1) I never, ever flat bid. This shuts me out of certain jobs, but there you go. I bill a per diem rate, or an hourly rate. Or, if it is a project rate, I always include an overages clause in my contract.

2) I stopped chasing the sexier, high profile projects – the margins are almost always crap. I focussed on the less glamorous work that I knew had good margins and a more appreciative client base.

3) I keep my operation as small as humanly possible, I only expand when I’m absolutely sure I have the billables in place to cover it.

4) I bill for everything, and if I’m not getting paid I shut the job down or walk. There’s short term damage from creating conflict, but the long term damage from not cutting a bad client off is far worse.

5) I stopped letting my business get treated like a doormat. The strange thing is, once I demanded respect from my clients, I started receiving respect from my clients.

I think there’s been a certain amount of naivete on the part of the VFX houses, in that they’ve been expecting somehow to get a fair shake from the studios. Which, really?

Now none of this would be a problem if the studios were dealing with the VFX studios in a mutually beneficial manner. However, they do not and the contracts VFX studios get are terrible. Specifically, one of the standard practices for studios is to force VFX studios to take “flat rate” contracts — which means a certain number of shots of a certain complexity for a flat fee. If the director or external visual effects supervisor changes his or her mind, the VFX studio eats the cost of the changes. For “Avatar,” whose director is infamous for being picky and fickle about his effects work, this resulted in Weta losing in the neighborhood of $50 million. Effectively, Peter Jackson (and eventually the NZ taxpayers) funded the biggest-box office movie ever, and saw none of the profits.

Why do Weta (and other studios) sign these type of contracts? Largely because they have no choice. There are effectively only six movie studios (obviously there are more, but only the big six American studios make effects-heavy films), which means that tacitly or no, there is a colluding oligopoly where the studios all offer identical terms, with none of them breaking ranks to be more generous. On the other side of the economic equation, there is an abundance of VFX talent in the world, so the studios can have the VFX shops bid against each other and take the cheapest. The movie studios always win, and everyone else loses. It regularly happens that a VFX studio will take a contract that loses them money because the alternative is having no work at all, and losing even more money (and all your employees). So if you’re trying to make a profit, you have to bid against VFX houses like DD who are not even bidding to break even. Good luck!

Even worse, this terrible situation is exacerbated by governments around the world offering huge tax incentives for film and effects work to be done in their countries. Most infamously, New Zealand rewrote its damn labor laws in order to help fund Weta (and thus fund American movie studios). It is becoming impossible for American studios to compete in such an unfair market, and the macroeconomic effect of these subsidies is to increase the amount of effects talent in the world, which is the exact opposite of what the market “wants” to happen.