The Cautionary Tale of Fatkat Animation

Gene Fowler

Depending on how you look at it, this is either an inspirational story about an animator’s resilience in the face of adversity or an infuriating indictment of his financial irresponsibility. The New Brunswick Business Journal offers the cautionary tale of Gene Fowler and his defunct Canadian animation studio Fatkat Animation. We posted about Fatkat’s closure back in 2009, but there are plenty of fresh details in this article.

The short version: Miramichi-based Fatkat was considered a major success story in Canadian business during the 2000s, and at its height employed over 100 people doing service work primarily for animated TV shows. But, as it’s made clear by the article, the studio’s growth wasn’t organic, and was made possible only through nearly $3 million in loans and Canadian taxpayer-backed funding. When the flow of government money stopped in 2009, Fowler claimed bankruptcy to the tune of $2 million.

Fowler, who is now 35 years old, defends himself in the piece: “A lot of people in Miramichi – in my own hometown – think that I just closed down that company and have a million dollars in my bank account. Truth be told, I went broke trying to keep that company alive. . . .If people think that I pocketed a bunch of government money in an offshore bank account or something like that, then hey, they can live those fantasies, because I certainly can’t.”

After Fatkat’s demise, Fowler launched a new studio Loogaroo, which is still in operation today. He’s doing it the hard way this time–without government money–and after two years, the article reports that the company is profitable, although Fowler works predominantly with freelancers and “there are no employees per se.”


  • http://www.youtube.com/watch?v=X98c8fCg5Sk ANIMANOID

    The quality of Fatkats business model, vision and strategy is good at heart but extremely flawed. They went a number of years with no layoffs, something unheard of in this industry. The thing is, when they grew to over 100 employees, what worked for 20-40 employees before was not going to work now. They tried to stick to that vision but to no avail, and with no…

    Fatkat began receiving government money in 2005 when it was extended a $15,000 grant. In 2006, it received more than $200,000 for a variety of projects. And in 2008, it received more than $600,000 from the provincial government, most of it in the form of a loan guarantee.

    It has also received money from the federal Atlantic Canada Opportunities Agency.

  • http://monstroanimation Jonah

    I’m extremely ignorant on business matters, so I was wondering if someone could explain to me how a studio could receive taxpayer dollars? I’ve just never paid much attention to financial/business matters, but I’m interested to learn.

    • The Gee

      Not to be flippant but in Canada a studio could (or can) receive taxpayer dollars. But, it is probably much more complicated than it sounds.

      I do recall the Fatkat flapdoodle. When studios fold, it can get ugly. Someone mentioned Big Idea below…smaller and very successful studios which didn’t have their own IP have equally complicated, frustrating stories. Sucks to hear about it at all but it happens.

      Best of fortune to the ones who can endure.

  • diggy

    This reminded me of an excellent article about the rise and fall of Big Idea, the studio that produced Veggie Tales. It’s a fascinating read and a great insight into the perils of growing an animation studio, or any business, too quickly.

    http://www.philvischer.com/phil-news/what-happened-to-big-idea-part-1/

    • ShouldBeWorkin’

      That story’s a little different If I recall correctly.
      Basically Big Idea was very succesful in the Home video. Suits were employed and kind of a forced growth into features and merchandising and over-hiring was thought to be the thing to do. IIRC, It kind of “got away” on Vishcer, hiring all these “experts”. In hindsight growth would have been more natural if they kept making these cute little videos for the home market. Oh, not to mention some kind of conflict with Lyric by distributing the Jonah movie through WB.
      Sounds to me like a case where the artist should have trusted himself and not hire all these experts.

  • Rufus

    Wait…so how did they generate revenue? I don’t recall ever seeing any happy tree friends toys or shirts…

    • http://steve-hogan.com Steve Hogan

      There actually is Happy Tree Friends merchandise, but as far as I can tell Fatkat was just hired guns working on the Television series, not the creators or owners.

