Interview with Marty Shindler.

Why do studios like ILM thrive while so many others are forced to shut down? Marty Shindler answers some of these questions. His list of a clients is a Who’s who of the CG Industry: ILM, Rhythm & Hues Studios, Sony Pictures Entertainment, Cinesite and many others.

Over the last few years, the industry has fallen on hard times, but most don’t know where it will lead. Now, thanks to Marty Shindler, we have a better understanding of what’s at stake and where we are going.

CGC: Perhaps you could begin by giving us a quick presentation of who Marty Shindler is?

MS: As we start, Jean-Eric, thanks for asking me to do an interview with you.

In a sentence, I can summarize my career by saying that I have always been one to provide a business perspective to creative, technology and emerging companies. I have worked in hands-on management roles in a number of companies, including two of the major film studios, Twentieth Century Fox and MGM, and two leading visual effects companies, Industrial Light & Magic and Cinesite.

Early in my business career I worked for Coopers & Lybrand (now PriceWaterhouseCoopers) and many years later rejoined the firm in the entertainment practice where I was involved in auditing and consulting with a number of different types of entertainment companies, involved in films, TV, production facilities, visual effects and software.

For the past seven plus years, I have been consulting independently, along with Roberta Shindler, my wife, with a range of creative and technology companies.

CGC: What led to your decision to do consulting work independently?

MS: When I was contemplating the independent route, I realized that I had met a lot of people who owned or worked in post production, visual effects and other creative and technology based companies who were very good at what they did.

However, they often lacked the business and administrative skills that are vital for the organizations’ long term success. I also recognized that many could not afford the services of my former employer Coopers & Lybrand or a similar type of firm, but they might be able to afford my services, giving them quality work on a lower cost basis.

CGC: You entered ILM as Director of Finance in the late 80’s. The company was going through rough times, what can you tell us about the work you did there?

MS: I joined ILM in 1989, hired as part of the first professional management team. A few months prior, as part of a Coopers & Lybrand assignment, I helped develop a number of recommendations for ILM to improve their business operations. In a nutshell, the Company, like so many others, needed to make the transition from being a small entrepreneurial company to a larger more sophisticated professionally managed company.

The new team’s mission was to put in place a strong business infrastructure, including the necessary policies and procedures, that would allow the Company to have the right foundation to support future growth profitably.

The Company was already strong creatively, having won many Academy® Awards for visual effects, so the effort on the business front was important if the Company was to become profitable over the long term.

CGC: ILM today is one of the most prolific VFX studios in the industry, what is the key to its on-going success?

MS: I have not been employed there for a number of years, but from what I regularly hear from various film producers, studio executives and others, ILM can always be counted on to get the project done on time and on budget. That is vital when there is a release date looming for the many high profile films in which they are involved.

Fundamental to getting the job done, ILM staffs each project with producers and coordinators that manage the project and the client relationship from beginning to end.

Although they do not have a lock on creative talent, let’s not forget that they do have strong VFX Supervisors supported by numerous talented individuals throughout the organization. Look at the range of productions in which they have been involved.

And to consider that they have been in business for over 25 years is testimony to their creative, technology and business skills.

CGC: Why do so many others fail?

MS: There is not a simple answer to that, but chief among the reasons is management. Many already have the creative and technology skills, but companies need to have both their entire staffs work on a strong business base. Of course, many small companies are undercapitalized which sometimes precludes their investing in having adequate and quality management.

I also hear frequently about small to medium sized effects studios that under bid their competition to the point of sometimes doing the work below cost. One cannot do that and expect to be in business for very long.

What is also important here, is that many facilities do not know what their costs are or what it will take in terms of time and manpower to get the job done. The result is a bid that the customer accepts but that often dooms the facility to failure.

Planning is important for success. You would be surprised as to the number of effects companies that do not do an annual budget or prepare monthly financial statements.

CGC: How can a studio best prepare for the very “cyclical” environment of this industry?

MS: The planning comment I just made is a part of being prepared for the cyclical nature of the industry. It is also important to have a balance of artists and others on staff that are supplemented with freelancers to meet demands. It is not easy under the best of conditions.

Constant marketing and looking for future projects is important. Often, the owner is involved in marketing to get the work, managing the project and the facility and helping to actually produce the work. It is tough to wear too many hats.

CGC: What is the best advice you can give to smaller studios that try to break into the market and want to survive without flying too close to the ground all the time?

MS: Start with as much capital as possible. Incorporate a formal planning process from the start, even if it is a “back of the envelope” type of budget. Most importantly understand your cost structure and that of your customers and competitors.

