and a lot of people look at 25 years and then we go out of business in year 26

and, and, it is kind of like well, what did they do wrong is the question right?

I’m sorry, 25 years, what did we do right?

Lulu Simon: What do I love about Rhythm and Hues, uh, mostly, the people

Jack Fulmer: It’s not corporate, its, its very familial.

Lois Anderson: We moved into our first house, my husband and I, ‘cause my husband worked here too.

John Hughes is one of the people that helped us move our stuff.

John Hughes: I think our first contract was actually a film logo so that was back in 1987

and computers weren’t all that fast and then there was no way of outputting it so we had to shoot it to film

Keith Goldfarb: We were just trying to get something, anything, to keep us employed

and being able to pay each other and make computer graphics.

I think the majority of the unifying factor was that we saw character animation as kind of a long-term future.

Babe: ♫ La la la, la la la ♪ 0:02:14.000,0:02:17.500 John Hughes: I look at some of the work we do, and I just don’t know how we do it.

You know, to me its just magic.

The work that goes into the tiger, or some of the other things we do its just, its beyond belief 0:02:28:000,0:02:30.500 Amanda Dague: As an animator, I just like the creativity of it.

I can take a blank slate and create a performance out of nothing.

Jack Fulmer: They’re like you know concert musicians, concert pianists, that are playing at the LA Philharmonic.

They’re at the top of their game.

Amanda Dague: We’re at our peak, our pinnacle, it’s so exciting!

Walt Jones: All of us I think at the end of the day are driven to create, and that’s what really gets us excited and what drives us.

The challenge with that is that in many cases, that can take over. Or at least it can cloud your judgement.

You’re going to put in extra hours because you want to go the extra mile. And you’re going to try to push things as far as you can as an artist.

Even if, the project, and the money for the project, do not require or facilitate that happening.

Jack Fulmer: Nobody’s doing this for the money anymore, maybe they were at some point, but they’re not doing it for the money anymore.

People are doing it because they love doing it, which is why I do it.

Scott Squires: Its not done by the computer, it’s done by a lot of people. And there’s a lot of people in the background

working away, night and day, to get the projects done.

We as visual effects artists, and as visual effects companies, do not participate in the profit of any of those films.

Michael Conelly: The visual effects business is a broken business model right now.

And the only people who thrive in this industry, in the movie industry, seem to be folks who have profit participation.

John Hughes: At the beginning of 2012 we knew that we had to raise money. I made four trips to China.

You know I visited Taiwan a couple times. Hong Kong a couple times. You know, we hired an investment banker.

Amanda Dague: You hear little rumours, you hear things in the hallways, little whispers. Um, have you heard this, have you heard that?

Uh, it just gets your mind reeling like all the hypotheticals of what could be going on that you don’t know.

John Hughes: 20 months of delays, that, between 1.2 to 1.6 million per month.

That’s anywhere from 24 to 30 million dollars of additional costs that we had to take on.

Saraswathi Balgam: Other projects were supposed to take the people onto that project. And that project got delayed.

And all these projects getting delayed, puts you in a really really bad situation.

John Hughes: You know I was prepared to sell my shares of stock for a dollar

if somebody would invest the 15 to 20 million that we needed.

Lee Berger: And then we had investors standing by who fell out at the last second.

Prashant Buyyala: We even had wire transfer information, bank account information. “Here, give us the bank account

we’ll submit to you know wire you this money by Monday morning.”

And over the weekend we’re like: “okay great, this is good, we’re gonna get the money in because everything’s been signed.”

And come Monday, the money just didn’t show up.

Lee Berger: And then, we went bankrupt.

Prashant Buyyala: It’s not to make the studios out to be the bad guys or anything like that.

Its just the model of how we have set up this business is flawed.

We billed 500 shots say for 10 million dollars or so, and that’s what it is.

Lee Berger: We’ll hire up, based on the contract and then sometimes things just change.

The making of a movie is not a precise science. There are creative issues in a movie as it’s being done.

