Disney’s first feature-length color animated movie, “Snow White and the Seven Dwarfs,” opened in Technicolor in 1937, and the company came full circle when Technicolor’s flagship visual effects company MPC was called upon to create effects on Disney’s upcoming live-action adaptation of the classic. But the timing now marks the sad end of Technicolor, which was founded in 1915 and went on to become one of Hollywood’s most recognizable brands, working on classic films such as “The Wizard of Oz” and “Gone with the Wind.”
On Friday, Feb. 21, Technicolor began alerting customers and employees that it was facing “severe financial challenges.” This included sending U.S. employees a WARN notice as required by law for large companies that anticipate closings and mass layoffs. Technicolor’s leadership worked through the weekend to find a solution, but by Monday CEO Caroline Parot admitted in a company memo to an “inability to find new investors for the full Group, despite extensive efforts” and the business began to shut down its global operations.
The stunning collapse of the iconic company and MPC – which was founded in the Soho section of London during 1970 and was one of the world’s largest and most recognizable VFX vendors – was a tragic blow to an already volatile VFX business. The closure affected thousands of visual effects artists around the world, including those in the U.S., UK, Canada and India – and it came not long after MPC’s lead work on “Mufasa: The Lion King” was shortlisted for a VFX Oscar.
One employee requesting anonymity related that when the WARN notices were sent to U.S. staff, there wasn’t a town hall or other communication from management, and many initially believed the email to be a scam. But as it became apparent that the ship was sinking, there was anger, tears, disbelief, and panic. There was looting of office items ranging from computer monitors to art that hung on the walls to relics of the company’s storied past such as awards, while employees hustled to retrieve their personal belongings. It was a scene that the source described as “madness,” “crazy,” “sickening” and “heartbreaking.”
With the closure, studios quickly got into gear, seeking new vendors to complete MPC’s existing work. Upcoming production that the company was involved with include Disney’s “Lilo and Stitch” and Paramount’s “Mission Impossible – The Final Reckoning.” Industrial Light and Magic is the lead VFX vendor on “Lilo & Stitch,” so it it may absorb at least some of MPC’s work. Meanwhile, other VFX entities started looking to hire some of Technicolor’s talent.
So, what happened? In her Feb. 24 memo to staff, Parot wrote that the company had been “experiencing difficulties linked to a variety of factors and has not been spared from external headwinds: the difficult operations situation resulting from post-Covid recovery, a costly and complex separation from the previous group followed by the writers’ strike leading to a slowdown in customer orders causing severe cash flow pressures.”
While the VFX business struggles are very real, many Hollywood insiders who were both sad and angry, place the blame for Technicolor’s collapse on what they describe as years of mismanagement. The company filed for chapter 15 bankruptcy protection in 2020, and since then it restructured and changed management several times. It sold its postproduction business to Streamland Media for $36.5 million in 2021, and in 2022 folded several brands and relaunched MPC, commercial VFX company The Mill, Mikros Animation, and Technicolor Games, which it rechristened as Technicolor Creative Services. Technicolor was contacted for comment.
“Having written a book on classic Technicolor, it gives me no pleasure to say that Dr. Kalmus (Technicolor’s visionary founder) is likely rolling over in his grave,” said Bob Hoffman, a longtime Technicolor vice president and Technicolor historian. “Look, meaningful reinvention was always a huge part of Technicolor’s DNA. After my long tenure with the company, it appears to me that management could have figured out a means to get through their most recent challenges … in my opinion had they been truly desirous to do so.”
While sources contend mismanagement was the major cause of Technicolor’s collapse, VFX pros acknowledge that some poor decisions were likely exacerbated by an already broken business model. The industry suffers from low margins and is heavily impacted by tax credits that have post-production work moving from one part of the world to another in an endless quest for the best incentives. For many VFX veterans, the timing of this particular shut down, just prior to the Academy Awards, was a sad reminder of the demise of respected VFX studio Rhythm & Hues, which filed for bankruptcy less than two weeks before the 2013 Academy Awards, where its work on “Life of Pi” won the Oscar.
In fact on Sunday, accepting the visual effects Oscar for “Dune : Part Two,” production VFX supervisor Paul Lambert acknowledged the contributions of the film’s numerous VFX vendors, including the “incredible MPC.”
But today’s industry has another challenge on the horizon: artificial intelligence. Many suggest AI tools offer opportunities to make VFX companies more time and cost efficient, while others warn that this could come at the expense of jobs. “The clients want it cheaper and fast, and they are looking for any alternative,” cautions Scott Ross, co-founder of Digital Domain, former general manager of ILM, and author of new book “Upstart.” “As soon as AI is able to do all of the tasks of visual effects workers, Game over. … I hope I’m wrong.”
