Business

Andras Erkel, CEO of Varga Holdings.

Jan Sawkins, Group Managing Director of Varga Holdings.

Varga Revamps. Varga Holdings, one of Europe's leading animation and special effects production houses, has completed its extensive restructuring. Group CEO Andras Erkel and Group Managing Director Jan Sawkins announced Varga Studios has been renamed Varga Budapest Ltd. and Varga tvc Ltd. has been newly named Varga London Ltd, while Varga Commercials' name remains the same. The new structure is Varga's strategy to unify the company and create a standard corporate identity under one Varga logo. In addition, the Budapest and London branches of the company will be joined by a new Los Angeles representative. Csaba Varga continues as Varga Holding's Chief Creative Officer, with Jeni Vass as Managing Director of Varga Budapest Ltd.; Mike Robinson as Managing Director of Varga London Ltd.; and Zsuzsa Kirsch as Marketing Director at Varga Commercials. Who will head the L.A. division has not yet been announced. Linked to successful productions such as Animaniacs, Varga has produced animated television series and specials for companies worldwide like: Disney, Warner Bros., Fox, Klasky Csupo, Miramax, and MTV in the U.S.; Channel 4, S4C, ITV, BBC, HIT, and Grand Slam in the U.K.; and ZDF in Germany. They have also done a number of award-winning commercials for Volkswagan, Nestle, Kellogg's, Procter & Gamble, Nokia and Uinlever.

EA & AOL Play Games On-Line. Electronic Arts, a world leader in interactive entertainment software, has created a new division to publish games for the Web and to operate a series of new on-line gaming sites. The new division has been formed to create content for America Online, the world's leading Internet service company. Electronic Arts' new on-line gaming division comes on the heels of their acquisition of Charlottesville, Virginia-based Kesmai Corporation, a developer of multiplayer on-line entertainment previously owned by News Corp. The new EA.com-subsidiary provides games to various other online companies including Excite, EarthLink, GolfWeb, Fox World and Fujitsu. By acquiring Kesmai, EA gains popular game titles like Air Warrior, the first graphic multiplayer on-line game; Aliens On-Line; Starship Troopers; and Multiplayer Battletech. The deal also grants EA non-exclusive distribution rights to Fox Interactive on-line games. Kesmai had previously been the major provider of games for AOL's Games Channel. Upon shareholder approval, EA plans to create a new common stock -- Electronic Arts B Common Stock -- to track the business potential of this new on-line venture. Once created, America Online, Inc. will purchase 10% of the new stock. Electronic Arts President and Chief Operating Officer John Riccitiello will oversee the new Internet business. The on-line division will be based in Redwood City, CA at the Electronic Arts' facilities.

Infogrames Acquires GT Interactive. Infogrames Entertainment, a leading developer, publisher and distributor of interactive entertainment, announced it has acquired GT Interactive Software (GTIS), a US-based company. The total investment is being reported as $135 million. Infogrames' product catalog includes such franchises as Mission Impossible, Test Drive and Looney Tunes. GTIS brings such titles as Driver, Deer Hunter, Blues Clues and Abe's Odyssey. This transaction is part of Infogrames' global expansion strategy and will help further establish the company in the North American interactive entertainment market.

Warner Enters On-Line Network Ring. On Monday, November 29, 1999, Time Warner launched its new Internet entertainment network, Entertaindom. The new channel is the first on-line entertainment network produced from a major media company. The channel will offer a smorgasbord of on-line entertainment, news, and services from Warner's vast vault of branded material. Entertaindom will include entertainment news and information from Entertainment Weekly, CNN, Reuters, Variety and other sources, including music and TV stories, movie reviews, hit lists and critics' polls. It will also provide on-line services, shopping opportunities and community functions such as e-mail, chat groups and entertainment home pages helmed by AcmeCity, the joint venture between Warner Bros. On-line and FortuneCity.com. Entertainment looks to be the main goal for Entertaindom. The network will provide new shows produced for the Web that have the chance to cross over into other media like The God And Devil Show and the cult character Dr. Science. Warner franchises like DC Comics' 3D Superman and Warner Bros.' classic Marvin The Martian will have their own "webisodic" shows. In addition, Warner will tap into its classic Looney Toon library and broadcast full-length cartoons as exclusive on-line features. "Entertaindom is an extension of our strategy to harness the consolidated strength of Time Warner's brands in the on-line world," said Gerald Levin, Chairman and CEO of Time Warner Inc. "Entertaindom features short programs which are as clever, creative and cutting-edge as many feature films and television shows," said Richard Bressler, Chairman and CEO of Time Warner Digital Media. Superman: The Menace Of Metallo will be a new, weekly 3D "Multipath Movie" series, with seven-minute episodes that recreate the thrill of cliff-hanging serials from the Golden Age of Hollywood. Marvin The Martian will bring back to life the Warner Bros. character with new minute-long 3D animated shorts, utilizing the famous Marvin voice and the original Carl Stalling Looney Tunes musical cues. The God And Devil Show will be a weekly, animated talk show featuring celebs (parodied by voice impersonators) who are interviewed by God and the Devil themselves. Dr. Science will be a weekly 3D-animated program starring an over-confident know-it-all in a lab coat. On-line surfers may submit their own questions each week and wait to see what crazy mis-information Dr. Science comes up with. Major advertisers like CD Now, Doughnet, eBay, Intel, J.C. Penney, Kabang, Microsoft, Movietown, Procter & Gamble, RCA, Volkswagen and Web TV have joined the channel already for its inital launch. With the combination of Warners' famous branded media, hefty names like CNN and "Entertainment Weekly," and big time advertisers, Entertaindom looks like it has the potential to be a major powerhouse and trail blazer in the world of Internet broadcasting.

