VFX Workers protesting at the Oscars

VFX studios do the work as work-for-hire, so if a film does poorly they don't loose money, but they never ever get any of the profits if a movies does do well. At the most simplified level - it's a loosing business model.

There's a very small set of "consumers" and there are more producers (vfx shops).

The bid amount for work that is awarded is a tightly guarded secret (this hurts transparency). Regardless, at a coarse level if tax subsidies (in Canada or the UK for example) allow your competition to under bid you by 20 million on a 60 million dollar set of work where your normal bid is for profit margin of 3% you are screwed.

VFX today is labor intensive. There is still a great deal of creative specialty skills involved, but outside of vfx they don't even quite realize how easy or hard an effect is to create and thus they view outsourcing of all work as a "sure and natural thing"

This year Life of Pi won the vfx oscar, and the work was done by a company in LA that just went bankrupt (Sigh, it hurts to think about Rhythm and Hues). If you watched the award show, just as the people accepting the award were about to mention R&H they were played off the stage. Film producers do _not_ want to even acknowledge how the industry works :).

As a long term career choice you do _not_ want to work in vfx. The people who work in VFX are the funniest, most passionate, and creative sorts I've ever worked with, but it's an industry that is going through "change" (as in, disappearing).

[0]http://vfx.iatse-intl.org/

[UPDATE] after doing some research:

From the comments at the end of this blog post[1], it seems that Sony Pictures Animation had gone union, and Imageworks had not.

Maybe also there is a dialectic between jobs lured out of big union states (i.e. California) and to right-to-work states by film tax subsidy programs.

[1] http://animationguildblog.blogspot.com/2011/06/confessions-o...

Did they not charge enough? Are they left holding the bag when effects go over budget?

I had a short period in Hollywood working with a VFX house many years ago, back then they had racks and racks of young artists doing the work. They were able to hire them cheap and sell the results of their work to the industry for a good price, making it pretty profitable.

However, that business model resulted in a boom of boutique VFX houses... so is this just a boom that has gone bust because too many houses were created to chase too few jobs?

Or are domestic producers unable to compete with foreign producers because they can get even cheaper young artists to do the work? And if so, why not split the work and create overseas divisions to do the more grunt work while keeping the experienced artists at home working on the harder stuff?

Seems engineers have the same potential risk, but american engineers are still able to compete.