Tuesday, August 23, 2016

Jam Filled Purchases Arc


According to C21 Media, Jam Filled has completed the purchase of Arc's assets.  There are about 200 employees returning to a facility in Toronto.  While the article specifies that the company will "take over production of current Arc projects," it does not specify what they are.  No word on whether Blazing Samurai, a feature that was in production, is still in-house or, if rumours are true, has moved to another company.

Thursday, August 11, 2016

Jam Filled Entertainment Negotiates to Buy Arc

The Globe and Mail has another article behind a pay wall, providing some details.  Deloitte, the receiver, ran an auction to purchase the rights to Arc's continuing projects.  Jam Filled Entertainment, an Ottawa studio bought just weeks ago by Boat Rocker Media, won the auction.  However, the deal has to be approved by the court and Jam Filled will be doing additional due diligence before the deal is concluded.

One part of the deal is that enough of Arc's former employees are willing to return to the projects they were working on.  The hope is that the deal can be finalized within the next two weeks.

As of now, there are many questions.  I assume that the work will stay in Toronto.  If they're looking to rehire Arc employees, it's going to be easier to do this without asking them to move to Ottawa.

While the deal obviously includes contracts for the work and the files created so far, does it include the hardware that the files are sitting on?  Will they occupy Arc's former space or move to another location?  Software licenses are not always transferrable.  Will Jam Filled get rights to the licenses as part of the deal or will they have to purchase new ones?  Which clients will be willing to continue their projects with Jam Filled and which will prefer to move them elsewhere?

Will there be pay cuts for returning employees?  How much?  Will they be across the board, meaning that everyone rehired gets the same percentage of their former salary, or will salaries be negotiated from scratch?

Who will be managing all this?  As Jam Filled is located in Ottawa, will they be sending a management team to Toronto?  Will they be hiring local management talent?  As management was the source of Arc's problems, hiring the right team will be critical to the success of the salvage operation.

Will Jam Filled continue the facility, assuming it is in Toronto, once the existing contracts are completed?  That may not be decided until projects are delivered and the balance sheet is scrutinized.

While Jam Filled's acquisition, assuming it goes through, is certainly good news, much more will have to be answered before this can be called a success or failure.  Good luck to everyone.

Friday, August 05, 2016

More on the Arc Situation


The Globe and Mail has an article behind their paywall about the Thursday court proceedings relating to Arc.  I can't quote from it extensively due to copyright, but I can summarize it.

While I was quick to say that without knowing specifics, it was not fair to blame Arc's management for the shutdown, it's now clear that the management was aware of the situation for at least five months and did not do enough, if anything, to fix it.

In December of last year, Arc made an agreement with Grosvenor Park Media Fund LP giving Arc access to up to $45.3 million.  $17.5 million of that went to repay Callidus Capital Corp, a previous lender.

On Feb. 8, 2016, Arc defaulted on payments to Grosvenor.  Grosvenor twice signed waiver agreements allowing Arc to pay later and extended another $4.6 million in credit.  At this point, Arc convinced the producers of Blazing Samurai to make their $1.05 million payment due to Arc to Grosvenor instead.

Arc again defaulted on payments to Grosvenor in May and July.  In the first six months of 2016, Arc ran a $9.2 million dollar loss.  It was also behind $250,000 in rent, $2 million for office renovations and $1 million in payroll.

On July 26, Guy Collins of GFM Films, international rights holders to Blazing Samurai, sent an email to Grosvenor saying he was concerned that Arc had stopped production on the feature.  Arc was trying to get an early payment for moneys due in August from GFM.  GFM indicated that they would not be paying any more money.  With no promise of revenue for Arc, Grosvenor called their loan and forced Arc into receivership.

This does not make Arc's management look good.  Defaulting on loan payments while continuing to hire and increasing expenses is not the route to success.  While I only know what was in the article, the logical thing to do would have been to cut expenses to the bone, eliminating anything not directly related to completing paying projects.  Had they been seen to do that, Grosvenor might have been even more forgiving than they were.  Arc's management had 5 months to fix things and didn't.  What's worse, it doesn't appear that they tried all that hard.

