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Ok, I'm going to comment (my 2 c)

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waltervolpatto

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Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 4:54 pm

I really understand how giving away the software for free will help the community... Yes it will help BM to kill any other software out there, but with lower income how we can expect that the product will grow and how much developer power will be put behind it...

Feel free to discuss...
Walter Volpatto - C.S.I.
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 7:07 pm

Look at it the same way Apple gives away OSX updates for their Mac hardware - Blackmagic is building an ecosystem of professional tools that support and enhance their cameras and their other hardware products.

The *full* professional toolset is a paid upgrade (and Fusion's $995 price tag is a bargain for a graphics pro) much the same as with Resolve so there's a (small) revenue stream there.

But that's not what this is really about - this is about selling cameras and backing them up with a killer (and affordable) suite of creative software.

Hats off to BM - I've always loved Fusion since the DFX+ days but it's always been held back by poor marketing and prohibitive pricing. Looking forward to seeing where Blackmagic takes it but for now, just having a blast reacquainting myself Fusion :)
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Rakesh Malik

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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 7:14 pm

Fusion's been one of the premiere suites in its market, much like Resolve was in the pre-Black Magic days when you couldn't get it for less than $30K. Its pricing hasn't held it back any more than Arri's prices have prevented the Alexa from dominating the broadcast and cinema industries for several years now.
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Lee Gauthier

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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 7:27 pm

The free version of Fusion is lacking a few key features for pro work, including optical flow, render nodes and shot management for running a VFX department. If you want to run shot management, you need multiple seats of the Pro version.

The free version is ideal for freelancers and students, who will eventually become VFX shop workers. By making it free, BMD seeds the next wave of employees. Selling the Pro version for $995 per seat flat with no additional charges, they make it very attractive to build a comp department around it. The free version can be used as roto stations or even comp stations if you don't need every desk to be shot managed.

I think you're going to see Fusion become ubiquitous because of the giveaway and low price.
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Lee Gauthier

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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 7:29 pm

Fusion's been one of the premiere suites in its market, much like Resolve was in the pre-Black Magic days when you couldn't get it for less than $30K.


FWIW, Before BMD bought Resolve, one seat cost about $250k. It did include hardware, but still, not $200k of hardware.

It knocks me out that you can get a seat of Resolve for free now, and they've improved it since the days of $250k per seat.

Gotta love BMD.
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 7:57 pm

waltervolpatto wrote:I really understand how giving away the software for free will help the community... Yes it will help BM to kill any other software out there, but with lower income how we can expect that the product will grow and how much developer power will be put behind it...

Feel free to discuss...


Personally I always looked at it like this.

A good carpenter is good because of his experience and being a master of his craft, not because his hammer is expensive. A bad/inexperienced carpenter having an expensive hammer does not make him skilled.
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waltervolpatto

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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 8:09 pm

Joshua Helling wrote:
waltervolpatto wrote:I really understand how giving away the software for free will help the community... Yes it will help BM to kill any other software out there, but with lower income how we can expect that the product will grow and how much developer power will be put behind it...

Feel free to discuss...


Personally I always looked at it like this.

A good carpenter is good because of his experience and being a master of his craft, not because his hammer is expensive. A bad/inexperienced carpenter having an expensive hammer does not make him skilled.


If the carpenter cannot go to a good artesan to learn the craft it will remain a bad carpenter: making everybody a carpenter will reduce the craftmanship ;).

If a good VFX company is going out of businness because we move all the work to india because it cost less, (just to make a broad example), how you can have somebody in europe or here (LA) learn from the "masters" given that nobody is left behind to teach the craft?
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 8:27 pm

Lee Gauthier wrote:
Fusion's been one of the premiere suites in its market, much like Resolve was in the pre-Black Magic days when you couldn't get it for less than $30K.


FWIW, Before BMD bought Resolve, one seat cost about $250k. It did include hardware, but still, not $200k of hardware.

