Ray Richmond contributes to Deadline’s conference coverage.

In the wake of the mass layoffs and bankruptcy filing of the VFX house Rhythm & Hues at the same time it was winning the Oscar for the film Life of Pi, the entire future of the visual effects industry has come under scrutiny — even as Rhythm & Hues recovers under new ownership. The question of the company’s crash-and-burn while creating award-winning work led off a Produced By panel this morning entitled “The Unlocked Picture: Global Opportunities in VFX and 3D Conversion,” where the consensus was that the R&H situation was both an anomaly and a harbinger of VFX industry issues that won’t soon be going away. Rhythm & Hues bankruptcy“It’s a tough business and changing business, and we’re right in the middle of a very tumultuous time,” said Chris DeFaria, Exec VP of digital production, animation and visual effects for Warner Bros. Pictures. While noting that Rhythm & Hues was beset by obvious cash flow problems, DeFaria maintained that the VFX business is being altered by an increasing standardization of tools and techniques and, most importantly, by more competitive financing globally. “You have an international workforce that’s mobile and capable of setting up low cost labor markets,” he noted. “There’s a big benefit in the exchange rates. These forces conspire to make it a very difficult business.”

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DeFaria was quick to add, however, that Rhythm & Hues is going to survive. “It’s just a very difficult transformation that’s going to have to take place,” he believes. DeFaria was joined on the panel by WME partner Mike Simpson, producers Palak Patel and Oren Peli, and by Namit Malhotra (CEO and founder of Prime Focus World). DeFaria was later asked where he sees the VFX business heading from here and stressed that the day is quickly coming when there will no longer be visual effects departments operating as separate entities. They will instead need to be more seamlessly incorporated into the individual films’ production. “You already have visual effects appearing in every single line item,” he points out. “It’s in vehicles, it’s in extras, it’s in cast, it’s in set design. It’s all throughout the budget of the film. And yet we’re still making films with this notion that down the hall we’ve got these visual effects. And anytime you need these digital tools you call digital effects. Which is insane.” He likened it to having a production department for hammers and having to go see them every time you need a hammer. DeFaria thus sees a change occurring in the next few years “where we’re breaking down digital effects into much smaller pieces. It’s the only thing that makes sense.”