Digital Economics
Issue: Volume: 28 Issue: 2 (Feb 2005)

Digital Economics

Given the incredible string of blockbuster digital-effects movies and computer-animated films released over the past decade and longer, there should be little doubt, even from those outside the computer graphics industry, about the quality of work that digital studios have been producing. Unfortunately, there appears to be a gap between the real versus perceived value of their work.

Consider that of the 25 highest-grossing movies of all time, all but two were effects films-that is, films that rely on digital effects or animation to take audiences places they’ve never been before and show them things they’ve never seen before.

Consider, too, that most of these films became blockbusters without the benefit of big-name “A-list” actors. In fact, all but a few featured performers who were not considered major stars at the time-although several subsequently became ones, including Harrison Ford (after Star Wars) and Leonardo DiCaprio (after Titanic).

Moreover, many other effects movies were hugely profitable, including those lacking in other qualities, such as the recent hit The Day After Tomorrow, which brought in more than a half-billion dollars at the box office despite a deficient plot and script.

Clearly, audiences enjoy effects films and always have, ever since the screen’s first science-fiction story-the 14-minute black-and-white French satire A Trip to the Moon-premiered in 1902. Unfortunately, although effects drive box-office revenues, and although effects artists command relatively higher salaries than any group of artists likely have ever received before, effects studios as a whole are not necessarily being compensated according to their value, at least with respect to today’s leading actors.

The main reasons for the inequity are steeped in movie-industry culture, explains Digital Domain CEO Scott Ross. Executives at film companies have long considered film stars to be the major draw for moviegoers, so they are more willing to pay them greater sums than they do effects studios. However, the business models for actors and studios are vastly different, Ross says. While big stars may have agents, managers, lawyers, assistants, and so forth, studios have far greater operating expenses, including the cost of the facilities, infrastructure, technology, technicians, programmers, business staff, and management, not to mention the creative talent.

But perhaps a bigger issue is that the parties involved may be more concerned about getting their share of box-office revenues from the films than about containing the costs of making them. “This practice doesn’t allow the movie companies and the craftspeople creating the products to share in the risk,” contends Ross. And it inevitably sets up a cycle that continuously drives up the expense of making motion pictures.

The first hurdle to overcome is for movie companies to realize that visual effects are as valuable today as A-list movie stars have traditionally been in the past. The second is simply to get everyone to share in the risk as well as the rewards. “The goal should be to create the best films possible, given the limited amount resources you have to do so,” says Ross. “Making movies is an art, but it’s also a business,” he adds. “I tell my people, if you want to be Vincent van Gogh, go cut off your ear and live in the South of France.” As effects studios do their part to reduce risks, movie companies should follow suit and make sure studios receive their just rewards.

Phil LoPiccolo