When Burbank-based Available Light replaced its outdated visual effects equipment earlier this year, the small boutique found itself with empty space. At the same time, another special effects company called Area 51 was looking to relocate from Marina del Rey after Dreamworks SKG pulled out of the Playa Vista project.

So the two special effects makers ended up as roommates. Likewise, when Available Light found itself with part-time employees who needed extra work in their down time, the company sent them over to Area 51.

The unusual alliance, in which both companies now share space and staff, is a way to stay alive in the increasingly competitive world of visual effects.

"The golden age ended three years ago," said Tom Atkin, managing director of the Visual Effects Society, an industry trade group based in Santa Monica. "Prior to three years ago, the work exceeded the body of talent needed to perform it."

Downturn in effects business

All that changed thanks to a combination of factors. For one, technology advances have drastically reduced the physical size and cost of the equipment needed to produce effects. Those advances mean less staff is required to do the work. And that has allowed more companies to open shop.

Meanwhile, studios are striving to reduce spending on feature films, and fewer movies that call for blowout special effects are being made.

The result is that more and more companies are being forced to make creative arrangements like the one between Area 51 and Available Light in order to survive.

"A lot of companies are getting together and starting to merge or make relationships," Atkin said. "What they're doing is reducing their overhead."

Besides forming joint ventures, effects companies are slimming down operations and expanding into commercials, television and video games.

"It's something you're seeing all over town," said John Van Vliet, president of Available Light. "If you don't change, you die."

Available Light, which focuses mostly on feature film work, has done theme park effects and "basically whatever comes through the door" to keep itself afloat, Van Vliet said. The company's resume includes visual effects work for such films as "Ghost," "Who Framed Roger Rabbit," "Honey, I Shrunk the Kids," "My Favorite Martian" and "Inspector Gadget."

Meanwhile, one-time film specialist Area 51 has turned its focus to television effects.

"We've found a nice niche in the TV market," said Tim McHugh, president of the company. Area 51 has done work on such shows as "The X-Files," "Space: Above and Beyond" and "Dark Skies."

By sharing space at Available Light's Burbank facility, McHugh and Van Vliet have been able to cut costs during what they call a drought in the visual effects market.

"We're still here," said Van Vliet, who has about 15 full- and part-time workers. "But it's been an interesting couple of years."

Up to a few years ago, McHugh said, Area 51 would get six to eight scripts a month requiring visual effects work. Today, the company is lucky to get two a month, he said. Last year, five of the shows the company expected to land as clients ended up turning to Canadian effects firms, he said.

"There's a shakeout going on now," said Van Vliet. "There have never been huge profits in this business, and a lot of people are discovering that and leaving the business."

Pluses and minuses of technology

Coupled with the downturn in business is the fact that the technology used in visual effects changes constantly meaning companies must almost continuously update their equipment to keep up with the industry. In fact, the technology is changing so fast that Area 51, which has a permanent staff of about 15, is forced to keep a full-time person on staff to upgrade the company's computer systems.

But what technology takes away in terms of upgrading expense, it adds in efficiency. Before, a printer might take up the space of a small room. Now, effects producers can fit six Windows NT workstations with printers in the same area. It was this advance in technology that allowed Available Light to reduce its space needs and accommodate Area 51 as a boarder.

Both Area 51 and Available Light have cut their staffs in half over the last several years. Most of the cuts came as a result of technological advances.

"We had a crew of 30 people when we did 'Ghost,'" Van Vliet said. "Now, to do those effects it takes half that number."

The changing platforms are also allowing companies to produce special effects that can be used for a number of different outlets, from television to film to the Internet the latter being an area that Van Vliet and McHugh say they are considering a partnership to exploit.

"One of the reasons we've come together is the opportunity for the Internet," Van Vliet said. "We're exploring the option of building our own shows. There's a lot of opportunities there that we don't understand yet."

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