During the post production process and sometimes even during shooting the movie starts to evolve.

Prashant Buyyala: If the movie extends, and we suddenly have to work for three months more or four months more

from the studios perspective they paid us 10 million dollars for 500 shots.

But, from Rhythm & Hues’ perspective now we’re paying for the same artists for three more months that we have to continue paying their salaries.

There is no other source of revenue other than coming out of Rhythm & Hues’ own pocket.

John Hughes: So our choices were to cut peoples’ salaries, or to lay off a significant number of people

or to work people overtime without paying them for overtime by restructuring their contracts.

So those kinds of changes are very difficult changes to make and I felt that any one of those would have

so dramatically altered the culture of Rhythm & Hues that they would have destroyed Rhythm & Hues.

And, well, you know, instead we’re in bankruptcy. So, I ended up destroying rhythm and hues anyway

So, you know maybe I should have done something along those lines in order to have tried to preserve Rhythm & Hues.

Prashant Buyyala: We’ve had to chase a price point that’s been dropping very rapidly.

And the reason the prices have been dropping quite a bit, or one of the fundamental reasons, really

is the tax subsidies that are being provided in Canada and in the UK and other places.

If a studio decides there is a 10 million dollar project that they want to take over to say Vancouver, and award it to a Canadian company.

The Canadian company will bid it at 10 million dollars, but the studio gets say three million dollars back as a tax rebate

So the only way to even get considered for that film is to bid it at 7 million dollars.

So we’re now getting less money for the same amount of work.

Scott Ross: And so the motion picture studios, told the visual effects facilities, that if you want to get this work, you have to do it in Vancouver,

where you’re spending a million, a million five, building a facility there.

So then of course what happens is another country or region, state, says

oh well that’s a good idea we’ll do that we’ll take our money and we’ll take it from our tax payers

and we’ll give that to the movie studios and then of course all those people now go to this other place

because what the states and the countries don’t realize is every movie they take a look at what’s the cheapest place?

So you move to Vancouver, find a house, live there for about 9 months or a year and then ultimately wind up getting laid off.

Barack Obama: Oh, it is good to be in LA.

This is one of America’s economic engines, hundreds of thousands of middle class jobs.

There is still no better place to make movies and television and music than right here in the Unites States.

Entertainment is one of the bright spots of our economy and that means that we’ve got to do what it takes

to make sure that this industry and every great American industry keeps that competitive edge.

So that more folks can find career paths like many of you have.

And get good middle class jobs that allow you to support a family and get ahead

Dave Rand: I live the life of what some of my comrades have started a Facebook page called a pixel gypsy.

You know, and its not that I’ve never been good enough to land somewhere for the duration, its that there never is a duration.

I’ve been on the staff of five visual effects shops that were really well known, did amazing work

that all went bankrupt, most of them owing the artists money.

You know you’re constantly on the go, chasing which government is going to give the greatest hand-out back to the studios.

I’ve taken to just living in hotels the past few years, find it’s a lot simplier.

I’ve got suitcases that were designed to fit in the trunk of my car, it all layers in there

[bullhorn]: Yay VFX.

I’ve got a king sized bed, I’ve got a Jacuzzi in my room

I have those little soaps that make me feel like I’m on vacation every day and I love using those little soaps

I love the way they feel when you open them up.

Rhythm and Hues was like a new girl in my life, I fell in love again, you know what I mean?

Then in a Friday meeting I had my heart broken, just like I have a million times

and now I’m just this kind of strung out grey haired old bachelor.

Matt Shumway: People want to have lives, and families, and houses, just like anybody else.

They’re not trying to live rich; they’re just trying to live their lives. And you can’t do that when you have to live in a different city every six months.

Because you’re, as the studios chase the tax incentives a group of artists have to follow

Lee Berger: I don’t think the studios want the visual effects studios to go out of business, because they have a lot of work that needs to be done.

And they want us to be healthy, however, they like any other person that has a job, they’re given a budget

they’re given a movie, and you have to do this work for this amount of money.

