DS: You cannot talk about visual effects these days without talking about the rough business climate. There seems to be a tug of war between the studios and the visual effects houses, with considerable finger pointing and frustration. Are there any answers? Is there much more shake out to come? Where do you see things headed?
JK: All in all, the picture is a little grim right now. Unfortunately, there are a lot of companies that engage in really foolish and short sighted business practices. You can’t just blame the studios for wanting to pay less and less for the work.
What’s happening is that when a low target number goes out, somebody says, “Yes.” A lot of times companies are saying “Yes” to a number that they know is going to be below their cost. They know they are going to lose money, for a variety of reasons. Sometimes they don’t know that’s what they are doing.
They completely misunderstood what it is they are bidding on and their bid is based on a wrong assumption. They are going to take it in the shorts because of their naivety. Sometimes they are doing it for strategic reasons, thinking, “We will buy this first one and then…”