I received an email from an investor asking about my opinion on a particular matter. After beginning my private reply, I figured I would just make an entry about it here. ...continued...
Animated films are extremely complicated. Because of the success of the Pixar and DreamWorks films, people are coming out of the woodwork proclaiming they can make the next blockbuster. If you look closely, you'll realize that most of these people really have no (or very little) experience in animated films (or even animation!). They ease their investors minds by saying they hired a few Pixar guys. That is great and everything, but the fact of the matter is, most failures are going to be because of management and producers and directors, not the artists themselves.
To this individual that asked about a particular company... If you are looking to invest in the community in which you live, then this company is probably a good choice. However, if you are simply interested in investing in animated films, you probably have better options available. There are many startups that are about to get off the ground that have a much more experienced pool of executives, producers, directors, and artists. Potentially being a negative in your situation is that these startups are based in the Los Angeles area. I guess only you know the answer to whether location means that much to your investment.
I get a kick out of the groups that come along and proclaim they are going to be the next Pixar. Even more amusing is that a lot of these groups really don't have any idea what they are doing. They may know business, but animation cannot be considered a normal business. An investor needs to examine and do their due diligence on the management, on the producers, on the directors. Look at their track record (if they have one) in animation. Did they produce a profitable product? Did they stay within budget?
Something else to think about. When a studio comes along and says they will complete a movie for $25 million, you really need to ask yourself (and them) how they are going to do it for that price. Where are the shortcuts going to be? How is that going to affect the quality or the story? If I opened an animation studio in San Francisco and claimed to be able to keep the budget within $25million. Your first question should be- where are you going to find the talent to fill seats? I'm going to have a hard time getting Pixar and ILM employees for that budget. So then I should start worrying about where these people are going to come from? Straight out of school? Inexperienced people looking to work on their first feature project? San Francisco has a ton of talent base. Unfortunately they already have jobs!! It is not the same environment as Los Angeles (people constantly shifting from studio to studio, tons of smaller animation studios to pick talent from). Salary is the number one expense in animated film production. Add up the number of people and multiply by the salary you will have to pay them to leave their cushy jobs at Pixar and then multiply by how many years an animated film is in production. Oh crap, I just blew my $25 million budget and I still haven't bought computers or paid voice talent or gotten sound design or, or, or.
There is a reason why animated films cost so much. Anyone coming along claiming they can do it for a quarter of the usual price is going to deliver a lesser product. There is no denying this. As an investor, you've got to understand that this won't be a Pixar quality production. If your cool with that, and you think the money will be spent in the right areas (story story story, marketing marketing marketing) and have the management, producers, and creatives to pull it off. Maybe it isn't such a bad investment.
If I had the money, I certainly wouldn't do it. I would be looking for a solid core group that has already done it elsewhere and has a budget of at least $45 million.