Producing an animated film based on a localised concept

Since I came back from our last IP seminar in Jakarta, many artists have been writing to me. Asking me business questions about producing animated content based on their localised concept. Some expressed disappointment. Even though their content is of high value, their investors don’t seems to be interested at all.

In general, if your animated content is too localised, you need to make sure that you have a strong domestic market to sustain the animated film. Overseas audience may not understand or appreciate immediately as it takes time for the culture to propagate across the globe. The same idea applies to how the Japanese Anime or Korean Drama grows internationally.

Lets use a Spicy Chilli Crab Analogy to illustrate the idea. If your Chilli Crab is targeted only at Singaporeans. And if you refuse to customise the taste for overseas market. Then you need to make sure you have a strong domestic market to sustain your business. It takes a very long time to establish it locally and accumulate enough foreigners to appreciate the acquired taste before a new worldwide fan base is established. If your domestic market is not strong enough to sustain your business. It will collapse locally even before it starts to grow overseas.
However, there is another way to do this if your local market is too small like Singapore. You can modify the taste so that you can expand your market share by tapping on both domestic and international market at the same time. It’s like making Spicy Chilli Crab for the locals and Sweet Chilli Crab for the Western market at the same time. What Lakon Animasi did for “Pada Suatu Ketika” is interesting. This is what I call Chilli Crab for the Global Market with a strong potential for merchandise.

If you want to make an animated feature film strictly for your own market. First, you need to find out what is the potential box office for both the foreign films and local films in your country.

Lets use Indonesia as a case study:
Indonesia Box Office in 2012
http://www.boxofficemojo.com/intl/indonesia/?yr=2012&p=.htm

Based on the above link. The estimated potential of the Indonesian box office in 2012 for Live Action Films seems to be USD$1.4M The estimated potential of the Indonesian box office in 2012 for Animated Films seems to be USD$700k. Now lets say you are producing a localised animated film. Without the super marketing budget like the foreign films, do you still think you can hit the above local box office?  Is your local audience supportive towards local content? Does your country has a problem with people downloading pirated films or buying pirated merchandise? All these consideration will affect your bottom line.

In cinema business, 50% goes to cinema rental. 25% to 30% goes to distributor. The remaining goes to advertising and publicity. You are left with very little money. Is this enough to cover your production cost based on the estimated box office returns above? If the answer is YES. Then you have a strong domestic market to support your localised film. If not, then it is a Red Flag to investors. This is a reality check and it is what runs through the investors’ mind. If the money left in the box office is not enough to cover your cost. Then the next question is whether there is any merchandising opportunity based on your current designs. Are your designs merchandise friendly? If you want to produce an animated film to maximise the opportunity, you need to target G Ratings for Children. (Family Entertainment) Not just for Geeks (Otaku) like you and me. ha ha. 😛 This widens the market. Hence you need to understand the kids’ parents. They are the ones who bring their kids to the cinema. Not the kids themselves. You need to ensure the parents feel safe to take their children to watch your animated film. Which in turn drive the merchandise. Can the local merchandise market cover your cost? Do you have a huge population to support sales of merchandise? Is that enough for your investors to consider your project? Your investor might ask whether your animated film can travel overseas to make even more money?

In the past, Japan has a strong domestic market to sustain their localise content. They do not need the global market. Unfortunately that is history now. Their economy is doing down and their market can no longer even sustain the production cost. That is why they need to go global. That is why the new generation of the leadership is to look at creating content for the world.

China on the other hand has a super strong domestic market now. They do not need the world. Hence all content created in China must have some sort of Chinese history or cultural relations if they want their government to support them.

Some Latest Animated Films from China
神笔马良 – The Magical Brush


Little Door Gods – Light Chaser Animation

CONCLUSION
End of the day, we are still talking about business. If you demonstrate that your animated film has a global potential, investor might feel safer to invest in you. You might not agree with what has been written so far. If your film focus only on art festival and prepared not to make any money, then it is ok. Else you will need to convince the distributors and investors to support your vision where most of their concerns is about making money. You also need to convince cinema chains to exhibit your film in many cinema halls and at the prime time slot. If they have no confident in your animated film, they will rather keep these slots for blockbusters. And exhibit your film in a few cinema halls at bad time slots. This will then hurt your box office sales.

