The inner game of Animal Logic

From software IP to in-house creative development on international projects, Zareh Nalbandian inches forward like a steam engine in mud - patient but unstoppable.
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Image: Zareh Nalbandian

ScreenHub has accused many Australian screen executives of an underlying business strategy, but most of them credit their trajectory to accident. The one person who really can’t hide behind chance is Zareh Nalbandian.

‘We started off as a twelve person VFX and animation company developing software for the world,’ he said in a phone interview. ‘We established as Discreet Logic in Canada and then sold out of Screen Logic and focused on Animal Logic as our creative company.’

Once upon a time, Zareh Nalbandian was an executive at Colorfilm, before he went to the Video Paintbrush Company as computers emerged into animation and post production. From there, with Chris Godfrey, he started again with Animal Logic, which he claims has always been driven by the one simple desire. 

‘Honestly, from my point of view, I am driven to establish a successful creative studio in Australia that is making money around the world and participating in the success of the films.  I am not trying to build a company to sell where I am looking at a market cap valuation.  My valuation comes from greater creative output and how much influence we have on popular culture, and how much we build a brand around the world as an Australian company that is working alongside the major American studios but is still independent, and is still based out of Australia.’

‘In every step of the company’s evolution I’ve been looking at driving it more and more towards becoming a filmmaking company, a true studio as opposed to a vendor or a facilities company.’

Most producers would say they want to control their own destinies by developing their own projects which reflect their values and passions. George Miller and Baz Luhrmann run their companies for that very reason; they are both ultimately directors. Nalbandian credits the growth of Animal Logic to George Miller for the work on Happy Feet and the series of films with Bazmark. 

For most Australian films, that control issue is relatively simple. Producers acquire the intellectual property or develop it themselves. They share ownership in that IP with equity investors, with the tax offset and smaller investments from Screen Australia counting as the producer’s money, so they retain IP.

But the game is much more subtle for the bigger players dealing with international studios and co-production partners. There are a lot of different deals, and Nalbandian has pushed quietly, step by step, beyond the original role as a simple vendor. 

His first outing as sole and lead producer was on Legend of the Guardians: The Owls of Ga’Hoole, made with Village Roadshow and released by Warner Bros in September 2010. It took the company into 3D.

On the basis of the work on Happy Feet, Nalbandian signed a deal to participate in an animation slate with Warner Bros in 2007. That ultimately resulted in The Lego Movie. Was that a vendor deal?

‘No,’ he said. ‘We were were the animation studio on those [Lego] films.  I draw a real distinction between being a traditional vendor where you get a package of work to do versus being a filmmaking partner. I’ve been an executive producer on each of those films – we’ve helped develop the strategy for making the film from the get-go and we’ve produced the majority of the content for the films out of Australia, out of Animal Logic, so I see us as much more than a vendor on those projects.’

But, he said, ‘I don’t want to take credit for more than what we’ve done. The distinction i would draw is through Animal Logic Entertainment where we are  actually initiating projects.’

That question of creative control remains central. The company was split into three pieces in 2014, including Animal Logic Entertainment, which was clearly charged with developing new projects inside the company. Nalbandian was hoisting a flag. A year later he opened a studio in Vancouver to make the Lego films, so that Lego Ninjago would be the last to dominate the Sydney operation. 

He was clearing the decks.

‘In the meantime in Australia we are transitioning from Lego into Peter Rabbit which is our movie. It is a live action hybrid so from here on we will be producing Animal Logic Entertainment movies or Animation Logic Entertainment and Imagine movies out of Australia so we will have our cake and eat it too. We will be producing Lego movies and our movies across two sides of the Pacific.

The role of IP in these deals is pretty subtle. As a producer, he does have a great deal of control over the creative development. ’In the  case of Peter Rabbit we controlled the IP up front but once you bring it to a studio, the financing partner ultimately will end up controlling that IP. 

 ‘When we are talking tentpole films, we are talking about films with budgets of fifty to a hundred million dollars. That requires a major studio who is going to finance and distribute and spend another fifty to a hundred million dollars on P&A. It’s very difficult to retain outright ownership of the IP but as a successful producer and production company you participate in the success of the movie. which is why we got to do it.’

The issue is not ownership but creative control, which is shared and ceded in a zillion different ways. 

In the last few months, Animal Logic has finalised a deal with Imagine Entertainment, the US company set up in 1989 by Brian Grazer and director Ron Howard. Notable titles include Kindergarten Cop, Apollo 13, Mercury Rising, How the Grinch Stole Christmas, A Beautiful Mind, The Da Vinci Code and Angels and Demons. 

