Thursday, April 12, 2012

Textor, DD, and our industry in crisis.

I will give him a listen to be fair but am very skeptical. 

AFAIK, being CEO of DD (by virtue of becoming the largest investor in the private equity group that bought DD under Carl Stork's leadership a few years earlier) in the past 2 years is his only connection, ever, to the industry.  He has historically shown no interest in VFX per se, or even filmmaking.  His $17MM/year as CEO of DD is a small fraction of his income from other sources. He is a very wealthy businessman who now realizes that his plans could be disturbed by a bunch of prickly nerds and is most likely just telling us what we'd like to hear, just as his talks to investors have been filled with what they'd like to hear.

Unfortunately for us, one thing he is not is stupid.  He is a very smart, perhaps ruthless businessman, and if he is saying that the work-for-hire VFX model is not a business worth pursuing, we'd freakin' better pay attention.  Not that we hadn't reached the same conclusion ourselves, but validation by a qualified professional is useful.

If he is serious about "detesting the cheap-overseas-labour-chasing side of the industry" then why do the deal with RMW at all? Indeed, why do the deal with Florida?  If you're looking to build a healthy VFX business venture, making it dependent on an outside infusion of capital + state subsidies + tax breaks + tuition charges + "free student labor" + a right-to-work state that's physically and politically isolated from the entire industry ostensibly being served seems to be a strange way to go about it.

Look at the numbers.  IIR, DD's reported income from film VFX work was less than $75MM last year. The State of Florida deal *alone* is worth more than $150MM, is it not? Of course he's going after that money -- he'd be a fool not to. But we all have to realize that makes DD no longer a VFX business -- it is a pursue-government-subsidies-and-tax-breaks business, which is obviously lower-risk and more profitable (an unusual combination in business!).

So Textor's message, to me, is not "John Textor isn't such a bad guy," nor "the students paying to work thing is no big deal," but "work-for-hire VFX is an officially failed business model."  This is HUGE.  This is a guy who understands business and making money better than any of us, saying that the core business model of our whole industry is NOT WORKING.

The work-for-hire model is, I believe, the root cause of all of the issues of workplace fairness, stress, long hours, shops closing when subsidies run out, lack of profit participation -- EVERYTHING.

David Stripinis has a dead-on accurate, and disheartening, post up on his blog, on why everyone's efforts,or wishes, to fix the labor side of the business (in the US at least) have already failed. I'm a tiny bit more optimistic, because I think Textor is showing us the only way out: change the core model.  His type of change will make him and a few people even richer, while hastening the demise of the industry that we need and love.  I think that we can, just maybe, eventually have the industry that we want, if we eliminate work-for-hire, and switch to a cost-plus model. Otherwise, we'll just continue as we are, with the industry we deserve.

(climbs down from soapbox and shuffles away, head down, pulling threadbare coat tighter against the growing chill)