back to article Why are all the visual special effects studios going bust?

An interesting read popped up on Motherboard recently: if all and every movie now uses ever more visual effects, then why the heck are all the visual effects (VFX) studios going bust? The answer given was apparently that Avatar didn't win the right Oscars. This is both amusing and wrong. The actual answer is that this is how …

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there's plenty of people willing to see ads

Spot the wrong word.

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Headmaster

Re: there's plenty of people willing to see ads

there's

What do I win?

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Thumb Down

Re: there's plenty of people willing to see ads

there's plenty of people willing to see ads

I don't think that's true at all.

I reckon if the corporations behind most brands really understood how at best people don't care about any of their ads, and how at worst, consumers actively dislike ads then there would be mass panic and a large number of people who have fooled their employers that they really do 'add value' will be exposed as the parasites they really are.

There's too much money and inertia at stake to ever let that happen. So marketers keep fooling themselves, and people who pay for marketing keep fooling themselves, although I expect the clever and self-aware ones know just how pointless and ineffectual the vast majority of advertising really is. Still they all believe they're 'fooling the public'. They aren't: we just don't care enough to disabuse them of their ingrained idiocy and mental blindness.

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Re: there's plenty of people willing to see ads

no its "willing" !!!

Should be Unwilling

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no its becky

No, it's "it's". (^_^)

(Or was that meant to be the joke and I just heard something go "whooosh"....?)

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Re: there's plenty of people willing to see ads

Isn't this in part the Law of Hidden Competence coming up?

"As I don't work in discipline 'X' it looks to me as if they are incompetent"

Whereas from inside, they do know what they're doing (see, Accountancy for examples)

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Paris Hilton

Re: there's plenty of people willing to see ads

The surprising thing is that considering Google mostly only makes money when somebody clicks on an ad, and since Google makes money hand over fist, then indeed there must be plenty of people willing, not only to see, but also to click on ads.

No, I don't know who these people are either.

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Happy

Re: there's plenty of people willing to see ads

I am one, I like clicking on ads for companies or services which I truly dislike, such as Microsoft, or our competitors. I then know they pay google/theregister/whoever (depending on which site I am on).

So that is one of those.

PS: No I do not care about the actual ads.

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Vic
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Re: there's plenty of people willing to see ads

at best people don't care about any of their ads

For many products, that's not true. Soap powder manufacturers learnt long ago that sales were directly proportional to exposure. That just is the case - however much we'd like it not to be.

I suspect there are certain ads that are a massive turn-off, though - the old Intel "bong bing bong bing" in every fucking advert that mentioned their processors was exceptionally jarring, and I actually went out of my way not to buy Intel just ion the back of that. I doubt I was alone.

My suspicion, therefore, is that ads that manage to be "smooth with a capital smoo" will cause consumers to buy the product. Adverts that are simply "in your face" will cause the product to be remembered, but not necessarily with the right connotations...

Vic.

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Vic
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Re: there's plenty of people willing to see ads

there must be plenty of people willing, not only to see, but also to click on ads.

I've clicked on quite a few ads.

I have a rather faulty touchpad on this laptop. Accidental clicks are not uncommon :-(

Vic.

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Big Brother

Re: there's plenty of people willing to see ads

"So marketers keep fooling themselves, and people who pay for marketing keep fooling themselves, although I expect the clever and self-aware ones know just how pointless and ineffectual the vast majority of advertising really is. Still they all believe they're 'fooling the public'. They aren't: we just don't care enough to disabuse them of their ingrained idiocy and mental blindness."

If only that were so, then the ad biz would wither away and we would all live in bliss anon. Alas, it's not true; The advertising industry isn't a bunch of hucksters, at least as far as the paying clients are concerned. Those clients want to see increased sales in return for their ad bucks, and if they don't, they will switch agencies in a heartbeat.

Nothing in our culture is more highly scrutinized than the results of a given ad campaign. Nothing.

It's true that a majority of ads don't produce revenue, but a goodly percentage do, and that's what counts. And now we have targeted ads courtesy of Google et al, so all those 'impressions' being pushed into your brain are much less pointless than before. That's progress, ain't it?

