Sunday, September 14, 2014

A Challenge to Studios Taking Pitches

The Ottawa International Animation Festival starts on September 17 and studios will be there to recruit.  As well, Nickelodeon will be there soliciting pitches for preschool shows.  I'd like to issue a challenge to Nickelodeon and any studio that takes pitches, though I'm confident that this challenge will be completely ignored.

I'd like studios that are looking for pitches to make their minimum deal public.  How much of the copyright, if any, will the creator get to keep?  What screen credit will the creator be guaranteed?  How much will the creator get per episode that's produced?  What guaranteed employment will the creator get on the project?  What percentage of online, merchandising, publishing and home video revenues will the creator get?

While I have no confidence that companies like Viacom, Disney, Warner Bros. or Fox will take this challenge, it presents an enormous opportunity for smaller studios looking to own intellectual property.  Imagine a studio that offers to let the creator keep half of the copyright and half the profits from all revenue streams.  Creators with confidence in their ideas would be fools not to take their work to that studio first.  Imagine if a studio agreed that if the project wasn't viable after a limited time, the creator could recover 100% of the copyright in exchange for reimbursing the studio for it's production and marketing costs.

We're in a transitional period.  What we think of as TV is shrinking and the online world of Netflix-like and YouTube-like entities are expanding.  Before the online world solidifies, as it inevitably will, a studio able to attract the best content because it offers the best deal would have a competitive advantage.

It would obviously benefit creators, but the point is that it would be good business all around.

Media companies hate bidding wars.  As early as 1909, Biograph was trying to suppress the names of their performers, afraid that they would ask for more money.  However, Carl Laemmle hired Florence Lawrence and Mary Pickford away from Biograph and publicized them in order to increase demand for his films.  As much as media companies would prefer it otherwise, the business is based on talent.  If a studio is taking pitches, what will it publicly guarantee to the talent?

And if you're a creator, do you have the nerve to demand to know the deal before you make the pitch?

Friday, September 05, 2014

Goodbye Canadian Content?

UPDATE: Those of you interested in what's happening to TV in Canada should read this article in The Globe and Mail.  It's a good summary of all the potential changes that are coming and how it might change the production landscape.  The reader comments show the level of animosity towards the cable companies and broadcasters.  You can't hold an audience with regulations, only by giving them something they want to watch.

There's an alternate TV universe developing in Canada.  It looks a lot like the old TV universe.  In fact the majority of the programming comes from the old TV universe, but there's an important difference: it comes via the internet and not cable channels.

So what?  Well, you can impose Canadian content quotas on cable, because no service gets on cable unless the Canadian Radio and Television Commission approves it.  And the CRTC always imposes conditions on any license it grants.

However, the CRTC has decided to keep its hands off the internet, precisely because it can't stop anyone from using the internet to distribute content.

There are huge repercussions from this.  First, when there were limited channels available and they had to run Canadian content, there was a demand (even it if was mandated demand and not audience demand) that had to be filled.  Second, when the public paid for cable TV and when the cable channels earned money from advertising, a percentage of the money was put into the Canadian Media Fund, which provided money for the production of Canadian content, including animation.

The problem started when Netflix came to Canada.  It allowed viewers to pay a flat monthly subscription rate to watch anything on the service.   As Netflix arrives via the internet, it has no legal obligation to put money into the Canadian Media Fund or to use Canadian content.  When a generation of young adults who have declined to have cable TV combines with disgruntled viewers who cut their cable to lower their bills, the cable companies panic.  Their billing is dropping and the shrinking audience will force advertising revenues downwards as well.  That's a one-two punch aimed at Canadian content.

Shaw and Rogers, the two largest cable TV providers, are fighting back.  They're collaborating to create Shomi (pronounced "show me") to compete with Netflix.  That's like Coke and Pepsi collaborating on a new soft drink, a move that could only be driven by desperation.  Bell Media has just purchased a library of older shows from HBO for their own version of video on demand.  Suddenly, the cable TV business has the cooties and everyone is running away from it.  Because these new services are on the internet, there's no obligation to run Canadian content and none of the subscription money goes to the Canadian Media Fund.

