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Indies Turn to Features

Independent animated feature film production is on the rise as costs come down and self-financing becomes a reality.

The producers of Pinatas (left) and Delgo took the self-financing route instead of shopping to the studios. © H2V Entertainment (left) and © Electric Eye Entertainment 2004. All rights reserved.

The producers of Pinatas (left) and Delgo took the self-financing route instead of shopping to the studios. © H2V Entertainment (left) and © Electric Eye Entertainment 2004. All rights reserved.

A growing number of independent animated films are in production, with budgets ranging from less than $5 million to more than $20 million. As the price of animation production has decreased, more producers are able to self-finance their properties and maintain creative control. Still, they face challenges in securing the exposure they need to succeed.

Producers that are able to self-finance and therefore dont require distributor fees to finish their films are in a good position to forge a lucrative and exposure-generating distribution deals later, say producers. Securing the best deal is not limited to maximizing monetary gain; independents also seek the widest possible exposure for their properties. Key distribution is very important, says Henrique Vera, ceo/president of H2V Entertainment in Canada. We dont want to compromise that. H2Vs Manga Latina Productions has three $5 million, 2D features Monica Made in America, Killer on the Loose and Piñatas in post-production.

The main reason producers are drawn to self-financing is that it allows the filmmaker to maintain control over creative decision-making. I couldve sold my script a dozen times in Hollywood, says John Michael Williams, director and writer of the independent feature The Easter Egg Escapade, animated by Loucas Films in Krakow, Poland, and based on his childrens book of the same name, illustrated by Pamela Levy. But I wanted to tell this story. What I loathe about Hollywood is you have business people evaluating creative products to decide whats commercially viable. Williams has retained First Look Studios as the films distributor and says First Look is willing to partner with a larger studio to enable a sizable theatrical release; discussions are ongoing with two majors.

The reality for many independent producers is that self-financing is often their sole option. We took the only path we could, says Marc F. Adler, executive producer/co-director of Delgo, a 3D feature from Fathom Studios in Atlanta, Georgia. We couldnt get distribution from the get-go, he noted, explaining that it is difficult for an indie to secure distribution before a film is finished. Its possible, but its highly unlikely. Fathom was able to generate enough funding from private individuals to complete the film and has hired an agent to handle distribution.

David K. Lovegren, producer of Hoodwinked observes that affordable software, hardware and RAM has given rise to independent animation production.

David K. Lovegren, producer of Hoodwinked observes that affordable software, hardware and RAM has given rise to independent animation production.

Of course, animated features, especially those with higher budgets, continue to be financed in the traditional manner, with studios coming on board early and distribution fees contributing toward production costs. Classic Media in New York City plans to go this route for some of its properties, including Underdog, set up as a hybrid live-action/CG feature with Spyglass Entertainment, and an all-CG Mr. Peabody and Sherman with Sprocketdyne Entertainment. When you tie up with the studios and studio-based producers, its more driven by the Hollywood moviemakers, says Evan Baily, Classic Medias svp of production and creative affairs. Thats a whole different business.

Classic also plans to produce two to three animated movies per year independently, including its nearly completed CG-animated Peter Cottontail: The Movie, done with Kapow Pictures and Ambience Entertainment, both in Sydney, and the 2D Frosty, animated by Studio B in Vancouver.

Threshold Entertainment is producing its first fully animated CG feature, Foodfight!, which takes place in a grocery store and stars every branded icon youve ever met, including Charlie Tuna and Mr. Clean, according to Larry Kasanoff, chairman/ceo of Threshold Ent. in Santa Monica, California, and its CG animation subsidiary, Threshold Digital Research Labs. The studio has signed an as-yet-unannounced distribution deal with a major studio for the $65 million movie. Like some smaller independents have done, Threshold started production before it had the distribution deal in place. We broke the number one rule of a producer; we gambled our own money, Kasanoff said.

Kasanoff believes theres room in the market for both big-budget studio pictures of the type Threshold does, and low-budget, self-financed, independent features. If you look at history, new-and-different works, and chasing after the tried-and-true never does. If its a good movie, its viable. Threshold, which does effects, theme park rides and animated primetime shows as well as features, is about to announce a slate of smaller-budget films for direct-to-video distribution.

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The current stable of stars at IDT stars include Casper Van Dien (The Fallen Ones), Danny Trejo (All Souls Day), Manga's Ghost in the Shell, the Tony Hawk feature, Scary Godmother, "Stan Lee Presents," Rob Zombie's El Superbeasto, Todd McFarlane's Spawn and Harry Connick Jr. © IDT Ent.

Rise in Independent Productions

Several factors are behind the increasing number of independent animated features in production, in addition to creators desire to maintain control over their properties. First, many see a market opportunity, as CG movies generate top box-office business. There are only a few people making theatrical CG movies, so theres room for a strong independent, Rick Mischel, ceo of IDTs foreign sales company, IDT Entertainment Sales (offices in Los Angeles and Vancouver), and Mainframe Entertainment, IDTs CG animation studio. IDT was started as a company that recognized there was a need in the marketplace for high-quality CG-produced animated movies.