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Anonymous Coward

Re: there's plenty of people willing to see ads

ah, two thumbs down from admen. Well done for finding your way here.

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Anonymous Coward

Re: there's plenty of people willing to see ads

Nothing in our culture is more highly scrutinized than the results of a given ad campaign. Nothing.

In this world, generally correlation != causation. In the world of advertising, the admen pretend otherwise; so high scrutiny != decent analysis of outcomes.

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Anonymous Coward

Re: there's plenty of people willing to see ads

The admen beg to differ. They have DECADES of experience to back up their work. What do YOU have? Also note precisely why a particular genre of show is known as the soap opera.

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Re: there's plenty of people willing to see ads

> I actually went out of my way not to buy Intel just ion the back of that.

I avoided United Airlines for years because they had to put "fly the freindly skies" into every fscking announcement - it was like being in a cult.

Hint to all the marketing people out there; your regular customers, the ones who fly several times a week, are very valuable - they are the ones who get pissed off at this sort of thing.

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Re: there's plenty of people willing to see ads

Advertising is as much about brand and product recognition as anything else. If you've never heard of Hyundai, what are the odds you will buy one of their cars? If you've been hearing about them for years you may at least consider them if you think they might meet your needs.

If you are looking for a big ass pickup or a sleek sports car you probably don't consider them, because you wouldn't recall seeing those products advertised. If you are looking for a basic sedan or minivan you might decide to visit the local dealer if you want to check all the options rather than just saying "I bought a Toyota last time and I was happy with it, so I'm doing that again".

Marketing people don't believe you are going to remember their ad after one viewing. Well, maybe their Super Bowl ads, or so they hope. They want it to enter your subconscious through being exposed to it over and over again. No matter how "immune" someone claims they are to advertising, they can't help that any more than they can avoid picturing a bright yellow elephant when they read this sentence.

This is why they push interstitial and pop up ads, because those enter your subconscious in a manner in which ads on the top/bottom/sides of the content you are interested in do not.

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Re: there's plenty of people willing to see ads

"So marketers keep fooling themselves, and people who pay for marketing keep fooling themselves"

To quote:

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” ― Upton Sinclair

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Re: there's plenty of people willing to see ads

"They have DECADES of experience to back up their work."

And yet they just keep cramming the same loud annoying ads in everywhere they can find or intrude, decade after decade, with no discernible improvement on them.

Are they just that stupid? Insane? Don't give a fuck as long as they get paid?

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Re: there's plenty of people willing to see ads

"Also note precisely why a particular genre of show is known as the soap opera."

Uh, because they were the only genre not totally swamped with cigarette ads at the time?

(Ladies didn't smoke back in the 50's, according to Madison Avenue.)

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Re: there's plenty of people willing to see ads

It is because they work. Harvey Norman is horrendously over-priced, and staffed by morons. But when people think about buying a fridge or a new computer Harvey Norman is on their list of places to consider. Their ads are the epitome of "yell at you" advertising.

You with your tech background will probably never buy anything from them because you can find the same product cheaper elsewhere. But the 80% of the population that find turning a computer on hard WILL go there.

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Re: there's plenty of people willing to see ads

Not necessarily. I purchased a computer there for my mother and after a bit of bargaining they actually were the cheapest place to get it. You just won't get anything cheap there if you're doing the xx months interest free thing.

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Happy

Re: there's plenty of people willing to see ads

there's plenty of people willing to see click ads.

I win. Sadly, for those of us with websites, the sentence was only true before my correction.

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Re: there's plenty of people willing to see ads

Awesome, you bring your mighty resources down to punish and hurt that evil company a mighty $1 or less at a time.

How many of these can you get through in an hour? Has their stock price been influenced yet?

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Re: there's plenty of people willing to see ads

there's

I fear FartingHippo and his or her 21 followers are succumbing to false pedantry.1

In the phrase "there's plenty of people", a copula of either number - singular or plural - is widely-accepted usage. The plural noun "people" is the object of the preposition "of", forming an adjectival prepositional phrase; it has no direct relationship to the copula and thus no influence on its grammatical number.