This will make it harder to produce original animation in Canada.  With lower ad rates, less money in the Canadian Media Fund and the audience abandoning cable, there will be less demand for Canadian content and it will be harder to finance.  For better or worse, studios interested in creating shows will have to compete with the rest of the world, without the government carving out a protected space for them.

There will still be service work, but that doesn't bode well for the future of Canadian animation.  Service work is sensitive to currency fluctuations.  The Canadian dollar has ranged as low as 63 cents and as high as 1.03 compared to the U.S. dollar over the last decade or so.  In addition, there is the volatility of tax credits and government subsidies.  The new government in Quebec has cut their tax credits due to their deficit.  Any deficit-ridden government (which is all of them at the moment) will be looking hard at expenditures.  Service work is great for cash flow, but the flow stops when the job is delivered.  There are no residuals and no money from merchandising.  Studios doing service work are always just a few months away from a potential bankruptcy.

This could be a great opportunity for Canadian studios, forcing them to cut the government's apron strings and grow up, but I'm doubtful.  History hasn't demonstrated that Canadian studios are eager for that challenge.  In the last 35 years, no studio has walked away from government protection or money to stand on its own.

While Canadian animation is booming right now, the future is uncertain at best.  The entire notion of Canadian content quotas may disappear quickly, not through government decree, but through cable TV erosion.  While Canadian studios have worked hard to satisfy the regulations, now it's time for them to focus on satisfying the audience if they want a healthy future.

Sunday, August 17, 2014

Is Canadian TV Animation Heading for a Cliff?

The TV animation business in Canada is on a roll right now.  There's a lot of work out there, as a glance at the job board at Canadian Animation Resources confirms.  While animation in Canada includes visual effects, features and videogames, TV still makes up the greatest proportion of production in terms of employment and the amount of material produced.

However, there are trends in several areas that make TV animation vulnerable.  The ground is already shifting and there are more shifts to come.

Television in Canada is regulated by the Canadian Radio and Television Commission.  This government body determines which new channels will be allowed to exist, sets quotas for Canadian content and determines how much money from cable fees will be set aside for Canadian production.

The CRTC is aware of the effect that the internet and internet TV providers such as Netflix are having on the market and have been holding hearings to determine how regulations should change.  There are several possibilities being considered.  One is unbundling. 

The CRTC has declared that certain channels such as YTV, a major Canadian animation market, are part of the basic cable package.  In other words, everyone who has cable is forced to pay money towards YTV.  Other channels featuring animation, such as Teletoon and Family Channel, are part of packages.  You cannot buy these channels on their own.  There are customers who don't care at all about animation who are contributing money towards these channels by purchasing the package they're included in.

Should the CRTC unbundle, allowing viewers to purchase only those channels they want, no one can predict how this might effect the demand for animation channels.  The number of cable channels using animation has expanded to include Nickelodeon, Teletoon Retro, Cartoon Network Canada, Disney XD, Disney Junior and Treehouse.  Can the Canadian market support all of these channels in an a la carte world?  Can studios survive if the number of Canadian buyers goes down?

There is an entire generation that has replaced TV with the internet.  The term "cord cutting" is used to describe people who give up cable TV, but there are many young adults who haven't had cable TV since leaving their parents' homes.  Walking in Toronto, I see children in strollers playing with iPads.  In a world of on-demand entertainment, does the concept of a broadcast schedule have a hope of surviving?

The shrinking audience is affecting even mainstream programming.  W5, a 60 Minutes-like news show has just cut production on the number of episodes for the coming season and laid off staff due to shrinking ad revenues. 

Many in Canada subscribe to Netflix instead of cable.  No money spent on Netflix is re-routed towards Canadian production as it is with cable bills.  This means that the Canada Media Fund, which funnels money towards various productions, has less to work with.

Finally, there is the issue of tax credits.  Ontario just had a provincial election, so the government will be stable for the next four years, but it is trying to eliminate a deficit. No poll of the general public has ever put tax credits for media production high on the list of priorities.  As a result, I would not be surprised to see the tax credits frozen at best and I anticipate some amount of claw back.  Certainly, they won't increase, which means that if another jurisdiction surpasses Ontario's tax credits, work will leave Ontario.