Challenges faced when Creating Animated Films with more mature materials

Many artists asked me about the question of creating Animated Feature Films with more mature materials. Besides Japan, the acceptance level for mature material (violence, sexual etc) in animated film is much lower in most countries. Japan used to have a very strong domestic market in the past to sustain their localise animated content for adults. They do not need the global market. It’s a Otaku (Geek) market. For DVD, Toys etc. Unfortunately that is history now. Their economy is badly affected and sustaining the production cost with their own market is a challenge. That is why some producers have decided to go global and started to look at creating content for the world but not only for their own market. The question you need to ask yourself is whether your content is strong enough to enter and compete in the Japanese market. You need to be sure that you have a strong domestic market that can support and sustain your animated film. So you need to find out what is the potential box office in your country. In cinema business, 50% goes to cinema rental. 25% to 30% goes to distributor. The remaining goes to advertising and publicity. Hence you are left with little money coming to you if your box office is not good. If you look at the global market for animated films. The top 50 animated films that have the highest box office is mainly animated films for children.

http://www.boxofficemojo.com/genres/chart/?id=animation.htm

Another example: Space Pirate Captain Harlock (With Mature Material) (Japan)

Nutz Job (For Kids) (Korea)

The result is as follows:
Space Pirate Captain Harlock Global Box Office is USD$17,137,302 (17 Million)
Nutz Job Global Box Office is USD$113,307,962 (113 Million)

Unless you are creating an animated film for Arts Festival and prepare not to make money. Then it is ok. Else the bottle line boils down to whether you can convince distributors and investors to take a risk to invest or distribute such adult animated content. As most of their interest is to ensure it makes money at the box office. Even convincing the cinema to exhibit your film is a challenge at times. If your film ended up exhibited at limited cinemas or at bad time slot, it is going to be a challenge to cover your cost.

Another case study: War of the Worlds Goliath 2012 (Made in Malaysia)
Base on Wikipedia, the box office is about RM $280,000 (About USD$78,607)
http://en.wikipedia.org/wiki/War_of_the_Worlds:_Goliath

Base on Box Office Mojo, US Box office is about USD$13,385. About 18 cinemas showing it. In the US, you probably need about 3000 or more cinemas to exhibit your films to stand a better chance to hit the box office. But convincing a good distributor or cinemas to exhibit your film is a challenge.

Especially for independent films.
http://www.boxofficemojo.com/movies/?id=goliath.htm

Other things to consider is this. Say a family of 4. What is the probability that the parents will take the children to watch the animated film with mature content. As compared to an animated film for kids. Lets say if you are targeted at teenagers. The question is what are the probability for the teenager to watch your animated film as compared to a live action film. What is the probability that the teenager will go to the cinema to watch your film and not download from somewhere. 🙂 Compare 1 teenager watching your film as compared to a family of 4 watching your film. DVD market is also affected as Video on Demand market is slowly taking over. Hence you can no longer depend on DVD market too. Other questions are whether your film has an merchandising opportunity. Will the teenagers buy your expensive collectibles? What is the probability? As compared to parents buying merchandise for their kids. These are the questions running through the head of money people. The global perspective is that animated films are for children. It is not going to be easy to change this mindset. Adults may or may not watch an animated film with mature materials as they have other choices in live action movies. Parents might not feel comfortable to bring their kids to watch it. Thanks to new free digital distribution platform, there is some good news. Nowadays online channel like Youtube can allow you to self distribute your animated film with less obstacles as compared to cinema distribution. For such a strategy, you need to have a strong social media and viral marketing campaign. But the objective is still the merchandising opportunity because money from online platform might not be strong enough to cover your cost. Make sure your designs is merchandise friendly. Your fans are your greatest assets. If you have a few millions fans for your online animated film, you have the power to negotiate with investors and they will be very interested. So that is your ultimate goal. In conclusion, I am not saying that animated film with matured content will definitely fail and children animated film will definitely succeed. A lot still depends on your story, marketing budget and campaign, your strategy, your release date, your fans support and other factors.