The predicate of the copula is the mass noun "plenty". Like many other mass nouns in English, whether it is treated as grammatically singular or plural is a matter of dialect.

1"Fear" is a bit strong. Actually I rather enjoy it.

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Anonymous Coward

Re: there's plenty of people willing to see ads

the wrong word is ads... it should be boobs.

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Re: there's plenty of people willing to see ads

Screw the "Admen" terminology.

The people that do this are Customer Analytics experts, who mainly have degrees in Statistics and Mathematics, and can manipulate SAS statistical models like wizards - or SPSS models if the company is smaller, or R models if the company is cooler. Basically, the guys that DO this stuff really DO know their stuff statistically, usually have degrees in it, and tons and tons of practice. These guys know how to do A/B comparisons, multivariate analysis, test groups, hold-out groups, control groups, etc. They probably know a lot more about this than you ever will...because they are NOT admen, they are mathematicians. They just happen to work for admen.

And I know, because I used to run the CRM Analytics department for a major credit card company, and my current job is head of Insights and Data for an international consultancy, and much of our client work is marketing analytics (with Risk and Fraud as the other legs of the practice).

Marketing works, period. And if you DON'T believe it, all you have to do is look at how much money is spent on elections in the US, especially on TV and radio advertising. That money isn't spent because it _might_ work...that money is spent because it absolutely works, over and over again.

BTW - I don't LIKE the fact that people are so easily persuaded by marketing. I hate it, in fact. The fact that it works so well really is a reflection of our frailties and shortage of logic as humans. But the technology and maths ARE pretty cool, and every now and then marketing does some good..like let you know of an event you would have missed, or a product that you really find useful. But it IS easily abused.

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US elections

.. are only expensive because of the fear that if the other side spend lot$ and you don't, you'll lose. So both sides spend billions of their supporters' money.

If they had some regulation on campaign spending, the results would be the same and it wouldn't be the ad industry - including its outlets - that was richer.

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You can extend this line of thinking to utility companies as well, which is why you see a tendency toward natural monopolies there. Utilities have the same situation: high capital cost, low marginal cost. Plus they have the NIMBY issue: people will tolerate the necessary evil of ONE utility, but once more crop up their infrastructure can become an eyesore.

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Nobody knows anything

William Goldman - author of The Princess Bride and screenwriter of many famous movies including Butch Cassidy and the Sundance Kid, and All the President's Men - not William Golding (author of Lord of the Flies and winner of the Nobel Prize for literature). He said it grammatically correctly, too, in his 1983 book "Adventures in the Screen Trade".`

I think you could argue that there are no stars who can open a movie on 3000 screens any more. Everything is franchises and sequels these days. And occasional hits that come from left field, yes.

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Re: Nobody knows anything

Not really a surprise that Worstall gets the author of Lord of the Flies confused with the writer of The Princess Bride.

For a more thoughtful and informative view of why the industry is having problems - written by someone who actually knows something about what's been going on and isn't just pontificating from ignorant distance because they have a column to write - see here:

SIGGRAPH - what's wrong with the VFX industry.

The real reasons are distorting tax breaks, short-term management thinking, a certain amount of art for art's sake, and poor negotiating skills.

Hand-wavey supply and demand innit is neither a sufficient nor a required cause.

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Anonymous Coward

Re: Nobody knows anything

I've heard that there's a return to physical effects in the films too. Obviously won't affect the animated film industry directly.

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Re: Nobody knows anything

>>"Not really a surprise that Worstall gets the author of Lord of the Flies confused with the writer of The Princess Bride."

I don't know much about the VFX industry, but I do know that every time Worstall has blundered into an area that I do know about with one of his polemics, his analysis has been shallow, misguided and above all, setting out to prove his desired conclusion. So I can well believe your post. Honestly, there's always that difficult choice when I see a Worstall article as to whether to read it and reward him with clicks but have the opportunity to correct the worst of his excesses, or play the long game and hope not reading will eventually mean he goes away.

