Double-whammy of bad news for animation business

In the wake of Friday’s closing of ImageMovers Digital, the animation business has been hit by a double-whammy of bad news.

Monday night Toronto-based animation/vfx studio C.O.R.E. Digital Pictures closed its doors, effective immediately, then Tuesday animation studio Cookie Jar Entertainment, which has a three-hour Saturday morning animation block on CBS, laid off 35 staffers, mostly in its animation department in Toronto.

The closings in California and Toronto expose a paradox: While California’s animation and visual effects studios lament the lack of tax incentives to keep their work from fleeing the Golden State for Canada, there’s buzz north of the border that Canada’s tax incentives aren’t entirely working for companies there, either.

C.O.R.E. gathered its staffers Monday evening and told them the company was closing immediately, and there is some doubt about if and when staffers will be paid their last two weeks’ salary. Computer Animation Studios of Ontario, of which C.O.R.E. was a founding member, is already working with member companies to transition C.O.R.E.’s current projects and staff.

Part of C.O.R.E.’s problems were due to the more robust Canadian dollar, which has made it less attractive for American producers to shoot in Canada. The Ontario government has a 20% tax credit that applies to labor expenditures for computer animation and special-effects work, but clearly this was not enough to offset the rising Canadian buck.

“C.O.R.E. was a fabulous anchor company for Ontario, and it contributed significantly to our international reputation for leading-edge technology and high-quality work,” Karen Thorne-Stone, CEO of provincial funding agency the Ontario Media Development Corp., said in a statement lamenting the closing.

Nonetheless, some laid-off animators were focusing their anger on Ontario’s Liberal-party government, led by Dalton McGuinty. Complaints surfaced that local production has grown too dependent on incentives, that local laws have made it difficult to get private financing, and that the incentive system there is generally broken.

Last month the Ontario government delivered a C$2.9 million boost to the creative sector via its partnerships fund, leveraging C$7.1 million to support 17 digital projects, including two ambitious animation and 3D training projects. C.O.R.E.’s closing deals a blow to future job prospects.

Founded in 1994 by William Shatner, Bob Munroe, John Mariella, and Kyle Menzies, C.O.R.E.’s first animated pic was Disney’s “The Wild,” which grossed about $100 million worldwide. It did vfx for the films “Splice,” “SUCK,” “Silent Hill,” “Cube,” “Harold & Kumar Go to White Castle” and “X-Men,” and the TV series “The Tudors.”

Also Tuesday, a spokesman for Cookie Jar said the layoff of 35 staffers was due to the Canuck company’s shift from animation to producing more live-action, because of market demand. The company also has an office in Burbank.

“We are re-aligning our resources and investments in response to the current environment in the global economy and new opportunities in our industry,” the company said in a statement. “Consequently, we have made the difficult decision to right-size our activities, mainly in animation, so that we can invest further and faster in live-action programming to complement our industry-leading animation library.”

A company spokesperson said the CBS block will continue.

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