Visual effects firm behind "Life of Pi" goes bankrupt

"Rhythm and Hues has filed for Chapter 11 and most of us have been laid off," a Boing Boing reader wrote in an email Monday.

"The visual effects industry woke up Monday morning to news it had been dreading," Variety reported later that day. "One of its most admired companies, Rhythm & Hues, had been forced into bankruptcy."

R&H's "Life of Pi" (2012) just won four Visual Effects Society Awards, including the equivalent of Best Picture; as well as the BAFTA for visual effects. The company will file for Chapter 11 reorganization in Los Angeles.

They're laying off staff now, and the LA Times has more.

• [Drew Coombs]

  This month has been like a VFX apocalypse in Los Angeles. These kids need a union something fierce.

  • [Xeni Jardin]

    It’s true. Also: hi Drew!

  • [Kevin Baker]

    A union doesn’t help if the company you work for goes bankrupt. The issue here is the relationship between the studious and the VFX houses, not the VFX houses and the employees.

  • [Antonio Carrasco]

     A union would be disasterous as the article clearly states that the reason so many of these VFX shops are closing down is due to cheap labor in other countries.

    • [Mark Hennessy-Barrett]

      Antonio, “cheap labour in other countries” is all well and good, but we’re not stamping out plastic widgets here.  Visual effects is a highly skilled, highly demanding job.  When VFX is outsourced, generally at least half the shots that come back need to be fixed by trained personnel before it doesn’t look atrocious.  

      A couple of years of thin box office and reviews saying “this looked awful” would not be the worst outcome.  Dwight Q. Horseburger, MBA may not know a good visual effect when it bites him on the arse, but the movie-going public definitely know a bad one.

      • [dirtyid]

        Implying artists in 3rd world are not as highly skilled? At least in arch viz this has not been the case. I know VFX can be more complex, but raising proficiency in these markets is only a matter of time.

        • [JohnnyLA]

          Agreed. It’s not like those “3rd world VFX houses” (which are mostly being trained by the West and really someone like China is not third-world anymore) won’t get to that quality bar soon especially now that the raw tech to make these shots are getting cheaper and cheaper.

          And honestly, not just the tech but the actually process is going to get simple enough that “good looking shots” are going to be much easier to make. I look at current ubiquitous technology such as digital cameras and like. It was a hell of a time to take pictures back in the day, now, the barrier-of-entry is so low anyone can get in on it and have it be “good enough” for the general public.

        • [dirtyid]

          Just to append, a lot of things can and will be automated but not taste and design insight. Some places are still stuck in lens flares and shiny bling phase of VFX, but cultivating sophisticated aesthetic sense happens much faster than the west would like to admit. There are great artists everywhere and we’ll be doubly fucked once they become proficient in english. The language barrier and ability to verbally articulate complex ideas is pretty much the last flood gate.

      • [Antonio Carrasco]

         I have seen plenty of movies lately where the VFX looked terrible. I don’t know whether those were done in the US or overseas, but depending on audiences to reject inferior VFX product–that ship has sailed.

        Unfortunately the film industry purse strings are run by suits rather than creatives (I know there are some exceptions but they are rare). Their goal is to maximize ROI. If they can make something creative that is all good and well, but ROI is always top priority.

        If the suits see an opportunity to cut costs buy sending the work overseas 9 times out of 10 they are gonna go for it.

• [winkybb]

  The advice I give my kids is that it is far easier to make money doing things that other people don’t want to do. VFX is presumably a very competitive space.

  But tough times for the company that made what may be the very best looking movie ever made. We loved it.

• [Mark Hennessy-Barrett]

  This is heartbreaking news.  Not just because I’m a visual effects artist myself, but because it’s symptomatic of an industry-wide problem.  Yes, VFX is competitive because we want to do it.  We love our art, and we want to put our all into it.  Making beautiful things and getting paid for it is something of a privilege.  But this love has been systematically and brutally taken advantage of; when a movie rakes in over half a *billion dollars* worldwide, and the people who created that movie don’t get paid, and get sent home without the paychecks and overtime money their families depend on, then someone is getting fat in a horribly unfair and unbalanced system.