While content quotas, bundling and tax credits have their place, especially for new enterprises, they turn into an addiction.  Ultimately, animation has to please the public if it is to survive.  Instead, too many studios have focused on satisfying regulations that generate money rather than on creating viable entertainment.  I fear that they have built their enterprises on a foundation of sand.  I have seen contractions in the Canadian animation industry in the past and they're not pretty.  I hope that studios are preparing for changes that may destroy their current business model.

To learn more about this, read Michael Geist and listen to this Canadaland podcast.

Friday, August 08, 2014

Guys with Pencils Down to Stubs

Andrew (left) and Adam
Andrew Murray and Adam Hines, the hosts of the Guys with Pencils podcast, have decided to pack it in after a few more episodes.  The podcast has featured people from animation, comics and games, giving the audience a chance to learn more about each of those fields and the careers of dozens of working artists.

The podcasts will remain available for awhile, but if you're not familiar with them, now's your chance to cherry pick the 172 episodes (so far) for whatever artists or fields you are interested in.

As somebody who has appeared on the podcast multiple times, I'd like to publicly thank Adam and Andrew for the opportunity to air my views on things like creator rights and for providing the animation community with such an informative resource.

I'm sure we haven't heard the last of these two.  I've watched them go from students to working professionals and I look forward to seeing what they'll accomplish in the future.

Tuesday, August 05, 2014

Profits Over Product

A couple of business stories have come to my attention that point up the conflict between those who value profits over product and those who value product over profits.  Neither is an absolute.  Those who value profit need something that customers are willing to buy and those who value product need to make enough money to keep going.  But there is usually a clear emphasis in most companies.

Cartoon Brew reports a story that YouTube is changing the rules on how they pay contributors money from advertising.  If I read things correctly, it was previously based on views.  Now, it's being based on the amount of time viewers spend watching a contributor's video and frequency of uploads.  This puts animators at a disadvantage as animation takes more time than live action to produce, so animated films are shorter and contributors upload less frequently than live action producers.

This is the same situation that faced J.R. Bray and Max Fleischer in the 1910s and '20s.  At the time, distributors paid film producers by the foot.  Film was treated like bolts of cloth or lumber.  It didn't matter what was on the film, simply how long it was.  While it might take as much time and money (or more) to do a 1000 foot animated film than a 2000 foot live action comedy, the animated film was only going to get paid half as much.  The distributors were looking to fill up screen time.  With fixed admission prices, the cost of a show had to be less than the box office take for that show, or there was no profit.  A clear case of profit over product.

Like the distributors of the past, YouTube is not creating the content, only distributing it.  Unlike the distributors, their customers are not the public.  YouTube's customers are the advertisers.  Therefore, they have to keep the advertisers happy and buying ads in order to pay for all the bandwidth and servers that keep YouTube running.

YouTube is blind to content.  It doesn't care what is uploaded in terms of subject or quality.  There's so much content there, that there is no question that there is material that advertisers will be interested in.  YouTube's only interest is matching advertisers to videos in the most efficient way possible, because that's where the money is.  Advertisers want viewers who spend a lot of time looking at something and who return on a regular basis, so that's what YouTube favours.

While this looks like bad news for animators, there are options.  I don't know if it's against YouTube's terms of service, but animators could go out and find their own sponsors and put 10 second ads at the head of their films.  Or they could super "sponsored by..." over their films.  Or they could seek out product placement.  There are also competing video hosting sites.  Animators are free to note their audience sizes and incomes and approach rival sites to see if they can get a better deal.  If enough animators try this, maybe one of the rival sites will realize that there's a way to boost their audience size while hurting YouTube at the same time.  Would YouTube react if suddenly their animation content dropped significantly?

Comics are not animation and the story of Kitchen Sink Press is different than YouTube, but it exposes the same tension between profits and product.  Denis Kitchen, publisher of Kitchen Sink, gave a long interview to John Cooke, editor of Comic Book Creator.  A large portion of that interview is available in a free .pdf download.

Kitchen started out as an underground comics publisher who eventually branched out into other comics related work, such as The Crow, Cadillacs and Dinosaurs and reprinting Will Eisner, Harvey Kurtzman and Al Capp.  At one point, he was approached by Kevin Eastman, co-creator of the Ninja Turtles, to have Kitchen Sink take over Eastman's publishing company Tundra.  In exchange for his financial investment, Eastman got 51% of Kitchen Sink.