Tuesday, August 02, 2016

ARC and the Hazards of Animation


The news that ARC, one of Toronto’s largest animation studios, has gone into receivership spread in record time thanks to social media.  I’ve been dismayed at many of the comments I’ve read in various places online.  Many are ignorant; some are accusatory.  I have no inside information, but anyone with experience in the animation business knows that a bankruptcy is always a possibility, especially for studios doing service work.

Everyone in animation has probably worked on a project that’s gone bad.  It could be due to demanding or ignorant clients.  It could be due to unforeseen technical challenges.  It could be due to an inadequate schedule.  If a job goes over budget, the costs have to be covered from the next job.  With luck, the profits from that job are enough to cover the loss, which leaves the studio in a break-even position.  But if the profits are not enough, or the next job goes bad as well, the debt begins to pile up.  This puts a studio in the position of using income from current jobs to pay off old jobs, and it becomes necessary to keep new jobs coming in so as to service old debts.

Every budget and schedule (really two sides of the same coin) contains unknowns.  Studios try to build contingencies into budgets to cover the unknowns, but in the competitive market that service studios face, budgets are lean and sometimes intentionally lower than the job requires.

There are valid reasons for under-budgeting.   The studio wants to work with a client that commissions a lot of work and the studio has to land a project in order to establish a relationship.  Or the studio has a crew that will finish a project shortly and needs something to keep the crew on the payroll.  Finally, there’s the need to keep money coming in to meet overhead and maybe service debt.  Every day that the studio stays alive is another chance for the studio to find the profitable job that will solve its problems.

There is also the issue of cash flow.  A studio can be profitable on paper, but if the money isn’t flowing in at a rate fast enough to meet the studio’s expenses, the studio is forced to borrow to bridge the gap.  That borrowing has costs attached to it: legal fees and interest to name just two.  If the cash flow can’t be straightened out, the interest piles up and the studio may be forced to seek other bridge financing.  The end result once again is debt that is paid by diverting money from current jobs.  This just pushes the debt forward.

Either of the above cases can drive a studio into receivership.  It’s important to understand that studios are forced into receivership by creditors.  It’s not something they would choose to do.  So when a studio shuts suddenly, it’s because the creditors have forced it to happen, not because management was trying to screw over artists.  Undoubtedly, management was negotiating with the creditors, hoping to reschedule debt payments or restructure the debt.  If the creditors decide that they’ve had enough, meaning they have no confidence that the studio can meet its obligations, they force receivership, capping their losses and hoping to recoup something from the bankruptcy.

No one – the creditors or the management – wants that to happen.  The creditors would prefer to be paid in full, something that rarely happens in a bankruptcy and won’t happen when a studio’s only assets are computers and furniture.  Management prefers to run a profitable company.  It puts more money in their pockets and makes their resumes look better.  Having a bankruptcy on a resume is not the greatest job reference.  It is possible that ARC’s management made bad decisions.  It’s equally possible that clients, competition and bad luck forced them into decisions they did not want to make.

There is no question that the closing of the studio is a tragedy for all concerned.  But without inside knowledge, no one can assume to know what went wrong.  Bankruptcies are common in all industries because sales, overhead, production and cash flow are difficult to get right.  Attributing malicious motives to this bankruptcy is wrong.  Attributing it to gross mismanagement may also be wrong. 

More than any other studio, ARC (under a series of owners) got Canada farther into the animated feature game than any other studio to date.  While the studio had an unhappy ending, it provided lots of jobs and opportunity while it lasted.  If the management is going to be criticized for the bankruptcy, the least we can do is give it credit for what it accomplished.

Monday, July 04, 2016

More Thoughts on VR

I attended a one day conference on VR & Film, sponsored by SIRT and ETV Film Inc in mid-June.  There were hardware and software demonstrations, but I was particularly interested in the talks, where people involved in creating virtual reality explained the storytelling issues they encountered.

Having worked in cgi in the early years, I'm confident that the technical problems of VR will be solved over time.  My personal interest runs more towards how VR is going to communicate with audiences as a narrative medium.