It knocks me out that you can get a seat of Resolve for free now, and they've improved it since the days of $250k per seat.

Gotta love BMD.


You're right, I'd forgotten... I hadn't looked at the price until after the BMD acquisition. :)

What has me the most baffled about it is the sustainability of the model. It relies on continued sales of their hardware to work, but maybe that's why BMD doesn't build its hardware to last.
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Rakesh Malik

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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 8:34 pm

Joshua Helling wrote:A good carpenter is good because of his experience and being a master of his craft, not because his hammer is expensive. A bad/inexperienced carpenter having an expensive hammer does not make him skilled.


You're forgetting that we live in the Flickr generation. What we're going to see is more of what we're already seeing... people suddenly getting access to stuff that was previously limited only to professionals, who took the time to learn the tools as well as the art, and basically assuming that having Fusion is sufficient to become a great compositor.

"I use the same tennis raquet that Steffi Graf used, so where's my 90 MPH forehand!"

"Damn you Dunlop, you lied! Your raquet doesn't work!"

(I don't know that she used a Dunlop, but you get the point.)
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 8:38 pm

Rakesh Malik wrote:
Joshua Helling wrote:A good carpenter is good because of his experience and being a master of his craft, not because his hammer is expensive. A bad/inexperienced carpenter having an expensive hammer does not make him skilled.


You're forgetting that we live in the Flickr generation. What we're going to see is more of what we're already seeing... people suddenly getting access to stuff that was previously limited only to professionals, who took the time to learn the tools as well as the art, and basically assuming that having Fusion is sufficient to become a great compositor.

"I use the same tennis raquet that Steffi Graf used, so where's my 90 MPH forehand!"

"Damn you Dunlop, you lied! Your raquet doesn't work!"

(I don't know that she used a Dunlop, but you get the point.)


I agree, however that is making more difficult for the talent to get the good craftsmanship.....
Walter Volpatto - C.S.I.
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 8:55 pm

What we're going to see is more of what we're already seeing... people suddenly getting access to stuff that was previously limited only to professionals, who took the time to learn the tools as well as the art, and basically assuming that having Fusion is sufficient to become a great compositor.


It's worse than that.

They get access to the tools, and tools get made smarter, easier and more powerful. So the noobs can now achieve 80-90% of pro-level work with very little training and experience.

By analogy, it's the difference between typing on a manual typewriter to a modern word processor. Spell-check, cut and paste, grammar correction, predictive typing -- you don't need the skills of a 1950s secretary any more to be much more productive.

Look at roto. When ILM did the roto for Empire Strikes Back, they traced enlarged frames by hand on an animation stand -- a rotoscope. They drew every frame by hand themselves. You had to be able to draw and animate at a professional level. Many roto artists were trained Disney animators.

Image

Now look at roto in software like Fusion. It's done with splines that you can correct easily, you can motion track and stabilize the shot to make tracing easier, and you can keyframe the shapes so the computer can draw the in-betweens.

Image



Today's roto artists need to be much less skilled and experienced than in the days of Empire.

This is the way all VFX and post is going. Everything is getting cheaper, easier to access and easier to use. If your career depends on specialized knowledge of expensive equipment in post production, start planning for a career shift.

The new BMD Fusion is just part of a bigger wave.
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 9:05 pm

Walter, since this thread already includes a few analogies, let me assuage your concerns with one more: regardless of the availability of a product, " the cream rises to the top."

Whether the best value for one's requirement for the services of a VFX shop is found in Los Angeles or Vancouver or Mumbai or Tokyo, we are in the global village that works 24/7 and I only see broadening the base of people fluent in a product as a good thing that doesn't threaten to make the most skilled artists extinct. As indicated elsewhere, it does enhance the talent pool and may give rise to new VFX teams but the quality portion of the 'value' equation remains paramount.

It seems all creative professionals have had their share of handwringing with the drastic reductions in the price of admission for various products in the last few years, but I haven't heard of companies saying, "that's it, we throw in the towel, we quit" because the product suddenly becomes more financially accessible. Examples include, Final Cut Pro and DaVinci Resolve.


