Flashback: The first-gen annimation Wizards of Hollyood's future

December 1993

DIGITAL WIZARDS OF HOLLYWOOD'S FUTURE
The Herring edit team explored the back studios of the titans of commercial animation production and talked to the executives and creative directors leading these shops into the digital age.
By Anthony B. Perkins
From December 1993 issue

Hollywood may have gone digital, but for this month at least, The Herring went Hollywood. As part of our excursion, The Herring edit team explored the back studios of four of the titans of commercial animation production and talked to the executives and creative directors leading these shops into the digital age. If you try to count the Oscars, Emmys, Clios, and other creative awards won by Colossal Pictures of San Francisco, Hollywood's Rhythm & Hues, Silicon Valley-based Pacific Data Images, and Sony Pictures Imageworks in Culver City, you will quickly run out of fingers and toes. The digital wizards that dwell in these studios have pioneered the use of computer technology for everything from motion control to blue-screen separations and compositing. Their magic wands have touched some of the most innovative music videos, television commercials, cartoons, and feature films -- includion Budweiser's "the BUD Bowl" and Coca Cola's "polar bear" commercial series, and the feature films Demolition Man, Total Recall, and In the Line of Fire. Read on and learn what The Herring saw when we looked into the crystal ball with these digital wizards.

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Drew Takahashi, President and Chairman, cofounded Colossal in 1976. He is fluent in a wide range of cinematic skills from live action through motion control and computer animation to classic cel animation. He created "Moxy," television's first real-time cartoon character, and developed MTV's Liquid Television series. Previously he worked with George Lucas, Francis Coppola, and John Korty.

Warren Franklin, chief operating officer, spent 14 years with George Lucas' Industrial Light & Magic (ILM) where he guided the production of visual effects for more than 25 films including the Academy Award winning Indiana Jones, Roger Rabbit, and The Abyss. He joined Colossal in 1993 to spearhead the company's digital media and interactive publishing activities.

The Herring: When do you think digital media began having a big impact on the filmmaking business?

Takahashi: 3-D computer animation was not really considered a viable special effects tool until 1991 with The Abyss and Terminator 2. After Jurassic Park the whole business really kicked off. No one could ignore that movie. In retrospect, it took people like Jim Cameron and Steven Spielberg, who appreciate and understand the possibilities and have the vision and clout to raise the money, to get the projects done.

The Herring: What have your experiences at ILM and Colossal taught you about what it takes to create good computer-generated art?

Franklin: I've learned most about the possibilities of computer animation by watching the motion scientists put together their performances. The effects they rough out and create in fifteen minutes today used to take fifteen hours only a few years ago. In the feature film market, Dennis Muren at ILM has to be one of the greatest artists. He has the ability to envision how a special effect will look on screen and how to make it look believable. It's an intangible skill that someone can develop only after a lot of experience making films. Dennis will direct shots in a very subtle way, for example, changing the lighting on leaves or changing certain textures, and it will make all the difference in the world whether or not a scene looks believable. It's really amazing. Phil Tippit is another great artist. He choreographed all the motion of the dinosaurs inJurassic Park. He laid out the rough animatic form that all the computer animators followed in doing all the shots in the movie. Phil's actually a stop-motion animator; he animated the chess game in Star Wars, he built Jabba the Hutt and all the creatures in The Return of the Jedi, and he did Robocop. He's a terrific artist who possesses traditional animation skills but also understands how to take advantage of them on the computer.

The Herring: So an artist is still required behind the wheel?

Franklin: Absolutely. The best artists in this business have been previously trained as traditional animators, photographers, or designers. But the trend is for these artists to start playing with their Macintoshes at home and see how they can create their art more efficiently and cost effectively.

The Herring: What achievement in the computer graphics area are you most proud of?

Takahashi: We've done a lot of fun stuff. "Moxy the Dog" was the first real cartoon actually fully generated by a computer. We've been swamped by people who would like to produce more cartoon work like Moxy.

The Herring: How's business at Colossal?