Eastman, like Kitchen, valued product over profit.  The problem was that Eastman was a poor businessman who was losing money on several fronts, which threatened the existence of Kitchen Sink.  Eastman brought in Ocean Capital, an investment group, which took 90% ownership in exchange for supplying the money to keep the company going.  Ocean Capital's plan was to grow the company and take it public.  While Kitchen's focus had always been on product, Ocean Capital's focus was on getting profits high enough to launch the public offering.  Unfortunately, the comics business underwent one of it's periodic declines and after two years of falling profits, Ocean Capital wanted to sell Kitchen Sink or liquidate it to get out from under.

Enter Fred Seibert, known to the animation community from his association with Hanna Barbera and now shows like Adventure Time and Bee and Puppycat.  Seibert bought the company in a fire sale from Ocean Capital, but a turf war broke out between Kitchen and a consultant named Don Todrin.  Both tried to convince Seibert of the right way forward and Seibert, worried about his investment, sided with Todrin.  Kitchen was fired from the company he created in much the same way that animators Will Vinton and Phil Roman were.  A year later, Kitchen's former company was bankrupt.

Denis Kitchen valued product over profit, but some business decisions that backfired put the company he created into the hands of people who valued profit over product.  It's a familiar story.  Walt Disney valued product but Robert Iger values profit.  Iger ignored the enormous concentration of talent within the Disney company and instead spent money to acquire Pixar, Marvel and Lucasfilm.  The emphasis on profit has contaminated Pixar, which now produces more sequels than originals and watches Disney rip it off with the Planes franchise.

Surviving in business is difficult, but when the emphasis shifts from product to profit, it rarely shifts back.  Investors, as a rule, are more interested in a return than how the return is achieved.  People who value product have to remain vigilant.  YouTube will change its policies to suit itself and investors will demand control in exchange for their money.  If somebody else controls your work, either through ownership or distribution, you're at their mercy.

Sunday, August 03, 2014

Studio Ghibli Closing?

There's this. Then there's this.

Animation on TCM

Turner Classic Movies will be featuring animation in the immediate and near future.

On Tuesday, Aug 5 at 4:30 a.m Eastern Time, they'll run Gay Purr-ee, a feature made by UPA in 1962, starring the voices of Judy Garland and Robert Goulet.  The songs are by Harold Arlen and Yip Harburg, the team behind the songs in The Wizard of Oz, though these songs are not as memorable.

The crew is a polyglot of Hollywood animation veterans from many studios.  It was directed by Abe Levitow and written by Chuck and Dorothy Jones.  Designers and art directors include Corny Cole, Ernie Nordli and Victor Haboush.  Animators include Ken Harris, Irv Spence, Ben Washam, Ray Patterson, Grant Simmons, Volus Jones, Harvey Toombs, Don Lusk and Hal Ambro.  The studios that those animators worked at include Warner Bros, MGM, Lantz and Disney.

On October 6 (and I'll post a reminder closer to the date), TCM will run 10 hours of continuous animation.  Starting at 8 p.m. Eastern Time, the films of Winsor McCay, with eminent animation historian and McCay biographer John Canemaker as guest.  At 9:45, it's the 100th anniversary of the Bray studio, with guest Tom Stathes, who has emerged as a leading historian of silent animation.  At 11, cartoons from the Van Beuren studio, with guest Steve Stanchfield.

Stanchfield has become one of the premiere home video producers for animation.  While companies like Warner Bros. are retreating from home video formats, Stanchfield is upping the output of his company Thunderbean Animation.  His latest release is Technicolor Dreams and Black and White Nightmares, which includes a color copy of the first three strip Technicolor cartoon, Ted Eshbaugh's The Wizard of Oz.

The balance of TCM's night consists of four animated features.   Lotte Reineger's The Adventures of Prince Achmed is on at 12:15 a.m, Max and Dave Fleischer's Gulliver's Travels is on at 1:30, Toei Animation's Magic Boy is on at 3 and Chuck Jones' The Phantom Tollbooth is on at 4:30.

Sunday, July 27, 2014

Book Review: Miyazaki's Turning Point: 1997-2008

Turning Point is the second collection in English of interviews and writings by Hayao Miyazaki.  It covers the period from Princess Mononoke to the pre-production of Ponyo.

