system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: Why is the visual effects industry doing so poorly?

I'm an animation student who wants to go into the film industry. I know that the visual effects industry has been doing pretty bad, and within the last few weeks it has been getting attention due to: 

1. Rhythm and Hues, one of the largest and best VFX studios in the US filing for bankruptcy. 

2. Protest at the Oscars, and Rhythm and Hues being cut off the stage in the middle of their speech (their chance to get their voice heard) after they won Best Visual Effects for Life of Pi.

Rhythm and Hues has seen the worst of it. But seemingly all VFX studios, whether they're in LA, Canada, or the UK have been doing pretty bad. So what's going on with the VFX industry? I've heard a lot of words going around. Outsourcing, globalization, tax incentives (how do those work?), unions. What the heck do these words mean and what is happening to the VFX industry? Why is it that films are more and more utilizing VFX, yet the industry is getting worse and worse?
gpt
As far as your point #2 goes, ignore the conspiracy-theory crowd. That guy was cut off because he went *way* over the allotted time. If anybody thinks he was cut off because he was about to spill a big secret, they're kidding themselves.

But back to your larger point, the VFX industry is collapsing because of a simple labor surplus. For fifteen years now we've been breeding compositors and roto artists and riggers and lighters by the tens of thousands, bringing up these kids who think they're gonna get a sweet job playing with a computer all day making dinosaurs or fighting robots or whatever. Despite the fact that demand for that kind of work is at an all-time high with no sign of plateauing, the *astonishing* oversaturation of the supply side has driven the price down below the point of sustainability for the big, expensive houses like DD and Rhythm.

Basically, you're seeing the collapse of a speculative bubble. It's just one in which the speculation was all on the supply side: "I love computers and sitting in the dark for sixteen hours a day. I'll learn Maya and be an animator because there's *always* gonna be work for me there!" Now that the demand is overserved, the price has dropped out, and the bubble's collapsed.

The fix is for six out of seven VFX artists to give it up and go be baristas for a few years. Which is happening, since it's no longer possible to make a good living in VFX in the expensive global northwest. Once the supply-side oversaturation resolves, the market price will stabilize and it'll be possible to stay in business as a VFX facility again.

(Meanwhile, VFX facilities need to diversify *yesterday.* If you're running a VFX house and you're getting the lion's share of your revenue from three shows a year, you are about to be homeless, and you need to panic.)