Pretty much everyone agrees that VR has a resemblance to theatre in that the audience is free to look where they wish.  The stage has various techniques for directing the audience's attention, lighting being a major one.  If only one part of the stage is lit, the audience will naturally look there.  Jeff Preyra of 360 Storylabs pointed out that with a 360 degree camera, it was impossible to place lights, as they would always be visible.  For this reason, he felt that the future of VR storytelling would be motion capture avatars in cgi environments.  The virtual lights in cgi are invisible to the camera, so in a cgi environment, directors could still control lighting.

Preya felt that establishing shots would have to be longer as the audience would naturally want to look around an environment and take stock of who is present before watching whatever dramatic action is going to unfold.  This makes sense, though when returning to established locations it shouldn't be necessary and if you want to surprise the characters and the audience, you could start the action of a scene immediately to prevent the audience from knowing everything that was present.

Preyra also felt that musical scoring didn't work in VR.  As the viewer was in the scene, any music needed to have a visible source.  I'm not sure about this.  In the early years of talkies, there was music under the opening and closing titles, but none during the film unless there was a onscreen source such as a radio, phonograph or visible musicians.  However, by 1933, just a few years after talkies became the dominant form of movies, King Kong had dramatic scoring by Max Steiner throughout the film.  By the late 1930s, composers like Steiner, Newman, Korngold, Waxman, Hageman and Tiomkin were hard at work scoring films throughout their run times.

Ian Tuason of CFC Media Lab said that cameras could only move in straight lines, as any change in the camera's direction might clash with head movements of someone wearing a VR headset.  This makes sense on the face of it, but again a look at film history leads me to believe that it can be done.  Films in the 1930s and '40s routinely shot in ways where the camera's position operated separately from the camera's view.  In other words, the camera's location would physically move while the camera itself would change what it was pointing at.  What was standard, however, was someone moving on screen that gave the audience a focus.  So if a camera was tracking through a restaurant before stopping at a table where the main action was to take place, the camera would follow a waiter while it was moving.  In a VR situation, if there is an obvious center of interest on screen, like a character, the camera could move, changing it's spatial and angular relationship so long as the audience has a reason to stay focused on that character.

I feel the same way about cutting to a closer view.  If the audience is looking at a speaking character, cutting to a closer shot should not disorient the audience any more than it does in a conventional film.


The next five to ten years are going to be very interesting with regard to VR.  No doubt gaming will be a leader, as it's a natural for putting a player inside the game.  But just as games have evolved cut scenes to provide the player with narrative information, VR is going to evolve storytelling grammar in order to do the same.  Once that grammar exists, we'll find out if VR is going to be successful with audiences as a storytelling medium or if it's just a fad like stereoscopic 3D.

For my earlier thoughts on VR, go here.

Friday, June 17, 2016

Nobody Wants to Read Your Sh*t

Steven Pressfield, author of The War of Art, has a new book called Nobody Wants to Read Your Sh*t.  It's a quick read and a master course in story construction.  Until June 30, 2016, it's free in a variety of digital formats, including .pdf.  You're not required to leave any personal information in order to get a copy.

Here are two quotes that jumped out at me that will give you the flavour of the book.
"Nobody wants to read your shit.

"What's the answer?

"1) Streamline your message.  Focus it and pare it down to its simplest, clearest, easiest-to-understand form.

"2) Make its expression fun.  Or sexy or interesting or scary or informative.  Make it so compelling that a person would have to be crazy NOT to read it.

"3) Apply that to all forms of writing or art or commerce.

"When you understand that nobody wants to read your shit, your mind becomes powerfully concentrated.  You begin to understand that writing/reading is, above all, a transaction.  The reader donates his time and attention, which are supremely valuable commodities.  In return, you the writer must give him something worthy of his gift to you.

"When you understand that nobody wants to read our shit, you develop empathy.