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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 9:40 pm

rick.lang wrote:Walter, since this thread already includes a few analogies, let me assuage your concerns with one more: regardless of the availability of a product, " the cream rises to the top."

Whether the best value for one's requirement for the services of a VFX shop is found in Los Angeles or Vancouver or Mumbai or Tokyo, we are in the global village that works 24/7 and I only see broadening the base of people fluent in a product as a good thing that doesn't threaten to make the most skilled artists extinct. As indicated elsewhere, it does enhance the talent pool and may give rise to new VFX teams but the quality portion of the 'value' equation remains paramount.

It seems all creative professionals have had their share of handwringing with the drastic reductions in the price of admission for various products in the last few years, but I haven't heard of companies saying, "that's it, we throw in the towel, we quit" because the product suddenly becomes more financially accessible. Examples include, Final Cut Pro and DaVinci Resolve.


Rick Lang
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For the majority of your argument I agree, but alas, company either trow the towel or relocate: think about Nucoda, for the latest I knew is bankrupt, or think about R&H: the same year they made "the life of pi, the went bankrupt....
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 10:19 pm

I do believe that vfx is more endangered by accepting poor to mediocre work being good enough for clients than by cheap software.

I also believe that having one company to have (close to) monopoly for vfx software is not good for compositors.

I am not very happy about Fusion being way cheaper than few months back when I updated subscription licence. I just really like Fusion and wanted to support it, and I am freelance - there is no company around that uses Fusion any more. I hope BMD will give Fusion new life and make good connection between Fu and Resolve. Fingers crossed.
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 10:26 pm

think about R&H: the same year they made "the life of pi, the went bankrupt....


To be fair, R&H went under because of gross incompetence on the business side. In the docu about the bankruptcy, the CEO says on camera that he knew they were running in the red for a year, but he just couldn't bear to do anything about it. He didn't have the heart to lay anyone off, or to talk about lowering salaries, or to forfeit his own salary as an example to others. He just pretended like everything was okay until the company hit the ground and everyone was fired.

Inexcuseable. He had a year of notice. If he had told the employees the situation with six months notice, some would have left, others would've taken a pay cut and a few more he'd need to lay off. But the company would've been able to survive.
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 10:34 pm

Lee Gauthier wrote:
think about R&H: the same year they made "the life of pi, the went bankrupt....


To be fair, R&H went under because of gross incompetence on the business side.


I suspect that this is what concerns the pros more than a bunch of know-it-all newbies having access to their tools. The know-it-alls will still continue to produce drivel and complain that their stuff looks/sounds bad because there's a feature gap in the tools, and the pros will continue to produce great things...

... until the bean counters hose up the finances and they can't get paid for their work anymore because the bean counters decided to hire the high school dolt without a clue for Subway sandwiches, because the bozo has the same tools, so he of course he can do the same job, but if we pay him in Subway sandwiches, we lower our costs and keep the savings for the executives!
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 10:38 pm

Rakesh Malik wrote:
Lee Gauthier wrote:
think about R&H: the same year they made "the life of pi, the went bankrupt....


To be fair, R&H went under because of gross incompetence on the business side.


I suspect that this is what concerns the pros more than a bunch of know-it-all newbies having access to their tools. The know-it-alls will still continue to produce drivel and complain that their stuff looks/sounds bad because there's a feature gap in the tools, and the pros will continue to produce great things...

... until the bean counters hose up the finances and they can't get paid for their work anymore because the bean counters decided to hire the high school dolt without a clue for Subway sandwiches, because the bozo has the same tools, so he of course he can do the same job, but if we pay him in Subway sandwiches, we lower our costs and keep the savings for the executives!


I'm inclining to give you the point.

