What a week it’s been. On Monday, June 8, Pacific Title confirmed the rumors that have been brewing for weeks: it told all its employees to consider themselves laid off. Pacific Title has endured 90 years of ups and downs in Hollywood and the nation since it was founded in 1919 by Leon Schelsinger.

Now, not only do more VFX artists/employees lose their jobs in tough times, but an illustrious, historic Hollywood pactitleartcompany shutters its doors for good. I see  this as another cautionary tale about doing business in our industry. When companies outside of our industry (banks, insurance companies, whoever) see the glitz of Hollywood, they think they’ll bring business acumen to VFX, post, animation and other narrow margin industry segments. They either think they “get” Hollywood or don’t think it’s important, since they’ll be bringing the financial expertise. But most VFX/animation companies were founded out of a passion for the business, not as a  way to make huge profits. By the time that group of dentists from Michigan realize that, it’s too late. The story always always has a bad ending.

That said, there is rarely anything simple anymore about the business of doing business as a VFX or animation company. For proof, I submit the following:

A few days ago, visual effects/image processing software provider The Foundry announced it had completed a management buy-out, led by Advent Venture Partners, a venture capital company. A mere two years ago, however, The Foundry’s management team (CEO Bill Collis and Bruno Nicoletti) had sold The Foundry to Wyndcrest Holdings, a Florida based private investment and acquisition firm focused on technology and entertainment. [A piece of info you’ll need to understand the story is that Wyndcrest–if which director Michael Bay is its prinicipals–owns Digital Domain, the Venice-based VFX company that also created the Nuke compositor.]

foundrySo, why buy back the company that you just sold two years ago? Luckily, I met with Collis, as well as chief scientist Simon Robinson and could ask that question. Here’s the answer I got: “Two years ago, everyone saw that Nuke had far greater potential,” said Collis. “Selling The Foundry gave Bruno and I a chance to have access to Nuke.”

Now, two years later, The Foundry exits the Wyndcrest relationship, Nuke in tow. “The value to Digital Domain isn’t in having Nuke but in having wide adoption of Nuke,” said Collis. “This way, they have a bigger circle of compositors who know Nuke, so when they have to gear up with 50 compositors for a big projects, they can find people who can get up to speed on Day 1.”

At that moment, Collis and his colleagues considered themselves “quite chirpy” about the deal, having just announced on June 9 that Industrial Light + Magic announced they’d bought a site license for Nuke. “If a company like ILM wants to invest in a pipeline, they have to have security that the company owning Nuke will have a future,” noted Robinson.

“Nuke has the modern capabilities that Shake doesn’t,” added Robinson, who noted that, although Shake has been the de facto standard, Apple–which purchased Shake–announced that it wouldn’t continue development on it. Those “modern capabilities” include 3D compositing, a multi-channel workflow and a strong development path. Nuke product manager Richard Shackleton reported that Nuke version 5.2, currently in beta at Digital Domain, Luma, Image Movers and other VFX houses, features metadata with camera/exposure information; users can also create new metadata. “The big new feature for 54.2 is pre-compositing,” he added. “You can break down the compositing script into sections and then split it up among artists. That means that the 3D artists can work on the 3D sections and the 2D artists can finesse 2D. It’s collaborative compositing.” Also new is RED camera support.

Meanwhile, Nuke 6 will go into beta end of August. “The big thing with Version 6 will be roto-paint,” said Robinson. “It’s a bit like Photoshop where you have a multiple layer approach to shapes and paint.” Version 6 will come in two options: Nuke and Nuke X, which adds integrated 3D camera tracker, which allows the user to automatically track motion and reconstruct the camera that shot the scene and lens distortion toolset for automatic and manual ways of removing lens distortion.

Perhaps it’s an old story that VFX/animation companies need venture capital companies and complex strategies to survive and thrive, and that unlucky companies are bought by enterprises not committed to the core business. It’s good news that The Foundry has found a way to make buying/selling and negotiating work for them, and for the VFX/animation companies they’ll service. It’s quite sad news indeed that Pacific Title fell prey to some of those same basic forces. I’d like to hear from ex-Pacific Titlers with their point of view.