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Independence Day: The Growth of Indie Animated Features

Karen Raugust looks at how the animated feature film business is no longer closed to independent animation houses in the U.S.

Exodus Film Group is developing itself as a mini-animation powerhouse with upcoming projects like Igor, which will be released by The Weinstein Co. © Exodus Film Group.

As the cost of animation has come down over the last several years, and as animated features from independent studios have started to see success at the box office and on DVD, more indie animation houses are developing movie properties. Some companies are taking a traditional distribution route, partnering early in the process with a studio that finances all or part of the film, in addition to distributing it. Meanwhile, others -- whether through choice or necessity -- are self-financing their productions before partnering with a distributor.

One studio that has opted for independent financing is Exodus Film Group. In 2004, it launched a $50 million private equity film fund, believed to be one of the first focusing on animated films, to raise capital from private investors. The three CG-animated films covered by the fund are Igor, being distributed in North America by The Weinstein Co.; The Hero of Color City, distributed domestically by Magnolia Pictures; and Amarillo Armadillo.

Exodus is also in preproduction on Paul Bunyan and Babe, a live-action film featuring a CG-animated Babe the Blue Ox.

While the distributors came on board early in the production process, they are not contributing to production expenses. "[Private financing] helps us retain more of not just the revenues, but also a piece of the underlying copyrights," says Exodus president John D. Eraklis. "We wanted to keep a majority of the upside for our investors."

Another studio that chose to self-finance is Atlanta-based Fathom Studios. Its CG fantasy action-adventure film Delgo is in the final stages of post-production and should be finished in the spring. Fathom's agent, Ken Kamins, will then screen it for distributors, for an anticipated 2008 release. (Fathom is also developing a second CG theatrical release, this one a comedy. A short based on the property is expected to appear on the Delgo DVD.)

"Delgo didn't fit the Hollywood CG formula: known story, comedy, talking animals, pop music, pop culture references, etc.," says writer/producer/director Marc F. Adler of Fathom. "Rather than adapt our story to the Hollywood mold, we looked outside of the studio system for financing."

Phil Nibbelink Prods.' founder Phil Nibbelink, who worked with Steven Speilberg and at Disney prior to going out on his own five years ago, recently completed a truly independent production. His 78-minute film, the 2D-animated underwater adventure Romeo & Juliet: Sealed With a Kiss, is being distributed domestically by Indican Pictures and internationally by MarVista. It has debuted in L.A., with Dallas/Ft. Worth its next stop.

"I got tired of the big industry merry-go-round and just wanted to make my own films," says Nibbelink, who had already completed two direct-to-video movies before starting on Romeo & Juliet. He financed the entire film and did all the production himself, using a Wacom tablet, Flash, Painter, Anime Studio Pro (formerly Moho) and Vegas Audio. He completed 112,000 drawings for the film (each in under two minutes), enlisted friends and his children as the voice talent, and recorded in a studio he built in his basement. Once the film was finished, Nibbelink rented out screening rooms to show the film to acquisitions execs.

Vanguard Animation has landed deals all around Hollywood for its upcoming films, such as Happily Never After, Space Chimps and Ribbit. © Vanguard Animation.

Studio Financing

Other independents operate more traditionally, signing a distributor who contributes financing to the production in addition to distributing and marketing the finished film. Vanguard Animation, formed in 2002, is one example. Its current slate of CG-animated family films includes Happily Never After for Lionsgate, Space Chimps for 20th Century Fox (scheduled for a 2008 release) and Ribbit (plus two other films) for MGM.

Vanguard's financing varies by picture, but includes negative pickups with minimum guarantees, plus prints and advertising, from the studios; investment from IDT/Starz Media, which owns approximately 30% of Vanguard and made a significant financial contribution to Space Chimps; bond partners; and other sources such as the Berlin Film Fund, which invested in Happily Never After. (Vanguard was able to independently finance an earlier film, Valiant, released in 2005, thanks to European co-production support. It was a period piece with an all-British cast and its budget came in under $40 million.)

Vanguard, which recently signed a deal with the founders of gaming company Oddworld Inhabitants to develop the CG-animated feature Citizen Siege, follows a live-action-style production model, building out a studio for each production and hiring people for the length of the production only. For example, it formed a Vancouver studio for Space Chimps, a potential franchise picture with a budget of $40 million, and hired 100 people from around the world -- including many who had worked on Valiant -- for the film, which is 10 months into a 24-month schedule.

While a producer's ability to bring financing to a project can be appealing to distributors, the commercial potential and quality of the film itself is more important. "The studios won't do things they don't believe in," says Vanguard CEO John Williams, who adds that there are both pros and cons to self-financing. "It gives you greater creative control, but also greater liability," he says.

Blue Yonder Films' first animated picture, Hoodwinked, was self-financed and went on to success at the box office (where it generated $101 million) and on DVD. The company raised funding through a private investor and didn't secure The Weinstein Co. as a distributor until less than seven months before completion. A sequel is in development, this time financed by The Weinstein Co.

Hoodwinked's success at the box office is the holy grail for all independent producers. © The Weinstein Co.

"Hoodwinked was a big part of the history and success of this company," says Katie Hooten, a producer and partner, along with Todd Edwards and Preston Stutzman, of Blue Yonder, a dozen-year-old company that had been doing music videos, commercials and a live-action film prior to Hoodwinked. "The repercussions of Hoodwinked have been really positive." Blue Yonder currently is involved live-action and documentary production as well as animation."

