In 1979, there was also a very limited theatrical run of another extremely bizarre puppet feature from Japan. Takeo Nakamura, an animator on Rankin/Bass’ TV special Santa Claus is Coming to Town (1970) afterward partnered with the Sanrio Studio (creators of Hello Kitty) in 1975. He spent the next 4 years directing a feature called Nutcracker Fantasy, which was loosely based on the famous Peter Tchaikovsky ballet and a story by E.T.A. Hoffmann. The influence from working with Rankin/Bass was certainly not lost on Nakamura; the puppet designs were similar enough to make many people mistake it for a Rankin/Bass production, although it certainly was not. The film opens with a terrifying sequence telling the bedside story of the “Ragman,” who creeps into children’s beds at night and turns them into mice. This leads into the story of a young girl named Clara (voiced by Melissa Gilbert in the English dub), who is given a nutcracker doll by her strange Uncle Drosselmeyer (voiced by Christopher Lee). She then slips into a fever-induced dream state where she goes into battle against the evil Queen Morphia, a giant two-headed mouse, and the queen’s entire mouse army. The various plot twists involving a king, a spooky fortune teller, and a heroic warrior named Franz are mixed with live-action ballet scenes, more incredibly disturbing mice sequences, and an extremely trippy “land of happy times” sequence that defies all description. After its very brief run in theaters, Nutcracker Fantasy was released to video and a few cable television airings, which was enough to traumatize plenty of children throughout the early ’80s. The opening “Ragman” sequence surfaced on YouTube and prompted a few nostalgic viewer comments about how it had scarred them for life.

The puppets in all of these early feature films were typically crafted out of foam latex, plastic, wood, fabric, or other rubber materials. The use of modeling clay as a material for creating puppets and sets began in several experimental stop-motion films in the 1910s and 1920s, then faded into obscurity for several decades. It would not be explored again until Art Clokey brought his iconic Gumby character to television in the 1950s, and it was further brought into popularity by Aardman Animations and Will Vinton in the 1970s. Nobody had attempted to use clay animation in a feature-length format until a company named Stowmar Enterprises embarked on an animated version of Walt Kelly’s popular comic strip Pogo. The production rights for Pogo were arranged in partnership with Walt Kelly’s widow Selby by executive producer Kerry Stowell and screenwriter/director Marc Paul Chinoy. Armed with a $2 million budget, they went into production on a clay-animation feature called I Go Pogo from 1979 to 1980. Also involved in the early stages of the company were Charlie and Stephen Chiodo, a team of brothers from New York who had grown up making their own animated films. I Go Pogo was produced in Arlington Virginia, right outside Washington, D.C., and production was set up in an office space in the Crystal City’s Crystal Underground shopping mall. At one point, they had a storefront area where the character-fabrication department was situated; although the windows were covered in paper for the sake of privacy, one face-sized hole was cut into the door. Crew members called this storefront area “the fish tank,” and mall shoppers would discover on their own that an animated feature was secretly being made inside.