The breadth and depth of Miyazaki's interests are on display here.  Where North American animators talk about the craft and the history of animation, perhaps also speaking of live action films, Miyazaki ranges much farther afield.  His interests include literature, Japanese history, social class, gender roles, consumer capitalism, geography, nature, environmentalism, economics, child rearing, mythology, religion and comparative religion. 

Miyazaki is conscious of his need for knowledge.  "It's up to the individual whether one reads books while a student, but the penalty for not reading will eventually come around for the individual. Increasing numbers of people think knowledge and cultivation are not strengths, but ignorance is, after all, ignorance.  No matter how good-natured and diligent you are, if you don't know about the world around you it means you don't know where you are.  Especially in our age, when each of us has to think about where we are going, there will be a heavy price to pay for ignorance about past history."

Miyazaki reflects on the people who enter the animation industry.  "We animators are involved in this occupation because we have things that were left undone in our childhood.  Those who enjoyed their childhood to the fullest don't go into this line of work.  Those who fully graduated from their childhood leave it behind."

The people who talk to Miyazki are not just reporters.  They include authors, academics and scientists.  It is a sign of the respect for Miyazaki and his films that he is not considered just an entertainer, but a social commentator with important things to say. 

It is Miyazaki's curiosity and wide-ranging knowledge that makes his films so satisfying.  He's not focusing on the box office or on story formulas.  He uses his films to try to figure things out and the uncertainty as to whether characters or events are good or bad lends a complexity to his films that is completely lacking in North American animation.  He says that American films "seem too manipulative, so I hate to give into that and get all excited.  And with splatter films, as soon as the music starts warning us about what's coming up, well, they just make me want to leave the theater."

"[People] delude themselves into thinking films are all about identifying with something and finding momentary relief in a virtual world.  But in the old days, people went to see films to learn about life.  Nowadays, when you go into a supermarket, you're presented with a dizzying array of choices, and, similarly, people think of the audiences for film as consumers who just grumble, or complain about things being too expensive or not tasting good.  But I'm not creating something just to be consumed.  I'm creating and watching films that will make me a slightly better person than I was before."

The seeds of future work are revealed in some of these interviews.  In an interview about cities made at the time of Mononoke, Miyazaki says, "I would like to see an expansion of workplaces for [older people] rather than insisting they have a comfortable old age.  A town where everyone, from children to the elderly, has self-awareness and a role as a member of the community is a town full of energy."  He's describing one of the main themes of his yet-to-be-produced feature Ponyo.

In writing about the 1937 book How Will Young People Live by Genzaburo Yoshino, Miyazaki reveals concerns that he dealt with in The Wind Rises.  Both are set in the Showa period leading up to the second World War. "When Yoshino poses the question of 'How will you live?' he means we should go on living, despite all our problems.  He isn't saying that if we live in a specific way that the problems will disappear and everything will be fine.  He is saying that we must think seriously about things and that, while enduring all sorts of difficulties, we must continue to live, even if ultimately to die in vain.  Even if to die in vain.  Yoshino was unable to write directly about the violence of his times, so all he could tell us to do when such times arrive is to keep living without giving up our humanity.  Genzaburo Yoshino-san knew that was all he could do."

I have one disappointment with this book.  The period of articles that date from the period when Howl's Moving Castle was produced do not cover that film at all.  It is a problematical film for me, and I was hoping that there would be a clue as to Miyazaki's thoughts that would serve as a key to that film.  At the time, Miyazaki was also involved in the creation of the Ghibli Museum and the day care centre for Ghibli employees.  Did these distract him from Howl?  Unfortunately, this book gives no indication.

I sincerely hope that there is a third volume, as I am interesting in reading what Miyazaki has to say about The Wind Rises.  In any case, this volume, and the earlier Starting Point, are essential reading for anyone interested in animation and particularly for those in the field.  Miyazaki's erudition shames us.  While many of us call for North American animation to break free of genre conventions, it will take more than wishes for it to happen.  It will only happen when animation artists engage more with the world as it is and let that be reflected in their work.

(For more Miyazaki quotes, please see my review of Starting Point.)