Franklin: Colossal has a real strong commercial production work-for-hire revenue stream. Over the last year, we also converted our shop over to a fully networked digital production studio. The timing was good because computer prices were reasonable, and the software is getting more powerful. But we did that all out of cash flow. We now have about 150 people on staff.

The Herring: If Budweiser or Sega comes to you to develop a commercial, how do figure out how much it's going to cost?

Takahashi: Have you ever seen those little crystal balls you can buy at the magic shop? (laughs)

The Herring: As the cost of technology goes down and its performance goes up, does Colossal end up making more and more money?

Takahashi: No. You can do better work, but your profit margins remain pretty much the same. It's an extremely competitive environment. As soon as a studio can do some effect for less, they're going to pass on that savings to their clients so they can win their business.

The Herring: Are you working on any content products that you hope to sell?

Takahashi: We're evolving into a business that will be able to address a lot of different media venues like theme parks and location-based entertainment with different techniques like virtual reality and multimedia. It's a natural extension of our existing skill sets. Right now, we're working on some traditional third-party author projects in which we design and produce content and turn it over to publishers like Broderbund, Electronic Arts, Spectrum Holobyte, and 3DO to market and distribute. The strategy behind starting our film development division back in 1988 was to develop situations such as the Liquid Television series on MTV, which left us with popular content that we could spin out into different products for different markets. The general thrust in our strategy is to take more control of the content we produce.

The Herring: But that will require the company to operate under a radically different business model.

Franklin: Yes. I think the traditional special effects service company model breaks down for companies, like Colossal, that want to grow. To grow sufficiently, we'll have to transform our business to become a developer and owner of original characters, location-based films and entertainment, interactive titles, and other content that, we hope, will reach a certain level of popularity in the marketplace. But it's a very difficult transition to make unless you have a depth of creative talent. In five years, we'd like to have an equal balance between service and content product revenues.

The Herring: How do you intend to finance this growth? - from retained earnings?

Takahashi: Well, it depends what day it is and what valuations look like out there. (laughs) We've been in business for seventeen years and have had a steady and growing revenue stream. Tons of money has been reinvested in the business. But I think we're looking at all options, including getting development money from a strategic partner, to non-cash deals in distribution and technology. As we move forward, we want to gain more of an equity stake in the content we produce.

The Herring: Are studios going to be able to roll the computer graphics developed for a feature film into a video game and maybe a theme park ride?

Takahashi: Yes, in some form. The technologies used to create special effects today are more compatible, and there's definitely a trend towards more cross fertilization and sharing of images. But a different set of skills are required for creating an interactive video game than for feature film work.

The Herring: How would you characterize Colossal's creative edge?

Takahashi: A lot of the shops are centered around a single artist's style that is distinctive in certain ways. We've managed to grow our business by offering a wide range of creative styles. Now, we didn't develop this way consciously. (laughs) It happened because it's how we had the most fun. That's the way we are: variety is part of our culture. Once we create a certain kind of animation, we generally want to do something different. No one has ever owned us, so we just do what we want to and have a lot of fun. One day, I actually realized that our true competitive advantage was our freedom to have fun and do just what we want!

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Tim McGovern, senior vice president of creative and technical affairs, has won five Clios for television work and an Academy Award for special achievement in visual effects for his design and direction of the computer animation in Total Recall. His work for Imageworks has included effects for Last Action Hero, In the Line of Fire, and The Pelican Brief.

Bill Birrell, senior vice president and executive producer, helped establish Imageworks in 1992 for its parent company, Sony Pictures Entertainment, to develop state-of-the-art digital imaging for motion pictures.

The Herring: From an artistic standpoint, is Sony Pictures Imageworks known for any particular type of visual effects style?

Birrell: We're particularly proud of the fact that we can create, out of synthetic elements, absolutely photorealistic, reality-based images. For instance, in the film In the Line of Fire, we changed history in several of our shots. We took an outtake of Clint Eastwood from Dirty Harryand fit it in perfectly with a shot taken with a 16-millimeter camera of JFK and Jackie Kennedy at Glover Field on the day the president was assassinated. In the process, we had to give Clint Eastwood a digital haircut, shave off his sideburns, narrow his tie, and give his jacket a digital lapelectomy.

