On February 24, 2025, Technicolor Group, the parent company of renowned advertising production studios such as The Mill and MPC, announced the cessation of its operations due to severe financial difficulties. This decision will affect around 10,000 employees worldwide, with the closure of the U.S. offices of Mikros Animation, The Mill, and MPC Advertising in New York, Los Angeles, and Chicago.
Closure of The Mill, MPC, and Scanline VFX: A Hard Blow for the Visual Effects Industry
Official Statement from Technicolor
In an email to employees, global CEO Caroline Parot stated, “The company must face reality,” signaling the intention to initiate insolvency proceedings in various markets. Additionally, Technicolor’s UK division entered administration, making most of its 440 employees redundant.
Implications for the Post-Production, VFX Industry
This closure represents a significant blow to the post-production industry, given Technicolor’s and its affiliate studios’ importance in the visual effects and animation sectors. The rapid timing of the closure, scheduled for next Monday, has taken many employees and clients by surprise, leaving uncertainty about the future of ongoing projects and future collaborations.
Closure of Scanline VFX in Germany
Meanwhile, Netflix, owner of Scanline VFX, announced the closure of the studio’s German operations. Founded in Munich, Scanline VFX was more than just a workplace; it represented a space where visionary projects were born, and lasting friendships were formed. The closure of Scanline Germany marks the end of a significant chapter in the history of German visual effects, a company that shaped the industry through the pioneering work of founder Thomas Zauner and VFX supervisor Stephan Trojansky, setting new standards in Germany and beyond.
The Causes of the Crisis in the VFX Sector
Lack of Demand: One of the main reasons behind the VFX industry’s crisis is the decrease in demand for visual effects. Film studios, TV shows, and advertising agencies are reducing the number of projects requiring visual effects, putting pressure on large VFX providers. This decline in demand is the result of a combination of economic and industry factors.
Post-COVID Correction: During the pandemic, the VFX industry saw a surge in work due to the explosion of digital content and streaming platforms. However, this period of growth created a bubble that is now bursting, with studios and streaming services facing economic difficulties and reducing budgets for future projects.
The Impact of the 2023 Strikes: Long-lasting strikes by major actors’ and writers’ unions blocked many productions, creating a bottleneck that slowed the entire film and TV production cycle. As a result, projects that would have been completed in 2023 have been postponed, reducing the amount of work available for VFX professionals.
High Costs and Economic Uncertainty: Rising interest rates and global inflation have made it more expensive for film studios to finance projects, forcing them to be more cautious in their production choices. Projects requiring complex and costly visual effects have become less attractive, prompting production companies to seek more affordable alternatives.
The Rise of In-House VFX Teams: Another trend negatively affecting large VFX houses is the shift of many companies toward creating in-house visual effects teams. In the past, advertising agencies and small TV studios often outsourced VFX work, but now many prefer to handle these processes internally to reduce costs.
Reactions from the Visual Effects Community
Netflix’s decision has sparked widespread discussions, particularly on platforms like Reddit, where many industry professionals have expressed frustration and concern. This event highlights a worrying trend: large studios prioritizing cost-cutting over art, shifting production to cheaper markets, and neglecting the long-term consequences.
Scanline shutting down German operations
by u/Ok_Substance6759 in vfx
VFX Giant MPC and Parent Company Technicolor May Shut Down Amid ‘Severe Financial Challenges’
by u/no_longer_huhmann in movies
The closures of Technicolor and Scanline Germany raise questions about the future of the visual effects and animation industries, highlighting the need for sustainable business models in a constantly evolving sector. It is essential that productions return to focusing on the artists who bring projects to life, recognizing their talent, dedication, and vision that make immersive visual experiences possible.
How VFX Artists Can Tackle the Crisis
Support Independent Projects: Artists working in small production houses or as freelancers are trying to survive this crisis. If possible, supporting these professionals by purchasing their projects or collaborating with them can make a difference.
Diversify Skills: Another helpful strategy for VFX artists is expanding their skill set, exploring new areas like digital advertising or web animation, where the demand for CGI is growing.