Creative Cow has a great article by Debra Kaufman on the crossroads of a Visual Effects Industry in Crisis. Well worth checking out. And a scary look inside the industry.
The whole flat bidding thing is the scariest thing, as jobs always get bigger and have more changes and if you don’t get overages eventually the expenses will kill a company and that is why so many are moving overseas where the labor is cheaper.
And it is not like Rythym and Hues is the first, this will continue, as it may prove too expensive to run an FX company in the current model. Maybe the studios just need to make their own companies on a per movie basis, though I don’t see that saving money either, as they will have to pay their own people!