VFX...Why Are You Like This?

Technical Creative Studios has sent shock waves across the global VFX and animation industry.

And by the end of the year, we were down to 100. So our our staff was cut in half.

[Music] From tax credits drying up to the point of wiping out the VFX industry in entire cities, major studios going from announcing five spin-offs in major cinematic universes to selling their office chairs

on Craigslist, thousands of employees being let go, senior artists forced to drive Uber to pay off their mortgages. AI going from unusable nightmare fuel to quasi usable tools starting to actually

their mortgages. AI going from unusable nightmare fuel to quasi usable tools starting to actually threaten our futures. And 2 years later, the VFX industry still hasn't fully recovered from the lasting snowball effects that first started with COVID and the Hollywood strikes. So once again, you know, I've got to ask, VFX, are you still not okay? So, as a quick recap, 2 years ago,

the VFX and animation industries and even gaming to some extent got hit by what we'll politely call the perfect storm that rattled the whole system. It started with the aftermath of COVID.

During the heights of the pandemic, everyone was locked indoors and therefore consuming more media than they could reasonably sustain. Once the world started to touch grass again, big studios didn't account for that and instead overspent and assumed their profits would continue to grow. That obviously didn't happen, so studios were forced to be creative in how they cut costs. Right around the same time, the major production studios decided Netflix was getting a

cut costs. Right around the same time, the major production studios decided Netflix was getting a little too comfy at the top of streaming hill all on their own. Naturally, they got a little jelly and decided they too wanted a piece of that content pie. Disney Plus, Amazon Prime, Apple TV, Paramount Plus, HBO Max, all decided to overinvest in acquiring and producing exclusive content because that would surely bring over the subscribers and kill Netflix. It didn't. Their

overpriced big IP remakes bombed. And now they too had to get creative and fire people. Next,

AI platforms like ChatGpt and Midjourney went mainstream. Suddenly, every tech bro in a Patagonia vest started throwing their money at any startup that even mentioned the letters A and I in alphabetical order. And so then came a title wave of AI video editing software. Every

content producer out there shhat their pants out of fear of missing out on potential savings and like scared turtles slid further into their shells and slowed down the development of new content even further. Needless to say, lots of people lost their jobs. Entire studios shut down and the new kids out of school are stuck working warehouse jobs, completely unable to find work in

the industry in which they were promised a golden ticket, but instead got an unpaid subscription to latestage capitalism. The issues within the VFX industry stem from well before any of this. The

latestage capitalism. The issues within the VFX industry stem from well before any of this. The

cracks were already there. And that's why it was so unstable to begin with that these winds of change could do as much damage as they did. The tools became more accessible and studios all over the world began competing. Jobs started hopping countries faster than a Marvel character in a multiverse. Sprinkle in tax subsidies and every studio bidding against each other in a race to

multiverse. Sprinkle in tax subsidies and every studio bidding against each other in a race to the bottom. Sometimes even taking jobs at a loss just to keep the lights on and avoid becoming a

the bottom. Sometimes even taking jobs at a loss just to keep the lights on and avoid becoming a sad LinkedIn post. Ununized workers don't have enough power to have any say in this. And even

if they did, the industry is so globalized that work can easily dry up in an ununized sector and be shipped out elsewhere. But the real killer in all this isn't even the external factors I just named. These wolves are ripping their own faces off. The biggest factor in all of this is the

named. These wolves are ripping their own faces off. The biggest factor in all of this is the sheer volume of creative iterations that studios run through before getting anything approved. An

insane amount of money is spent every time someone wants anything changed. And they want everything changed all the time. There's this belief among executives that AI is going to remedy that problem by allowing for quicker, cheaper iterations. But so far, the quality is mid and tricky to control and hilariously in some cases, like Netflix's new show using Gen AI or the Coke commercial. They've shown that they're actually completely fine with compromising on quality when

commercial. They've shown that they're actually completely fine with compromising on quality when there aren't any actual human people to complain about deadlines, dignity, or fair wages. But look,

before I even get into the AI stuff, let's take a look at what happened over the last year when we were hoping everything would come back. Hold out to 2025, we were optimistically told. Well,

since then, Montreal, the Beyonce of global VFX hubs just a year or two ago, became a completely desolate VFX landscape. Quebec has suffered the most dramatic decline in VFX jobs over the last year. The government imposed a 65% cap on tax credits for international films, where there was

