ILM Feeling the Effects of Digital Filmmaking

In a pivotal scene in “Star Wars: Episode II Attack of the Clones,” the artists of special effects giant Industrial Light & Magic were called upon to create a massive Roman-style amphitheater for the execution of the film’s heroes.

Initially, they relied on traditional methods, carving a miniature version out of foam blocks and painting in the details by hand. But construction flaws were picked up by the high-definition digital cameras that director and ILM owner George Lucas used for the film.

That forced ILM to go back and explore new technology and methods to match the standards of digital filmmaking--a costly process of trial and error that the company repeated scores of times while creating “Episode II.”

“We had to revamp what we do from the ground up,” said Jim Morris, president of Lucas Digital Ltd., the parent company of ILM.

Hailed as the grandfather of modern movie magic, Industrial Light & Magic has found itself in a period of profound change for its technology and day-to-day business.

The company, born out of the original “Star Wars,” has been among the first to feel the financial and technological effects of the digital revolution in filmmaking, thanks to the latest “Star Wars” chapter that starts Thursday.

The evolution of digital film production--as computers replace the traditional photochemical process--has forced ILM and the effects industry as a whole to rethink nearly everything it does, from the paint it uses to the computers it buys.

It has been a key transition for the privately held company. Though the company says it has been consistently profitable over the years, the changes are coming on the heels of last year’s business triple-whammy: A potential actors’ strike, the dot-com advertising bust and a general economic slump after the Sept. 11 terrorist attacks led to a short-term workload slump for all of Hollywood’s digital effects players.

Rival company Digital Domain, based in Venice, has cut its staff over the last few years. Walt Disney Co. said it will close its effects unit, Secret Lab, by 2003.

ILM, the largest special effects shop in the business, plans to shutter its TV commercials unit, ILM CP, by the end of June.

Despite the slump, the competition remains fierce. Smaller, scrappier rivals who rely on cheap and powerful personal-computer tools are nibbling away at the edges of the empires of the large effects houses that once dominated the scene.

“Before, we could take advantage of our scale. Now, everything’s extremely competitive,” said Gail Currey, vice president and chief operating officer of ILM. “It’s not an easy transition we’re making. But to keep everyone happy and working, it’s the transition we need to make.”

Shop Has Tied Its Fate to Latest Technologies

It’s not the first time ILM has had to reinvent itself. From its renegade roots of building battleships to fly across a Van Nuys airplane hangar, to the modern-day ascension of giving birth to virtual dinosaurs and talking robots, ILM has tied its fate to the latest technologies.

Back in the 1970s, Lucas landed a deal to shoot the original “Star Wars.” Looking for a workshop to handle the special effects, he was shocked to realize that none existed. At the time, studios had scaled back their effects teams to skeleton crews.

Lucas decided to fund his own shop. He hired John Dykstra, a young designer who had experimented with cameras controlled by a computer, to put together the original ILM team and located them in the only place they could find that was cheap and spacious--an abandoned airplane hangar near Van Nuys Airport.

The work was expensive, and Lucas dropped millions of dollars into the fledgling company to bolster it during its early years.

With the box office success of “Star Wars,” Lucas opted to expand ILM and relocated it closer to his offices in Northern California. Today, ILM sits disguised as a series of garages and office buildings that still boast the name of its previous owner, “The Kerner Co., Optical Research Lab.”

Inside, light sabers and a human-size Darth Vader suit line the hallways. When the original “Star Wars” trilogy craze reached its peak, fans routinely showed up at ILM’s doors and rummaged through the company’s trash.

As the years passed and computer technology evolved, ILM expanded its portfolio of tools.

Creatures from the first trilogy were made with bulky costumes and clay miniatures. Today, computers rule the back lot. Hundreds of ILM digital artists, modeling gurus and computer programmers slaved for months on “Episode II,” transforming hours of computer images into a seamless, lush world populated by unearthly creatures.

Of the 2,000 visual effects shots that make up “Episode II,” a mere 100 remained untouched by ILM’s effects crew.

“This is a digital movie with guest human appearances,” Morris said. “No one’s done that before.”

Digital Process Costly but Beneficial

The process of digital filmmaking proved to be harder than it sounded. Company officials declined to discuss ILM’s financial specifics and would not talk about how much their work on “Episode II” cost.

Yet the process was clearly expensive, as the project was riddled with unexpected problems, starting with data management. As scenes were shot, staff would transfer the digital images into a massive computer database. Within weeks, millions of images cluttered the database and workers were confounded. Trying to find a specific scene became impossible.

ILM staff had to create a software program that helped workers track particular scenes as they made their way through the production process.

Yet there also were unexpected benefits, such as the process of viewing the daily rushes. Typically, filmmakers will send the footage shot each day out to a processing lab. After the film has been developed, the footage is returned.

It’s a time-consuming process, one that is nearly eradicated with high-definition cameras. The reason is simple: What you see on a digital camera is what you get.

“It saved a lot of time,” said Andy Hendrickson, senior technology officer at ILM. “In our business, time is money.”

Such financial shortcuts bolster an industry in which profit margins are paper-thin and competition is intense.

Nearly every film, television show, commercial and music video requires some sort of electronic modification. For many of these projects, the job is relatively small, such as clearing up the complexion of a starlet or erasing a boom mike that accidentally dropped into the camera’s view.

The availability of powerful PC tools has enabled smaller shops, which can under-bid big houses such as ILM, to go after these low-end jobs.

“Competitors spring up like dandelions,” said Richard Edlund, visual effects guru who worked at ILM during the early “Star Wars” films. “You can get into the business with a checkbook. You can buy off-the-shelf hardware and software and start working.”

Smaller duties come with a smaller price tag, and no need for ILM’s expensive expertise. Filling the gap is an expansive boutique industry in Southern California, where such companies as Hammerhead Productions in the San Fernando Valley employ digital artists who can work for cheap from home.

ILM’s abandonment of its TV commercials venture was a rare defeat for a company that has set the pace. At one time, the unit brought in 20% of the company’s annual revenue, Morris said.

Instead of being the electronic answer for all Hollywood projects, ILM says it has focused on larger, flashier projects, giving the smaller jobs less priority.

Even on this front, it faces new rivals hungry for glory, including New Zealand’s WETA, which worked on “The Lord of the Rings” series, and Bay Area-based Escape, which is working on “The Matrix” trilogy.

But ILM has its own blockbusters in the works. As “Episode II” finished, the company already was involved with projects, including the “Hulk,” “Men in Black 2” and “Terminator 3” films.

Next year, it will begin work on “Star Wars: Episode III” and may face new hurdles as the digital stakes are raised again.

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ILM

Name: Industrial Light & Magic

Headquarters: San Rafael, Calif.

Job: The largest visual effects house in the movie business

Top executives: Owner, George Lucas; Jim Morris, Lucas Digital Ltd. president

Big projects: The ‘Star Wars’ series, the ‘Indiana Jones’ series and the ‘Jurassic Park’ series. Current projects include ‘The Hulk’ and ‘Terminator 3.’

Employees: 1,300

Oscars: Since 1977 ILM employees have worked on 14 movies that have won the Academy Award for best visual effects. Employees also have worked on technologies that have nabbed an additional 16 Academy Awards for scientific and technical achievements.