VFX Company Shows How NOT To Do Business

Well, I'm a year older, so now it's time for a more serious post.  In case you haven't been following it, Digital Domain is a digital effects company that has a long track record with providing digital special effects for films.  More recently however, the company has been in the spotlight regarding some controversial new actions to further the company's growth.  I won't go super in-depth into the issue because there are plenty of people more qualified than me who have been investigating for months, but here is the gist of the problem:

Digital Domain recently opened a new studio in Port St. Lucie, FL in an effort to try and break into the animated feature film game.  Possibly fueled by the success of Rango by LucasArts, they decided that it's time they tried to get a piece of the pie that only a few major animation studios have enjoyed.  For their first film, they settled on a, "family film," titled The Legend of Tembo starring a young African Elephant who is captured and taken to India.

The problem is the method of how the studio plans on making the film.  Using Florida state funds, they have created an in-studio education program where upper class animation students pay to work on projects like The Legend of Tembo.  Oh yeah, and they won't be paid for their work.  Here is a direct quote from Digital Domain CEO John Textor:

Classes starting in the education space, what’s interesting is the relationship between the digital studio and the college. Not only is this a first in a number of ways that we’ve talked about, but 30% of the workforce at our digital studio down in Florida, is not only going to be free, with student labor, it’s going to be labor that’s actually paying us for the privilege of working on our films.

Thirty percent of the workforce would be unpaid!  People like Amid Amidi have been covering the gross abuses of unpaid internship programs in the animation industry for a while now, but this takes the cake.  Textor has since gone on and tried to backpeddle, but it sounds more like he's just trying to spin the situation in his favor rather than actually apologizing or trying to change the program. 

The more John Textor is investigated, the worse he looks.  He has a 24% stake in Digital Domain, but the loan used to buy those shares was provided by Palm Beach Capital, the company's largest shareholder.  DD stock has fallen 75% in the last four months and now Textor is talking about buying the company to keep it afloat.  Putting yourself further in debt to buy the company to which you are already indebted doesn't exactly sound like a solid business model.  Then again, this is the same man who believes that DD can expand rapidly by attempting to, "tie up the real estate," of creating virtual performers like the Tupac "hologram" that DD made for Coachella back in April.  Never mind that the gimmick itself is an old one and there are plenty of VFX companies that are capable of achieving similar results.

If this is how he chooses to dress as a pirate, surely you can trust him 

to run a multi-million dollar company

This subject is close to my heart because these for-profit animation programs are rife with questionable behavior and only make life harder for VFX artists who are already treated like crap compared to other artists involved in film making.  Digital Domain and John Textor have been getting a lot of heat lately over this, and hopefully the attention will change things for the better.  I don't want to see all the artists who have worked so hard on Tembo and other projects end up out of a job, but I certainly wouldn't mind someone showing John Textor the door and letting someone who knows and cares about the business of animation take over the company, if there is still one to save when all is said and done.

Update: Cartoon Brew posted a story late last night detailing Digital Domain's default on a $35 million loan, plus another $16 million in interest and penalties, plus an additional 32% drop in stock price.  Click the link and watch the embedded news story where John Textor tries to claim that $51 million isn't a lot of money.

Update #2 (09/07): It has been announced that Digital Domain is shuttering its Port St. Lucie studio, laying off 300 employees and shutting down production on The Legend of Tembo.  Furthermore, John Textor has resigned as CEO, handing control over to DD Executive Ed Ulbrich.  A sad day for all of the artists who were victims of this debacle. TCPalm.com has more coverage and interviews with some of the laid off workers if you want to read more.

For more information about the state of the VFX industry check out the VFX Soldier blog and head over to Defending Axl Rose to read my guest column on using animation to bring dead celebrities back to life.