Eidos Announces 2nd Quarter Results. U.K.-based Eidos plc, one of the world's leading publishers and developers of entertainment software, announced their results for the three and six months ended September 30, 1999. Revenues for the quarter were BR£27.3 million (US$45.0 million), up from 21.8 million pounds for the corresponding period last year. On a U.S. GAAP basis the company's loss before tax for the quarter was £16.8 million ($27.8 million), giving a net loss of £12.8 million ($21.2 million) and a loss per share of 66.3 pence (109.4¢), compared to a net loss of £8.8 million and a loss per share of 51.3 pence in the corresponding period last year. Revenues for the half year were £44.1 million ($72.7 million), compared to £47.6 million for the corresponding period last year. On a U.S. GAAP basis the Company's loss before tax for the half year was £38.1 million ($62.8 million), giving a net loss of £27.1 million ($44.8 million) and a loss per share of 147.0 pence (242.6¢), compared to a net loss of £11.8 million and a loss per share of 69.1 pence in the corresponding period last year. Charles Cornwall, Chief Executive Officer for Edios plc, explains, "Following on from the quiet first quarter, Eidos' interim results reflect the relatively fewer new releases in the period coupled with increased levels of development and corporate activity." In November, Eidos plc announced the acquisition of a 19.96% holding in the U.S.-based Internet company, Maximum Holdings. The software company also signed an agreement with the Disney Corporation to utilise three of their characters in games for release next spring and beyond. With the company still reaping in good results from the million-copy sold Legacy Of Kain: Soul Reaver game, Eidos plc will enter the holiday selling season with a powerful new product line-up featuring highly anticipated titles like Tomb Raider: The Last Revelation, Fighting Force 2, Resident Evil 3 and Gex III for the Game Boy Color.

Film Roman Launches Level 13. Thanksgiving weekend, Film Roman, Inc., producers of The Simpsons and King Of The Hill, launched Level 13.net, an innovative multi-channel animation network to be delivered via the Internet. Level 13 is the industry's first regularly scheduled, animated television-like network made directly for the Web. William Shpall, Chief Operating Officer of Film Roman, and architect of the company's Internet strategy, said, "While many of today's entertainment and Internet leaders are still testing enhanced television programming strategies and offering various limited entertainment programming on-line, we at Film Roman have eagerly and wholeheartedly launched a wide array of compelling animation content produced or acquired specifically for Internet distribution." The 18 to 28 year-old focused network will provide new programming for each channel at set times starting in mid-December. Each of the 13 individual channels will have a focus all of its own. "Level 13 Shorts" will broadcast premiere animation shorts and special events produced exclusively by and for Level 13. "Buy Me" will provide consumers the chance to purchase everything from t-shirts and posters to videos and collectibles based on Level 13 franchise properties and other Level 13 related animators. "Adult Humor" will be available for a US$4 a month charge to subscribers over the age of 18. The channel will focus on original animated adult humor shorts. "Skidmore The Flasher" will feature the popular flash animation of the same name. "Reviews" will offer Level 13's animated answer to traditional broadcast television's entertainment news, reviews and current affairs programming. Willis And Jonah are security guards who, while watching their security camera monitors, review current movies, concerts, videos, and music. Also featured on the channel will be Flick And Flora, two teenagers who will offer Net surfers their opinions on a variety of current events and social issues all spiced up with a little good old fashioned American teen angst. "Featured Artists" will offer live-action interviews with today's top animation artists. "In the Dirty World" will bring to viewers 3D animated Babs Babylon and her often opinionated gossip on the lives of the celebs. "Free Crap" will provide free screen savers, sound bites, art work and other downloadable elements from Level 13's library. "International Shorts" will broadcast foreign language animated short films. "Air Out Your Shorts" will provide Web surfers the chance to check out animated innovative short films produced outside the company collected by Level 13. "Experimental Animation" will provide a platform for new animation techniques, styles and innovations. Available in January 2000, "Make Your Own" will allow fans the chance to create animated shorts and/or custom e-mail using Level 13's recurring episodic characters. Finally, the LEVEL13.net home page, will give surfers network-wide navigation tools and will offer advertisers and sponsors premium placement opportunities. According to Shpall, Film Roman looks forward to expanding their shows as broadband technology develops on the Internet. When speaking with Shpall about the launch of his brain child, he said the thing which made him most excited was that "a year ago when I approached people with this idea they thought I was nuts. They said, 'What is this guy talking about?'" With the current success of animated material on the Net, the "theys" may be redefining their criteria for insanity. With some 400 animators included in its worldwide creative family, Film Roman's Level 13 has the potential to be a formidable leader in animation on the Net.