In addition to Hoodwinked 2, Blue Yonder is working on Escape from Planet Earth, a family comedy involving an alien prison break from Area 51, for which Mainframe is doing animation, and Dragons, which will be formally announced shortly. "Thankfully, we're not going the indie investor route on these," says producer and partner Stutzman. "Everything on Hoodwinked was done by necessity, due to the lack of a full budget and the lack of a full crew."

Animation for the film was done at a newly formed studio in the Philippines, by a young and talented group of animators who had virtually no experience in 3D animation or full-length features. The producers had to create a fully functional 3D studio and train the crew, all while production was ongoing. "It was reinventing the wheel," Stutzman says.

Independent production also allows for artist to work in 2D as in the case of Romeo & Juliet: Seal with a Kiss. © MarVista Ent.

Sandman Studios, a four-year-old house involved in web development, videogames, print design, animation and VFX, has at least half a dozen animated features in development, and is looking primarily for independent financing, although some investment ultimately may come from studio/distributors. "We wanted to try and control our own destiny," says Stephen Sobisky, head of production/VFX supervisor at Utah-based Sandman. "It's always nice to make some extra zeroes, but the main thing is the creative control."

Sobisky points out that one of the company's projects, City of Gold, which is being developed with creator Jeanne McKinney, is based on a historical tale of a Mesoamerican teen's fight for freedom and is the first of a planned trilogy. "We didn't want to lose the integrity of the story," Sobisky says. "Some studios would Hollywoodize it."

Sandman's goal for most of its projects is to raise $1 million or so privately for development of a five-minute animated short, and then use that to pitch the project to investors or possibly studios. Most of its films are expected to have budgets in the range of $20 million to $25 million. Other properties in various stages of development include The Terrible Tooth, Cromwell (a reverse-engineering of Jack and the Beanstalk), 'Tude Shifters, The Elves and the Shoemaker and The Loch, about the Loch Ness Monster.

Standing Out from the Crowd

Whether the studio that distributes the film invests in the production or comes on board later, one of its key responsibilities is marketing the theatrical release to consumers. "That's why choosing the partner is so important," explains Williams. "You need to ask, 'What is their real level of commitment in seeing the film succeed?'"

Some independent producers have tried innovative tactics to get consumers interested in their films, especially before a distributor comes on board. Starting in 2001, Fathom Studios posted digital dailies on throughout the production process; an archive of posts, including work-in-progress and comments from studio artists, is still available.

"This 'making of' in the making offers a glimpse into the process of computer animation -- the good and the bad, the mistakes and the triumphs -- all in an effort to provide audiences a greater understanding of the realities of film production while developing a personal connection to the picture," Adler says. "We've been very fortunate to have struck a chord with audiences who are interested in watching the making of Delgo online."

Nibbelink took a hands-on approach to marketing Romeo & Juliet. Wearing a sandwich board, he promoted the film in theater lobbies and in front of theaters, and gave out comic books and drawings of the characters. Those activities led to some appearances in L.A.-area schools. "We didn't have the advertising muscle the majors do," Nibbelink explains, noting that his efforts served to raise awareness for the film. "It wasn't a runaway blockbuster hit, but I think it helped a little."

The fact that there are more animated pictures being released these days -- many with similar plots and themes -- is a positive in some ways, since it helps make independent CG films viable in the eyes of investors and distributors. But it also can be a negative, since it's harder for individual films to stand out. "It's kind of a double-edged sword," Sobisky says.

But most observers believe it's a good period for independently produced theatrical animation. "Success of independent animated features breeds opportunity for more independent animated features," Adler believes. "The monopolistic dominance by one or two animation studios is behind us. It's not critical to have a $100 million-plus budget if the story is compelling and the characters can strike an emotional chord."

Fathom Studios has been working on Delgo for years, attracting a lot of big names to lend their voices to the film. © Fathom Studios.

"It's not the exclusive domain of Pixar, DreamWorks and Blue Sky to be the purveyors of all the hit movies," agrees Williams. "There's room for competition against those three players. It seems like there's going to be a lot of different players all reaching for the golden ring of major studio distribution."

At the same time, with the number of films out there, "there's a high hurdle rate to be able to get [a film] fully funded," Williams says. "It's tougher now. The money doesn't seem to come unless there's studio distribution."

Filmmakers point out that the idea of animated films competing with one another, almost as if they are a genre instead of a style of filmmaking, is really unfair. "Using CG animation to tell a story is not any different than telling one with live action," says Adler. "We should expect CG to not be a genre, but a medium. There will be CG mystery, horror, comedy, sci-fi, action, romance, drama, etc."

"You don't have these discussions with live-action movies," agrees Eraklis. He adds that animated films shouldn't be compared to one another in terms of their levels of box office success, since each has its own budget and its own expectations. "A blockbuster for an independent studio may be a failure for a major studio in financial terms," he says. "It's not apples to apples."

Hooten points out that privately financed animated films from indie producers were almost unheard of three to four years ago. But Hoodwinked and others have shown that such productions can succeed. "There's such an opportunity for people to create animation now," she says. "There are more outlets than ever, not just features but the Internet, direct-to-DVD, YouTube and personal websites. It keeps people at the studios honest, because people can create great things in their basement and get them to an audience in some way."

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).