The fall of Technicolor – what went wrong

I have been shocked but not surprised by the events this week and the falling over of Technicolor, one of the giants in the VFX community, comprising MPC, The Mill, and Mikros brands.

When asked how I felt this morning by several old colleagues including one of the founders of The Mill, I was reminded of when my father had been diagnosed with pancreatic cancer in 2009. A death sentence that enabled the grieving process to begin immediately but having imagined I would be prepared for when the time came, 18 months later I was caught out by the stark reality of losing him.

There has been a huge outpouring of emotion for the loss of these incredible companies, a celebration of their inspiring body of work and the abundance of people they nurtured, but mostly a huge concern for the people made redundant. Because it is the people that make these companies.

I was lucky enough to have worked for both MPC and The Mill from the mid-1990s up until 2013 and I loved both of them. Many friends and former colleagues have been in touch and we have swapped memories and photos and it feels like a sort of grief.

I am, along with many, shocked by the abrupt nature of the final blow and how it was administered to staff. Several thousand people wake up to find out they have lost their jobs and are not being paid so close to payday at the end of the month. I would like to imagine that the management may have hoped to save the day until the last minute but it’s irresponsible if not brutal to gamble with people’s paychecks.  

The troubles experienced by Technicolor have been shared by nearly all companies operating in the sector, globally. Covid and the cessation of all production, the slow return during 2021, followed by the dam bursting in 2021/2022 to reach unprecedented levels of activity towards the end of the “streaming wars” up until the writers’ and actors’ strikes of 2023 and the slow, petering out of the work during 2024 as the tap got turned off and the hosepipe began to drain over proceeding months. In truth, the strikes exacerbated and accelerated a slowdown that it seems had already begun in the autumn of 2022.

All of this has left large legacy companies that have grown to fulfill the demand at the level it was several years ago, struggling to adapt quickly to the current world in which we find ourselves and therefore vulnerable.

MPC Film was a company that had evolved to become capable of handling thousands of shots in movies like The Lion King (amazing work). We have seen a decline in output from the studios and a contracting market. How was Technicolor debt ever to be paid back in a challenged, low-margin business? How can a ship the size of the Titanic be turned around quickly?

The other issue that is not new is the dichotomy of business and creativity in a creative business. They are like oil and water but necessary to find a symbiosis to flourish and succeed. 

The cultures of both MPC and The Mill were truly remarkable before the Technicolor years and even then teams of people within these organisations can still carry their own culture despite the corporate machine at the top. To create great work a creative business needs to foster a great culture, talented, nurtured, well-led people backed by technology and making a profit.  

Invariably the people who start and lead these businesses understand this and find a way to spin all the plates, protect the talent and support the talent to create great work that generates profit. When corporate entities come to purchase or swallow these successful businesses they are generally focused on profits and shareholders and the cultures become less important, tainted, pale reflections.

They begin to fail. The founders inevitably leave unable to continue as they have before. Replacing or succeeding the rare breed of people who understand the culture, the creativity, the technology, and the business is hugely difficult

We have seen these cycles before but they are not linear and as things come around again they are off-axis and look slightly different. 

This era of industry challenge is very different from what we have experienced before because the clients of VFX companies are experiencing unprecedented change.

Our kids watch TV whilst on their phones and possibly with laptops on their knees as well. They like TikTok, YouTube, and Netflix.

They didn’t have interruptive television advertising until last year on the streaming services. We are in a new “creator economy”.

The Hollywood studios are trying to work out what is the right level of spend and output and are being cautious, a huge change from 2021.

They, like all of us, are seeking to find out where it is all heading. Old formulas and IP aren’t reliably and consistently achieving their aims. Empires rise and fall.

More than ever, the need to take the cost out of a very expensive process is paramount to succeed. The future of all businesses will be small teams doing the work of large teams. Technology is ever-advancing and promising much efficiency in this area. 

However, the business model for creating VFX needs to be tweaked, restructured, and reimagined for the future for companies, artists, and studios to break the dangerous feast or famine cycle.

I am concerned about what I fear will happen in the short term, more companies may be unable to overcome their challenges, but I remain excited and optimistic for the future as well.

There will be new ways to tackle VFX work and production. Storytelling won’t stop. VFX isn’t going anywhere but new and exciting tools are coming to aid their creation in a more streamlined and efficient process and enable smaller groups of artists to create great work.  

Perhaps now is a great time to begin again because this feels a lot like where we began, only different.

I imagine the year will continue with mergers and acquisitions but that several new companies will spring up. We may now see a period of clients seeking to spread the risk on large projects by limiting the amount of VFX work handed over to one company, employing a larger number of VFX studios to work on smaller packages of work, again a little bit more like how it used to be, only different.

Will Cohen is a VFX producer/executive producer/VFX consultant and former managing director and executive VFX producer for Mill Film and TV