The Herring: Poor Clint!

Birrell: Actually, he liked it.

The Herring: How is Sony Pictures Imageworks structured as a business?

Birrell: Sony Pictures Imageworks is a full-service visual effects production company founded in November 1992. We are part of the Sony Pictures Entertainment umbrella of companies, which also includes Sony Pictures Studios, TriStar Pictures, TriStar Television, Columbia Pictures, and Columbia Pictures Television, as well as all the Sony filmed entertainment production and exhibition entities. Colloquially, we're considered part of Sony's software side, as opposed to the hardware side.

The Herring: What is Imageworks' mission statement?

Birrell: The founding of Imageworks was based upon certain assumptions. We believe that as the cost of implementing visual effects technology goes down and its performance goes up, this technology will be applied more widely and deeply in the production of feature films. These tools are having a huge impact not only on the way stories are being told, but also in determining what stories we can afford to tell. Given this impact, it only made sense for Sony Pictures to take control of the visual effects production side of its business. Until Imageworks was founded, Sony Pictures relied predominantly on outside production vendors. If you look at the movies we've released over the last fifteen years, you'll see outside visual effects companies listed in the credits. The effects for Hook and Terminator 2 were provided by Industrial Light and Magic; Dream Quest Images did a lot of the work for Total Recall, and Boss Films did part of the work for Cliffhanger. Now, however, Imageworks will handle a significant portion of Sony Pictures' visual effects production work.

McGovern: It's kind of like when they built the stages back in the '30s and '40s. The goal was to gain more control over things like lighting and how sets were organized. Today, you essentially incorporate the whole production process in your computer in the form of a digital studio. You have cameras, lights, objects and sets simulated onto your digital -- almost virtual -- stage, where everything can be controlled and manipulated. Ultimately, you can achieve a tighter level of integration between live characters and computer-generated images than anyone could have imagined. Visual effects technology has become so powerful, you can remake almost any part of any character with a computer-generated image, and the viewer could never tell the difference. As time goes on, more and more work will be done on these digital stages and added to feature films. As Bill was saying, the experience of working on visual effects-intensive movies like Total Recall in the late '80s and Hook and Terminator 2 in the '90s made Sony Pictures' management realize how profoundly advanced technology techniques were going to impact the future of filmmaking.

Birrell: Another way to look at it is to say that Imageworks provides Sony Pictures with a significant advantage because we serve as sort of an on-lot production consulting operation. We educate our film makers about what technology techniques are possible and which are cost-effective.

McGovern: And this happens at the very beginning of the film production process -- sometimes even before the script is completed.

Birrell: Right. Very early on, we teach directors and producers how to leverage visual effects technology to tell their stories more powerfully and dramatically. Our type of high-value service is hard to find from a third-party visual effects vendor. When you contract an outside vendor, you generally send them some story boards and tell them you'd like to see a bid for the work in a week. You just don't have the opportunity to collaborate at the story conception stage with an outside vendor as you do if you can access an on lot production unit like Imageworks.

The Herring: Has Sony Pictures ever used this capability to lure any top directors and producers into one of its projects?

McGovern: Yes! In fact, Imageworks was very active in the process of recruiting the director of the movie we're working on right now, which I don't think I can mention the name of yet. For a very reasonable amount of money, we were able to demonstrate to this director precisely what the production process would be like, what techniques would be easier, which would take longer, and we showed him how interactive everything could be, and how much it would all cost. Ultimately, he was lured to the project, and we got the studio more excited about the film than they were before we performed the test.

The Herring: I can see now how Imageworks can provide a real advantage.

Birrell: But to be fair, it's a collaborative process. If you have a technologically astute director like a Jim Cameron working on the team, who has been around the block a few times, then you can really do some great things. When you look at The Abyss, for example, Jim Cameron's experience working on the effects connected to the pseudopod in that film, gave him the confidence that he could achieve the level of effects he wanted to tell the Terminator 2 story.