year. The government imposed a 65% cap on tax credits for international films, where there was none beforehand. In the simplest terms, before, if your VFX labor cost a million bucks, you could

none beforehand. In the simplest terms, before, if your VFX labor cost a million bucks, you could claim the full amount and get a nice $200,000 tax return from the government. Sweet, right? Now,

that same job is capped at 65% of the cost. Even though the base credit bumped up from 20 to 25%, you're only claiming 25% of $650,000. So, roughly like 160 grand. Translation, you're getting back less money with more paperwork and fewer reasons to stay in Quebec. So, that's about a 20% overall decrease, which could easily wind up closer to 25% if you account for budget structuring and credit

stacking. As a result, thousands of people were left without work. Some sources estimated that

stacking. As a result, thousands of people were left without work. Some sources estimated that over 4,000 workers have lost employment. And so roughly 70% of the entire VFX force gone like a deleted render cache. In the process, studios like Digital Dimension and On Animation also gone. Not pivoted or downsized, just straight up gone. Outpost is rumored to have shrunk down

gone. Not pivoted or downsized, just straight up gone. Outpost is rumored to have shrunk down to a skeleton crew. Like hold the fort down with three people in a Wi-Fi router type of skeleton.

Heavyweight Dean Egg pretty much yeated its entire VFX department. Sinite, Rodeo, Frametore, all let hundreds of artists and support staff go. And of course, the industry's largest employer, Technicolor, went bankrupt and shut its doors. Not just one branch, not one country. Globally,

studios in Quebec like MPC, MRO, and The Mill were all forced to shut down. Yikes. The global impact of Technicolor's bankruptcy apparently resulted in 10,000 plus people looking for work. Double yikes.

Even outside of Quebec, other studios struggled to keep their doors open. Phil Tippet's famous Creature Studio, Tippet Studios, had to file Chapter 11 bankruptcy. Scanline closed its German office, and that's where they started, in favor of shifting work to India and Korea. I'll let you guess why. Synocite still standing but wobbling is reporting significant losses and dragging a fairly

guess why. Synocite still standing but wobbling is reporting significant losses and dragging a fairly large debt. Jellyfish Pictures in the UK suspended operations and closed their doors. And Access

large debt. Jellyfish Pictures in the UK suspended operations and closed their doors. And Access

Studios also in the UK had to seize operations completely while they were in mid-production.

And these are only the major cases over the last year. The studio obituary goes on and on with smaller boutique studios praying the next invoice gets paid before the lights get cut. The

bidding game overall seems to have gotten uglier. The name of the game has always been to get the most cinematic high-quality work for the price of like a Netflix subscription with ads. Studios

everywhere are trying to undercut each other and finding it difficult to compete with bids coming from regions with generous tax credits and lower wages, promising photoreal dragons for the cost of an overtime dinner just to keep the work coming in. Studios have slashed their bids to dangerously low levels, desperate to stay in the race. And when the numbers don't add up, guess who gets

cut? People every single time. Support staff gone, coordinators gone, juniors, hods, pipeline devs,

cut? People every single time. Support staff gone, coordinators gone, juniors, hods, pipeline devs, all lovingly shown the door. What's left is a skeleton crew holding the entire show together with duct tape, coffee, and trauma bonding, all forced to take on larger roles at no extra pay.

And so, some shows didn't roll as smoothly as they'd hoped. And as you can imagine, that meant lower profit margins and more problems. Right now, you've got California-based studios paying full US wages with zero tax credits, trying to compete with vendors overseas paying onetenth the salary, plus cashing in massive government rebates. So, how do they compete? They squeeze the timeline, cut corners, and bleed their teams dry until they hit delivery or someone breaks down, whichever

comes first. On the client side of things, bids are often weaponized against vendors. I've heard

comes first. On the client side of things, bids are often weaponized against vendors. I've heard

directly from onset production supervisors that they'll often purposefully send out multiple bid packages to many studios, shop them for a bit, get them to do some free tests and lowcost labor for a bit in hopes of winning contracts, only to ghost everyone but the cheapest bidder. Other times,