  • Jason H

    This is something that’s been really bothering me about Canadian studios in general. For the most part, they all rush for the government money and yet the industry there really never stays when the funding ends. No business picks up the slack and so companies go under. Maybe it’s because they tend to go for the jobs that overseas countries push for so the budget is inherently regressive due to the competitive nature of a developing country over a first world. They have difficulties handling big features as most of the talent drifts down to bigger studios elsewhere since the work is more interesting.

    Right now Toronto and surrounding Ontario is bit of a wasteland for animation. Only Vancouver really seems to be hitting it at the moment due to Pixar and company so hopefully that’ll change. I really like Canada.

    California has cultivated a strong community of artists as studios there tend to survive longer. I guess they got lucky when they became entrenched in the 30′s and onward.

    • ShouldBeWorkin’

      I’m a Canadian and I agree with you. Our successes in film always seemed a little artificial to me because of the funding.I admit I don’t understand the details of how funding and grants work but I know it is there and in reading a press release or story about a “successful” or new studio what funding is received is usually hardly mentioned. I mean, what is clear net profit from the gov’t support in defining a successful studio?

      But FatKat did prove there was the talent and possibilities in Eastern Canada; a place which once relied on fishing, which market is now depressed.

      Clearly the gov’t wanted to revitialize the provincial economy and was willing to grant the money.

      This is not to take away from Mr. Fowler’s brief success and his noble earnestness to keep animators employed.

      • Jason H

        Oh no, I’m not knocking him either. I just find it interesting how difficult it is to survive as a studio in Canada.

      • Jmatte

        It is difficult to survive, because it is difficult to be profitable.
        Let me ramble on about that a bit,if I may. If I say something wrong, someone please jump in and correct me. I’m not certain I’m right on these points, but it is what I gathered from a few years of experience, having mostly worked in TV productions in Canada.
        In very broad strokes:

        1) selling your show to a broadcaster:
        The US are lucky: Cartoon Network, Disney, Nickelodeon make their own show AND own their own channels (and their worldwide divisions). A great source of revenue and financing, especially if you add other products like toys, books, etc…

        The market is limited in Canada: you have Teletoon, Vrak TV (or at least, they used to show animation), YTV and a few other channels that will play animation here and there. None of these are really studio owned, though some may have some special deals or have market shares.

        Say you are a small studio with a 13 episodes show ready to sell. The broadcasters will pay only a FRACTION of the cost of all these episodes for the rights of airing the episodes on their channel for a certain number of years. You won’t make your money back that way.
        How else do you get your financing?
        You can try to sell your show to as many broadcasters as you can, worldwide.
        There may be a catch: a lot of the productions in Canada are co-produced with other studios to reduce the cost. Share the cost, but now share the sales! That other studio may demand the rights over certain territories For example: a Canada-France co-production. The french studio may demand the exclusive sales rights over the European territory (and a few other places), leaving the Canadian studio with North America (and whatever is left). Trying to break into the US market can be extremely difficult.

        2) You *may* be able to make money by selling merchandise based on your property, but if you’re a small studio, that’s a whole other department with its own costs! Production, distribution, etc…
        Hard, but not impossible.

        3) Government money.
        Nothing like a little investment from the government to get you started! But is it ever enough to keep you going for so many years?

        That’s just the tip of the iceberg. I unfortunately don’t have numbers to share. I don’t know how much a broadcasters pay for the rights to air a show. I just know they don’t give you 1$ if it cost you 1$ to make it. It would make for interesting maths though: to how many broadcasters can you sell your show in order to make your money back?

        And when it comes to an internet based production…I am completely in the dark. Web revenues is still esoterical to me.

      • Tragedy of P

        Also, don’t forget the government regulation of a Channel not being able to own their own “studio” like Disney/Nick/Cartoon Network.

        That’s essentially shooting the industry in the foot.

    • jordan reichek

      Jason…

      I understand you are generalizing in regard to Canadian studios and how the Government funding works. To be fair, the lack of tax/funding assistance in the US doesn’t necessarily make the situation better.