"You acquire the skill that is indispensable to all artists and entrepreneurs -- the ability to switch back and forth in your imagination from your own point of view as writer/painter/seller to the point of view of your reader/gallery-goer/customer.  You learn to ask yourself with every sentence and every phrase: Is this interesting?  Is it fun or challenging or inventive?  Am I giving the reader enough?  Is she bored?  Is she following where I want to lead her?"
And this:
"A real writer (or artist or entrepreneur) has something to give.  She has lived enough and suffered enough and thought deeply enough about her experience to  be able to process it into something that is of value to others, even if only as entertainment.

"A fake writer (or artist or entrepreneur) is just trying to draw attention to himself.  The word "fake" may be too unkind.  Let's say "young" or "evolving."
...
"To get over it, the candidate must grow up."

Saturday, June 04, 2016

Muhammad Ali and Darwyn Cooke

No doubt you're wondering what these two have in common and why I am writing about them in an animation blog.  I'll get to that.

2016 has been a tough year for celebrity deaths.  Two that have hit me hard are the recent deaths of boxer Muhammad Ali and comic book creator Darwyn Cooke.  Both of these men widened the frame of reference for their respective fields through their work and their words.

I have no idea when Ali became politically aware, though he may have been from birth.  In any case, after defeating Sonny Liston and winning the heavyweight championship, he changed his name from Cassius Clay, telling reporters, “I don’t have to be what you want me to be,  I’m free to be who I want.”  Later, he resisted induction into the U.S. military, refusing to fight in the Viet Nam war.

While there were certainly great African-American athletes before Ali -- Joe Louis and Jackie Robinson come to mind -- the times forced them to tolerate the racism they experienced and they confined themselves in word and action to their respective sports where they avoided controversy.  Ali refused to just be a boxer and with his religion, politics, and taking his bouts to other continents, was an example of how a person could define himself regardless of how a dominant society attempted to keep him in his place.  Ali was an outstanding athlete, but his impact owes as much to his life outside the ring as in it.

Darwyn Cooke grew up loving comics and managed at a young age to get a story published by DC.  In those days, before Fedex and the internet, the fact that he didn't live in New York City pretty much ended his comics career right there.  While he was no doubt disappointed, it ended up enriching his work.

Cooke spent time art directing music and fashion magazines as well as running a design studio.  In doing this, he gained experience in the commercial art field, dealing with clients and absorbing aesthetics from fields other than comics.  He then went into TV animation, working with Bruce Timm on the influential Batman: The Animated Series, a show that also brought in artistic influences from outside comics.  It was at this point, after a decade and a half outside the field, that Cooke finally made it into the comics world.

Like Ali, Cooke was determined to define himself.  He did so in terms of the design of his work and his treatment of the subject matter.  Too many of the people in comics had graduated from being fans directly into the industry, and had a very constricted view of what comics were supposed to be.  They had little to no experience in the wider business world.  Comics art of the period was overly detailed and fussy.  Fan-favourite art had a lot of lines in it.  Cooke had a cleaner, more direct style that was counter to what comics were doing artistically and he was comfortable with incorporating modern graphic design.  In terms of content, as former fans-turned-writers aged, they continued to write comics for themselves, taking characters intended for children into questionable areas of sex and violence.  Having worked in the real world where he did business with women, Cooke treated his female characters with far more respect than those in other comics from DC.  He also insisted on heroes being heroes, not psychopaths.

So what's this got to do with animation?  From my perspective (and you're free to disagree), animation in theatres and on TV has gone stale.  Too much of it is the same.  The insularity is due to producers who imitate successes to line their pockets and artists who immerse themselves in animation while growing up and then graduate into the field.  Ali and Cooke each brought some of the wider world into their professions.  They enlarged their fields with their life experience.  Animation needs that.  Though the cost of production discourages it, animation needs to open up to more points of view.  It's not just a question of a more diverse workforce or adding characters of colour or varying sexual orientations to the films.  Animation needs to challenge what the audience thinks an animated film or TV show is supposed to be, the same way that Ali challenged how people looked at athletes and Cooke challenged how comics should be done.

In 2016, giants are passing on and leaving holes in our lives.  While celebrating their accomplishments is appropriate, we should build on their lessons to create accomplishments of our own.