play anyone off the stage. This is why we go to such great lengths to inform our nominees of the time limit, via letters, at the nominees luncheon and even during the producer's speech to the audience immediately prior to the show. Playoff music is triggered solely by length of time and nothing else."

Still, some were irked by how early the playoff music began for Westenhofer. The Jaws theme could be heard 43 seconds into Westenhofer's speech. The Academy confirmed for EW that nominees are told to limit their acceptance speeches to 45 seconds and that that clock starts ticking as soon as the winner begins speaking. Others, however, were given more time for their acceptance speeches. Best Cinematography winner Claudio Miranda spoke for 54 seconds, and Best Supporting Actor winner Christoph Waltz said his thank-yous for one minute and 20 seconds – both without a note of playoff music coming from the orchestra. A representative for the Academy would not comment on this extra time given to other winners.

NEXT PAGE: What do directors and studio heads have to say about all this?

Ang Lee
Credit: Jake Netter

What is the response from other directors and studio heads?

EW reached out to several other directors of visual effects-driven films aside from Emmerich and to all six major Hollywood studios for this article. George Lucas, Life of Pi director Ang Lee, Sony Pictures and Paramount Pictures declined to comment, while other directors and studios have not returned EW's request for an interview for this story. The Directors Guild of America was not able to make a guild representative available for an interview.

Lee, however, has responded to questions about the visual effects industry while at recent events. He has praised the VFX artists but has voiced dissatisfaction with the costs of their work. On the Oscars red carpet he told EW, that Rhythm & Hues employees "worked with me for two, three years, and every one of them I consider them artists, not technicians," echoing visual effects artists' recently vocalized sentiments that their work is not merely "technical" as often described, but also artistic.

When he appeared at the Motion Picture Sound Editors' Golden Reel Awards, Lee said, "I would like it to be cheaper and not a tough business [for VFX vendors]…. It's very hard for them to make money. The research and development is so expensive; that is a big burden for every [VFX] house."

The Life of Pi director has come under fire for that remark, spurring Zoic Studios visual effects artist Phillip Broste to write an open letter in response, explaining why VFX artists take that statement personally and why it is expensive to create visual effects-heavy films. Bruce Branit, owner of Branit FX, pointed out in a lengthy Facebook post that Lee "has not discussed how actors' salaries could be cheaper, or how director or producer's percentages could be limited."

More recently, at a press event promoting Life of Pi's Blu-ray release this Sunday, Lee said, "For a movie like this, it's very common for visual effects to take up half the budget. Some of those segments are so expensive. Millions of dollars have to be spent before the studio can see it. How do they approve that budget?"

NEXT PAGE:  What happens now?

Warner Bros.[/caption]

What happens now?

Awareness has increased, artists have spoken out, but what does the VFX industry plan to do moving forward?

Treviño told EW, "It's definitely encouraging that awareness is building. We just have to be smart about how to work with our own companies and the studios from here."

Though he is no longer working in the film industry, Oberdorfer plans to "talk to the Visual Effects Society and try to get them in front of this issue because we have an organization that already exists for this industry…. But at the same time I think it'd be great if there was a grassroots effort to organize labor around a union."

Rand contends that real change will have to come from leaders in VFX companies taking a stand on various issues and changing how they do business with studios.

Kaplan told EW that IATSE will continue holding info sessions about unionization and releasing statements encouraging visual effects houses to unionize, but the next step has to be taken by those VFX artists and companies; they have to "band together," Kaplan said, and sign union cards and contracts for unionization to happen. Emmerich, like Kaplan, believes that VFX artists should unionize but also points out, "They have to do it for themselves."

VES is also currently organizing a VFX Congress to address issues facing the visual effects industry.

As for Rhythm & Hues, the latest news is that South Korean media company JS Communications Co. has submitted a bid for the struggling effects house, according to The Wall Street Journal. The deadline for all bids is Friday, March 22.

Following its bankruptcy filing, Rhythm & Hues secured $20 million in loans from Legendary Pictures, Universal and 20th Century Fox so it could continue work on those studios' film projects. Production is expected to be completed on-schedule for Fox's Percy Jackson: Sea of Monsters (due Aug. 16), Universal's R.I.P.D (July 19) and Legendary's The Seventh Son (pictured above, due Oct. 18). Warner Bros. has pulled two of their films from R&H, 300: Rise of an Empire (due Aug. 2) and Black Sky (no release date set), a source close to the two projects told EW.

Follow Emily on Twitter: @EmilyNRome

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