McGovern: Jim Cameron is, of course, a rare exception. But with the closer proximity of good technology tools to the hands of new directors, they can learn very quickly and execute on techniques they might once have thought impossible.

The Herring: Tell us more about the specific digital production tools that Imageworks uses.

Birrell: The best way to describe those tools is to outline for you our production process in creating a film. Our pre-visualization group performs the animated story-boarding process. Based on hand-drawn story boards and production designer blueprints, this group creates a shot-by-shot animatic of entire film sequences that can be edited together. This gives the director the opportunity to experiment very creatively with a significant number of alternatives before he even walks out onto the set. And he can do this at a fraction of the traditional expense, because you don't have a crew standing around on the set.

McGovern: It's great for laying out visual effects strategies or complex stunts. You can see on the computer, for example, that if you back up the camera on Stage 30 a certain distance, you're going to run into the back door and not be able to take a shot of the whole set, even if you have a 17-millimeter lens. That type of advance information helps make the whole production process far more efficient. To perform this kind of work, we use Pentium-based systems, using primarily 3D Studio software from Autodesk.

The Herring: Once you have the production plan, then what happens?

McGovern: The film group comes in and provides the crew and the motion control equipment, camera rigs, and blue screen systems so that we can get precise registration to other effects that will be produced and composited. These rigs allow you to take a shot in real-time and play it back again so you can make the effective pass. For instance, if you wanted to take a shot of someone walking a wire strung across the Grand Canyon, you first shoot the move the way you want it in real time, record the move, take the move back with the rig, put a person on a wire later, fly them in front of a blue screen, and you can make the move match perfectly. You can also take the data from that move, apply it to the next step, which is the computer animation component, and make another element that would fit into that composite, and then digitally tie it all together. The basic idea is that we have cameras that can shoot any aspect of photography required for a visual effect or any other part of a film that needs to be tightly controlled beyond the limits of normal filming technology.

The Herring: Then things go into the animation department?

McGovern: Yes, we call it digital production, and it includes all the work that needs to be done on Silicon Graphics workstations. We use a variety of software to do models, choreograph, render, and complete synthetic imagery. We have all kinds of equipment that deal with motion capture of human characters, tracking of cameras and space, and the compositing of any of those elements together as appropriate. So, this group deals with generating imagery that can't be generated any other way and compositing it into live action. We scan all our work at very high resolution, so we can put any image we produce back onto film with the subtly of the grain and the contrast and color range you could normally achieve only on a bright sunny day.

The Herring: Do you use packaged software on your SGI boxes?

McGovern: It depends on what part of the process you're talking about. Our motion capture software is totally generated in-house and works in real-time on Silicon Graphics Reality Engine II, Onyx workstations. For modeling, we use software made by Alias, SOFTIMAGE, and Wavefront. Our R&D department has developed a complete plug-and-play system that allows us to use the best elements of all these packages in a quick and efficient manner. Of course, we still have to write a lot of software ourselves.

The Herring: Would it be outside Imageworks' charter to perform work for an outside studio?

Birrell: Not at all. We recently finished work on The Pelican Brief and we're currently working for Caravan Pictures on a project that will be released through Disney. I think that our services are being solicited by other studios because they know that since we are part of a big studio ourselves, Imageworks can appreciate and understand their perspectives. We know how to be realistic from the very beginning about what can and cannot be done. And, most important, we deliver precisely what we promise at the originally estimated price, excluding changes in scope requested by the client.

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Charlie Gibson, executive vice president, cofounded Rhythm & Hues in 1989 with three partners. He has a reputation as a top animator and has won dozens of awards for his film, commercial, and themepark work at R&H and as senior technical director at Robert Abel & Associates. He also served as head of research and development at the Universal Studios Computer Graphics department.

The Herring: What's the biggest computer you have ever worked on?

