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Growth Looms In The Made-For-Video Animation Market

George Johnston reports on the numerous direct-to-video projects that are underway and discusses the many positive aspects of this lucrative market.

When animation historians look back on significant trends of the 1990s, they may conclude that the decade's most important contribution was in made-for-video animation. And, as is so often the case, the success of made-for-video animation took many in the industry by surprise.

Way back in 1994, following the artistic and financial success of Walt Disney's Aladdin, the company tried an experiment. Using its television animation wing, a feature-length sequel to the theatrical original was released, but not in theaters. Instead, The Return of Jafar went directly to video and it is estimated that more than 10 million units of the tape were sold at a suggested retail price of $22.99.

While research showed VCR penetration in the United States at about 90 million, the results astounded even Disney. It didn't take a magic genie to figure out that the company had discovered a new gold mine. "It sort of turned the company on its ear," says Laurel Whitcomb, Vice President of Publicity at Walt Disney Television Animation. "Here was a product stream that we really didn't go after with an elaborate and detailed marketing campaign, and the results were simply fantastic." Since Jafar, Disney's other made-for-video animated releases have been a second Aladdin sequel, Aladdin and the King of Thieves (1996), and Pooh's Grand Adventure: The Search for Christopher Robin (1997).

The Land Before Time V. © Universal Studios Home Video.

The Majors' New Market

Among the major U.S. animation studios, Disney is not alone in recognizing the potential of made-for-video animation. According to Universal Home Video president Louis Feola, "We recognized the opportunity for feature-length direct-to-video animated movies back in late 1991. Early in the process, we recognized that the marketplace would be open to quality, direct-to-video feature-length animated product. The Land Before Time, which was a very successful feature-length movie, became the obvious option to move forward on. We have since released Land Before Time II, III and IV to enormous reception." According to Feola, the four titles in the Land Before Time franchise have had collective sales of more than 20 million units. More will be sold as well, when The Land Before Time V is released on December 9.

The Hollywood Reporter's home video editor, Scott Hettrick, who has been observing the made-for-video animation trend, says, "If the amount of resources, energy and effort being put into made-for-video projects by studios is any indication, the market will be considerable in a short period of time." He noted that Universal has a Hercules and Xena feature, based on the popular live-action shows, set for direct-to-video release in January. Meanwhile, MGM Animation released its Babes in Toyland directly to video on October 14. Hettrick also says that Warner Bros. is producing a feature-length made-for-video version of its Batman series using 3-D animation effects. But wait! There's even more. A sequel to 20th Century Fox's FernGully: The Last Rainforest will go directly to video in the Spring of 1998, and Hallmark Entertainment is set for a December release date of Annabelle's Wish. Disney, of course, has the most titles in the works. Theatrical features Beauty and the Beast, Pocahontas, The Hunchback of Notre Dame and The Lion King all have made-for-video sequels in various stages of readiness.*

Independents Taking A Chance

Just as the response to made-for-video animated product took the animation industry by surprise, a variation on the trend, the original animated video or OAV, could also have a similar affect on the future of animation. According to animeexpert Fred Patten of Streamline Entertainment, OAVs started accidentally in Japan in the early 1980s when an "animation company tried to get backing for a TV series based on an idea they came up with, but could not. Since they had the presentation already made up, they talked to one of the video companies about subsidizing it as an original video and it caught on." Patten says that now in Japan as many as 30 OAVs per month are released. Some Japanese OAV titles have been released, and many serialized, in the United States. They include Crying Freeman, Doomed Megalopolis, Giant Robo and The Guyver.

Putting an American spin on the OAV phenomenon are some smaller animation companies that are trying to be Davids to the Goliaths of animation. Two of those companies are actually comic book publishers: San Diego-based WildStorm Productions and San Antonio, Texas-based Antarctic Press. Another company, taking a different tack, is San Francisco's Wild Brain Inc.