[computerized voice]: Remember this is a fixed bid. You absolutely cannot charge us more than the fixed bid.

You said there were some changes to the boards, what vfx are involved?

The additional shot has beautiful running footage of a car driving across a salt flats,

the car then turns into water, and morphs into seven unique animals, all made of water… but one is made of fire.

That may be a little more than we bargained for.

This is a fixed bid.

Lee Berger: A fixed bid would be, you bid the work, and then no matter what the work is, that’s the price that you get.

John Hughes: Film making nowadays is very much a fluid situation, the shots change dramatically

you know easily half of the shots that we bid could disappear and be replaced by other shots

Lee Berger: You know this is the film making process, and its really difficult to go in and know exactly what you want.

Dave Rand: Most construction that you see, most houses, skyscrapers, airports, they’re built on a fixed bid.

Which makes sense because there’s a blueprint where everything is laid out, down to like every screw, every I-beam, every piece of glass.

Markus Kurtz: People always compare it with building a house, you know if you go to an architect you wanted to make the changes

well if you agreed to a plan and you laid a foundation to your house, its going to cost you to rebuild that house.

In visual effects it doesn’t work that way because we’re not paid by the hour that we work, we get paid by the completed project.

Lee Berger: If shots change, if they are lengthened, if they are shortened, if you add characters, you can ask for an overage.

John Hughes: But unless we can prove to the studio that there were additional shots

or that there was in fact a very clear change of direction on a part of the director,

you know, we just don’t get much in the way of overages

Dave Rand: Now we’ve got this fixed price, you know this fixed price bidding model where there’s a fixed price

and the director just doesn’t really have to be there. Because the visual effects artists can just do it over.

John Hughes: The art of film making seems to have changed a little bit over the years

it used to be that you’d have a script and you’d story board it, and you’d have all three acts, and then you’d go out and shoot.

But nowadays, they often start shooting without really know what act three is going to be.

You know it’s really hard to have a fixed bid and a fixed deadline when the studio and the director haven’t even agreed on act three yet.

Jack Fulmer: It’s like getting in the car to drive somewhere and you don’t know where you going.

You’re like: “Well, don’t you… do you have enough gas?” “Well I don’t know, I’m just driving!” [laughs]

Dave Rand: When you’re creating these huge fluid dynamic simulations like we did on Life of Pi,

and they want to change this wave from going that way to this way, or make the rain go completely differently.

That’s a lot of simulation time, just to make the change. And then, finally it gets shown to the client who says something like:

“why is it even raining in this shot? It’s not supposed to be raining in this shot.”

Walt Jones: So now we go back, we do that work that we think we’re supposed to be doing.

We present it again, it goes back up through the chain of approvals. The decision maker sees it, and they give their feedback.

Then it goes back through the chain the other direction, and we find out whether or not we’re done or we have to keep going.

John Hughes: And we understand that if you have a vision and you’re moving toward that vision

but as long as you’re moving in the same direction toward that vision that’s fine, you know we’re gonna get there.

But what we see often is that you know that they’ll be heading towards a vision and you might be heading toward that vision for six months

and then all of the sudden they turn around and they’re heading off in an entirely different direction.

Jack Fulmer: If you are not a visionary, or if you don’t have a visionary involved in a project and relies heavily on visual effects

it’s not going to succeed.

John Hughes: The studios would not permit a director to shoot for a week or two on set and then say tear down the set and build a new set.”

You know that simply wouldn’t be tolerated because in the live action portion of filmmaking everything is paid by the hour.

Dave Rand: Pretty much everybody who is making everything happen on the movie set it’s by the hour.

So the meters running, the focus is dynamic. Because it makes the director and the decision maker

whomever that person is, usually it’s the director, has to be there. And there is someone telling him every second what the meter is at.

And the creativity just rolls because everybody is so focus and the decision are being made in real time.

But when you remove the decision maker from the process, which is what happens in visual effects