First, catch your (CGI) dragon: hope that visual effects breakthrough can reanimate UK film industry | Visual effects (VFX)

Even the most talented visual effects artists would struggle to make their profession sparkle right now.

Technicolor, one of the most famous names in movies, went into administration last week, a symptom of a malaise hanging over a British film industry hit by budget cuts and competitors overseas.

Yet a London startup is about to unveil cutting-edge technology that it believes will help reinvigorate the UK’s fortunes.

Joseph Steel, co-founder of Visualskies, which has worked on movies including Paddington in Peru and Napoleon, and his team have found a way to allow camera operators to see onscreen graphics while they are filming in the real world. “If a dragon is landing on a beach, you’ll be able to see that in your monitor,” Steel said. “So the camera person will be able to react to the animation he’s seeing, instead of imagining it.”

Computer-generated imagery has transformed TV and movies at a dizzying pace already. The HBO show House of the Dragon filmed many of its scenes in front of a wall of LED screens so that the actors could react to flying through the air rather than guessing in front of a greenscreen – a process so frustrating that Sir Ian McKellen said it made him consider giving up acting during filming of The Hobbit.

But that kind of virtual production is less feasible for large-scale scenes or aerial shots which directors prefer not to do in a studio. Visualskies plans to show off its solution this month at a reservoir in London.

Marty Waters, a VFX supervisor responsible for overseeing effects in movies including Venom: Let There Be Carnage, starring Tom Hardy, said the technology would have “saved a lot of time and money” on previous movies by preventing the need to reshoot scenes or use expensive post-production techniques if a camera operator hadn’t focused on the right place or had used the wrong lens.

The Visualskies technology, funded by a £250,000 grant from Innovate UK, comes as VFX faces a crisis. The UK film industry had a “really big boom” as Netflix, Amazon and Apple TV hunted subscribers after the Covid lockdowns, according to Neil Hatton, chief executive of UK Screen Alliance, which represents film production firms. “Then Wall Street said, ‘Hey guys, we’d like to make some profit.’”

Production was cut back in 2023, coinciding with strikes by Hollywood writers and actors. “We had this gradual tailing off, then this extra factor came in and it just went off a cliff,” Hatton said.

He is optimistic that there are “green shoots” of recovery but the casualties have been firms such as Technicolor, which worked on films from Disney’s 1940 Pinocchio to last year’s Mufasa: The Lion King. It had too much debt to cope with “two black swan events in the last five years”, he said.

There are new threats, too. On Friday, OpenAI launched its Sora tool in the UK, allowing subscribers to generate realistic video footage from a prompt. “We’ve been using AI or what we used to call machine learning for a long time,” Hatton said.

“Sora is interesting but not incredibly useful. The current generation of AI is fairly undirectable. You’ll get something interesting from an initial prompt, but when you want to iterate it in a particular direction, it’s difficult to do.”

Technicolor – used for the first colour movies – is not quite the original visual innovation. That is generally considered to be Georges Méliès 1902 film A Trip to the Moon, which created the illusion of a bullet-shaped spacecraft being fired into the face of the moon.

Film-makers then focused on special effects in front of the camera, such as miniature models, until the first onscreen computer graphics system was invented in the 1950s, followed by the greenscreen.

The innovation used by Visualskies relies on technology it already uses to create 3D models of real objects, places and people, which can then be manipulated using computers. This extends beyond movies, with 3D models being made of historic buildings such as the House of Parliament. But for the movie industry, these scans are a good insurance policy.

“If your actor gets injured, or you can’t shoot in the environment any more, or you forget to shoot something, you can still fulfil your shots,” Steel said.

“We’ve had clients who call us up two years later and ask if we still have that data. ‘Please, we need it because otherwise we can’t finish this sequence’. It has happened quite a lot.”