For the last two years, WildStorm's Santa Monica, California animation studio has been working on an animated version of its top-selling title, Gen13. According to WildStorm president John Nee, Gen13 is essentially about a group of superpowered teenagers. "Their parents were part of a government experiment to create superpowered soldiers," he says of Jim Lee, Brandon Choi and J. Scott Campbell's joint creation. WildStorm's experiment with OAV differs from the efforts of majors Disney and Universal in that there have been no theatrical antecedents to boost public awareness. Still, if the success in both live-action and animation of another comic-based title, Spawn, is any gauge, Gen13 could show that a made-for video animated project doesn't require a successful theatrical predecessor. However, the Hollywood Reporter's Hettrick notes, "Even with recognizable brands and characters, marketing and publicity expenditures on an original title are enormous." Another distinction is that, unlike most of the properties from the major studios, Gen13 is not aimed at young children. Plans are to release Gen13 in both G and PG-13 versions.

FernGully II: The Magical Rescue is being produced by Wild Brain and will be released by Warner Bros. in spring 1998. © FAI Films/Rosen Harper Entertainment.

Finally, there is the issue of creative control. Unlike WildStorm's earlier foray into animation with WildC.A.T.S., which was on a television network for Saturday morning consumption, Gen13 will have no worries about a network's broadcast standards and practices department, nor of FCC educational content concerns. OAVs have taken off in Japan for similar reasons. "Since this is direct sales to the public, they don't have to worry about television censorship or anything like that," notes Patten.

Antarctic Press' Ben Dunn echoes the sentiment. As the publisher and creator of soon-to-be animated Warrior Nun Areala, which is best described as "a superhero nun who fights evil," Dunn says, "Creative control is very important. You get to do whatever you feel your vision is. If it works or fails based on what I feel, I'm willing to take that chance. But at least I can say it was something I had a 100 percent hand in." There is yet another difference in approach by these smaller companies. Unlike a bigger operation, where marketing and demographic studies are presumably needed before greenlighting a project, the decision to go forward on the Gen13 made-for-video was made strictly by the seat-of-the-pants. "There were no studies done. You just go to the comic book stores and video stores and see what people buy," says director Kevin Altieri, whose distinctions include directing 28 episodes of Warner Bros.' Batman: The Animated Series. Joe Dunn, Vice President of Antarctic Press and younger brother of Ben, has a similar viewpoint. "First and foremost, we think it would be neat. That's how we do most of our creative endeavors."

A Very Lucrative Market

While Wild Brain didn't have that luxury with its contracted FernGully sequel, FernGully II: The Magical Rescue, its CEO and co-founder Jeff Fino likes the made-for-video approach for its financial potential. While Fino describes the plot as "baby animals are taken from the forest by bad men, and our old pals from the forest come to their rescue," he does say, "The thing about FernGully that made it an attractive property to us was that we could make it inexpensively by animating it overseas, but ensuring high quality. The end result was that we were able to produce a high-quality film for not a lot of money." The budget for the feature-length FernGully is in the $4 million range. The feature-length, Gen13's budget is roughly the same, while Warrior Nun's budget for a 30-minute length first installment comes in at roughly $250,000.

Continues Fino, "Our clients may have been dealing with diminished expectations, but I think everyone was pleasantly surprised with what we were able to accomplish. So, I think the direct-to-video market is kind of encouraging from that perspective. You really have to do a lot of creative things to make the film work on a shoestring budget."

WildStorm's Gen13 © WildStorm.

Addressing the cost-to-return ratio, Fino adds, "I think the financial aspects of direct-to-video are the most appealing. If you think about it, say a direct-to-video movie costs $4 million. For something like FernGully, it is not unreasonable to project unit sales of four million cassettes. Now if you multiply that by, say, $15 per cassette, that's $60 million. Of course you have production, distribution, advertising costs, etc. Those costs are not as high as theatrical releases, so you don't have the kind of major expenses. I think, if you add even the distribution percentages that studios tend to add, you're still going to have a very healthy profit."

