Attack of the Baby Pixars

Fast Company: They want to make computer-animated feature films for family audiences, too, but they're looking to do it on an entirely different scale: smaller, cheaper, faster... As Kasanoff puts it, "Animation is the only part of film production where quality is going up while costs are going down." What's more, kiddie cartoons are the sweet spot of the industry. While the average feature film produces $33 million in U.S. box-office receipts, the average for family films is $90 million. The figure is an astonishing $225 million for digitally animated films.

Astonishingly, the low-risk, high-reward potential of digital animation has generated tremendous interest in investors far from Hollywood. Phil Knight, cofounder of Nike, recently bought Will Vinton Studios, the animation house in Portland, Oregon, where his son worked. Knight renamed it Laika (after the 1950s Soviet cosmo-dog) and bankrolled it to make animated feature films. And "there's an enormous amount of money in Asia to produce animated motion pictures in the $25 million to $50 million range," says Ellen Goldsmith-Vein, who runs the Gotham Group, a management company for many of the top writers, directors, and producers of digital animation. Taiwan's Digimax, for example, has committed financing for her low-budget animation flicks.

"Intellectual property rights--that, frankly, is the essence," says Vanguard's founder John Williams, who produced Shrek and Shrek 2, both owned by DreamWorks. For an upcoming animated film that Vanguard is producing, with Fox distributing, Williams says, "We've held back all the merchandising, licensing, and video-game rights. If and when we get a significant franchise"--a film with lucrative sequels, such as Shrek or Toy Story--"we'll own those rights. The intellectual-property rights are the treasure trove."