George Lucas once said that "A special effect is a tool, a means of telling a story. A special effect without a story is a pretty boring thing." Case in point, The Phantom Menace? I was reminded of this quote when I saw the billion-dollar grossing Avatar. Is it impossible to make a special-effects-driven film with a compelling story? It always seems that one must suffer for the sake of the other. In my opinion, Avatar was beautiful to watch and perhaps the most ridiculous story I have ever seen.
I personally have never directed any film beyond home movies, but I know that a huge amount of work goes into even a small budget film with no special effects. Incorporate special effects and the complexity must rise exponentially. With an effects-laden film, the burden on the director is enormous. He (because, let's face it, most effects-driven films are directed by men) has to communicate his vision to all of the cast and crew, manage their work, and tie it all together nicely. That's a crazy job for even the most talented director.
In the last 20 years, the best example of where the story for effects sacrifice has not been made has been The Lord of The Rings (LOTR). Let's take that film and two others as examples for discussion--the aforementioned Star Wars: The Phantom Menace (TPM), and District 9. LOTR and TPM had a springboard that completely original effects films like District 9 do not---their visions have already been well documented. Do you have any doubt that most of the key cast and crew (i.e. cinematographer, effects supervisors, actors) of LOTR and TPM hadn't been exposed to the prior books and films in the canon? This fact alone should have made it easier to bring the film's vision to the screen. Yet, the general consensus is that TPM was a terrible film. Why? Well, it could be that Lucas managed to achieve his vision for TPM but that his vision was simply not compelling. Have you ever watched the special features on TPM DVD? It's all about Jar Jar and the freaking pod race. If Jar Jar and the pod race were Lucas' ideas for the foundation of the film, then you could argue that he succeeded. I would also argue that the film ultimately suffered a death by greenscreen. What little time Lucas spent on casting (Jake Lloyd blew chunks) and character development, the actors continuously looked lost and disoriented because of the situation they were placed in. It's no wonder that Liam Neeson almost retired from acting as a result.
District 9, on the other hand, didn't have any of those problems. It was effects-laden (though with a smaller budget, much less so than LOTR or TPM), yet it managed to present director Neill Blomkamp's vision and great character development amid the whizbangery. Ironically, the effects did create some awkward moments--some of the early shantytown-clearing scenes shared between humans and aliens were clunky and choppy. Ultimately, this story about the transformation (physically and psychologically) of the protagonist, Wikus Van De Merwe, was fully realized. Blomkamp wisely allowed us to spend time with him without constantly surrounding him with smoke-and-mirrors, which would have distracted from the story and the actor's performance. It is hard to quantify, but the priorities of Blomkamp come into play here as well. There was clearly a lot of attention played to the script and political overtones--attention that would have been removed if Blomkamp was more interested in blowing our minds by blowing stuff up.
So, how did LOTR arguably get it right? It was far from low budget. It was loaded with special effects, and the three films together were probably the largest scale movie production in history. I don't have enough personal insight into the production to speak to this, but I think that there are three reasons that director Peter Jackson was able to get it right with LOTR--separating performances from post-production, having the proper scope to tell the story, and having a visionary director.
The three films in the LOTR trilogy were filmed as one long production over the span of eight years. Having that amount of time to dedicate surely paid dividends in the battle of story versus effects. Principal photography of the three films lasted 274 days (source), which must certainly have had the side effect of allowing the actors to more deeply inhabit their characters and understand the relationships between characters. Also, undertaking the principal photography of the three films all at once certainly enabled Jackson to concentrate his energy on performances, saving his attention for the massive effects productions later. Still, Lucas showed that having a trilogy format doesn't ensure success on that score. And if The Matrix and Back to the Future sequels told us anything, it is that filming sequels together does not alone translate into better films.
Another way that LOTR got it right--telling the story over three films. Had the LOTR treatment been limited to one or two films as was originally planned, they certainly would not have been as effective, as Jackson would have been forced to spend every moment furthering the plot at the expense of characterization. This is not to say that in order to create a balance of effects and story, once needs to be given the creative freedom to make an 6 to 8-hour film. LOTR as an body of work simply demanded that. With three films and each film being well over two hours (three for the extended cut DVD versions), it allowed Jackson the creative freedom to deeply explore the characters and their relationships. District 9 was a much simpler story and was able to achieve its vision in one tight film.
Peter Jackson is the additional wild card here. He is a uniquely gifted filmmaker who had the perfect combination of a compelling vision and the ability to manage a complex production. In contrast, Lucas, in my opinion, has a limited vision and is only able to manage effects well, not actors. James Cameron has been hit and miss. When he has been able to craft a vision and manage it onto the screen, he has created masterpieces like Aliens, Terminator, Terminator 2, and arguably Titanic. When he misses on vision or management of vision he has produced films where effects have clearly overwhelmed story like The Abyss and Avatar. That is not to say that Jackson is perfect--he did make a mediocre King Kong. Certainly other pieces have to fall into place--like in the case of the LOTR, a willingness on the part of a studio to dedicate a huge budget to a project up front. By the way, all of these directors (and Blomkamp on District 9) had a lot of input into the screenplays of their films. This is probably part of what it takes to build a vision.
In the future, perhaps acting schools will teach courses on "acting on greenscreens" or "your motion capture self" so that less talented directors will be able to produce higher quality effects-driven films. Until then....