Gibson: I worked on a Cray when I was back at Digital, and it was really marvelous. But I think it's possible to achieve today on a Silicon Graphics machine that cost a couple hundred thousand dollars the level of complexity we reached seven or eight years ago on a multimillion dollar supercomputer.

The Herring: At the SMPTE conference, the founder and chairman of Silicon Graphics, Jim Clark, told the audience that in two years it will cost only $15,000 to buy the computing power that costs $150,000 today. Given that you have $3 million worth of SGI equipment humming in the back room, how does that make you feel?

Gibson: Frustrated! (laughs) We value our equipment over a two and a half year period, so we assume that all our computers will be replaced in that period. We're on our third wave of equipment.

The Herring: What was the founding vision behind Rhythm & Hues?

Gibson: There were two parts to our founding vision. The first was to do very high-quality television commercial work. Ninety-nine percent of all computer graphics being done when we started the company was in the television commercial area. Our second goal was to create an entirely computer-animated movie. We haven't done that yet, but it's still very much part of what we want to achieve.

The Herring: What percentage of your work today is focused in the TV commercial area?

Gibson: Our studio probably does more commercial work than any other studio in the country. But even so, this type of work represents only half of the computer graphics work we do today. The other half is for theme parks and movie visual effects. There's not a lot more growth for us in the TV commercial area, so I think that over the years you'll see the other areas representing higher and higher percentages of our workload. I can't say that's going to be the case for other studios.

The Herring: In your opinion, who are the artists that have been most responsible for pioneering the computer graphics revolution?

Gibson: It's hard to identify specific individuals, because computer graphics is such a collaborative effort. One artist/animator whom I think you can say has really made a big difference with this medium would be John Lassiter at Pixar. He really helped to merge traditional animation talent with the computer. His initial work was a real eye-opener to the industry at large. Bill Kroyer is another individual who has had a profound impact in this area. He was responsible for the movie Fern Gully, and he did a lot of work on Tron. He uses computer graphics to support cel animation. But, really, there have been a number of people who have contributed little bits to the art that people latch on to and use.

The Herring: How about the guy who did the Luxor project in Las Vegas, Doug Trumball. He was responsible for a lot of the work in 2001 and Close Encounters.

Gibson: He is certainly a pioneer in large format entertainment. But, Trumball was one of the last holdouts to give in to computer graphics technology. You might say that when Doug Trumball finally embraced computer graphics, that was a good sign. (laughs) When I was eighteen, I had a phone interview with him because I was looking for an internship, and I told him about how I had been doing computer graphics for a couple of years. His response was "That's fine, but can you saw wood? Are you handy? We need people who can do some realwork." (laughs)

The Herring: Tell us more about the computer-generated movie you folks want to make.

Gibson: We are very interested in creating a long-form product that is as high in quality as some of the commercials and visual effects we produce. One problem is that if you translate the amount of money we generally invest into producing that level of work, it would mean that it would cost about $25 million to produce the movie. And it's hard to find anybody to fund a movie based on an emerging technology. Pixar's theatrical productions group is actually doing a computer-generated film for Disney right now. So some precedents are being set. The Nightmare Before Christmas is another good example. We are very interested to see how that movie is going to pay off, because it wasn't done using traditional Disney-style cel animation but used an alternative form of story-telling called stop motion, which employs animated puppets shot one frame at a time. If that movie really flies, the bigger studios will feel a lot warmer to the idea of funding a computer-generated movie.

The Herring: Are you actively trying to make this movie happen?

Gibson: Absolutely! We've been aggressively selling the concept to the big studios, using our existing work to show people what's possible. Unfortunately, commercials are not the best kind of work to make believers of the studios, so we're developing shorter, less ambitious internal projects that can demonstrate our creative talent.

The Herring: Still seems like a hard sell. It's kind of like raising venture capital up in the Valley.

Gibson: We're actually really pleased about the whole digital television revolution, because all sorts of investors are now coming to us as a due diligence check. In the end, I'm confident it will all come together, because the momentum is moving in our direction.

