The VFX firm DNEG is currently undergoing a consultation process that may result in around 5% of its global workforce being laid off. The layoffs are said to be focused on R&D teams and are a response to the ongoing challenged market conditions. Despite efforts to improve the situation, including a pay offer for staff last year, the company has not been able to escape the impact of the Hollywood strikes and the overall economic instability in the industry.
In the UK, where approximately 100 layoffs are expected, the union Bectu is actively supporting its members who are affected by the redundancies. Bectu boss Philippa Childs acknowledged the difficult year that UK film and TV workers have had and expressed solidarity with those facing job cuts at DNEG. Meanwhile, in Canada, where DNEG recently unionized via an IATSE branch, workers are receiving assistance through the process from both Bectu and IATSE Canada.
This is not the first time DNEG has had to implement layoffs in response to the global recession affecting the VFX sector. Last year, the company laid off around 70 employees from its Fitzrovia base in London. In an attempt to avoid further job cuts, DNEG introduced a controversial pay offer that required staff to take pay cuts of up to 25% or participate in a loan scheme. Despite offering additional options to employees, such as spreading the salary reduction over a longer period or compensating for lost wages with paid leave, the situation has not improved as hoped.
DNEG’s recent unveiling of a new facility, DNEG 360, in partnership with Dimension Studio for virtual production, comes amid a challenging time for the company. The VFX behemoth, known for its work on projects like Dune: Part Two and The Last of Us, has a history of success with Oscar-winning films like Inception and Tenet. However, the constantly changing economic landscape in the industry has presented obstacles for DNEG, leading to tough decisions like layoffs and pay cuts.
Despite posting impressive financial results for the year ending March 31, 2022, with revenues soaring by 33% and adjusted EBITDA surpassing $100M, DNEG’s economic outlook has shifted since then. The company’s plans to go public through a $1.7B SPAC deal in early 2022 were ultimately abandoned six months later, indicating the challenges it faces in the current market environment.
DNEG’s decision to implement more layoffs reflects the ongoing hardships faced by VFX companies in a tumultuous industry. As the company navigates uncertain economic conditions and strives to adapt to changing market demands, the road ahead may be filled with tough choices and difficult challenges. It remains to be seen how DNEG will weather the storm and emerge stronger on the other side.
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