You cannot build as a company a huge renderfarm+200 computer and licenses and pay 200 top skilled worker if each vfx will cost only 100 bucks a piece, that is one of the reason why companies fail....
Walter Volpatto - C.S.I.
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 11:03 pm

waltervolpatto wrote:
For the majority of your argument I agree, but alas, company either trow the towel or relocate: think about Nucoda, for the latest I knew is bankrupt, or think about R&H: the same year they made "the life of pi, the went bankrupt....


I think these are false comparisons to 'software development'. When one watches any CGI/FX heavy film these days, often that category of worker takes minutes to scroll by in the end credits...

I would be astonished if the group developing software such as Fusion, numbered more than 10. There may be more developers for other products... But if there are a large number of employees, it would most likely be for actually using the software to produce films on a project by project basis.

These days, with 'open software', such as Blender for 3d/modeling/somecompositing/etc. a number of companies are producing 'free' versions such as Resolve, now Fusion, to address a large group of users who may not see their way to spending $1000 (even if that's cheap by some older pricing scheme...) for the package. Adobe with the Creative Cloud offering pretty much gets my $600 a year, on a monthly subscription plan... where I would only pay for updates about every third major release in the olden days... and only for the specific packages I would use... not the 'master bundle everything including the kitchen sink' package...

As a note, Pixar is releasing a 'free non-commercial use' license option for Renderman, which has been a mainstay of 'renderers' for over 25 years...

Beats me how they can monitor 'non commericalness' of a licensee... but that's what they announced. The non-free is $495...
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 11:49 pm

The upcoming Nvidia Pascal, and the Grid VCA are pretty exciting products, as they should replace the render farm for a relatively low price. In about 5 years, you will be able to build pretty complete top to bottom production solution for less than $30k, minus the lenses of course. It wouldn't surprise me if in 5 years the BMD cameras are better than anything else on the market. By offering this stuff free right now, you are securing the future market share of the so called "noobs".

I'm more worried about a company like Apple buying this company, and jacking up the price of everything.
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Re: Ok, I'm going to comment (my 2 c)

PostMon Nov 10, 2014 11:58 pm

... until the bean counters hose up the finances and they can't get paid for their work anymore because the bean counters decided to hire the high school dolt


You kinda missed the point of my story re R&H. The CEO was a VFX artist who couldn't bring himself to tell his "family of coworkers" any bad news. 12 months out, he knew they were operating at a loss. He could've saved the company if he had either laid off workers, asked for them all (including him) to take a pay cut, or some combination of the two. He could've told them, "six months from today, this is going to happen."

That's what CEOs are supposed to do. They make the tough calls that will result in the survival of the business with the minimum harm to the employees. The alternative is surprising everyone one day by saying "there's no money, and there are no more jobs."

From my perspective, it's not kids being paid in sandwiches that cause VFX houses to fail. It's artists with no business training deciding to be CEOs. It's CEOs who don't know their own operating costs. Believe it or not, people who go to business school study hard and learn a lot about how to run a business and avoid the kinds of debacles we keep seeing in VFX.
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Rakesh Malik

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Re: Ok, I'm going to comment (my 2 c)

PostTue Nov 11, 2014 12:10 am

brent k wrote:By offering this stuff free right now, you are securing the future market share of the so called "noobs".


It's a double-edged sword, but in the end it will most likely work out to be a good thing. Some of us are willing to put the effort into developing artistic skills and learning to use these tools that are now free. Having them available at such low cost basically means that people with small budgets but a lot of dedication no longer have anything preventing them from making films that look like they came from Hollywood productions.

Basically, the minority of us who will put in the work are being subsidized by the majority who will buy the toys and complain that there's no "talent" feature. :)

I'm more worried about a company like Apple buying this company, and jacking up the price of everything.


Or pulling another Nothing Real or E-Magic. They successfully killed off Shake by terminating the Windows version and essentially making the mac, which at the time was hopelessly outclassed across the board by even cheap windows PCs, into a Shake dongle as well as anchor. And hence... one of the best-liked compositors out there basically vanished. Logic almost went the same way, but Apple resurrected it.

