Changing Scope Can Make Studios Bankrupt
Corridor Crew, part of Corridor Digital, is a popular channel on YouTube where VFX artists’ review “good and bad VFX”. They have over 5 million subscribers and regularly invite guests to join them on the sofa and give viewers insights into the VFX process.
In a recent video – ‘VFX Artists React to Bad and Great CGI’ – they highlight some key challenges that our industry has faced throughout the history of VFX studios: “scope creep”. This is where VFX studios typically have to agree to a fixed price to win a bid for a project. For the client, this is to try and manage their budget, but for the VFX studio, this is almost always a very risky process.
In a highly competitive landscape, studios need to win business, but not to make millions in profit, rather to keep staff employed, cover expenses and make a minimal profit to enable growth and innovation.
However, more often than not, the work will evolve, as changes are inevitable during a creative process. Therefore, the original scope will change and increase a studio’s workload, usually to complete within the same deadline and with no chance of financial recuperation. This is where the VFX studio starts losing money. The contract is already signed, the fee agreed, and the VFX studio wants to keep the client happy.
Rhythm & Hues
Rhythm & Hues is a prime example. They were a well-respected VFX studio with amazing talent and unlimited passionate energy for their craft. They worked 100 hour weeks to make sure Ang Lee’s ‘Life of Pi’ not only delivered on time, but looked incredible too. The result?
- The movie won multiple Oscars, including ‘Best Visual Effects’.
- Rhythm & Hues went bankrupt 11 days after their Oscars celebration, where they were cut-off mid-speech whilst declaring they were in financial difficulty.
They created a heartbreaking short film on their demise, ‘Life After Pi’, which you can watch now on YouTube.
Cut to today and recently we’ve seen Axis Studios, Technicolor (and with it MPC and The Mill), Jellyfish Pictures, Laughing Dragon, On Animation, and many more, close their doors for good.
A Flawed Business Model
Taking Action
We’re encouraging active discussions on the future of VFX and animation. If you run a studio, we want to hear from you. Get in touch for more information.
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