Wild Brain Child On The Net. Wild Brain, Inc., a leading U.S. animation studio, has brought to the ever-expanding club its new child, wildbrain.com. The new Web channel will broadcast animation from around the globe and will be the feature provider of animation on Yahoo! Broadcast. In the deal, Yahoo! will provide Web solutions for Wild Brain's video animation programming, which is available on wildbrain.com as well as Yahoo! Broadcast. wildbrain.com will debut with Glue, an Internet exclusive toon featuring the adventures of a town full of quirky 2D characters. Creating the talent base for the new venture is: award-winning creative director, John Hays (Wild Brain's president and co-founder); general manager, John Kirtland (former director of international at Infoseek/Disney's Go.com portal); and veteran animation producer, Amy Capen (MTV's Liquid Television). The new network will provide surfers with four key areas of focus. The "Digital Drive-In" will broadcast original animation produced exclusively for wildbrain.com. "Festivals" will event schedules, interviews and live broadcasts from around the world. "Showcase" will bring together innovative animation projects from the far out reaches of the universe. Finally, "Games" will provide joystick junkies the chance to view "cut scenes" previously available only to expert players. The focus of the network will be animation only; a forum dedicated to the global promotion of the art of animation. In addition to providing entertainment, the new venture will allowed Web surfers the chance to purchase merchandise that will include favorite festival materials, exclusive wildbrain.com videos, animation cels, books, magazines, artist materials, clothing, and loads of other animation related items. With new Web animation companies springing up faster than Pokemon rip-offs, Wild Brain's strong animation history and veteran staff will give wildbrain.com the potential to be a major competitor in the exciting new avenue of Internet animation.

New Nirvana For Nelvana & RTV. Toronto-based Nelvana Limited, an integrated family entertainment company, has formed a multi-layered partnership with German-based production house RTV Family Entertainment AG, a leader in children's programming in Germany. The agreement includes a significant distribution deal for current and library programs and a 3-year deal for future productions and co-productions. Through the deal, RTV will bring Nelvana's library of shows to TV, home video, and merchandising venues across Germany, Eastern Europe, and select Nordic territories. The distribution deal pays Nelvana US$10.25 million in cash, payable in full within one year. Nelvana will receive proceeds from the library, after RTV recoups its initial investment. After RTV's license term is up, all rights revert back to Nelvana. The output deal consists of a 3-year $22 million reciprocal distribution arrangement between the two parties. Beginning in 2000, RTV will distribute a minimum of 65 episodes a year of new Nelvana programming in Germany and other territories. In turn, Nelvana will distribute a minimum of 26 episodes a year of new RTV programming in the Americas. Both parties intend to maximize the merchandising rights in their respective markets. "This agreement represents the continuation of many years of co-production between Nelvana and RTV which has resulted in successful RTV titles produced by Nelvana, such as Little Bear, Blazing Dragons, and Rupert," said Peter Hille, Chairman of the Board of RTV. "This partnership helps meet several of our strategic objectives -- the continued internationalization of our activities and the consolidation of our position in our key domestic markets." Michael Hirsh, Co-Chief Executive Officer of Nelvana said, "This relationship is both financially and strategically attractive. With RTV's strong broadcast relationships in Germany, we are confident our programming will receive excellent broadcast placement in this market."

Read Micheal Hirsh's article about Nelvana and co-productions in Animation World Magazine.

