Death in Toon Town

San Francisco's digital animation district is foundering, and Duke may be down for the count

Vinny Carrella takes a bite out of his bagel. I sip my coffee. We both look briefly away: at the table, out the window, at the other customers in this upscale yet gloomy Potrero Hill cafe. Duke may be dead. Likewise Sister Randy. Mr. Cranky's on the way out. And the Smile Time Puppet Theater guys are, for all we know, a couple of stiffs.

"I'm scared as hell," Vinny says.

Everybody is.

San Francisco Toon Town may be going down.

On Friday, Nov. 10, Protozoa, the S.F. tech company whose main division is the digital animation house Dotcomix, told its 60 writers, animators, modelers, and everyone else to take the weekend off and not come back. A few weeks earlier the Steven Spielberg-backed entertainment/animation Web site had crashed and burned. Entertaindom, the Warner Bros.-backed cartoon-heavy Web site, is downsizing, with a rumored burn rate portending more of the same. The cartoon producer Spunky Productions Inc. has decided to cut its cartoon-making business and focus almost entirely on running gift-shopping Web sites. The rest -- Web animation companies such as, Icebox, and others -- are likewise eating through cash.

Carrella's own small animation shop,, which had done work for Dotcomix, is seeing cartoon development contracts dry up. Carrella's figuring he'd better invent a new way to make money in the next month or two, or shut down.

"I'm thinking, I'm not going to make it through Christmas unless I change my focus," Carrella says. "To what, I don't know."

After a Fantasia summer of endless Web animation deals, San Francisco's Potrero Hill digital animation district is beginning to resemble the set of Who Framed Roger Rabbit following a cartoon version of the St. Valentine's Day Massacre. There are bright-colored, big-headed corpses everywhere.

The 'toon carnage is, in one sense, another banal casualty of our local technology industry's ongoing financial malaise. The collapse in technology stock valuations has scared off the sorts of investors who once hoped to get rich off Web-based IPOs, cartoon or otherwise. Because Web sites of every stripe are dying, the need for Internet content such as cartoons has greatly diminished. And, as in other hubris-driven Web industries, animation entrepreneurs vastly overstated the potential demand for their product, in this case slow-loading computer cartoon shorts.

It's all part of the most blithe industrial collapse history has ever known, if the conventional wisdom is to be believed. Every fun, cool, weird, or interesting Web-oriented business is closing down, or is about to. But, the conventional wisdom says, it's all for the good -- the bad companies are being weeded out, the good ones are merging with one another, and the end result will be a stronger, more sustainable technology business environment.

Even if there is a net loss of jobs, the local version of this CW holds, it can only help matters. Prices on apartments and commercial space will stabilize. Artists and other creative people will again be able to afford to live here. The city's cultural diversity will be preserved.

But to me, the decline of the local digital animation business, as exemplified by the recent closure of Dotcomix, feels anything but blithe. It seems as though, as our city remains engaged in the entirely laudable battle to preserve arts space in the face of a dot-com invasion, another portion of our city's cultural wealth may slip away without much notice.

When we lose the hundreds of animators and writers employed in the Web-animation district around the Potrero Brewery -- many of whom do performance art, radio theater, and all sorts of other cool things on the side -- I'm not certain a painters' colony will take their place. A bunch of Yahoo! shopping sites, perhaps?

A couple of weeks before Dotcomix went down, I had lunch with Damon Danielson, the company's CEO, at the same Circadia Coffee House where Carrella and I would later lament the company's demise. Danielson, a former VP at Sony, had been involved in some venture capital start-ups. He had joined Dotcomix back when it was assumed the company would bring in significant money with an IPO.

He was your usual venture-capital start-up CEO: a Yale MBA, the type of guy who's as happy making sausages as cartoon characters.

"If there's a medium, and there's a way to create some value, we'll be there," Danielson said of Dotcomix, adding that within three years he hoped to make his company competitive with the major Hollywood studios.

After that lunch, I went back to Dotcomix headquarters, where the company flack showed me the equipment they used to create their brand of animation, a sort of high-tech puppeteering that allows cartoon characters to interact with real people off screen. At the time, they were in the midst of the Duke 2000 presidential campaign, for which Dotcomix programmers and writers gave life to the Gary Trudeau cartoon figure loosely based on Hunter Thompson.

Thanks to a combination of computer graphics and a process called motion capture, the Duke cartoon character was able to interact with interviewers in real time. A backstage actor wore a special suit rigged with sensors, and when the actor moved, data about the scale and direction of his movements was translated into an on-screen image of Duke via a sophisticated combination of hardware and software.

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