DNEG, a prominent VFX firm known for its work on blockbuster films like Dune: Part Two and The Last of Us, is facing a tumultuous period that has resulted in hundreds of layoffs. This article will delve into the recent developments at the company, the reasons behind the layoffs, and the broader market conditions that are contributing to the challenges faced by DNEG.
Reports indicate that DNEG has initiated a consultation process in the UK and Canada, where around 5% of the company’s global workforce, totaling approximately 10,000 employees, may be at risk of losing their jobs. The layoffs are said to be particularly impacting the R&D teams within the company. This move comes as a response to the continued difficulties in the market, which have persisted even after the resolution of the Hollywood strikes.
In the UK, sources suggest that about 100 employees could be affected by the layoffs. Philippa Childs, Bectu boss, has expressed solidarity with the workers, emphasizing the union’s commitment to supporting members who are facing redundancies. She acknowledged the challenging times faced by the industry, with many businesses, including DNEG, being forced to make tough decisions. In Canada, where DNEG recently unionized under IATSE, the branch is reportedly assisting workers through the layoff process.
This isn’t the first instance of layoffs at DNEG, as the company had previously let go of around 70 employees from its London office. To mitigate further job losses, DNEG introduced a controversial pay offer to its staff, which included options like pay cuts, reduced hours, or compensation in the form of additional leave. However, these measures have not been enough to offset the challenging economic conditions faced by the company and the VFX sector at large.
While DNEG had seen positive financial results in the past, including a 33% increase in revenue to $409 million in the fiscal year ending March 31, 2022, the economic landscape has shifted significantly since then. The company’s adjusted EBITDA exceeded $100 million, indicating a strong performance prior to the recent downturn. DNEG had even attempted to go public through a $1.7 billion SPAC deal in early 2022, but the plan was scrapped six months later, reflecting the uncertainties in the market.
DNEG’s decision to implement layoffs reflects the broader challenges faced by the VFX industry as a result of market conditions and other external factors. The union support and responses from both the UK and Canada highlight the importance of employee welfare during such turbulent times. As DNEG navigates through this difficult period, the company will need to adapt to the changing landscape and make strategic decisions to ensure its long-term sustainability in the industry.