Disney Gets Yield On Stopping Go Logo. As we reported previously [AF 11/16], U.S. District Court Judge Terry J. Hatter Jr. had ordered Disney to stop using its Go Network logo until after a trial on the matter next year, agreeing with the plaintiff GoTo.com that Disney's logo was confusingly similar to its own. However, the green and yellow traffic light logo of Disney's Go.com has gotten a stay of sentence at least for a little while. Soon after the initial ruling, a three-judge panel of the United States Court of Appeals for the Ninth Circuit stayed the preliminary injunction issued by Hatter. The stay suspends the initial order until an expedited appeal of the order is held in the upcoming months. That means Disney can use the old Go.com logo if it wishes. However, Disney may give up on the logo considering the company has said it will be hit with damages ranging from $2 million to $40 million if it loses the logo in subsequent hearings. "The decision today is a procedural one and not a ruling on the merits of the case," said attorney Pierce O'Donnell, who is representing GoTo.com. "We are confident that when the Ninth Circuit reviews the facts of the case, they will affirm Judge Hatter's preliminary injunction order. We are pleased that the court has agreed to the expedited schedule for hearing the facts of the case, as both parties have recommended."

A New Vivid Animation Studio. Vivid Animation, a new high-end CGI animation studio specializing in sophisticated digital characters and animated effects for commercials and interactive media, has been formed by Jeff Lotman, CEO. "Vivid Animation opens its doors with a trio of world-class digital animators as its creative nucleus," said Lotman, CEO. This nucleus, all of whom come from senior positions at Digital Domain, includes Animation Supervisor, Stephane Couture, Digital Effects Supervisor, Gonzalo Garramuno and Vivid Animation's vice president for creative development Daniel Robichaud. Under the helm of Robichaud, Vivid plans to develop computer animated characters and effects based on the photo-surreal style of the team's award-winning short film, Tightrope, which was produced at Digital Domain, and premiered at SIGGRAPH '99. "The Vivid style will stand out from other computer animation companies," said Robichaud. "CG animation is in its infancy and we will continue to explore new styles, especially in photo-surrealism, which looks very much alive but is highly stylized." With Digital Domain, Robichaud worked on Apollo 13, T2 3D, The Fifth Element, and Titanic. As a character animator, Couture's credits include Titanic and Coca Cola's "Panda Picnic" commercial. Garramuno's credits include Titanic, Supernova and Lake Placid. Rounding out the new company is producer Paige Wilds, who has worked on visual effects for feature films including Air Force One, Starship Troopers, and the HBO miniseries From The Earth To The Moon. Vivid Animation will be based at 3679 Motor Avenue, Suite 200, Los Angeles, CA, USA 90034. For additional information contact producer Paige Wilds at (310) 253-5131, or visit www.vivanim.com.

AtomFilms Attracts $20 Million. Monday, December 13, 1999, AtomFilms, a leader in next-generation entertainment, announced that it has inked a deal with investors totaling US$20 million in financing. This signing marks the end of a second round of strategic financing led by Chase Capital Entertainment Partners LLC and Chase Capital Partners, and joined by Arts Alliance, Frank J. Biondi Jr., general partner at WaterView Partners and former chairman and CEO of Universal Studios, Intel Corp., and Trans Cosmos USA Inc. "This round of financing is significant to our efforts in expanding into new markets and building the next big entertainment brand," said Mika Salmi, founder and CEO of AtomFilms. "We are continuing to expand our scope of distribution and are aggressively pursuing more traditional venues for promotion of short form entertainment." The first round of financing in May 1999 was led by Art Alliance and joined by Warner Bros. On-line, officers and employees of Allen & Company, and Frank J. Biondi Jr. AtomFilms is based out of Seattle, Washington and launched its site in March 1999.

Web Disney Dumps $1 Billion. Disney's Internet arm Go.com has announced a loss of $1.06 billion in fiscal 1999. Disney's Web division was formed three months ago to combine its Internet search engine Go.com, a co-venture with Infoseek, with Disney's other online assets, which includes ESPN.com, Disney.com and ABCNews.com. The loss, which includes $956 million in depreciation and amortization expenses, widened from a loss of $991 million a year earlier and includes all of Go.com's new-media properties. Much of the negative performance is being attributed to losses inherited from the purchase of Infoseek. Go.com's Web sites are still in "investment mode" said Disney Interactive president Steve Wadsworth. He also hinted that the future doesn't look much brighter financially, at least for awhile. Who knows what Disney's losses will peak at next year after their fight over similar traffic-light logos with GoTo.com ends. Disney estimates they could lose $2 million to $40 million in branding costs if it is forced to change the icon.

Olive Jar Opens In LA. Boston-based Olive Jar Studios, Inc., an animation, special effects and theme park attraction production house, has opened a branch in Los Angeles, California, U.S.A. The new west coast facility will house both stage and production space. Olive Jar specializes in film techniques that include mixed-media, stop-motion, CGI, cel, drawn, and live-action/special effects. Executive producer Matthew Charde said, "Our presence in Los Angeles will be a tremendous asset to the business since we will be more fully able to service our theme park and major studio clients, while at the same time broadening creative and production opportunities for advertising agencies." Olive Jar's west coast representation is by Vandamme at Tel.: (415) 398-9915.