In the new year, Canadian animation companies must face a contracting economy, an uncertain broadcast landscape, an ever-globalizing marketplace and opportunities opened up by troubled competitors. With all this in mind, tooncos are preparing their strategies for the NATPE 2002 conference in Las Vegas, Jan. 21-24.

Networks in the crucial U.S. market are reevaluating their approach to children’s programming. Fox and NBC are reported to be potentially following CBS’ lead by selling off their Saturday morning blocks to outside programmers. Fox may even get out of children’s programming altogether. With the rise of 24/7 children’s specialties such as YTV, Teletoon and Nickelodeon, the mystique of Saturday morning cartoons has all but vanished.

Corus Entertainment-owned Nelvana is one of the companies negotiating with the U.S. nets.

‘We’re very interested,’ says David Kincaid, Nelvana’s chief marketing officer, adding that it would not be a venture to enter into lightly. ‘It’s not a simple task to sit here today and forecast with any degree of certainty what the production demand and revenues are going to look like over the next two to three years.’

While the cost of production has not declined, a glut of programming available in the last two to three years, due largely to increased competition from overseas, has led to declining prices for licence fees, making profits in animation production hard to achieve.

Nonetheless, Nelvana, Canada’s largest animation house, has recorded an increase of 15% to 20% in its production volume from a year ago. The company believes that in this era when coproductions are a matter of survival, it has weathered the storm because it’s Canadian and because it’s independent.

‘If Disney owns you, you have a hard time cracking Viacom and Nickelodeon,’ says Kincaid. ‘We can play and service a range of customers due to our independent status, and because we’re Canadian we’ve got a favorable [exchange rate] working in our support, along with the strong reputation Canadian animation and production has on a global scale.’

Kincaid heads up Nelvana’s new strategic brand management and marketing department launched in October. With a sharper focus on demographics, Nelvana is headed to NATPE to showcase the recently acquired Beyblade, spun off from a popular Japanese toy; The Berenstain Bears, from the classic book series; and Jerolemon Street Players, an animated urban sitcom offering an innovative mix of Flash animation and photographic backgrounds.

Montreal’s CineGroupe sees the scaling back of production arms in the U.S. as providing a ripe opportunity.

‘Four or five years ago, everybody wanted to own their own animation studio,’ says CineGroupe president and CEO Jacques Pettigrew. ‘Viacom had a studio in New York with 500 people – they closed it; Warner Bros., Columbia TriStar and Disney have closed studios. Now Disney’s talking about subcontracting some of their jobs, which was unthinkable a few years ago. The big players now see the opportunity to work with Canadian mini-studios.’

Pettigrew reports that CineGroupe experienced a record year in 2001 and expects 2002 to be similarly strong. The company presently has four returning animated shows on the air and six new series that are animated or partially animated, including Sagwa, The Chinese Siamese Cat, about a feline in ancient China. The show is produced in association with Sesame Workshop and broadcast on TVOntario and PBS. New in production are: The Three Pigs, a France copro about a teenage pig who moves in with his uptown cousins, and Edward, a series of 30-second clips about an odd fellow seeking the meaning of life. Both will be broadcast on Teletoon.

Growing tooncos such as Vancouver’s Studio B Productions also foresee making a greater impact to the south.

‘What I think Canadian companies such as ours are able to offer is a good-quality product financed by coproductions so that the price point isn’t too high,’ says Studio B cofounder and partner Blair Peters.

Studio B recently signed deals for three new shows: Yakkity Yak, an Australia copro about an ox with comedic aspirations, to air on Teletoon and Nickelodeon Worldwide; Bein’ Ian, which follows an imaginative and film-crazy 11-year-old, to be distributed by Decode Entertainment and broadcast on YTV; and Something Else, a U.K. copro based on the award-winning children’s book, for Family Channel. Studio B’s NATPE offering will also include shows in development: Surf and Turf with Mainframe Entertainment and Warner Bros.; the U.K. copro Crime Crackers with YTV; Alone in the Dark with Family Channel; and Todd Parr with Discovery Kids.

