Once the gatekeepers of the worldwide animation business, Canadian toon producers have, of late, been rather quiet on the international TV distribution scene. It’s not that they are not producing, but rather that they are not distributing. “It’s part of the Netflix factor,” said Bill Brioux, VideoAge’s Canadian contributor, when called upon to investigate.
Take DHX Media, for example. After losing money for two consecutive years, DHX, a Canadian animation powerhouse, changed its name to WildBrain last September, and sold a building it owned in Toronto for C$12 million.
Eric Ellenbogen, the former president of Marvel who now serves as WildBrain’s CEO, said that it’s not news that the company has faced “some considerable challenges” in recent years, and announced a reorganization of the business to have a more simplified structure as it works to grow its audience while also managing a large corporate debt.
“Netflix now employs more Canadian animators than any other media company in Canada. They will have released 37 new animated children’s shows just in 2019,” wrote Brioux. And “Nelvana doesn’t appear to be in slowdown mode; it’s at capacity according to company president Pam Westman, although probably not as profitable [as it used to be].”
Brioux quoted Westman as saying: “A few years ago we realized that producing and financing by ourselves and then going out into the marketplace and hoping to see and earn your money back was becoming increasingly difficult. We decided to partner with some of the blue-chip broadcasters.” Those partnerships for Nelvana include Nickelodeon in the U.S. and Sumitomo in Japan.
One reason for that was a sharp shift in the market. While Nelvana is operating near capacity with between 600 and 700 animators, traditional broadcasters aren’t buying like they used to.
“Every broadcaster is feeling the pinch of cord-cutters and TV ad revenues going down,” said Westman. “Broadcasters have less money, but they still need to fill schedules.” New generations of consumers are also finding ways to spend less. “People are consuming more content but they’re not paying for it the way they used to.”
Companies such as Nelvana have kept busy servicing OTT providers. As previously mentioned, Netflix is now the number one employer of Canadian animators — a fact confirmed by Netflix CCO Ted Sarandos. The Canadian animation houses have also shifted their focus to create more short-form fare.
“We are now embarking on a series of digital shorts that are made purely for YouTube,” said Westman. “They’re musical shorts, earworms, all based on songs for young children.”
For decades, when it came to children’s animated programming, Canada has been a toon titan. Thriving companies such as Nelvana, 9 Story Media Group, DHX Media (now WildBrain), and Bardel Entertainment have brought both beloved brands as well as modern, computer-generated adventures to life in all manner of renderings and designs. Take Nelvana for example. The Toronto-based media company, owned since 2000 by Corus Entertainment, was founded in 1971. Today it has offices in Toronto, Paris, Shannon, and Tokyo.
“Over the years, we’ve been able to form some fantastic relationships with the broadcasters in all the major territories, as well as other studios,” said Westman.
One big advantage Nelvana and other Canadian studios enjoy is strong government support. Federal tax credits and other incentives tied to employment can translate into a 30 to 35 percent savings for animation companies and their partners. That, coupled with a lower dollar (compared to the U.S.) helps bring the world to Canada’s door — especially in an era when traditional ad revenues are iffy and streamer- subscriber competition is stiff.
The subsidies are a factor, too, in accounting for Canada’s deep pool of talented animators. Many of those animators got their start at Sheridan College near Toronto, which has been training Academy Award-winning artists for over 50 years. “They take the terrific, raw creative talent in this country and mold it into terrific animation talent,” said 9 Story Media Group CEO Vince Commisso.
Bardel CEO Rick Mischel said that Tax breaks and Talent are only two of his company’s “Three T” advantages. The other is Time zone. “A lot of brand owners are based in Los Angeles,” said Mischel, “so having us in the same time zone in Vancouver is a little bit of an advantage over some of our other provinces in Canada.”
The acquisition of Bardel in 2015 by Italy’s Rainbow was a turning point, said Mischel. While Bardel excelled at 2D animation, Rainbow represented another level of expertise in the computer-generated field. Other Bardel/Rainbow blue-chip partnerships include DreamWorks and Netflix.
The drive to become a full-service company with world-class 2D and CG animation capabilities also led to 9 Story’s ambitious transition in the past few years.
“The way the world is going from both a con-sumption of content and a procurement of talent standpoint, you really need to be an international entity as a producer,” said Commisso. In 2015, the company began a series of strategic moves with the acquisition of Ireland’s Brown Bag Films.
“We didn’t have any CG production at that point,” explained Commisso, “and they were the best complementary production house in the marketplace.”
Up until then, 9 Story was best known for 2D content. The Brown Bag acquisition “really rounded out our offering,” said Commisso, allowing 9 Story to perform “at a very high level of creative excellence in both 2D animation and CG animation.”
9 Story didn’t stop there, with further brand acquisitions in the last two years including Out of the Blue Enterprises (now Brown Bag USA), Colorforms, Breakthrough Entertainment, and Scholastic Media.
Earlier this year, to meet the surge in production, 9 Story also acquired the Indonesian animation facility BASE, with the studio becoming a wholly owned subsidiary.
Despite the many technical advances in the field of animation, there’s one further “T” that isn’t likely to change in Canadian animation circles or anywhere else: Time.
“Don’t be fooled,” said Bardel’s Mischel. “It still takes an 18 to 24 month schedule to create a great animated series, in CG or 2D.”
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