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June 09, 2009

REINERIO A. ALBA

Animation in the Philippines is an export-oriented industry with more than 7,000 artists engaged and P105M revenue posted in 2007 growing at 8% annually. This year, the global market for animation reaches US$68.4B.

Jessie Lasaten is among those who have found a business haven in the animation industry. Originally, Lasaten has been doing musical scoring for the local movie industry for a total of 14 years, having studied film scoring in Berkeley College in Boston.

He previously worked for Roadrunner Network (a subsidiary of ABS-CBN) as its musical director. “Naisip ko, what’s going to happen to me after several more years? Pano ko papakainin ang pamilya ko? So, I went into editing and visual craft naman since with the Mac computer that I had at that time, you can do music, you can do anything. Minaximize ko lang ang technology available to me,” explains Lasaten.

Now, aside from doing musical scores, Lasaten, now 40, is serving as the Chair and Chief Executive Officer of his own production company Cutting Edge Productions that has since turned to animation.

Cutting Edge Productions started out as a home-based enterprise and eventually moved to Greenbelt Mansion in Makati when it expanded. From an original group of three (himself, his wife and an editor), the Company now has over 500 artists working for them. “We’re hitting our target of growing steadily by at least 20% each year but of course the quality of the work should be there for us to retain our clients.” 

Since its incorporation in August 21, 2004, Lasaten said that they have been aggressively providing their core services such as video post production services, animation, original music and audio recording for major media communication companies in the country.

Net revenue for the Company alone in 2007 was already at P31.21 million, and the net income for 2007 was P11.74 million, which Lasaten says, is 258% higher than their 2006 net income.

In 2007, the Company expanded its services to include 2/D3D animation.

But instead of outsourcing projects, Lasaten says they opted to produce their own animation film starting with its content, using a business model that is premised on creating and owning intellectual property.

Investing 15 million to build their own animation facility, the Company then started work in 2007 on their first ambitious full length digitized animation feature film titled “Dayo,” and their very first entry in the 2008Metro Manila Film Festival (MMFF). “Dayo,” directed by Robert Quilao, is a story of Bubuy who must rescue his abducted grandparents. His quest leads him to Elementalia, a land inhabited by strange creatures such as theaswangs, and the manananggal or the flying half-bodied creatures.

“Coming up with our own content opens a chance for us to co-produce projects that can yield multiple sources of revenue from merchandising to licensing. Profit margins are also higher in co-production because the life-cycle of a product is longer, unlike in an outsourced service deal, which ends with the completion of the animation work.”

Lasaten admits that putting up a production company like his is a high capital investment starting with the Apple Macintosh machines, 21 inch Wacom Cintiq screen tablets that the animation is drawn with, the Toonboom Animation software (the same software used for “The Simpson” Movie). He says that one set of equipment with licensed software costs at least P500,000.00.

One also needs to consider the professional fees of all the people that will be involved in a single project: director, scriptwriters, animation directors, clean-up supervisors & checkers, in-between supervisors and checkers, digital ink and paint supervisors, post producers, production assistants, video editors, sound engineers, musicians, and even band artists including the support of IT, HR & admin, finance, marketing. Add to this list are the voice talents.

And why did his company choose to do a full length animation as an initial project?

”We chose full-length animation because it is the form of highest quality. Besides, the “Dayo” Movie will serve as a “calling card” for Cutting Edge, and a signal to international clients that we can do such a project here.”

And as for being resourceful, Lasaten admits that the funding of “Dayo” at a budget of $1M, for example, came from pooling finances from a bank, suppliers and friends. They also raised capital by taking on loans against the equipment.

Lasaten says that they are also still realistic with the potential income of ‘Dayo.” “The MMFF is a P350-400M market. To recover our $1M production costs, we need to get $3M to at least achieve break-even because $1M will go to the government and the remaining $1M to the theater owners.” Hence, rather than expect a direct income from the MMFF ticket sales, Lasaten says they are instead looking at revenues from ancillaries such as direct-to-video, cable, foreign distribution, licensing and merchandising, and being an animation that it is, revenues are in perpetuity.

Cutting Edge has also created “Dayo” as a trilogy and targets to show one film every year at the MMFF festival.

And what were the major learnings of their company in having created “Dayo?”  

“In 2007 , our main question was on how we are going to do this big project and how it will be funded. We could have aborted right away and just content ourselves in doing the usual animation. But “Dayo” is not just a story of a boy named Bubuy. It is also a story of our company and also the artists in the industry as well. It is being confident and believing on what you can do. This is a challenging year for Cutting Edge but, more importantly, the animation industry is looking at us to take them off the ground.  Kaya nating lumipad.”