Getting a toon up

After it finishes its first full-length feature, keeping it real is not what this Twin City animation studio is all about.
By Maggie Frank

On a spring afternoon, two young women blow up purple balloons in the main room of a century-old duplex near downtown Winston-Salem. Open boxes clutter the floor. Inside them are T-shirts touting The Magistical, a Disney-inspired fantasy that will be Out of Our Minds Animation Studios Inc.’s first feature-length film. What was once the living room is now the studio’s lobby, and the shirts and balloons are part of a public-relations campaign the company is kicking off at Winston-Salem’s annual RiverRun International Film Festival, where a trailer for the movie will premiere. If all goes as scheduled, the film should be ready for screening by year’s end.

“How many people can say they got the chance to work on a full-length animated feature right out of school?” says animator Brooke Garris, who is helping the receptionist inflate the balloons. Owner John Cernak hired her last year after she graduated from UNC Charlotte with a fine-arts degree. “This is a once-in-a-lifetime opportunity.”

Unfortunately, she might be right. Cernak’s biggest worry is that this could indeed be his only opportunity to release a feature, despite the studio’s critical success with short films. Since 2003, Out of Our Minds has produced three — Dear Sweet Emma, Flyaway and Joyride — that have taken more than 100 awards at film festivals around the world. Cernak has spent much of the past two years on The Magistical. His shaggy hair, big eyes and scruffy duds fit the creative stereotype and the studio’s name well. But he’s enough of a businessman to know that if The Magistical doesn’t find a distributor and make money, all the critical acclaim in the world won’t keep his dream alive. “It does cause me sleepless nights. I mean, if we make a film and no one wants to see it, I don’t think we’ll get another chance.”

He already is preparing for that possibility. Out of Our Minds started as a graphic-design firm, and when it wraps up the movie, it will shift more of its resources to ad campaigns. “The split will happen gradually, with more and more staff moving to the commercial work as their responsibilities on the film are fulfilled,” says Danny Oakley, the company’s animation director. “We just have to stay flexible. The distribution deal we get will decide the next steps.”

That Cernak, 56, could launch a film studio as a sideline to a graphic-arts shop testifies to the impact of technology. Cheaper, user-friendly software has allowed upstarts to sneak into some of the same theaters that show the works of Goliaths such as Pixar Animation Studios and Walt Disney. The former, started in 1986 by Apple founder Steve Jobs and computer-graphics pioneer Ed Catmull, now is owned by the latter. Pixar’s Toy Story was the first full-length computer-generated 3-D animation, and each of Pixar’s eight features has topped $1 billion in ticket, DVD and merchandise sales.

Cernak idolizes John Lasseter, who conceived and directed Toy Story and Cars, and he has adopted some of the bigger studio’s ways. Pixar’s stories, for example, are conceived by its directors, not adapted from outside sources, and Cernak is the one who came up with the plots for The Magistical and his studio’s three shorts. But his background isn’t Pixar perfect: He’s not a trained filmmaker. Born in Yonkers, he attended State University of New York at Plattsburgh for a year before dropping out to join a graphic-design firm in White Plains, N.Y. He came to Winston-Salem in 1980 to work as a designer for R.J. Reynolds Industries. Five years later, he left Reynolds to start a graphic-design firm, The Creative Source.

In 2000, Cernak and his five employees went to a computer-graphics trade show in New Orleans and came home with a $99 rudimentary 3D program called Animation Master. Oakley learned how to use it and became the company’s animation director. Before long, the company was making short films on the side and started calling itself Out of Our Minds Animation Studios. Cernak says it more accurately reflects the process of creating. Though technology now aids artists who once relied on ink and paper, what goes into the final product still comes out of their minds.

The company found success with its first stab at a short — the four-minute Dear Sweet Emma. It’s a darkly humorous story about a murderous, psychotic elderly woman that offers a twist on the cute and cuddly look of classic Disney. Shadows and rudimentary 3-D effects complement the mood of the film. The staff completed it in about two months in 2002 — while doing advertising work — and sent it to an independent-film festival in Hollywood. It circulated through more than 200 regional festivals, won more than 40 awards and was nominated for a British Academy Award in 2003. Though it didn’t win, the recognition convinced Cernak and his team to make another one. He also began thinking about how he might bankroll a feature film.

He approached brother-in-law Jim Woodcock, a principal at Carolina Financial Group Inc., an investment banking boutique based in Brevard. Woodcock brought the project to the attention of CEO Bruce Roberts; both are listed as executive producers of The Magistical. Roberts initially was gun-shy. While at Credit Suisse First Boston in New York, he worked with Matsushita Electric’s investment bankers in the Japanese company’s takeover of Universal Studios in 1990. “I would have told you I would never go near a film deal, because it’s quite treacherous.” But his initial meeting with Cernak was positive. He wanted to invest his clients’ money in projects fueled by passion, he says, and Cernak seemed passionate about his work.

When the deal was announced two years ago, the Business Journal of the Greater Triad Area reported investors were putting up about $2 million of the $3.5 million needed to make the movie, but Cernak and the executive producers won’t talk about the budget. Roberts says Out of Our Minds holds a 41% stake in Cre8-3d Films, the limited-liability company that owns and finances the film. Carolina Financial owns 10%, individual investors have 40%, and 9% is held by the film’s staff and voice talent — a rarity in Hollywood.