production companies might pretend they're working exclusively with one studio while low-key farming out the other shots to different vendors to lower their costs. Meanwhile, VFX studios are engaged in their own cost cutting battles, hiring outsource vendors with fixed bids to get some effects done, only to pay them a fraction of what they should or what they would if they had been forced to pay

their actual staff by the hour. Honestly, the entire industry could use a hell of a lot more transparency across the board. But hey, that's Hollywood for you. For decades, studios have been trying to build tools to accurately predict how long each task would take and how much it would cost. Unfortunately, with so many artists working ghost hours just to get the job done, it becomes

cost. Unfortunately, with so many artists working ghost hours just to get the job done, it becomes impossible to predict. So, the productivity metrics are trash because it's not a trivial thing to predict how much pixel [ __ ] should be accounted for in each shot. A single explosion from one show could easily cost you three to four times as much on the next if a supervisor decides

that the flames don't emotionally resonate with his soul as they workshop their inner Michael Bay. But all of this is meaningless anyways when you have to artificially reduce bids by $100 to

Bay. But all of this is meaningless anyways when you have to artificially reduce bids by $100 to $200,000 just to stay competitive in the market. It's like asking a Michelin chef to make a five course meal on a Taco Bell budget and then telling them the client wants everything gluten-free, vegan, and photoreal done by Friday. And until middle management could step out of their own

way and let artists do their thing, every instinct will be second guessed. Every revision cycle will add another five digits to the budget. And the welloiled manufactured creativity machine will continue to blow past budgets and leave studios seeing minimal profits. You got to love it when a client or supervisor gives you a note to change something only to tell you that the shot looks

worse the next time you show it, gaslighting you into thinking that it was your idea all along.

Meanwhile, artists lucky enough to still have jobs are holding on to their posts for dear life out of fear of not knowing if they'll even be able to land something else. While those less lucky are often left struggling to find their next roles. In some cases, veteran artists with 20 plus years of experience have been tossed by the wayside, unable to find work. There are so few studios left that

even supervisors and heads of departments are struggling to find work. You'd think having held those positions would give them a leg up. But those that have been let go are often finding it just as hard since those leadership roles are pretty rare and have mostly already been filled.

And hiring managers get nervous when someone who used to run a team now wants to light shots. They

start wondering if they remember how to use the tools, if they're up to speed with new workflows, or will they bail the second something better comes along. Many of them have decades of institutional knowledge, but haven't been on the box in a while. And apparently,

in some cases, candidates were straight up told they were too old. On the other hand, juniors are viewed as too young and inexperienced to hire. And the studios are rarely willing to give any newbie out of school a chance. Now, with how tight budgets have become, they want their labor costs to be as sure a thing as possible. That means many young folk

directly out of school are finding it unreasonably difficult to land their first gig. Still though,

schools are still offering expensive diplomas, running flashy reels, and keep selling young aspiring creatives on the promise of becoming working VFX artists. So, every year, hundreds of VFX artists graduate with little to no hope of finding work in the field. So,

who are these studios hiring now? Seems like the ideal candidate nowadays is a 20-some year old prodigy with 10 plus years of experience. Must be a wizard in Unreal, Houdini, Blender, Maya, ZBrush, and Nuke. Also needs to know rigging, modeling, effects, animation, lighting, shading, and few other departments just for fun. Bonus points if you can also write Python scripts, solve pipeline issues, and emotionally support your co-workers, all while getting paid a junior

wage. If it sounds like you, great. When can you start? But even if that is you,

wage. If it sounds like you, great. When can you start? But even if that is you, we have a new mandate for you. For the company to remain competitive in the future, we're going to need you to learn Comfy UI on your off time and find ways to implement AI into your workflow in order to reduce our costs. Honestly, AI has taken a significant leap once again over the last year.

Somehow though, it still kind of feels like a solution, desperately looking for a problem.

