By Anne Thompson | Thompson on Hollywood February 11, 2013 at 3:22PM
The fragile economics of the visual effects industry was front and center at last week's Visual Effects Society awards. And even the well-respected company, Rhythm & Hues, that spearheaded and supervised the extraordinary visual effects in Ang Lee's "Life of Pi" --which won best live action feature effects at the VES and BAFTA awards and is favored to win the VFX Oscar-- is in danger.
Rhythm & Hues is filing for Chapter 11 bankruptcy, now that possible buyer Prime Focus hasn't come through. Variety reports that other buyers are "interested in acquiring the company out of bankruptcy."
"They said it was unfilmable," recalled accepting winner Bill Westenhofer of Rhythm & Hues at the VES awards.
"This is not visual effects," Lee said at the VES Awards. "It's visual art." The only downside: "It's too expensive," he said, underscoring the evening's dark side.
VES chief Eric Roth stated that visual effects companies face an uncertain future even though "we have become the center of the entertainment universe...Globalization is here and hard financial realities." He challenged studio leaders and the biggest most successful VFX houses to help the struggling smaller ones to survive by finding a new economic business model.
The studios, including Twentieth Century Fox, which made "Life of Pi," Sony (which owns Sony Imageworks) and Disney (which now owns Lucasfilm's dominant VFX house ILM) have been trying to come up with a long-term solution for their go-to indie VFX houses, which are subject to wafer-thin profit margins and hideous cash crunches, especially when a planned project falls through. They also constantly bid too low in order to win big projects, and then become strapped for cash when they cost too much to complete.
Something's wrong when the sector of the industry that is most crucial to success in eye-popping visual entertainment is not able to stay afloat.