EXCLUSIVE: Jonny Slow, CEO at global VFX company Pixomondo, which has the creation of Game Of Thrones‘ dragons among its many credits, has fired a stark warning to the biz that his sector is facing unprecedented difficulty as the ongoing production shutdown has created a void of work.
Speaking to Deadline, Slow outlined that the post industry may have had a less rocky start to the pandemic than production or exhibition due to ongoing projects and a successful pivot to work from home, but the production shutdown is now catching up and a lack of new business is leaving companies at serious risk.
Last week, France-based VFX giant Technicolor SA filed for Chapter 15 in U.S. bankruptcy court as the company attempted to steady the ship and restructure some of its $1.58BN debt. Technicolor has long faced financial difficulties and other disruption (including being indicted on fraud and breach of trust charges last year). However, it released a statement alongside the bankruptcy filing acknowledging it had been “severely impacted by the COVID-19 global pandemic”.
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Slow notes that Technicolor also owns numerous other high-profile companies including the Oscar-winning 1917 VFX outfit Moving Picture Company and the cross-media VFX major The Mill, which has offices in the UK, U.S. and India. The Pixomondo boss thinks that the Technicolor situation is just the tip of the iceberg, and there are numerous other major post-production companies out there that could be at risk.
“VFX companies have lots of fixed costs in the form of employees, offices, and tech,” comments Slow. “That relies on a steady stream of new business to keep it going. Post-production is a bit like an airline, if you haven’t got any passengers, you burn through your cash very quickly – most companies will struggle to stay solvent for more than a couple of months.”
He notes the scale of a company such as five-time Oscar-winning studio DNEG. “They have 6,000 employees and $300M debt. When revenues stops – and it must because nothing is being shot – they have to find quite a lot of money to keep the lights on.” There’s no suggestion that DNEG is in difficulty, but the sector counts numerous well-staffed, debt-laden companies that have focused on aggressive global expansion in recent years and could face a period of real struggle now.
Pixomondo is on the smaller side in the industry and Slow says it “should be well placed” to ride out the crisis, but it still employs north of 600 people and times are tough as work is drying up. The CEO reveals that he has been forced to “have a conversation” with one third of his workforce to date; that has included introducing reduced hours, unpaid leave, and in some cases ultimately lay-offs. “We’ve tried to keep one foot in the door for people,” he says.
The company – which won an Oscar for its work on Hugo, has an ongoing relationship with Roland Emmerich and his VFX-heavy movies, and has Gerard Butler action pic Greenland upcoming – was busy working on HBO’s Westworld when the pandemic hit and had to transition swiftly to remote working, which Slow says saw it take “a financial hit”.
But work has now slowed right down, and the cautious return to production means there could be a long lag before business picks up again. “There’s a stalemate and that’s making the potential second lockdown news so depressing. It’s fuelling cautiousness, and I’m not saying that’s not right – once you start production it’s very expensive to stop it – but it’s going to mean a while before we get clarity from our clients.”
“There’s not a lot of work and there won’t be for a few months. We’ve accepted that. We’re still working on VFX heavy things that were shot pre-pandemic, and we’ll be on those over the summer and I think everyone got some of that,” he adds. “But there’s an inevitable slow moment that starts around now, and could run well into Q3, depending on the number of ‘second waves’ and restrictions on actually filming anything. That is something that, as an industry, we need to be shouting about.”
Government support schemes in various countries are helping post houses survive the shutdown, but as those begin to run out, many companies are still facing a long delay before they see new work come through the door due to the ongoing production hiatus. Slow says the schemes have helped Pixomondo “avoid financial catastrophe to date” but he is concerned about how much help will be available going forward.
With all that in mind, Slow is calling for the industry to support the post-production sector.
“We want to get the word out there [about the challenges]. The industry needs us to survive and there needs to be recognition of that,” he states. “We need to have conversations about when we [post-production companies] are paid. There’s a real need for cash in this part of the sector and the payment terms need to be amended accordingly.”
“We need people to be sympathetic to how the shutdown is progressing down the line. Communication with us helps hugely. We need clients to give us clear communication on timing and be flexible with moving payments towards the start of the work – that would help hugely,” he adds.
The Bright Side
This is a tough time for just about every facet of the industry (streaming arguably aside), but the film and TV biz has faced crises before and ridden them out.
Any future work for the post sector will first require a return to production, of course. Pixomondo has two offices in Germany, where it was founded, as well as Los Angeles, Vancouver, Beijing, Toronto, Montreal and Shanghai. The European offices have been less affected in terms of cuts, says Slow, thanks to government support schemes, and there is cautious optimism that shoots may pick up in Europe soon, particularly in Eastern Europe where Amazon’s Carnival Row, which Pixomondo works on, is set to resume. That could funnel work back to the German office, he notes. Canada is also trying to get back up and running but still has a closed border with the U.S.. The LA office has been hit hard, though it’s one of the company’s smaller presences.
For post-production, the picture of a post-pandemic future may also have upsides. As Deadline reported on back in May, the biz has been looking at Virtual Production – i.e. filming within an environment generated by a digital engine, often using gaming tech – as a potentially virus-safe and cost-effective method for film and TV making. Jon Favreau used the technique on The Mandalorian and the positive results from that show have gotten others interested in exploring it for future work.
“The Mandalorian was a watershed moment, Virtual Production is now getting a lot of traction with our clients,” says Slow, who notes he had 15 inbound calls in one day recently about how the tech could be harnessed to make crowd scenes. Pixomondo was already investing in the medium heavily pre-COVID, adds the CEO, and he expects many others who haven’t already to follow suit.
Could it be a saviour for VFX companies? “100%,” he replies.
A greater reliance on tech should help out post-production companies, as long as they survive to see it come into effect. “Long term I am pretty positive on the outlook for VFX. If travelling is harder, and if it’s harder to do crowd scenes, and if producers can only get insurance for working inside studios, there are opportunities for VFX companies,” Slow says.
“It’s not all bad news, but there’s a pause now that is really going to be painful,” the Pixomondo boss concludes.