A $3.5 million deal is on the small side for Carolina Financial, which has put as much as $50 million in other companies. Since setting up shop 10 years ago, it has financed some 300, about half based in North Carolina. For The Magistical, it recruited about 40 investors, many of them high-net-worth individuals. About a third live in North Carolina. For some, it’s an “emotional investment” as much as a moneymaking venture.

The gamble, though risky, looked to Roberts like it could pay off big: The 30 or so feature films that rely entirely on computer-generated animation, from Toy Story onward, have grossed an average of $300 million worldwide. Out of Our Minds had won all those awards for shorts its employees completed in their spare time. Who knew how well they could do if they devoted more of their time to filmmaking?

Roberts also knew the film could be financed for less than the $100 million an animated feature typically costs. One reason is the 19-employee studio’s labor costs. Cernak, whose wife and two grown children also work there, has put together a team of young artists willing to work for less than scale. But that’s not their only benefit. Their passion, he says, outweighs their lack of experience. “You know how a lot of kids enter college and they really believe they can conquer the world? Then after a while, they get some experience and it takes them out of the follow-your-dreams and into more of a this-is-the-real-world type of thing. Well, we are very much follow-your-dreams.”

A panel discussion about animation at the RiverRun Film Festival is winding down. Film students and alumni are gathered in North Carolina School of the Arts’ 300-seat main theater along with local graphic designers and animators, children wearing Pixar movie T-shirts and curious Winston-Salem residents. They have been sitting quietly and attentively throughout the hour-long presentation by high-powered executives from Pixar, Disney and Rhythm & Hues Studios — along with Out of Our Minds.

An audience member asks Disney casting director Jen Rudin Pearson how he might get a meeting with studio executives to show a pilot he had made in his spare time. Her reply is blunt: She tells him Disney never looks at blind pitches and suggests that he would have to find another way to get his work in front of anyone at a major studio. Rhythm & Hues’ Bill Kroyer, who directed animation for The Chronicles of Narnia, nods in agreement, adding that the man shouldn’t expect anyone at a major studio ever to see his pilot.

Chilly responses to unproven talent are common in Hollywood. But today, artists have alternatives to the old methods of selling their work through influential middlemen such as agents and managers. With the rise of the YouTube.com video-sharing Web site the past two years and the proliferation of regional film festivals in the past five, it’s easier than ever to expose an audience to a project.

Out of Our Minds may not have to use YouTube, but regional film festivals could be part of its marketing strategy. When The Magistical is finished, Woodcock says, the next step will be to rent a theater in Hollywood, seat buyers from major studios such as 20th Century Fox and Paramount with a group of 10- or 11-year-old children and show the film — all in hopes of getting a bidding war going. He envisions a public-relations and ad campaign six months before the official release date, a wide national release and $100 million in box office receipts.

Though not common, this strategy has worked to varying degrees for some live-action films, including 1989’s Sex, Lies, and Videotape, says Dale Pollock, a film professor at the School of the Arts. Other indie films that found distributors this way started off slowly, gaining traction and recognition for their directors, who then went on to bigger things. Cernak would be happy with that.

If they can’t spark a bidding war, The Magistical’s backers will pitch the film at major festivals such as Cannes and the Toronto Film Festival. Out of Our Minds also could charge a fee to smaller festivals that want to show The Magistical, a practice that’s becoming more common, Pollock says. He estimates that 10% to 20% of films shown at a regional festival charged fees ranging from $400 to $2,000. But even getting the top price, The Magistical would have to play at 1,750 film festivals to recoup the reported $3.5 million investment. That’s not exactly a viable moneymaking strategy, but it could be a secondary revenue stream.

Another option is releasing directly to DVD, a route most often taken by genre flicks such as low-budget horror or action movies and sequels to major-studio films. Woodcock is not yet interested in that option, but Roberts is more comfortable knowing The Magistical could be released that way and still turn a profit.

There are notable quality differences between The Magistical and a film like Pixar’s Ratatouille, which came out in late June. Pixar employs hundreds of modelers, animators and lighting specialists who make every image look realistic in ways Lasseter only could have dreamed when directing Toy Story in the early ’90s. Today’s animated characters have computer-modeled skeletal and muscular structures that transform them from two-dimensional pen-and-ink drawings to 3-D celluloid images.

The Magistical characters are three-dimensional, but they have a far more basic skeletal system than Ratatouille’s. On the other hand, the film’s lighting and the slightly disproportionate characters may enhance its drama and draw the audience into its world. Cernak isn’t providing many details about the story. All anyone outside the studio knows is what’s available in the trailer, which shows about a dozen characters and hints at a battle between good and evil. Evil goes under the name of Dracken, an orange-red giant who spits fire and whose voice Cernak describes as “what Carol Channing and Eartha Kitt’s love-child would sound like.” The Magistical namesake is a wizard. He’s the good guy.

Cernak hopes the movie’s unusual look and its willingness to embrace a fairy-tale format that includes wizards and dragons will make it seem fresh, compared with slick big-budget animated features. But he has no crystal ball or magic mirror that can predict if the movie will produce a fairy-tale ending for the studio and its investors. “It’s like our child,” he says. “We don’t know whether it will end up in college or jail.”

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