      The odds are greater for start up businesses in the US more or less because of simple proximity.

      There are far more studio failures/closures in California just because there are more companies taking a turn at bat.

      A great deal of LA studio business has gone to Canada (both animation and live action) due to the Government incentives-not to mention the lack of Unionization.

      There are plenty of solid Canadian studios that have endured and grown with complete success without replying solely on such Government help .

      BARDEL based in Vancouver is a great example.

      I’m sure such incentives helped them start and expand, but they are now thriving in this terrible climate and employing a lot of Canadian artists, ie; generating taxes. They started over twenty years ago as an ink and paint service and now cover features, tv, web gaming, commercials, etc.

      I’d say that’s a pretty good example of Government assistance that paid off for a studio with a well rounded production platform.

    • Michael

      This is, unfortunately, ill-informed opinion passing as analysis.

    • dirty animator

      It’s the government funding that stunts any progress. How competitive do you have to be when your projects are halfway funded? Not very. Name one Canadian made cartoon that was a major worldwide success.

      I work in the industry here in Vancouver & I am always glad to have work, but usually sad about the overseas/lets-keep-this-as-beige-as-possible mentality about the actual projects. It’s all overhead.

      You see amazing new shows popping up in the states and wonder why that can never happen here. There are a lot of reasons, but mainly it’s the government funding. It keeps everything sub-standard & safe.

      • http://www.sweetposer.tk/urbmn/ Cameron A.

        To be fair, the cable channels and networks in Canada play it safe, too. Teletoon, for instance, had its Teletoon at Night Pilot Project, which brought forth titles like Angora Napkin, Ninjamaica, Dunce Bucket and – yes – Fatkat’s Space Knights Go!

        Regardless of what one thinks of the projects’ quality, the only show greenlit so far is Fugget About It. Creator Jeff Abugov wrote for Two a Half Men, Roseanne, Grace Under Fire and other American network sitcoms. I suspect Crash Canyon was only greenlit since creator Joel H. Cohen wrote for The Simpsons and Saturday Night Live. You don’t exactly get a Superjail! or a Venture Bros. under circumstances like that.

      • Sardonic Tuba

        “…titles like Angora Napkin, Ninjamaica, Dunce Bucket and – yes – Fatkat’s Space Knights Go!”

        Oh come on. You just made those up.

  • Maratime Animator

    Missing from this article is that Fatkat was actually the second studio that was closed under Gene’s leadership. I believe the employees of the first company were left with no severance package of any kind and owed almost a months pay.

    And Logaroo not tun in government money? Since when? It was not that long ago, that Gene was rallying troops to contest the cutting of New Brunswick media grants to small businesses.

    http://www.canadiananimationresources.ca/?p=4681

  • anonymous

    Obviously a generalization here but tax credits are everywhere, not just Canada. Bluesky picked up house just to walk down the road a few miles to Connecticut. I am guessing Digital Domain is in florida for the same reason
    Pixar Canada, sony and many of the other studios setting up in Vancouver not only do it because of BC’s taxes incentives but because of zero time difference between there and california.

  • Niffiwan

    States typically provide arts funding as a means of investment in the cultural traditions of their nation. In most European countries, and in many Asian countries, there is some form of state support for animation. Practically the only ones that don’t do this are countries that are at the centre of economic power, and they don’t do it because they do not need to; their economic power allows their cultural product to be sold to many other markets, pushing out the local culture.

    Cultural trends are a consequence of economic trends – i.e. manga & anime spread around the world right around the time when Japan was at its economic heights. People like watching the culture of winners, hoping to learn the secrets of success.

    The countries that subsidize their own local culture do so in the knowledge that economic power can be fickle, and it can be a good idea to keep a little heartbeat of local culture pumping, so that native skills and mindsets are not entirely lost to the buffeting winds of fashion.

    • jordan reichek

      ….man, if that’s the case, we’re screwed!

  • Superdude

    The show Fugget About It was NOT created by Jeff Abugov. It was created by Nicholas Tabarrok and Willem Wennekers.