  I have no idea what the answer is, but a hell of a lot of the best artists in the industry are going to be selling insurance or used cars next week.

  Something special got lost this week.  It’s a shame it’s probably going to just keep happening.

  • [JohnnyLA]

    It’s like this in most industries though. I currently work (but probably not for long given the state of the industry) in the video game sector. Same thing is happening. A pub like Activision makes 1 billion in sales but pays their rank-and-file mostly peanuts with little job security. Look at the collapse of THQ.  

    This has ALWAYS been happening those in the visual arts for millennia  The people who hold the cash are the kings be it movies, art, music, cave painting, etc.  

  • [Donald Petersen]

    when a movie rakes in over half a *billion dollars* worldwide, and the people who created that movie don’t get paid, and get sent home without the paychecks and overtime money their families depend on, then someone is getting fat in a horribly unfair and unbalanced system.

    Does this happen a lot?  If so, what kind of dipshit VFX company invoices its work contingent on net profits?

    I don’t work in features, and haven’t for twenty years, but in episodic TV.  Our VFX vendor submits a breakdown.  Once it’s approved, they start the work and submit an invoice.  If our studio took too long to pay the invoice, the VFX company wouldn’t do work for them anymore.  Is that not the business model that holds in the feature world?  If not, why not?

    I remember reading that John Carter cost $250 million.  Disney lost ~$80 million on that one.  But of the $250 million production budget, how much of that went to VFX?  Did a lot of the VFX work go unpaid?

    I like genre movies, so I tend to see ones with a fair amount of VFX.  Watching the credits of an Avatar, or The Hobbit, or Titanic, one sees a substantial number of names working in some capacity under the VFX banner.  Sometimes hundreds of names, and a half-dozen or more VFX firms working on one big feature.  It seems like there’s an awful lot of overhead there.

    Sometimes I’ll pay an invoice for a muzzle flash and it’s $750, and I’ll start to think that your garden-variety VFX (the ones that tidy up loose ends that Production didn’t catch on-set) can be a license to print money.  Other times I’ll see some truly astonishing VFX work and wonder how many person-hours went into those seconds of screen time.

    But I’m honestly ignorant and genuinely curious: when a company with the creative track record of Rhythm and Hues, one of the paramount VFX companies in motion picture history, with such a recent grand success as Life of Pi still bringing in boffo B.O. and up for several awards, when that company has to go under due to current market conditions, I have to wonder WTF is going on.  Do the studios only pay for big VFX after the box office rolls in?  Do VFX houses rely on net points for payment, like wet-behind-the-ears starlets?  Are they really not getting paid more-or-less upfront for their services rendered?  Or have the VFX houses themselves become a bit bloated and unsustainable?  I have no idea, and I certainly wouldn’t have thought so.  As for outsourcing, I remember when directors would decry studios sending productions to Canada to save money, since (the argument went) the crews there were less experienced and less skillful.  And of course now the film industries in Toronto and Vancouver are perfectly mature, with highly skilled crews, due to all the work they got when the exchange rate was so favorable to Canadian production.

    I’d really like more info about this.  I remember seeing the VFX that Blomkamp was able to slap together for Alive in Joburg, or that Alvarez pulled out of a hat for $300 in Panic Attack, and I was amazed that consumer-level prices could produce VFX akin (or superior) to big-budget features from less than twenty-five years ago.  Obviously that stuff won’t pass muster for a contemporary mid- to big-budget feature these days.  But dammit, that money’s gotta be going somewhere.  And “into the pockets of the studio heads” is too simplistic an answer.

    • [Jude Adamson]

      R&H is just like every other visual effects house – they bid on shows based on what they think it will cost, and then have to compete with the bids submitted by other houses. Basically it’s a race to the bottom, vfx studios underbidding each other in a desperate attempt to get the project – and the movie studio is trying to get the most for the least amount of cash.  Contracts are not locked tight, and studios can pull work at any time.

      While the work is going on, the directors and producers request a myriad of changes and extra work that was not in the initial bid – often this does not get paid for. VFX houses are loathe to not do it, as it could mean the work getting pulled or not winning the next job from that studio.  Meanwhile.. the artists rack up long hours of overtime trying to get all the changes done for the same delivery schedule – hence costs ballooning. 