Housed within Studio B’s Coal Harbour Studio is sister company Mercury Filmworks, a 2D digital ink-and-paint and FX house. Peters reports that although Mercury has traditionally been a service company, it is looking to take on coproductions of its own. As a further example of animation expansion in a time of perceived economic recession, Mercury, whose clients include Studio B and Decode, recently opened a Toronto facility after landing a gig with Nelvana’s Rescue Heroes II.

‘We’re now in a position to partner on projects that simply would not have been available to us because of tax-credit hurdles that exist for Ontario producers in British Columbia,’ says Clint Eland, Mercury’s CEO and executive producer.

It is economically imperative for work-for-hire companies to diversify, as it has been difficult securing projects. One company that is moving toward producing its own content is Vancouver-headquartered 3D-animation company Mainframe Entertainment.

‘It would have been more disastrous for us if we weren’t in the process of making a switchover, acquiring our own properties, developing them, and going out and selling them,’ says Dan DiDio, L.A.-based senior VP creative affairs at Mainframe.

But with the consolidation of broadcasters in the U.S., including Disney’s acquisition of Fox Family Channel (to be renamed ABC Family Channel), tooncos are hesitant to proceed with new projects.

‘There’s a lot of uncertainty about the type of product broadcasters are looking for, so we’re waiting for that to settle out so we can start developing products we know have a better chance to make it to air,’ DiDio adds.

Two projects Mainframe will promote at NATPE demonstrate its new model of acquiring rights to properties with name recognition and presold appeal: Tony Hawk, based on the real life pro skateboard phenom, blending action sports with Hawk’s personality; and Betty Boop, which reinvents the 1930s character as the 3D lead singer of a rock band. Mainframe is also developing large-format theatrical films with Imax Corporation, its largest shareholder.

Some animation houses are trying to capitalize on developments at Montreal’s Cinar. Over the past two years, the toon titan, whose properties include Caillou, Zoboomafoo and Arthur, has been rocked with allegations of tax fraud and the improper investment of company funds. Its future in doubt, Cinar is not expected to expand for the time being. Companies such as Toronto’s Decode Entertainment look to fill a void left by Cinar and other hard-luck companies.

‘Because some of these players who were producing major preschool properties are not around anymore, at some point the programs they have will start to get a bit dusty, and broadcasters are going to need new product,’ says Beth Stevenson, Decode partner and VP, development and production. ‘So we found [an animated project] we think is fairly distinctive and we’re moving it forward.’

The project in question, to headline Decode’s NATPE slate, is the series Franny’s Feet, about a five-year-old girl who gets whisked away to different places with each new pair of shoes she tries on. The project is a coproduction with Toronto’s C.O.R.E. Digital Pictures, with which Decode produces the highly successful Angela Anaconda.

Producing projects like these in the digital domain is smart business because it not only lends shows a look distinct from traditional 2D animation, but also digital characters, objects and backgrounds can be efficiently kept on file and called up for repeated use. Additionally, digital creations can be easily transposed to other media, such as promotional websites.

Stevenson expects to make an announcement regarding a Canadian broadcast deal for Franny’s Feet shortly. Meanwhile, Decode will also present Olliver’s Adventures (previously known as Ollie’s Under the Bed Adventures), featuring a six-year-old who deals with day-to-day problems in an imaginary world. In July, Decode signed a deal for the international distribution rights to the series, produced by Halifax’s Colleideascope for Teletoon. For the preteen demographic, Decode will also have Girls Stuff/Boys Stuff, a show about relationships among teens. It is a copro with the U.K. and Hong Kong.

-www.natpe.org

-www.nelvana.com

-www.cinegroupe.ca

-www.studiobproductions.com

-www.mercuryfilmworks.com

-www.mainframe.ca

-www.decode-ent.com