VFX studios keep going bust because they run below capacity, do they? That might harm some investors yet somehow doesn't seem to be harming the market as VFX continues to become ever cheaper and more commonplace. That is likely the greater reason - IT investments depreciate quickly and with the rate of progress in VFX by the time you are set up and ready, you have a very limited window because your next competitor springs up without the weight of investment in legacy technology holding them down. You spend ten million dollars on your hardware and software (and to some extent staff as skills also depreciate in a fast-moving sector), and six years later whilst you're still paying that off, someone else spends ten million dollars on hardware and software and new hires and they're better equipped than you are.

Normally start-up costs are significant barrier to entry. But when your investment depreciates with time, that offsets it to a surprising extent. A second factor is staff retention. In a growing market, staff have supreme mobility. And the VFX market is growing and healthy.

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Vic
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Joke

Re: Nobody knows anything

SIGGRAPH - what's wrong with the VFX industry

Are they misinterpreting it as SIGKILL?

Vic.

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Coat

Re: Nobody knows anything

@Vic:

SIGTER would be funnier for VFX folks...;-)

P.

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Re: Nobody knows anything

Yes. Exactly.

The opinions on offer in the article are some I've heard way too many times - It's abstract high-brow economics talk that has little ACTUAL correlation with the business. You have to have actually worked in the business or understand how it operates to see why the sky is falling. It's not about equipment and capital outlay - it's about scope creep and time spent (and I say time, because this is realistically the only way to quote and charge for work, because we don't get to itemise 'equipment' like the shoot people do). In the end, people costs will always dwarf equipment costs and nobody chooses your VFX company for the job because the equipment you have is two years newer than another company.

The visual effects business like MOST creative/media/content businesses don't submit to these simplistic economic 'rules' because none of these businesses make widgets - these businesses are a mix of services and products - services and products that are never standardised. Each job is highly variational and each job is usually conducted on a project basis: there are almost never retainers or long-term contracts that span multiple projects. Quoting and cost-estimation is notoriously difficult - the end product is only very loosely defined by the client, meaning, amongst other things, that quotations can vary wildly from supplier to supplier and scope-creep is rampant.

When is a shot 'finished'? Who decides? How many times must you re-do an effect before it can get ticked off the list of deliverables? The entire process and end result is built largely on individual opinions - and can't be accurately spec'd beforehand. This makes for extremely volatile accounting for time(money) spent on a job - the potential for a loss is very, very high. These factors would cripple other service-based industries like law, consulting etc IF they didn't have objectives that were easier to define or outcomes that were easier to agree on.

This is partly why it's so hard to grow creative businesses - the lack of reusable 'recipes' in multiple business dimensions mean they are extremely difficult to scale.

The VFX industry works with uncertainties and changing scope to a degree that would terrify most people in other lines of work. But they do it because they're in the business for LOVE first, not money. And thus, in the end, their powers of negotiation are usually underdeveloped and the studios have all the leverage in the relationship.

Tax breaks, that allow studios to shop their work around the world, are a major factor in the situation, but that has been better laid out elsewhere. I think the factors that don't get enough discussion though is simply the broken relationship between client(studios) and VFX producers, the lack of accountability by studios in their project scopes and ultimately the lack of strong industry representation (negotiating bodies and standards enforcement) and perhaps even unionisation.

In its simplest form, many of the above issues could be solved by simply specifying how many hours/days each shot would be assigned - OR how many change requests are allowed for in the budget per shot. This is how many graphic design jobs work, to limit the endless change-cycle that could creep in to every project. Good luck getting studios to agree to this system without every single VFX house getting on board at once though...

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Ah, No.

"there's plenty of people willing to see ads, plenty willing to sell them, only a few who can intermediate between the two."

No. There's plenty of people able to see ads, but in comparison very few people willing to see ads.