The Herring: The typical Silicon Valley paradigm for building a company is to raise venture capital and ride a five to seven year product-cycle to an IPO. Have you ever considered reinventing Rhythm & Hues as a product company, raising some bucks, and jumping on the Silicon Valley-style track?

Gibson: That's our intention. We are, of course, working on one of the most expensive mediums in the world. It costs a lot of money to produce content, using radical techniques like digital puppetry. But that's our goal. To finance that kind of work, however, we have to continue to establish a very firm bed of service revenues. That keeps the doors open, the staff in place, and the best computers in the back room. But we're now certainly to the point where our heads are above water, and we have some extra resources we can dedicate to creating our own content. For example, we started a games division and have signed up as a 3DO developer.

The Herring: What are some of the other venues you might pursue to create your own content?

Gibson: Well, location-based entertainment. We already do a lot of themepark film work for big players such as Disney, MCA, and the World's Fair. It's kind of like the Star Tours stuff you see at Disneyland. Eventually, someone will take Theater 14 at the Multiplex, rip out the seats, put in a motion base, and turn it into a ride theater. So for two bucks, you can take a ride in between seeing two movies. To make these ride theaters work, you essentially have to create mini-films, which can be created and distributed using basically the same business model as the feature film business. There's definitely a big opportunity for us in this area.

The Herring: What should investors take into consideration before they invest in a company like Rhythm & Hues?

Gibson: The computer animation industry is still in the novelty stage. Ultimately, people will be able to tell the difference between junk and high-quality creative product. It's like the difference between Disney's work on the Little Mermaid and the plethora of Little Mermaid rip-offs in the market. There's no comparison. Ultimately, technology is temporal, so investors have to look at the individual creative talent -- the staff of designers and animators within a company -- because that's what will define the long-term value of any digital studio.

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Carl Rosendahl, president, founded Pacific Data Images in 1980. PDI has produced visual effects for over five hundred film, television, and themepark productions. Feature film work has included effects for Toys, Terminator 2, and The Babe. Commercials include "The Bud Bowl" series. PDI also put morphing on the digital map with its work on Michael Jackson's Black or White music video.

The Herring: Do think it's possible for a Hollywood-style digital studio to raise venture capital?

Rosendahl: I'm not sure if any of the digital studio companies that I'm aware of will ever pursue a business plan that's familiar or attractive to the Silicon Valley investment community. Basically, customers come to us because they need us to produce a very specific piece of footage or imagery. Therefore, by definition, every single product we make for a particular client really has value only to that client. It's very much a service industry.

The Herring: How does PDI differentiate itself from the pack?

Rosendahl: We believe we're different from other studios both in our artistic philosophy and the direction we're headed as an operating company. One hundred percent of the work we do is digital. We're involved in live action, models, and miniatures, etc., but rather than try to do everything for everybody, we focus our energies and resources on developing our computer animation talents. For the other work, we hire the best live action directors and other necessary talent on a project-by-project basis. One of our competitive advantages is the depth and quality of our relationships with top outside talent.

The Herring: Is there a trademark look that unifies all of PDI's art?

Rosendahl: Our work has a very distinct style and look that tries to shamelessly integrate computer animation into live action. We work hard to blend our character animation and visual effects tightly into reality so the viewer has no idea how it's done. It's like being a magician. We're trying to replicate reality to such a degree that you don't know what happened. On the character animation side, we've developed a distinctive look that uses shadows and realistic lighting. We also always animate at 24 frames per second because the computer is doing the work, not a bunch of artists drawing every frame. In the end, we have a better look, produced at a much lower cost.

The Herring: Silicon Graphics CEO Ed McCracken says that he likes computer animators because they really drive and define much of the demand for better graphics technology.

