Transform Outsource are saddened by the news, which comes just months after another huge Digital effects company, Digital Domain filed for bankruptcy. So why are Hollywoods biggest visual effects companies filing for bankruptcy?
Founder of the Digital Artists Agency Bob Coleman says,
“This results from the unrelenting drive on the part of the studios to continue to lower their cost of production. We call this the race to the bottom. Some point their fingers at the visual effects companies, which continue to lower rates. But the net consequence is lower margins. We have known for last 10 years that profit margins at the biggest house have been zero to 6 percent. You can do the best visual effects work in the world, and you will struggle because you are not being allow to make money on the one thing that differentiates you: the quality of your work.”
Transform Outsource discovered that when dealing with high overheads, competition and cheaper labor costs from competition overseas, some of Los Angeles original and most famous visual effects studios including Rhythm and Hues have just been unable to stay afloat.
The CEO of Transform Outsource added,
“Unfortunately as with any business, if the over heads are too high then it is very difficult to make a sustainable profit. We don’t tend to encounter these problems in the Outsourcing industry as our business is particularly cost effective, allowing for positive profit margins for both ourselves and our clients".
The CEO continued,
"It is such a shame to hear that some of Hollywoods most brilliantly skilled and award winning companies from the visual effects industry are falling under the pressures of modern times. As a huge film fan myself, it is particularly sad to know that when I am watching the latest films, it is highly likely that the company behind those incredible visual effects is struggling, despite the huge success of the film itself”.
Transform Outsource are currently working alongside one of the UK’s most successful entertainment/
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