      Making this stuff is not easy. R&H has been perfecting its full cg animal pipeline for *years* – if they are not able to pull themselves out of this, don’t expect to see anything like Life of Pi again for a long time.

  • [Kimmo]

    Yeah something’s horribly wrong when the guys who made the most gorgeous flick ever seen are looking for work.

    What is this, an anti-meritocracy?

• [artbyjcm]

  This feels rather typical to me at this point. Hollywood has about zero appreciation for special effects (digital or practical) and it really bothers me. The number of studios going unpaid and closing over the past decade is shocking. It’s all because the people in the movie industry are just out to screw everyone over.

• [Ryan Lenethen]

  Victim of “Hollywood Accounting”? 

  • [Antinous / Moderator]

    No Hollywood film has made a profit in decades. Which might actually be true. Harvey Weinstein’s trillions may be entirely from merchandising.

• [Thorzdad]

  That’s sad. R&H has been around for a long time, and done some spectacular work. A ton of VFX work is going overseas these days. Was R&H still doing the work locally?

  • [chapsandmutton]

    Yes. Hundreds of artists in El Segundo. Most of their overseas work was roto or other outsource able work. Vancouver took on a lot of shotwork but LA still had the bulk.

    • [Jude Adamson]

      That’s not quite correct. They have two offices in India, one in Malaysia and new ones in Vancouver and Taiwan. The Indian offices in particular have been doing large amounts of lighting, animation and comp work as well as matchmove, bg prep etc. Movies would be split between the LA office and the overseas offices.

      It’s saying something that *even* with these off shore offices, R&H was still not able to make payroll. LA vfx is in serious trouble.

• [ItsOver]

  Essentially the VFX firms have to own their content, they have to stop being the outsourcer for the studio and just do it themselves. Look at Pixar. They are a whole show, writing, directing, animation, everything. They aren’t outsourcing and thus they aren’t being nickel-and-dimed by hollywood style accounting where a movie makes $0 due to brilliant accounting and contracts.

  • [JohnnyLA]

    Uhhh…not so fast. I heard plenty of people who used to work at Pixar saying it’s not all that it’s cracked up to be. Yeah, maybe Bard Bird and Lassater are fine but the rank and file are still vulnerable to the vagaries of the market and budgeting contraints. 

    I would also point out to the Valve as “the Pixar of games” with their lay-offs today. 

• [Sean Lally]

  I did an aquarium for their office in the early 90s.  Lot o’ water under the bridge…

• [Brad Bell]

  I know visual effects is too new to have unions, so the artists have been getting screwed up the pooch for as long as VFX has existed – so it seems doubtful the problem is artists are being paid too much. I suspect a big part of this is about computers democratising film and visual effects. If this sounds like wild digital utopianism, go watch “Monsters,” by Gareth Edwards. VFX by Gareth Edwards using off the shelf software. (It’s a good movie with lots of visual effects.) 
  http://www.rottentomatoes.com/m/monsters-2010/trailers/

  A couple other examples:
  Modern Times
  https://vimeo.com/17631561

  The Third & The Seventh – photorealistic CGI
  https://vimeo.com/7809605 

  I don’t mean to suggest VFX is easy – I mean big companies with big industrial processes can be out-innovated by tiny players with digital technology, ie. the means of production are in the hands of the artists, ie. maybe they don’t need a big company after all. Maybe they don’t have to be in any particular place.

  • [Donald Petersen]

    The handwriting should have been on the wall for this for ages.  As the technology and software have gone global, now it’s only a matter of time (if it hasn’t happened already) before the artistic talents of the workforce in those nations with much cheaper standards of living approach or exceed those of the Western VFX artists.

    And digital VFX are trivially cheap and (nearly) instantaneous to import and export, unlike physical goods.  Market forces at work again, and I can’t think of any way this situation can be fixed in a way that would benefit American VFX houses for any prolonged period of time.

    But damn, it sucks hard.

• [x jeremy jarratt]

  Several very rich people make lots of money, and the artists who slaved over the product get the shaft. Thankfully, those who create nearly always do it out of love for their craft, or this would have long ago become a World Without Art, Unchecked capitalist greed continues to run amok.