VFX House Pixomondo Shuts Shanghai Office, Will Abandon Film (Exclusive)

Visual-effects company Pixomondo will abandon much of its film business after shutting its Shanghai office in the wake of closures in London and Detroit, the company told TheWrap.

CEO and founder Thilo Kuther (pictured below) said Pixomondo, which recently completed work on the Tom Cruise action film "Oblivion," has just laid off roughly 20 animators and artists in the Shanghai office. About a half-dozen employees were moved to its Beijing office, he said.

Most significantly, Kuther told TheWrap that Pixomondo, based in nearly a dozen cities worldwide, is moving away from Hollywood projects because of the challenges facing the visual-effects business.

"We are revamping the whole thing, moving on," Kuther said. "We are taking our business further from here. The feature side will be part of it, but we're moving on."

Read also: After Rhythm & Hues, Visual-Effects Community Asks: What Now?

He said Pixomondo would be focusing on design and conceptual work, which he has been "ramping up for the last three years."

The decision is not surprising. The post-production and visual-effects industry has been decimated in the past two years, from the fire sale of Digital Domain to last week's cliffhanger of a bankruptcy sale of the Oscar-winning Rhythm & Hues. Last week, Tippett Studio laid off 40 percent of its workforce, about 50 employees.

Also read: Tippett Studio Chief on Layoffs: 'Why the Hell Doesn't California Do Something?'

In between come continual reports of layoffs, cutbacks and shutdowns elsewhere, largely due to movie studios finding cheaper labor abroad and moving productions constantly to chase global tax incentives.

With about 850 employees based in nearly a dozen global cities from Santa Monica to Stuttgart, Kuther insisted that only about 30 percent of his business came from Hollywood animation and visual-effects work, with more revenue coming from corporate clients.

He disputed rumors that Pixomondo was near bankruptcy. "We're not closing. We're not bankrupt," he said, adding that he has had to continually refute reports of his demise.

Also read: Rhythm & Hues Sale to Prana Approved by Judge

"I believe in the philosophy that every seven years your company has to reinvent itself," he added. "For two to three years you build up, five years you run your business, and six to eight you come up with a new idea and the business has to adapt. "

But adapting to the visual-effects business has been particularly challenging. Skilled Asian labor has made it very hard for companies based in the United States and Europe to compete. An affiliate of an Indian-American company, Prana, bought Rhythm & Hues out of bankruptcy last week.

Also read: Digital Domain CEO: We Can Still Save the Visual-Effects Industry

Still, Kuther insisted his decisions had nothing to do with this.

"I'm not related to that R&H story. I never opened a place because of rebates -- not really," he said. "If I open an office in London, I'm not looking for L.A. work in London; I'm looking for local work. I never opened these locations for rebates."

However, the company's website belies this attitude. Although film may represent a minority of the company's work product, it is the major subject of its website's home page, which prominently mentions winning an Oscar for working on "Hugo."

According to the site:

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