L.A. software developers help animate small businesses.

Los Angeles-based software companies, anticipating a huge demand for personal computer-based animation systems, are scrambling to get a new generation of affordable animation programs to market by the end of 1993.

And they will most likely succeed, local analysts said.

By simplifying their customized animation programs, local software companies plan to mass market such software to PC owners throughout the world.

In the past three years, software has been written for Apple and IBM PCs that will let users create animation on computer systems that cost $10,000 to $20,000. That's a far cry from the systems used by major animation studios, which typically cost $500,000 to $2 million, or more.

But the biggest potential market for animation software is the PC user at home or at very small businesses, said Brian Katison, director of business systems consulting at Big Six accounting firm Arthur Andersen & Co. PC-based animation systems for such home and very small business applications can be had for as little as $2,000. And that is where many software companies are now focusing their attention.

"There are three types of computerized animation software users," said Katison. "The 'A' group, which produces the top-quality animated features and commercials, have extremely high standards and must use large, expensive computers. But there are only five to 10 'A' customers for animation software in Southern California."

Animation software being produced by Los Angeles companies is marketed primarily to 'B' customers -- small independent production companies, graphics firms, ad agencies and corporate communications departments, Katison said.

But L.A. animation software companies are not stopping there. They're now trying to develop a "C" market program for PCs that sells for $90 to $125, Katison added. That software investment would need to be accompanied by at least a $2,000 investment in computer hardware, which is still well within the budgetary grasp of most small companies.

"The real market is for small graphics shops and home users," he said.

Katison said he expects the major software companies to jump on the computerized animation train by the end of 1993.

The new, more affordable animation systems could greatly enhance market opportunities for small independent production companies, which often operate on shoestring budgets. Such companies have until recently been priced out of the animation business because of animation's exorbitant start-up costs. Affordable computer-animation systems also help independent producers lower costs because animation often eliminates the need for actors.

Pasadena-based Electric Image is one local software company that is concentrating its efforts on creating animation software for "B" and "C" users.

Electric Image hasn't devoted all its efforts to the "B" and "C" markets, however. In fact, the company's founder, Jay Roth, wrote the animation software used to "blow up" Los Angeles in the blockbuster movie "Terminator 2," said Wendy Bozigian, an Electric Image spokeswoman.

But the company has since lowered its sights to the huge, lower-priced market for PC users. The $7,500 version of the Electric Image Animation System was introduced in late 1991. Bozigian would not reveal how many of those systems have since been sold by the privately held company. But most users are satisfied, Bozigian asserted.

"The only complaint we get about it is that a lot of people wish it cost less," she said.

Electric Image software has been used to create animated titles, special graphics and demonstration films by production companies throughout the world, Bozigian said. The $7,500 system has also been popular with architects and attorneys, she added.

American Film Technologies, a North Hollywood-based animated film service, has developed software similar to Electric Image's $7,500 system. American Film's product is written for use on IBM-compatible personal computers, said a company spokesman.

Animators outline figures on "cells," the individual frames that are sequentially photographed or videotaped to produce animation. Those line drawings are then scanned into a computer that converts them to a digital code, a format that can be stored on tape or disk.

Once the outlines are scanned onto disks or tapes, those disks or tapes are sent to American Film Technologies' studio in Del Mar, Calif., where the computerized outlines can be "electronically colored."

In simplified terms, electronic coloring involves a technician "coloring" the images by moving an arrow into each portion of the drawing and designating a color code for it.

The technology was first developed to colorize black-and-white films, but also enables animators to color cartoons on computers. The computerized scanner can read the tint of gray and assign the appropriate hue from a palate of 200,000 colors, said computer animation experts.

Animators using colorizing technology can either draw their characters directly onto computers, or draw character outlines on paper and then scan them into the computer later.

Either way, the technician can assign different color codes to animated characters. The wide variety of colors gives computerized animation a three-dimensional appearance, said experts.

Joe Mazzuca, American Film's vice president of production, used proprietary software to produce eight episodes of a made-for-TV cartoon series called "Attack of the Killer Tomatoes."

American Film also has been part of the production team in animation projects for Warner Bros., Marvel Entertainment Group and the Walt Disney Co., Mazzuca said.

"A lot of animation companies are vying for the business. But you need to get a good production line system set up to use the software to its highest potential," Mazzuca said. "The important things are time and price."

Hollywood is not the only customer being targeted for the affordable cartoon systems. Such systems also have a plethora of non-entertainment applications, such as allowing architects to create videos simulating tours through buildings that are still being designed.

Lawyers can use computerized animation to recreate events that are key to their clients' cases, added industry experts.

IBM is working to develop software similar to that being marketed by Electric Image, said Peter Dibble, a partner at the Los Angeles office of KPMG Peat Marwick, an accounting and consulting firm.

Just last month, IBM announced that it has teamed up with writer/director/producer James Cameron, special-effects expert Stan Winston and Scott Ross to form Digital Domain, a Hollywood-based entity that will create a studio to provide support services for filmmakers who want to use computer animation.

Digital Domain will also create a PC-based software for interactive entertainment and educational materials, said industry sources familiar with the upstart.

Companies that need to teach skills to blue-collar workers can then use the PC-based animation software to produce training films, Dibble said. He added that KPMG Peat Marwick has itself used computer-generated animation for some of its in-house presentations.