Rosendahl: I'm sure that's true. Most of the top digital studios write a lot of their own software. And even the software products developed by the Wavefronts and SOFTIMAGEs are incredibly influenced by companies like PDI because we're pushing and defining the high end of the graphic tools market. A perfect example is morphing -- a technique originally invented at New York Institute of Technology. Morphing became a mainstream production technique only after Industrial Light and Magic started applying it in a few of their film projects like Terminator 2. When we produced Michael Jackson's Black or White video, the morphing technique really took off. It's a tool you can now buy for $100, and it can run on your PC. Without the initial exposure from commercials and film projects, no one would have ever heard of morphing.

The Herring: What percent of your work is for TV commercials, and what percent is for feature films?

Rosendahl: I would say about 60% commercials, 40% film effects work. But ten years ago, 100% of our business was to produce commercials and television graphics. The percentage mix changed because we've always strived to apply the tools and creative expertise that we've developed to other segments of the entertainment world. As certain techniques became more commodity-like, we were basically forced to keep pushing the technology and apply it to new areas. We started out doing broadcast graphics which we pioneered and nearly monopolized the market for a few years. In the mid 1980s, our business began to plateau, and we pushed the tools available at the time as far as they could be pushed. Then, the computer system and software guys showed up in the market with a whole new bunch of tools, and we got a breath of fresh air. We moved out of broadcast graphics and into commercials. Eventually, we mastered our new set of tools and began focusing on longer-format work such as feature films and television programming. Next to ILM, we've done more footage in feature film work than any other studio. More recently, we moved into new media content. Our new push is to develop our own content.

The Herring: Is it hard to serve Hollywood studios from Northern California?

Rosendahl: About three years ago, we opened up an office in Hollywood. It was a strategic move based, in part, on our desire to take advantage of the emerging digital visual effects market for films. But it was also a very important step for our longer-term goal to create our own properties. In order to create great content, it helps to be in Hollywood with the studios, talent agencies, writers, directors, producers, and others resources necessary to make things happen.

The Herring: It sounds like PDI wants to reinvent itself one more time and start developing its own products to sell.

Rosendahl: As a production service company, you have a three-month business cycle. With commercial work, for example, the time between when you hear about a job and when you've delivered your final work is maybe eight to ten weeks. I consider this a risky business because it's difficult to forecast exactly where your revenues are going to come from, and your client base is constantly changing. Also, service companies have no control over the creation of the development cycle. We operate at the mercy of the advertising agency or the film producer, and often we aren't given enough time to do our best work. We'd like more control and more predictability in our business. That's why we're interested in developing our own products.

The Herring: What kind of steps have you taken towards developing your own content?

Rosendahl: Earlier this year, we started a second company called Critical Bit Productions to develop and produce our own content projects. We currently have four projects under development. One is a fully computer-animated feature. Another is a live action project with a lot of incredibly cool special effects. Two of them are in re-write, the others are in the script writing process. One of Hollywood's top talent agencies, ICM, is helping us package and produce these projects, including identifying studios that can ante up the money. Content development is a much more complicated process than worrying about producing the special effects for a film after a director hands you the vision. We have to create a compelling story that's interesting and entertaining enough to draw large audiences. It's a completely different business, which isn't to say that the two aren't complementary. We're interested in developing properties that take advantage of what PDI can do. We're developing projects in which the effects are being pushed very hard. We're doing stuff that's visually amazing -- things that you've never seen before!

The Herring: Where do you want to be in five years?

Rosendahl: I would love it if half of PDI's production work in five years was for our in-house projects. I would also like to see PDI operating a thriving new media division that's producing hot games, interactive cable content, and theme park productions. We're in a good position to make this happen because we possess the artistic talent and computer technology skills that are in demand in the emerging new media marketplace. Our challenge is to figure out which new media segment to attack first and how we finance our growth. Because we bootstrapped our way into business, we've had to be really intelligent about the way we take advantage of new opportunities. With all these new markets opening up, it isn't really clear where the best opportunities are. But that's what's so exciting. Suddenly, some event happens that changes the way we do business, and we have to reinvent ourselves once again. I love that! It's not much fun to plod along on the same path. We're always looking for the next mountain to climb. We're all really lucky to be in this industry!