Underbidding in Visual Effects: Coercion, Communication and Trust

In our previous two discussions of “underbidding in visual effects” (here and here) we discussed the reasons why a facility might intentionally underbid (for example, to drive a competitor out of business) and we discussed why a facility might underbid by mistake. But we have only scratched the surface of what the glamourous and rewarding motion picture industry means by underbidding in visual effects.

The first thing to realize is that most of the time the label of underbidding is applied retrospectively to a job. Oh, something went wrong, it must have been underbid. For example, suppose the client turns out to be an asshole who says one thing but wants another but doesn't want to pay for it. Then if you are in a big fight with this client, it can be said that you underbid the project, because frankly it wasnt worth the trouble to deal with that asshole at the rate you are charging. In that circumstance, you may say that you underbid the project, it is a judgment by the facility after the fact.

But lets take another scenario. Lets say that the client is being unreasonable, doesn't know what they want, change their mind constantly, yet wants more and more but doesnt want to pay for it and wants you to pay for it. Then the client will want to pin the blame on the facility and will say that ha, you were incompetent, you underbid the project and therefore it is your responsibility to bend over and do whatever the client wants.

There are also a number of types of underbidding by coercion.

Here are two case studies from the 1990s in which the names have been changed to protect the guilty.

In scenario #1, a large motion picture studio has built a very expensive visual effects studio on their lot in order to keep all that big money spent on visual effects internally. A large special effects project is scheduled and the director, who is known to be insanely difficult, wants a deal on the visual effects in order to use the on-lot facility. He refuses to do the picture unless he gets a deal, and the facility, therefore does make a deal, they agree to do a certain number of shots for a fixed amount. That was a big mistake because the director had every intention of packing as much into that limited number of shots as he could in order to ream the effects studio a new asshole and basically help finance his film by making the vfx studio lose money. And thats what happened, after a lot of screaming, the vfx studio did as they were told and lost their shirt on it. But since it was a part of this larger studio, that financed the film, it was really the studio that got fucked but blamed the vfx studio. This project was “underbid”.

Keep in mind, the last thing a producer or director wants to do is to use an in-house effects facility.  As long as the vfx is outside the studio, then the director and producer have complete control.  But when it is in-house, then studio politics come into play, on both sides.   You get to complain if the facility is too expensive or too slow or not doing the quality of work that you want, but they get to complain too.  That you change your mind, that you want them to work for free and so forth.  They are inside the kimono, inside the sacred square, they know where some of the skeletons are buried and they can fight back.  So you would much prefer to work with an established reliable off-lot facility that you have relations with, that you have worked with before.   And from the facility point of view, working with an in-house film means that they have to navigate all the forces that are applied to them from the studio to lower prices, etc, that is outside of your judgment of how much time and money it should cost.  In other words, you are being coerced. 

In scenario #2, a director has a limited amount of money for their film, and awards it to a very competent smaller effects studio, very little money very little time. This was basically a favor by the vfx studio for the director, but they also wanted to do this movie, so it was mutual.  In other words, the director did not have enough money but the vfx studio offered to do what they could for the money available and the director promised to work with them to get it all done.  But the director had every intention of demanding the most expensive work no matter how long it took, and fucked the effects facility as hard as he could. Then the studio pulled the job and gave it to ILM, forcing ILM to manage the director because they, the studio, did not have the balls to do so. The movie did come out and was a big success. The original vfx studio was no doubt damaged by this bullshit, none of which was their fault. When ILM did the work, they charged an arm and a leg, why not? And the studio that made a huge amount of money on the film, it was a big hit, had not forgiven ILM 10 years later. 10 years later they were still complaining that ILM had charged them real money for a movie that was in trouble because of the choices that the director and the studio had made. Oh yes, it goes without saying, that when ILM was involved, the studio found the time and the money needed, the time and money that was not available when the little vfx studio was involved.

So what is the real problem here? Is it underbidding by the VFX studio? No, I dont think so. Sure thats part of the problem. But maybe the real problem is incredibly difficult clients who want the world for nothing combined with asshole visual effects studios who are always trying to undercut each other and put each other out of business, in a business that is fundamentally a work-for-hire production service one the facility can not be profitable most of the time anyway.

And why can't visual effects be profitable? That is a topic for another time.