IDT has a slate of theatrical and direct-to-DVD films in development. [The properties] will be financed and owned internally through the asset base of the company, says Mischel. IDT recently signed a deal with Stan Lees POW! Entertainment for six feature-length movies for TV and DVD release.

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Meanwhile, costs are coming down to the point that independent studios can generate funding to complete a picture themselves, without the involvement of a studio. The price and performance of PCs have changed dramatically, and made it possible to do it independently, says David K. Lovegren, one of three producers of Hoodwinked: The True Story of Red Riding Hood, a $20 million Kanbar Entertainment and Blue Yonder Films co-production. Lovegren notes that a Circuit City-purchased computer can run Maya better than Silicon Graphics machines could just a few years ago. With the cost of software, hardware and RAM all coming down, the investment isnt horrific. We can do it at a faster pace and lower price point than the studios. Hoodwinked is being animated at a 5,000-square-foot studio in The Philippines, staffed by 20 animators from a defunct studio in that country.

The cost of technology is certainly coming down, agrees John Eraklis, president of Exodus Film Group in Venice, California. It puts [production] in reach of small studios like ours. Exodus is self-financing Bunyan and Babe, a $20 million to $25 million live-action movie with a CG-animated character (Babe the Blue Ox), and Igor, a 3D film about a town full of mad scientists. Exodus retains worldwide rights to both pictures.

Even bigger productions are taking advantage of new technology to lower costs. Threshold signed a deal with IBM two months ago that allows it to use off-site IBM machines for on-demand rendering, saving the studio time and money. It might be a $65 million movie, and thats a lot of money, says Kasanoff about Foodfight!. But thats half the price of our competitors films and it looks great.

The producers gambled their own money on Foodfight! and now are about to announce a distribution deal with a major studio. © Threshold Digital Research Lab.

The producers gambled their own money on Foodfight! and now are about to announce a distribution deal with a major studio. © Threshold Digital Research Lab.

Of course, the existence of low-cost production methods doesnt guarantee quality or success. Its not about showcasing technological wizardry, its about telling a story, says Adler. The barriers to entry are in the execution. If its a 90-minute special effect, people arent going to embrace it.

The real life force in animation is going to come from the choices the artist makes, Baily concurs. And thats not necessarily cheap. Baily believes the driving force behind the proliferation of independent animated features is that theres an enormous amount of distribution chasing product. He points out that trends such as cocooning and home theater are leading to a greater appetite for content, including animated features.

The wide range of exploitation opportunities for independent films, from DVD to licensing, enhances the potential for ancillary revenue streams. This increased profit potential helps small companies attract investors, since all parties have a chance to make money. You dont need the big machine any more, Vera says, noting that doing animation festivals and DVD alone can generate a profit, as well as needed exposure.

Non-Theatrical Distribution

While most producers have theatrical distribution as their objective and are finishing their films for this medium, they realize they may have to look at other options such as television or direct-to-DVD. In some cases, alternative distribution may even be preferable, if it offers increased exposure or superior financial potential.

You can only make so many theatrical commitments in a year. Its a totally different economic model, says Mischel of IDT, which is designing its Stan Lee properties, starting with Whirlwind and The Chameleon, for video and television, with completion expected by fall 2005. With TV and video, you can produce on a shorter timeline and get them out in the marketplace. Another consideration is that IDTs video subsidiary, Anchor Bay, needs product. Were focused on filling that pipeline, Mischel says.

Self-financing Bunyan and Babe (left) and Igor allows the producer Exodus Film Group to retain worldwide rights to both pictures. © 2004 Paul Bunyan, Llc. All rights reserved (left) and © 2004 Exodus Film Fund I Llc. All right

Self-financing Bunyan and Babe (left) and Igor allows the producer Exodus Film Group to retain worldwide rights to both pictures. © 2004 Paul Bunyan, Llc. All rights reserved (left) and © 2004 Exodus Film Fund I Llc. All right

Malibu-based Earthworks Entertainment opted to sign with Cartoon Network and Warner Home Video for its 70-minute, theatrical-quality 2D feature Nine Dog Christmas, which was self-financed by rights holder JRS Properties. (A sequel, Nine Dog Night of Fright, is in production.) Peter Keefe, Earthworks ceo, notes that, as a rule of thumb, a theatrical feature needs to earn four times its negative cost at the box office to break even. There are a lot of people dancing down the boulevard of broken dreams, he says.

Some international territories are likely to release Nine Dog Christmas theatrically, primarily as a promotion to boost home video sales and/or TV viewership. For example, in India, local broadcasters sponsor theatrical releases in malls while, in Japan, audiences sometimes watch DVDs on the big screen.

For us, the focus is the properties, the properties, the properties, says Baily, noting that Classic Media is screening the finished Peter Cottontail for theatrical, home video and television distributors worldwide and then will weigh its options. Sometimes the best path is a feature film, but sometimes it isnt. Were coming at it from the standpoint of whats the best way to get our properties out to the consumer.

