Imagi: Animation Contractor or Pixar East?
Tax breaks, subsidies, cheaper labor, lower overhead – manufacturers have long found overseas production to be cheaper. Software developers have also drawn the same conclusion and shipped some of their development to overseas firms from Ireland to India. Why not the same for digital animation?
A recent article in Forbes suggests Imagi, a Hong Kong based Computer Graphics animator is trying to be an “Asia’s answer to Pixar.” I don’t entirely agree. The facts in the article lead me to believe that recently appointed CEO Douglas Glen is positioning Imagi to be both an offshore partner of choice for CG Animation as well as a standalone animation studio. I think the company is going to go after both contract work and the development of their own franchises.
Glen is no stranger to off-shoring, nor its benefits. Prior to taking the helm at Imagi in September 2006, Glen worked at toy giant Mattel where he was president of a media division responsible for software and electronics. Mattel often relies on contracted Asian manufacturing. Glen was also an executive at Sega of America handling game development – and the gaming industry has a well publicized history of moving production to Asia in recent years but keeping creative control elsewhere. With his background, I’d also expect Glen will insure Imagi has a hand in the lucrative licensing market that surrounds big league animation franchises
Imagi was founded in 1983 and is listed on the Main Board of the Hong Kong Stock Exchange. Currently, Imagi’s primary focus is on producing feature length films and TV Series of their own creation. A 3D animated series called Zentrix was released to TV audiences (and awards) in France, Japan, Germany, England and Hong Kong in 2002 through 2004. This coming March Imagi is scheduled to premier a global wide release of a feature length Teenage Mutant Ninja Turtles film (distributed by Warner Brothers). Other slated projects include a concept called Astro Boy (due 2009), an anime feature length version the cult favorite Highlander movie franchise, and a feature version of a popular anime Ninja story called Gatchaman (2008).
While in house developments targeting young teen audiences have been Imagi’s bread and butter (and are certainly part of their future plans) , contract work is a more certain revenue stream than cash from box-office receipts. The cost savings and talent pool at Imagi make them an ideal partner for traditional studios looking to develop an animated offering to compete with Pixar/Disney or Dreamworks Animation. Working together wouldn’t be a new idea. In 2004, DreamWorks (before its sale) contracted Imagi to do work for them. I wouldn’t be surprised to see more contracted work in the future.
From Imagi’s perspective, owning a franchise provides significant upside for the investment in the form of licenses, tie-ins, and royalty streams but the cost and time of a developing a full feature is high (A fair estimate would be $75m plus and several years time, not including marketing expenses which might be partly handled by a distribution partnership). Hedging the risks of that scale of an investment by working in partnership with another studio, or offsetting the risks by gaining an alternate revenue stream of contract work seems prudent.
The Imagi process is also good fit with Hollywood. Within Imagi, creative development- storylines, writing etc – are handled in LA which is known for its creative storytelling talent. Coding and animation are done offshore in a warehouse in Hong Kong with a team of upwards of 400 full time animators. The offshore coding environment can save a studio 1/3 to ½ the cost of animating in the US. I think Glen may be interested in collecting some of that money as contract revenue, and not taking all of the risks of being a studio handling creative and development work alone. Time will tell.
The biggest obstacle to more animation work moving offshore is probably deal structure. Given the time involved in completing a feature length CG animation (years are spent start to finish), Imagi, I’d hypothesize, will want to be more than just a hired coder; I’d expect them to want to have an agreement that gives them some of the back end benefits of merchandising and tie-ins that go with the film production. Those elements are too lucrative to pass up. Those tie-ins would also well suit Imagi’s founders’ background in toy and novelty manufacturing.
If Glen can find a way to structure partnership deals, I’d bet on a happy partnership between Hollywood and Hong Kong. There are plenty of studios who’d like a share of the pie Pixar (Disney) and Dreamworks Animation split largely between themselves. It’s not improbable for Imagi to be in a position to offer some of that.
In addition to Glen’s stints at Mattel and Sega, Glen was also a General Manager at Lucas Arts, George Lucas’ special effect and entertainment company. Glen is not a newcomer to Hollywood it has just been a while since he’s been a full time fixture in the Hollywood landscape.
