"How will you put your kids through school? Pizza and beer will no longer make it worthwhile, nor will a credit on a movie that goes by really fast”

VFX industry vet Scott Ross, the co-founder and former CEO of Digital Domain, asserted that the state of the visual effects business today is as "f—ed up as it has ever been — I wish I could say it’s gotten better, but it’s gotten worse."

Ross is among the VFX industry participants who have been leading a call to fix a broken business model. The message has been the loudest in the U.S., but Ross is also taking the message aboard. On Wednesday, he spoke at Trojan Horse Was a Unicorn (THU), a VFX, game and animation festival in Troia, Portugal that has attracted an estimated 600 people from 45 countries.

He emphasized that part of the problem is the business is driven by only six clients — the major Hollywood studios. “Maybe that will change slightly as we see things like Netlfix, but generally the clients call the shots ... and the studios are the only ones winning,” he said, adding that incentives are creating an uneven playing field. “Governments, for some crazy reason, think they should subsidize the conglomerates — and for-profit Hollywood movies.

“Why is the UK taking tax payers’ dollars and investing in Lucasfilm?” Ross asked, referring to how that company has set up shop in England to make the Star Wars sequels. “Instead of investing in Warner Bros. and Disney, why not invest in [UK-based animation studio] Aardman Animations (of Wallace & Gromit fame) and allow them to have global distribution?"

He then turned the subject to New Zealand, saying that every resident effectively paid $10 toward the production of James Cameron’s Avatar. “I don’t understand what the value is for New Zealand. Many of those employed at Weta (Peter Jackson's VFX house) are actually from [other countries]. The good news is because Peter Jackson has made the same movie seven times, he is able to sustain employment in New Zealand for a long time."

Ross pointed out that in other incentive-driven regions, governments are “coughing up money to sustain an industry ... but the artists might work there 6-9 months on a job before moving for the next job. Companies set up major facilities, and when they are not able to sustain those facilities they will close.

“We are a global community, and what’s happening in Canada will happen somewhere else next,” he added, saying that it facilities and artists will continue to be bounced around the world chasing incentives until something changes. “The politicians approving the subsidies are [eventually] going to get it.”

Ross had been urging owners of VFX facilities to form an international trade association that can lobby collectively. “It probably won’t happen in my lifetime because people who run the companies are afraid of upsetting the studios,” he admitted. “They like to talk, but not about changing the business model — and the core of the problem with VFX is the business model.

“The major VFX facilities do not make money. Not Double Negative (now part of Prime Focus), not Rhythm & Hues, not Framestore,” he said, noting that while Industrial Light & Magic’s numbers are not public, “I can tell you they don’t make money. ... And the people that bought Digital Domain continue to lose money.”

Since an international trade association doesn’t appear to be in the cards, Ross is a board member of the recently formed ADAPT (Association for Digital Artists, Professionals and Technicians), which wants to put an end to the subsidy race. With this goal, it has retained law firm Picard Kentz & Rowe to challenge subsidies in the U.S. Court of International Trade and ask that a mandatory duty be levied against producers who utilize subsidies. “ADAPT is trying to raise enough money to take this effort through the courts in the U.S.," he reported.

During this program session, Ross also questioned why VFX houses don’t get profit participation even for films such as Gravity, which he pointed out was largely animated. "Sandra Bullock made in excess of $50 million because she had profit participation. Did Framestore [Gravity’s VFX house]? Not that I’m aware of.”

Ross noted that he asked Warner Bros. exec Chris DeFaria, who was a producer on Gravity, why this was the case. “Because no one negotiated for it,” was the response. Said Ross: “Why aren’t there people in the major VFX and animation facilities saying ‘I’m mad as hell and I’m not gong to take it anymore?’ In my opinion they don't negotiate it because they are scared to death, because there are only six clients.”

Addressing the younger members of the audience, Ross said, “the business part [of VFX] is really going to affect you, especially as you get older. How will you pay your mortgage and put your kids through school? Pizza and beer will no longer make it worthwhile, nor will a credit on a movie that goes by really fast.”

Noting that many of the young artists will take any job to get a foot in the door, Ross warned, “Don’t do that … You’ve got a degree and have incredible talent, why should you work for free or for a wage where you can’t get paid overtime, like in the UK?”

Email: Carolyn.Giardina@THR.com

Twitter: @CGinLA