H2Vs Manga Latina films will be released theatrically in the co-producing countries (Canada, U.K. and Spain) but are likely to see other forms of distribution elsewhere in the world, according to Vera. The U.S. is a particularly difficult territory for an independent to gain meaningful theatrical distribution. We aimed for theatrical and theyre finished for theatrical, Vera says. But [U.S.] screens are more used for the big blockbusters.

Having no theatrical distribution is sometimes better than securing only narrow exposure and then getting lost. While it is possible that Hoodwinked will be released first on video despite being theater-ready, produced in HD with 5.1 surround sound Lovegren is hoping for a 2,000-screen release. We need that marketing machine behind it, he says.

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Cartoon Network and Warner Home Video will release Earthworks Entertainment's Nine Dog Christmas, which was self-financed. Peter Keefe, Eathwork's ceo, feels most producers don't know how to market and need some big company muscle to get the product out to consumers and the trade. © 2004 JRS Properties Llc.

Challenges for Indies

While it is relatively simple to generate $35 million from private investment to make five $7 million films, producers need strong connections and an industry pedigree to get the films out to the trade and consumers. Producers dont always know how to market, Keefe says. The reason for the under-exploitation of these good little films is that they get lost in the translation. Signing an agent or distributor doesnt guarantee the film will break theatrically and, if it does, it will typically be in about 700 U.S. theaters (versus close to 4,000 for The Incredibles). If it languishes, its gone, Keefe says.

There are rent-it options for distribution. The independent producer or studio handles and finances production and advertising (unlike with a traditional studio arrangement), while the studio physically distributes the film for a lower percentage. You have to arrange the additional funds and do the whole magilla yourself. You drive the train, Lovegren explains. He believes this will become a more common option as studios look to fill holes in their schedules at low risk and low cost, and as independents seek a viable distribution window and are willing to self-finance not only the production but marketing as well. Its sort of a mutual admiration society in this respect.

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Independents must also do some marketing even during the production process, in order to prime the property for its introduction to the industry and to moviegoers. Fathom has been creating buzz for Delgo by uploading digital dailies on its website, getting hundreds of thousands of views each month. By the time we have the release, well have built this exposure in the community, Adler explains.

In addition to an increased concern for marketing, independents need to find creative low-cost ways to add value to the production itself. Exodus wanted brand recognition for the films it was developing, for example, but as a small company it couldnt afford exorbitant licensing fees. It opted to develop stories around well-known, public-domain characters such as Paul Bunyan.

It can be difficult for independents to find good stories and ideas as well. Most things go to the big players first and we have to wait for them to trickle down to us, Eraklis points out. Yet the majors can pass on good ideas, leaving independents to take advantage. Igor was one of those diamonds in the rough that we were lucky enough to get our hands on, reports Eraklis.

Securing talent can be a challenge for indie filmmakers, especially if they lack connections or a track record. The casting was cumbersome, especially without distribution in place, says Adler. Rather than faxing an offer letter to voice-over talent, as is traditional, the studio created a casting kit with a teaser showing what the property looked like, a script, character cards, etc., and sent it to agents. You have to go the extra mile, Adler explains, pointing out that having one or two big names on board makes it easier to secure additional talent.

In an early marketing ploy, Marc F. Adler of Fathom Studios, is uploading digital dailies of Delgo on its Website, getting hundreds of thousands of views each month.

In an early marketing ploy, Marc F. Adler of Fathom Studios, is uploading digital dailies of Delgo on its Website, getting hundreds of thousands of views each month.

In some cases, luck plays a role. Williams went into New Yorks Carnegie Deli to get out of the rain and met actor Joe Pantoliano and his daughters, who were interested in the books he was carrying. That chance encounter led to Pantoliano being signed to voice the main villain in The Easter Egg Escapade. It was sheer happenstance, says Williams.

Success Factors

One criterion for independent film success is that the subject fits the format. Baily notes that the original Peter Cottontail TV special produced by Rankin-Bass, on which Peter Cottontail: The Movie is based, was a great piece of material, funny, quirky, silly, with stuff in there for kids and adults. But Classic felt it could do more with the property and give it a fresh take. There was enough in there to warrant the bigger canvas of a movie.

Producers stress that successful properties must be multifaceted; that is, they must appeal to audiences of all ages and in all countries, as well as work in multiple media and distribution channels. If a property is to be financially viable, especially as a franchise, it must work globally, work in licensing and also stand the test of time, Keefe says.

Many of the independent films in production have been able to attract brand-name voice actors and other creative personnel, as well as business executives and partners with studio track records. Having such experience is critical. If you go down this path, make sure you have people who have the talent, Eraklis advises.

Finally, it is important to keep the business aspects of filmmaking in mind. Be flexible, but at least have a plan. Have a notion of what you want to accomplish, recommends Lovegren. As independent producers, we have the passion for the film, but not always for the film business. And it is a film business, first and foremost. You have to balance business and art. You can be a starving artist, but its hard to be a starving filmmaker.

Karen Raugust is a Minneapolis-based freelance business writer specializing in animation, publishing, licensing and art. She is the author of The Licensing Business Handbook (EPM Communications).

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