Honestly, I'm more concerned about this turning into a race to the bottom. If the competition tries to join the Black Magic approach, then the industry will self-destruct sooner or later. More likely is that Black Magic will continue to be the cheap-ass brand, that has stuff that isn't as sexy and feature-packed as the Big Dogs(tm), but it has what counts... to the people who care about making movies, rather than about tech specs. The cameras will probably never be as durable as the high end cameras, and there will probably continue to be some compromises that BMD has to make to maintain their price points (durability being one). Features will be another; we'll probably get higher frame rates eventually, but so will the likes of Red and Arri. It will probably be a long time coming if ever for BMD to get a camera with a 65mm sensor on the market, because 65mm sensors are so expensive.

People with higher end cameras (Red) will continue to pooh-pooh Black Magic users, trying to claim that you can't make a Hollywood movie with a BMD camera, and eventually their audience will stop listening to them when they start seeing more and more gems made with BMD cameras.
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Re: Ok, I'm going to comment (my 2 c)

PostTue Nov 11, 2014 12:22 am

Lee Gauthier wrote:
... until the bean counters hose up the finances and they can't get paid for their work anymore because the bean counters decided to hire the high school dolt


You kinda missed the point of my story re R&H. The CEO was a VFX artist who couldn't bring himself to tell his "family of coworkers" any bad news. 12 months out, he knew they were operating at a loss. He could've saved the company if he had either laid off workers, asked for them all (including him) to take a pay cut, or some combination of the two. He could've told them, "six months from today, this is going to happen."


No, I didn't. That was just one example, I was commenting about the trend for bean counters who don't understand what they're managing to look for cheap labor rather than good labor. I'm working in an industry where this is common practice, and it's a false economy. The same bean counters that do this in the tech industry are however getting into other industries... they follow the profit, and they use the same strategies that always fail.

From my perspective, it's not kids being paid in sandwiches that cause VFX houses to fail. It's artists with no business training deciding to be CEOs. It's CEOs who don't know their own operating costs. Believe it or not, people who go to business school study hard and learn a lot about how to run a business and avoid the kinds of debacles we keep seeing in VFX.


I think we're both right, honestly. The hollywood studios are becoming increasingly dominated by bean counters who would (and do) happily shift their VFX contracts to the cheapest vendors regardless of whether or not they're any good, but also they put their time and effort into shuffling their profits into so many loopholes that they can claim to have not made any money at all from a film with a gross of 2-3x the film's budget.

And those are the monkeys who hire the VFX shops like Rhythm and Hues to create VFX for their films.

It isn't JUST that Rhythm and Hues had a lousy CEO... but that doesn't redeem the lousy CEO. :|
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John Clark

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Re: Ok, I'm going to comment (my 2 c)

PostTue Nov 11, 2014 12:42 am

Lee Gauthier wrote:Believe it or not, people who go to business school study hard and learn a lot about how to run a business and avoid the kinds of debacles we keep seeing in VFX.


Actually you are seeing the effect of 'bean counters' aka people 'studied hard in business school', that is selling off what they can before the final crash comes of a company which had some industry presence, but due to cheap (because other bean counters directed to move 'production' off shore) labor elsewhere, could not compete.

Only patent/intellectual propery trolls are further in on the inner rings of hell for companies that have innovation as their 'most important product'.
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Re: Ok, I'm going to comment (my 2 c)

PostTue Nov 11, 2014 1:29 am

I think we're both right, honestly.


I appreciate that.

bean counters who ...put their time and effort into shuffling their profits into so many loopholes that they can claim to have not made any money at all from a film with a gross of 2-3x the film's budget.


Um, you've never worked in distribution, have you? It's a good rule of thumb that the "break even" point of a movie comes at about 2-3x the film's negative costs. When most movies gross 3x their budget, there are no profits.

