Reply to post: Some Thoughts

Some Thoughts

Capitalization is an issue, but more importantly, the hardware and software advances faster than the debt on the old, now under-productive, systems are paid off. The hardware doesn't care what country it is in, so countries with lower labor costs than Hollywood, California, can buy new equipment, hire the artists and technical support and be ready to profitably charge less with better throughput than the established Hollywood companies. (And Hollywood companies is a bit of an anachronism, FX production has been migrating out of town for a while. Yes I live there and am on the remotest fringes of the fringes of show business.)

One also has issues about a limited number of customers. There aren't many people who can make 100 million dollar movies and, collectively, they don't make that many movies in a year: miss out on the dozen big budget movies slated for 2017 and that's an under-utilized 2015.

The studios are also wary of FX cost overruns and also may push for fixes if the shooting script changes or the output doesn't work convincingly. Bottom line, fixed fee contracts with inadequate margins and little tolerance for add services. Because there are so few customers, it again is take it or leave it. And look at the credits of the next comic book movie you see. Notice how many FX houses were involved. Clearly the studios/producers are spreading the work and I imagine that's partly meant to reduce risks, especially as FX houses do go out of business.

It's a buyer's market and the buyers know it.

I suppose there are timing issues as well. These movies are mostly targeted for a summer release, which could mean that once attached to one movie, an FX house has to pass on other business because they only have so many people and systems. Or look at it from the other direction, one could build the capacity for a few months of multiple movies, and then have to figure out how to carry the payroll into the next year's production season. That's assuming that Fox, for example, would be unconcerned about leaks or paying for the r&d for others when hiring an FX house that is working on Marvel and WB films.