Studio heads across the world are treating this like the second coming of Christ. If Chrysler were cloud-based and trained on stolen art, to them, it'll surely solve all cash flow problems and speed up workflows. And realistically, it probably will have a significant impact soon enough. But as

of now, from what I've seen in actual production, everyone is still kind of fumbling around trying to actually figure out what to do with it. There are some legit use cases with some early concept and pre-pro workflows. Like you can iterate through thousands of conceptual images pretty quickly or you can generate some pretty decent base meshes to start modeling from. Generate some

quick textures and you can get some pretty quick garbage mats and you know generated effects of a plate to get a quick idea of the shot. But really though this is all very early concept phase stuff and more often than not for VFX companies at least this is the kind of stuff clients might send your way anyways before the real work even starts. It does save a few hours here and there,

no doubt. But in the grand scheme of things, even if, for example, I start with some 3D

no doubt. But in the grand scheme of things, even if, for example, I start with some 3D generated base mesh, I still have to retopo and clean up the whole thing, then UV it, texture, shade, that's most of the work. It just handed you a messy head start. And if I were to start from nothing, I wouldn't first build a concept mesh anyways. I'd just build the damn asset. So,

it's really only speeding up the rough proportion stage, if anything. And that seems to be the case of almost all applications of AI and VFX at the moment. It speeds up the easy or creative part, leaving the hard stuff exactly where it was on us. Even when you can find an application for AI, it's usually a legal minefield if you actually want to use any of these platforms in production. Studios

are running so lean now they can barely afford lunch breaks, let alone invest in full-on AI R&D.

So, they're hoping to find some off-the-shelf applications to use directly. Unfortunately,

most of these have been trained by scraping all the data the internet has to offer, and clients don't want their vendors to go anywhere near that stuff when working for them. If we're being entirely frank, though, VFX artists are secondary creatives. We're not the ones writing the stories.

We're the ones making other people's stories look cool. We're trades people. And even with the democratization of tools, whether through AI or real-time engines or accessible software, not all the effects workers can be a director or creator of their own stories, and the bar of entry in this field has gone up significantly. The ones left at any remaining studio are generally very skilled.

So, if you're trying to break in now, competition is more fierce than a death drop on Drag Race. And

it'll likely only get more challenging from here. Look, I don't want this to be all doom and gloom.

There is still more work that started flowing through the industry. We got past the real low where there was straight up no work and things are slowly starting to move again. Bezos is still emptying out his pockets on the rings of power. Cameron is out there chat gptting madeup sounding species names on the next Avatar films. The new Harry Potter series is about to kick off and

that's going to feed half the VFX industry for the next decade. Apparently, there was very little CGI on that one which obviously means they've hired actual wizards and dragons along with all the other various projects Disney continues to pump out. And with all that, I think the positive way to look at this is to kind of hope that some of the larger VFX and animation studios with

deep connections to Hollywood will scale down their internal staff significantly. But instead

of closing altogether, distribute more of the work out to smaller VFX boutiques to get the work done.

Hopefully, that just means that smaller teams get to keep working without the overhead from a larger organization that might slow things down. And I've said it before, but I'll say it again.

I think YouTube is quietly becoming the content platform. Younger generations care less and less about what Netflix and Disney are serving. YouTube channels have evolved from viral home videos and cat stuff to curated serialized content that actually feels like a real show. Again, recently,

we see traditional media series like CBS's Late Show being cancelled, while a podcast set with IKEA lighting racks is pulling millions of views every week. The appointment television era is gone. Instead, we're likely transitioning into the age of micro audiences. smaller channels and shows

gone. Instead, we're likely transitioning into the age of micro audiences. smaller channels and shows each pulling anywhere from a 100,000 to 5 million viewers at a time. And that's great. I think that means more people have a chance to create their own stuff. It means smaller teams that produce more personal and original content. And with VFX animation content becoming more accessible and affordable to create, it's only a matter of time before independent creators start dropping full

cinematic episodes directly to their subscribers. Will they pull Marvel numbers? No. But will they pull rent money and a fan base that actually cares? I mean, probably, right? So, the future might not be giant studios, but maybe thousands of tiny ones, each telling their own story and maybe getting paid for it. So, if you're a VFX artist trying to figure out how the hell to adapt,

if you're at a crossroads, unsure whether to keep pushing forward or pivot entirely, just know that you're not starting over from scratch. You're carrying years of battle hardened, high pressure situation problem solving skills under your belt, a high level of technical software mastery, and somehow managed to stay creative through it all. And whether you decide to walk away from VFX altogether or not, those skills and that mindset don't vanish when you

leave your shot list behind. We're all problem solvers and we'll figure it out in the end. Or,

you know, join us on Discord if you want to keep the conversation going and figure it out together.