We collected a range of publicly available data and conducted 22 interviews in the Australian PDV sector. Interviewees were selected from a database we assembled of key sector players – firms, industry associations, training bodies and policy makers. Our initial findings can be summarised as follows:
Firm strategy and industry competitiveness
The Australian PDV sector and the firms within it face constraints which derive from (a) the small size of the industry; (b) its geographical separation from the centre of activity in Hollywood, and the consequent time difference; (c) the cyclical nature of work resulting from dependence on Hollywood at the high-end; and (d) the tight budgetary constraints involved in domestic production. These institutional constraints affect firm strategy; to be successful, firms have had to address them effectively.
For some firms, the process of overcoming the constraints of the Australian environment has itself become an important basis for innovation and competitiveness. Such firms can be seen as market leaders. The vast majority of firms can be regarded as survivors who struggle to sustain a viable business in a small and geographically isolated segment of a highly competitive global market; for these firms, the constraints identified above serve to impede growth and innovation.
The small size of the industry
The small size of the domestic industry makes it difficult for Australian firms to compete for high-end work, which depends on access to a sufficiently large talent pool. The elite firms have overcome the obstacles of limited industry capacity by establishing individual reputations and securing the capacity to maintain those reputations through regular contact with LA.
Isolation from Hollywood and process innovation
A major source of innovation for successful firms appears to be the process innovation associated with conducting PDV work at a distance. The Australian industry has been a global leader in the development and adoption of technology which facilitates real-time communication and exploration of media around the world. As a result, the Australian PDV sector is widely acknowledged as having the capacity to successfully undertake spatially disaggregated work.
Tight budgets and quality vs. cost competitiveness
The need for the PDV sector to work within the budgetary constraints faced by the Australian industry can be seen as one aspect of its competitiveness in attracting Hollywood work on the basis of low cost. However, Australian firms’ strategies are more complex; they do not rely exclusively on cost competitiveness. Value for money is the primary determinant for winning international PDV work, and the notion of value is intimately tied not to considerations of cost so much as perceptions of the quality of the finished product. Rapid (and costly) technological development has meant that those PDV firms wishing to work on big-budget Hollywood films have had to continually reinvest in both hardware and software. The successful high-end firms in the PDV sector in Australia are mindful of costs and budgets, but are also driven by a desire to produce world-class visual effects which showcase Australian professionalism and creativity.
Creative Cluster: collaboration and knowledge-sharing in the Australian industry
Collaboration occurs in the general support for the development of the PDV industry and for capacity-building. However, relations between firms remain strongly competitive. When they do collaborate, it is generally because the commissioning producer has portioned the work between a number of different firms, not because the firms are working together to win contracts or share knowledge.
Democratisation of the industry: technology and offshore Hollywood creating opportunities for satellite industries in countries such as Australia
To manage risk, Hollywood producers divide digital shots between a number of PDV houses as a matter of course. Within Australia, there are too few firms for this strategy to be viable, except on smaller films. Overall capacity within the Australian industry thus limits the opportunities that are available locally. Initial findings indicate that Hollywood productions in Australia benefit an ‘elite’ group of firms who have invested in the technology that is necessary to produce visual effects to world-class standards. The local film industry, with its relatively small budgets, has not been able to replicate either the creative impact or the substantial capital investment found at the higher end of the PDV sector.
Democratisation of the industry: technology providing opportunities for new market entrants
Initial findings indicate that this situation creates a climate of exploitation rather than opportunity. The victims are freelancers who are willing to produce material at an unsustainable price in the hope of building a reputation which will secure future work. This state of affairs may lead to a ‘race to the bottom’ in which price becomes the sole basis of competitiveness.