HOW TO SUCCEED IN the VISUAL EFFECTS BUSINE

January, 9th 2012

by Marc Bourbonnais

When we founded Modus FX in 2007, we knew that to succeed as an industry leader, we would have to extend our reach beyond the local market. We believed that, if we could get a piece of the Hollywood and international markets, we could compete with the best.

Visual effects is a tough business. Audience expectations grow every time a new film sets the bar higher, but the movie studio's budgets don't change much. In 1999, a classic VFX film like The Matrix had just over 400 CG shots. Today, a film like Tron has almost four times as many. We are constantly challenged to find efficient ways to produce more and better effects.

We currently employ between 80 and 100 skilled artists and technicians, depending on our workload. We have created CGI for such Hollywood movies as Source Code, The Immortals, Jane Eyre, Barney's Version, Twilight: Breaking Dawn Part 1 and many others. Every year we move a little bit closer to our goal of becoming one of the top ten visual effect studios in the world. The secret to our success so far has been careful business planning based on five key factors.

1. Think global

While we have certainly taken on big projects here at home, such as Canada's first 3D animated film, Sarila, most of our work has been on films from France, Great Britain, Asia, and, of course, Hollywood. We now run a full office in Los Angeles and recently won a spot on ICM, a major talent agency the first Canadian visual effects company to be represented by them.

2. Choose your niche

The high-end studios we work with appreciate our full visual effects capabilities, including concept development, on-set support, 3D modeling, animation, and compositing. But for most VFX facilities it is wise to specialize. At Modus FX, for example, we have developed expertise in surfaces, such as the trains in Source Code and the water plane in Barney's Version, as well as CG environments and invisible effects, such as when we changed the season from winter to summer for several scenes in Jane Eyre.

3. Find and keep talent

Visual effects artists are highly skilled and dedicated professionals. They are hard to come by. It is crucial to create an environment where they feel engaged and where their contributions are valued. To keep doing great work, we need to make sure we continue to attract, and develop, great artists.

We are now at an optimum size for a facility that serves the feature film industry. We have a stable core team of about 50 permanent staff. We typically have another 40 or 50 on a contract basis, usually hired for a specific project, and often rehired for the next one. Of course there are only so many artists to draw from in Montreal, so we also need to recruit from abroad.

Finding artists is an ongoing task. We are also becoming more involved in training new talent at home. Quebec has great training programs, such as the Centre NAD, and here at Modus we plan to extend that with in-house training for emerging artists.

4. Use tax incentives

Tax credits have been a stable part of the Canadian film production landscape for twenty years, offering local companies an advantage over their American competitors. Tax incentive programs in some states are far from stable and encourage producers to turn to dependable environments like Quebec and Canada.

In Montreal the tax credits for digital effects services can reach 35-40%. These credits are great for everyone: they support an industry that provides long-term high-tech jobs, and they infuse around $1.50 into the local economy for each dollar awarded as a tax credit.

5. Become an attractive investment

Although our business is not without risks, our size makes us attractive to local investors who want to get involved with large projects.

Expenditures on equipment and staff in this industry are high and it can be hard to get long-term advance agreements on projects. Cash flow is a challenge for almost everyone in this industry, but we benefit from having regular clients and a lot of repeat business. Our track record means our credit margin is good. Our bank has confidence in our stability and that's crucial to weathering the ups and downs. That stability works all the way down the line: from the film companies who keep coming back with new work, to the freelance and permanent staff who like to work here, to our investors and creditors who know that we're in business for the long run.

People say that the movies are a recession-proof industry. Even with the increase in the value of the Canadian dollar and the financial turmoil in the US, people want to be entertained. Digital effects are used in all films these days and increasingly for TV. This is a growing market.

Marc Bourbonnais is president and co-founder of Modus FX, a visual effects facility in Ste. Therese. He represents Modus FX at the Quebec Film and Television Commission and is an active conference speaker. Bourbonnais was recognized with the NAD Centre's Tribute Award in 2010.

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