They aim to make six animation and hybrid animation films over five years, all aimed at a family audience, for which they are raising outside equity finance ‘to fund fifty percent of the budget and development costs over the five year term.  Target production budgets are between $75 and $85 million,’ in the company’s words. 

‘The first part of our strategy is our joint venture which has been terrific so far and we are very like minded and complimentary, said Nalbandian. ‘The next part is negotiating a world wild distribution deal for our films with a major studio which we are in the process of doing. And the third part to raise a significant amount of investment capital that we will control to co-finance our films. And therein lies the next strategy which does come back to your question as to ownership of the films and greater participation in their success than just a producer.’

Nalbandian ends up with more creative control, and access to returns, and work with a veteran company. According to Cartoon Brew, Imagine can bolster its fortunes by leaping the barriers to entry in the specialist animation market which is currently very profitable.  

How much does this have to do with finding tentpole properties which can be deliberately developed as a franchise? 

‘We don’t take a cynical view when developing a movie about whether it will make a franchise. We start off with is this a great story to tell? Have we got a really original point if view? Is it going to excite audiences? We believe that if you make that first movie great then the franchise opportunities will be self-evident.  The Lego Movie is a great example of that. Warner Brothers didn’t greenlight the movie because they could see a franchise. Between the producers and Animal Logic we demonstrated the potential of that movie for a great series – the success of that movie has generated an industry in itself.’ 

One of the remarkable things about Nalbandian’s approach to filmmaking is his continual interest in popular culture, as in ‘creating popular culture for the world in a good way, not in a cynical way.’

It helps to explain why he would commit to Bone, based on the graphic novel series by Jeff Smith, for which Warner Bros owns the film rights. And to Betty Boop, originally created in the 1930’s by Max Fleischer, which is now on the back burner.

But Zareh Nalbandian’s passion for Astro Boy is pretty spectacular. It is now set up in development with New Line Cinema, a subsidiary of Warner Bros, to be made as a live action adventure which is no longer just for children. Nalbandian is producing with Ranger 7 Films wrangling the EP work.  

‘I grew up with Astro Boy – it is one of the things influencing me growing up. It was a show I loved to watch on TV, but more to the point I felt like it was a piece of IP that had been undervalued and under-developed and the idea of developing a live action movie with a more human than human robot central character was so exciting to us because it did feel really fresh. Those sorts of projects really excite us.’

‘In the slate of films we develop we are very balanced between licensing our IP or optioning IP. For example, we optioned the IP on a Neil Gaiman book, Fortunately the Milk which we developed alongside Johnny Depp’s company Infinitum Nihil. 

‘On Astro Boy we negotiated the rights with the son of the creator Osamu Tezuka, while we own the domain IP on Peter Rabbit where we partnered with the rights holders because we believe in being good partners. We also have a slate of original films conceived by our creative team that will fit alongside our more known brands in the market. 

‘Its a very difficult business unless you are Pixar to go out only with original films, but at the same time we don’t just want to go out with branded IP because we want to be able to tell more original stories as well.’

Animal Logic is a very unusual company in the Australian production landscape, because of the sheer scale of its ambitions. Village Roadshow is also an international company with Australian origins, but it came from exhibition and distribution. Those disciplines are pretty different from post production and computer animation. 

‘I think as a private company, the thing that distinguishes us‘ ,said Nalbandian, ‘is we invest significant amounts of money in developing IP on an annual basis. And its that risk capital that is missing in  Australia.

‘There are not the companies of scale that are prepared to take the risk and invest on their own, whether it is IP in the form of stories and content or IP in the form of technology, proprietory technology and innovative technology because of the size of our market. 

‘And that isn’t a real part of our culture and our industry in Australia, unfortunately. And to that extent we are one of the larger players. But I believe it is not because we employ five hundred people or because we are a big business. It is because we think big and we think strategically and we back ourselves in every way.’

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There are some nice clips from Animal Logic on Vimeo.

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This story was updated to replace Screen Logic with Discreet Logic, and Chris Godfrey’s name is now correct. The story of Discreet Logic is fascinating in itself

David Tiley was the Editor of Screenhub from 2005 until he became Content Lead for Film in 2021 with a special interest in policy. He is a writer in screen media with a long career in educational programs, documentary, and government funding, with a side order in script editing. He values curiosity, humour and objectivity in support of Australian visions and the art of storytelling.