Remember, you have to give about half the gross to the cinema, pay for ads, ship the film to the theatres, pay the movie star a percent of the gross... it adds up fast.
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Re: Ok, I'm going to comment (my 2 c)

PostTue Nov 11, 2014 1:33 am

Actually you are seeing the effect of 'bean counters' aka people 'studied hard in business school', that is selling off what they can before the final crash comes of a company which had some industry presence, but due to cheap (because other bean counters directed to move 'production' off shore) labor elsewhere, could not compete.


John, this confuses me. If you were the CEO of a VFX facility, and your competitors were underbidding you, how would you win the job? You know they consider all the candidates good enough quality. The studio wants a price -- how would you deliver that price to them?
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Re: Ok, I'm going to comment (my 2 c)

PostTue Nov 11, 2014 1:39 am

Lee Gauthier wrote:
Actually you are seeing the effect of 'bean counters' aka people 'studied hard in business school', that is selling off what they can before the final crash comes of a company which had some industry presence, but due to cheap (because other bean counters directed to move 'production' off shore) labor elsewhere, could not compete.


John, this confuses me. If you were the CEO of a VFX facility, and your competitors were underbidding you, how would you win the job? You know they consider all the candidates good enough quality. The studio wants a price -- how would you deliver that price to them?


That is what can breaks the bigger facilities: you want the 4k room with the 4k projector DI grade with a 4K machine capability and a good artist but you want pay like it is a mac with a Flander monitor...
How a DI facility can stay in businesses? a proper 4k room with shared machines can cost up to a million dollars....
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Lee Gauthier

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Re: Ok, I'm going to comment (my 2 c)

PostTue Nov 11, 2014 1:55 am

That is what can breaks the bigger facilities: you want the 4k room with the 4k projector DI grade with a 4K machine capability and a good artist but you want pay like it is a mac with a Flander monitor...
How a DI facility can stay in businesses? a proper 4k room with shared machines can cost up to a million dollars....


Right, and it's a crying shame, but if the client can go to a competitor and get the 4k/4k for the low price, how do you compete?

Part of the problem is the speed of disruption is increasing. It won't be long before the million dollar room only costs about $10k. Any business (or career) that depends on the protection of high priced gear is going to be in trouble.
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John Clark

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Re: Ok, I'm going to comment (my 2 c)

PostTue Nov 11, 2014 2:11 am

Lee Gauthier wrote:
Actually you are seeing the effect of 'bean counters' aka people 'studied hard in business school', that is selling off what they can before the final crash comes of a company which had some industry presence, but due to cheap (because other bean counters directed to move 'production' off shore) labor elsewhere, could not compete.


John, this confuses me. If you were the CEO of a VFX facility, and your competitors were underbidding you, how would you win the job? You know they consider all the candidates good enough quality. The studio wants a price -- how would you deliver that price to them?


Well, if 'all the candidates are equally good'... something's gone wrong with the sales guy's pitch... no set of vendors are equally good unless one is selling paperclips, or whatever the e-equivalent is.

I would imagine that VFX projects are somewhat like most projects in that 'staffing up' may actually yield less output than 'lean and mean' in the first place. The latter has the problem of staff burnout... one can only stock the goodie bar with so much junk food... furnish the lounge with only so many 'cat nap tanks', or the like.

If one's focus has been 'major Hollywood productions', then perhaps spending money to research new markets for the skill set... split in to smaller divisions that take on more specific segments of 'who needs VFX' and perhaps appeal to the 'independent' minded of the group to be more entrepreneurial in such divisions.

And perhaps confront the beast by taking on jobs that you 'shop' to the world... with current staff at the project program management level. Usually that sort of thing requires more money to be give to such staff, which pains bean counters until it's proven that it works...

Bean counters are ultimately timid sheep and typically will not gamble, and so the 'CEO' has to be the force from hell to get 'new things and new ways' done.