Seriously. Does anyone really believe that people visit web sites, read magazines, or watch TV with the intent to watch the ads. Really? "Oh, I watched a truly marvelous series of ads last night on the TV. Such a pity they kept being interrupted by that damn movie."

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Re: Ah, No.

"willing to" != "delighted to"

If you have ever watched an ad without being physically forced to do it, then you were willing.

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Anonymous Coward

Re: Ah, No.

"In fact, advertising used to be an art."

Most Classic FM adverts often make me cringe and change channel to Radio 4 ...but once in a while they have an advert which really is amusing even on repetition.

It is probably very subjective - possibly generational. After all the words "Radio 4 humour" are an oxymoron to me.

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Re: Ah, No.

Advertising still is an art. And, like all art, it is occasionally done beautifully but there's a hell of a lot of dross out there.

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Anonymous Coward

In fact, advertising used to be an art.

So did film making and SFX come to think of it.

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Re: Ah, No.

Exceptions granted, though I will note that that kind of thing is funny and entertaining despite being an ad.

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Re: Ah, No.

I watched a truly marvelous series of ads last night on the TV. Such a pity they kept being interrupted by that damn movie

Someone once described ITV programs as the filler between the adverts. And it was true: The programs were just there to keep your attention so you'd be around to see the adverts. The TV companies have a fine line to tread between forcing as many adverts on you as possible and you getting p***ed off and changing channels.

But this was before some bright spark realised that: A) You can make a lot of money from premium rate phone voting, and B) Your program can actually just be one massive hype-gasm advert for your final product. And if your hype-gasm advert includes premium rate voting, you're getting your customers to pay for your advert. Win/Win!!

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Anonymous Coward

Re: Ah, No.

Win/Win = Won.

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Anonymous Coward

Re: Ah, No.

Win/Win = One

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Paris Hilton

diminishing returns

A well-versed YouTube uploader can do a lot with no budget, and a lot more with a high-end camera or better animation software. GPUs are improving much faster than CPUs, and will reap the benefits of Moore's law right to the "end" at 1 to 5 nanometeres in 2020-2025, before cores start being stacked and we get Moore decades.

For comparison, Big Hero 6 used a cluster with somewhere between 500 teraflops to 2 petaflops of performance, 589+ TB of RAM, 690+ TB of storage, and used their Hyperion software to create diverse, realistic feeling background crowds with loads of ray tracing. It's not Earth-shatteringly difficult to obtain 128 GB of RAM, a couple dozen terabytes of storage, and a few teraflops of performance now, and although there may be a similar gap between what hardware Disney/Pixar and amateurs can buy in 10 or 20 years, the capability gap will shrink. The software will get better to the point where Disney will sing "Let It Go" as it lays off extra animators. Such improvements will trickle down to the lone animator.

Computer animation will allow for small filmmakers to create expansive greenscreen worlds (decent CG is well within the reach of TV shows now), and eventually, virtual actors, perhaps based on famous dead ones. You can expect speech synthesis to advance too. Input an actor's filmography, press "Go". Personality rights may become as big of a battle as copyright in this scenario.

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Animation

> The software will get better to the point where Disney will sing "Let It Go" as it lays off extra animators. Such improvements will trickle down to the lone animator.

Nonsense. Computers don't make animation easier. A modern Pixar film requires more animators than an old hand-drawn Disney effort, not less. There is also the fact that no two animators have the same style, so you always give each main character to a different animator so that those characters act differently -- it's not an efficiency measure.

Computers have taken over the work of inbetweening in hand-drawn stuff, but that was always tedious grunt work anyway.

If Disney require far fewer computers in the future, they will presumably require fewer IT support staff.

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Re: Animation

> Nonsense. Computers don't make animation easier. A modern Pixar film requires more animators than an old hand-drawn Disney effort, not less.

A modern Dreamworks/Disney/Pixar film is a blockbuster. More budget, more animators, more chest hair on Shrek.

They are also doing much more on computers than traditional animators could have ever attempted. You can't ray trace in near real-time by hand. But eventually, there will be diminishing returns as the animation will look good enough to match any style you need for your story/vision.

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