As for Gen13's potential sales, Nee says: "It's hard to peg because nothing like this has ever been done." Altieri, on the other hand, is more enthusiastic, saying, "I think it's gonna make a mountain of cash." With regard to the Warrior Nun OAV, Ben Dunn says, "My feeling is that there is really no possible way we can lose money. When you have the product, it's in your hands, and it's there forever. So as long as you have it, you can just keep on selling it until you finally do make money. It may take a long time, but I'm willing to take that risk." Opening the Floodgates WildStorm, Wild Brain and Antarctic all believe they are on to something big and new with original made-for-video animation. Beyond the potential for profit, Dunn feels that there is a bigger picture to the trend. "What I'm trying to do basically is open doors. I'm trying to show that a small company like ours is capable of doing animation that is comparable to anything that is currently on TV or on video right now. It remains to be seen whether anything like this is going to be successful. If this project makes money, people are going to take notice. If we can show that it is possible to do a reasonably budgeted animated feature direct-to-video and make some money off of it, it's going to open a lot of doors to the people who want to get in on it as well." Post FernGully II, Fino indicates that Wild Brain may try the OAV approach with original characters as well. "There is nothing to stop us. FernGully proved a lot of things to us and one of them was that we could handle this kind of production, and that we like it. Also that there is a huge market for this kind of product." Meanwhile, the major animation studios will do everything within their considerable powers not only to keep the made-for-video market going but to dominate it. Walt Disney Television Animation Vice President for Specials and Direct to Video, Sharon Morrill says that lessons learned post The Return of Jafar and The King of Thieves puts the priority on quicker turnaround times for sequels to the theatrical releases and raising the bar for quality to approach the level maintained by Disney's feature division. "We've been playing catch-up, but in the next two to three years we will be releasing these (made-for-video sequels) in a timely manner," she says. "Also, another strategy that came about was to increase the quality of our direct-to-videos. It is very important to us that people perceive the direct-to-video as not a second-rate movie, but indeed, a first-rate movie and probably the best that they will see on video.

Antarctic Press' Warrior Nun. © Antarctic Press.

"We have all-digital ink-and-paint systems in our wholly owned studios now. We also have computer graphic imagery in our upcoming movie Beauty and the Beast: The Enchanted Christmas [which is slated for a Nov. 11 release]. There is incredible CGI work in there. So, the quality of the animation has increased significantly." On the talent side, Morrill points to the use of known stars such as Demi Moore, Tim Curry and Bernadette Peters to voice the characters. Musically, Disney will utilize Academy Award and Grammy Award-winning composers and lyricists.

But Disney is also keeping a watchful eye on the OAV front. Months ago, when it bought the rights to make a live-action version of WildStorm's Gen13, it was canny enough to also buy the domestic distribution rights to the aforementioned animated version.

Hopefully for the animation industry and animation fans alike, made-for-video programs will continue to grow. However, despite the optimism of the animation companies, the final word rests with the consumers. Could a glut of product mean buyers with limited budgets will keep their purchases to just a couple videocassettes per year? Or, is the potential market bigger than just the families upon which majors like Disney, Universal and Warner Bros. have concentrated? And, if these pioneer American-style OAVs catch on, will every storyboard artist with a "killer idea" launch a flood of mediocre product that will eventually kill the goose that lays the golden videocassette? Fino, for one, remains hopeful. With Antarctic's, WildStorm's and Wild Brain's projects all hitting retailers next year, he notes, "I think '98 is going to be a breakout year for this market. Certainly the big studios are into it, but I think there is room for a grassroots effort if smaller studios have aspirations to that end."

*It should also be noted that Disney and Pixar have a sequel to the computer-generated hit Toy Story that will go straight to video, but it is not being produced through Disney's TV animation division.

George Johnston is the electronic editor at The Hollywood Reporter and is a member of the Writers Guild of America's Animation Writers Caucus.