It may be that the enterprise will go down the tubes anyway... but it will not be because of myopic bean counter economies.
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brent k

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Re: Ok, I'm going to comment (my 2 c)

PostTue Nov 11, 2014 2:51 am

Lee Gauthier wrote:
That is what can breaks the bigger facilities: you want the 4k room with the 4k projector DI grade with a 4K machine capability and a good artist but you want pay like it is a mac with a Flander monitor...
How a DI facility can stay in businesses? a proper 4k room with shared machines can cost up to a million dollars....


Right, and it's a crying shame, but if the client can go to a competitor and get the 4k/4k for the low price, how do you compete?

Part of the problem is the speed of disruption is increasing. It won't be long before the million dollar room only costs about $10k. Any business (or career) that depends on the protection of high priced gear is going to be in trouble.

That's why I went into sports media, cheaper equipment helps me immensely.

The new 3D silicon, and next few die shrinks will make 4K very inexpensive.
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Rakesh Malik

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Re: Ok, I'm going to comment (my 2 c)

PostTue Nov 11, 2014 6:33 pm

Lee Gauthier wrote:Um, you've never worked in distribution, have you? It's a good rule of thumb that the "break even" point of a movie comes at about 2-3x the film's negative costs. When most movies gross 3x their budget, there are no profits.


Worked in? No. but I understand what you're talking about, in general terms. Shouldn't those costs be considered part of the budget, since it's not like they're a surprise.

In seminars I attended that were about an introduction to the business of film, we were warned to plan for these sorts of costs in our budgeting. Why would a Hollywood bean counter be held to a lower standard?
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Lee Gauthier

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Re: Ok, I'm going to comment (my 2 c)

PostTue Nov 11, 2014 7:11 pm

Worked in? No. but I understand what you're talking about, in general terms. Shouldn't those costs be considered part of the budget, since it's not like they're a surprise.


Movie Cash Flow in an oversized nutshell:

Negative Cost is the money required to go from an idea to a finished negative. This is normally what non-producers call "the budget."

Prints & Ads includes the cost of duplicating the prints, shipping them to cinemas, guarding them from being stolen, shipping them back to the distributor and storing them. It also includes all advertising and promotional costs, from TV buys and bus banners to paying for Your Movie Star's party bus to take him to the press junket. P & A normally costs 1-1.5x the Negative Cost of a film. More for big movies.

Overhead are the costs carried by the studio over time. These include the interest on the money the Studio used to pay for Negative Cost and P & A, and the cost of your production company's cool office on the studio lot. All those costs -- even the big premiere and the after party -- are charged to the movie as Overhead.

So before the first ticket is sold, your movie is down the Negative Cost + P & A + Overhead.

Now, when people start buying tickets at the cinema, the total ticket sales is reported as "The Gross." This is the number you read on the internet that says how well the movie is doing at the box office. The Gross is just that -- gross sales. The studio doesn't get to keep all that money. A few important bites get taken out first.

Exhibitors are the cinema owners. They keep around 50% of the ticket price. (It's much more complicated than that, with sliding scales, and different rates for different movies, but 50% is a good rule of thumb.)

Gross Participants are people and entities entitled to a share of the gross revenues because of an agreement negotiated prior to the movie's release. For example, stars like Tom Cruise and Will Smith will often do movies where they work for union scale payment, but taking 5-10% of the gross. Also, if you're making a movie based on a famous property like a best selling novel or a comic book, the owner of the rights may have a gross participation from 3-5%

Financiers are people and entities who loan or invest money to the studio to make movies. As a part of their deal to provide the cash, they may have the right to take 10-20% of the gross until they have been paid back the original money they put at risk.

Fringes and Residuals are the revenue participations required by some unions. While most of them are part of the Negative Cost, SAG, WGA and DGA get residual income, which comes out of the box office. This can add up to another 1-2%

This means that when you read that a movie cost $100 million to make, it actually cost closer to $200 million to put in cinemas. When you read that it grossed $300 million dollars, it actually netted around $175 million and is still $25 million in the red.

Of course, this is a simplified, back-of-the-envelope example. Mileage will vary greatly, but now you understand the dynamics at work.

Hope that helps.

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