SARA FISHER

Staff Reporter

Everybody wants to be a producer even the folks at L.A.'s digital special-effects houses.

Actually, they don't have much choice. As studios cut down on the number of big-budget, effects-laden releases, special-effects powerhouses and small boutiques alike are launching their own production divisions in order to stay financially afloat.

"The visual-effects business isn't a business anymore, since that word implies making money," said Scott Ross, chief executive of Venice-based Digital Domain, which founded a production arm in April. "Looking at the Hollywood landscape shows that producers and/or studios are the only ones making serious money. We have to move up the food chain."

Digital Domain plans to co-produce and co-finance two films a year, in the $60 million to $70 million budget range.

One of Digital Domain's first films will be an effects-laden World War II epic whose story was developed by Ross, whose entire career has been on the effects side. Other special-effects companies like Rhythm & Hues are soliciting treatments from their rank-and-file employees.

Marina del Rey-based Rhythm & Hues intends to develop seven feature film ideas, all dreamed up by company employees, with envisioned budgets ranging from $20 million to $50 million. In September, the company will begin pitching to investors its first movie, "Abbott's Book," to which an award-winning screenwriter is already attached.

The company's feature film and development division also has created two animated television series currently being floated around town.

"Look at it this way," said Deborah Giarratana, senior production executive at Rhythm & Hues, "We were forced into creating a production unit in order to keep us in business and give our artists continual work. With major studios hesitant to green light heavy-effects films, and budgets being cut left and right, we believe that this is going to be the way we stay in business."

For other special-effects houses, creating a production arm is more about creative freedom than staying financially solvent. The management team at Flat Earth Productions Inc., a 65-person television effects outfit in Burbank, is getting involved in the world of smaller-budget, independent filmmaking.

"We want to create the genre film that we all love, but that no one is making anymore," said company co-founder and President Kevin Kutchaver. "We've slowly amassed the tools and talent needed to produce films, and we've learned how every phase of the process works through our effects work. Now we're ready to flex our creative muscle."

The company launched Flat Earth Entertainment in February to develop and co-produce its own projects, and already has five small-budget movies in varying states of development.

Similarly, Valencia-based effects house Foundation Imaging has created an internal television and film production unit called Revenge Productions. To further its transformation, the company has built its own post-production and sound department so that projects can be made from beginning to end on the Valencia campus.

"We're creating a miniature old-time studio, just in the digital age," said co-founder Paul Bryant. "This place is full of filmmakers, not computer geeks, and we want to make movies."

Bryant believes that within the next 12 months, revenues will be doubled through the production efforts. The company has a computer-animated science-fiction thriller currently in production, as well as a live-action science-fiction television pilot.

Managers at visual-effects studios have been talking about moving into the production arena for years, but market conditions now appear to be ripe. And Pixar Animation Studios' rousing successes, first with the animated "Toy Story" and later "A Bug's Life," proved both to financiers and distributors that visual-effects houses could create critically and commercially popular work.

"A couple years ago, the studios were saying that we were tech people, not creative, and never the twain shall meet," Ross said. "Thanks first to 'Jurassic Park' and then 'A Bug's Life,' the studios are now enthralled to talk to us. Clearly there is a consumer marketplace saying it's interested in what we can do."

For reprint and licensing requests for this article, CLICK HERE.