1. The document analyzes strategic and operational challenges for visual effects (VFX) firms operating in global production networks, based on interviews and a VFX credit database. 2. Key challenges include limited bargaining power and intense competition, and managing uncertainty from the intangible nature of VFX work. 3. VFX firms develop strategies like controlling inputs, diversifying, and capturing intellectual property to respond to pressures. They also implement processes like careful costing and monitoring to manage contract variations.

1. Strategizing in global production networks:
Connections with CCI research themes
1. Data set on global VFX industry
2. Findings
3. Connection with CCI streams for extended life

2. VFX data
• Interviews
– 54 including 24 with firms (11 in Australia, 7 in London, 6 in
Canada), 16 with employees in Australia, 14 with other
Australian industry experts, 1 VFX producer in LA)
– Questions: opportunities created by technological change,
globalisation → strategies for addressing environmental
constraints and market uncertainty in GVC
• VFX credit database
– 2504 VFX credits from IMDB.com
– Exchange partners (local and global), industry segments,
variations across region and time

3. Critical strategic and operational problems for VFX
firms in GVC
1. Position in value chain
• Limited exchange partners
• Intense competition with and across regions
• ‘Bottom of food chain’
2. Uncertainty arising from intangible nature of service delivery
(‘relational value chain’ Gereffi et. al. 2005).
• Codification of product specifications difficult
• Transactions complex
‘

4. Critical strategic and operational problems for VFX
firms in GVC
Number of VFX firms operating year year by region
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USA Canada UK Australia/NZ Western Europe Eastern Europe Asia Total

5. Critical strategic and operational problems for VFX
firms in GVC
“Producers know how to play the game and triumph. They go X, Y,
Z, get all the bids, go back again X, Y, Z and then just play and
play and play until players just pull out and say you know what, it’s
just not worth it. It’s just not worth competing’ (Canadian VFX firm)
‘The VFX companies are at the bottom of the food chain’ (London
VFX firm)
‘It’s as per the story board. The story board is a very general kind
of thing, huge amount of room for interpretation’ (London VFX firm)
‘Contract variation management has globally I think been a
challenge for a lot of people. How you manage the client,
especially clients who can leverage the intangible nature of service
delivery. What classifies as completed delivery?” (Australian VFX
firm)

6. CCI theme connections
• How do firms manage these strategic and operational problems?
Interdisciplinary analysis drawing on global production network
theory (economic geography) and resource dependency theory
(strategic management)
• Strategies for responding to pressures of GPN and operational
responses to contract variation provide insights into:
– CCI theme B(ii) “Mapping the creative economy” by providing
“toolsets for practitioners to improve their performance at the
business of being creative”
– CCI theme A (iii) ‘Actually existing innovation”, particularly
service industry component
– CCI theme C (ii) ‘Business process management’
• Patterns of global network relations in VFX
– CCI theme B (iii) ‘Spatial network analysis of the games industry’

7. Strategic responses to position in GVC
• Adapt by controlling key inputs – labour and technology – by
choosing market segments
– Small core workforce, limited workstations, low-engineered
solutions, 2D, low budget films
– Larger core workforce, upscaling capacity, large technology
infrastructure, R&D intensive 3D VFX projects
• Avoid pressures by manoeuvring within and across value chains
– Diversification
– Capturing IP, moving into production
• CCI theme connections: moving within and across GVC is an
important component of ‘business’ of being creative

8. Operational responses to intangible nature
of service delivery
• Stage 1: dialogue, careful costing, concept phase, preview VFX
work
‘I think once they went through that they were confident and they
felt that they could comment or they had an input on the final
production. I think that’s what they want’ (Canadian VFX firm
• Stage 2: work monitoring and early intervention
• Stage 3: communication with client
• CCI theme connection: organisational process innovations which
manage exchange relations are critical within service industries and
are an extension of business process modelling

9. Geography of VFX industry
• Increasing globalisation but
• Distance is a barrier
• Hollywood decides on global distribution of work
• Firms are not embedded in ‘local creative clusters’ involving
collaboration and knowledge sharing (highly political and
competitive relations within and across regions)
• Knowledge flows as much global as local
• Intense competition between regions
• CCI theme: cross-sectoral comparison of spatial network mapping