CGC: It seems the most successful studios are often those that can rely on other source of revenues to survive. Correct me if I’m wrong, but ILM can in some cases rely on the revenues generated by Lucasfilm; Sony Pictures Imageworks can obviously rely on Sony, and Pixar…well… Is there any room left for other studios that exclusively do VFX?

MS: Every business entity must learn to stand on its own, otherwise it is only kidding itself as to its potential and its profitability. The larger companies that are a part of a conglomerate have the controls at the corporate parent level that allows them to monitor the bottom lines of the effects subsidiaries. As such, if the VFX companies are not performing to plan, i.e. an acceptable bottom line, then changes are made, either in management or in closing the companies. There are several studios that operated effects companies a few years ago, that got out of the business when they realized how difficult it can be.

Lucasfilm has only produced two films in recent years, Star Wars Episodes I and II, so that would not be a sufficient amount of effects work to sustain ILM. In fact, if you look at the number of films in which ILM has been involved during that same time period, you would see that there is work from most of the Hollywood film studios, not just from Lucasfilm.

Pixar is effectively an in-house production facility that develops and produces product for its own account. Their current arrangement is for Disney to release the product.

Sony Imageworks does do a lot of work on films produced by Sony Pictures, but they, too, have continued to build their business from many other studios.

There continues to be plenty of room for other, smaller facilities to do work in the visual effects business. Smaller companies can develop a reputation for quality creative work and continue to garner a share of the market. Even many of the films that may have the bulk of the work done at ILM, Imageworks, Digital Domain or PDI/Dreamworks often use several smaller companies for portions of their effects production.

CGC: How does the future shape up when studios all over the world are opening and competing directly with US facilities?

MS: Films have always been shot on location, including many of the world’s production centers outside the US, such as Montreal, Toronto and Vancouver in Canada, London, Paris, and over the past decade or so, more principal photography has been moving to eastern Europe, Australia and New Zealand. As such, it is natural that support facilities and talent for handling equipment, post production, visual effects, etc. developed in those areas.

Given the fact that many films do not earn a profit for their investors, the trend to continue to do work in the most cost-effective manner, including choice of location, will continue.

With something as simple as the myriad of overnight delivery services such as FedEx, satellite and fiber transmission capabilities, getting dailies back to the Hollywood studios is a relatively simple process. Continued development of technology will continue to play a role here.

CGC: How can Hollywood fight back?

MS: I am not sure the term fight back is appropriate. Also, the term Hollywood ranges from the major film studios to the many support organizations located in California.

The major studios primary objective is to make the best film possible for the least amount of money. That sounds like a cliché, but in a sense they have become financing organizations. So, getting the work done in whatever city or country can best accommodate their needs is what is done.

Given what I said a few minutes ago, it is a natural thing for films shot in Montreal for example, to be posted there and to have effects done there, too.

If Hollywood support facilities want to continue to get their share of the work, they must continue to produce the best work possible for the best price. A proactive offensive is the best defense.

CGC: How do you explain the recent closure of Mill Film or Centropolis?

MS: I only know what I read in the press on these two companies. Mill Film decided that working on feature films was too competitive and not providing a sufficient level of revenue and, of course, bottom line, to their organization.

Centropolis, it seems, had its problems tied to its parent.

CGC: How can CG Channel’s readers learn more about your Company, The Shindler Perspective?

MS: The best way is to visit our web site at http://iShindler.com. There they will see an overview of the types of projects in which we have been involved, our credentials and a select list of some of the companies for whom we have worked.

There are also a number of articles on business and management topics that are designed especially for the small to medium sized business. I especially recommend Indirect Marketing, Budgets, Not Just for Accountants, When Showing Up is Not Enough and Never Underestimate the Power of Marketing.

Of course, your readers may also feel free to send me an email at Marty@iShindler.com.

CGC: Thanks, Marty.

MS: You are welcome, Jean-Eric. I enjoyed our discussion.

CGC: How do you explain the recent closure of Mill Film or Centropolis?

MS: I only know what I read in the press on these two companies. Mill Film decided that working on feature films was too competitive and not providing a sufficient level of revenue and, of course, bottom line, to their organization.

Centropolis, it seems, had its problems tied to its parent.

CGC: How can CG Channel’s readers learn more about your Company, The Shindler Perspective?

MS: The best way is to visit our web site at http://iShindler.com. There they will see an overview of the types of projects in which we have been involved, our credentials and a select list of some of the companies for whom we have worked.

There are also a number of articles on business and management topics that are designed especially for the small to medium sized business. I especially recommend Indirect Marketing, Budgets, Not Just for Accountants, When Showing Up is Not Enough and Never Underestimate the Power of Marketing.

Of course, your readers may also feel free to send me an email at Marty@iShindler.com.CGC: Thanks, Marty.

MS: You are welcome, Jean-Eric. I enjoyed our discussion.