(Source:Pittsburgh Post Gazette
Michael Kao saw no reason for change. The 61-year-old had seen his plastic Christmas tree business, Boto International Holdings, become a colossus with contracts with Wal-Mart and Target stores. However his son Francis, armed with a finance degree from Sacramento University, realized that Boto's profits would eventually decline and the future was in computer animation.
"Everyone is moving up the value chain," he says. "And that's going to drive up labour costs."
It also helped that Target, Wal-Mart and K-Mart, who accounted for 60% of Boto's business, recently told Michael Kao that they were going to pay less money for his trees. The writing was on the wall for Boto and the industry.
Francis originally convinced his father to hire techs and animators to build a website to advertise the company's wares. Consumers enthusiastically logged on but sales didn't rise. However, Francis realized that digital animation was the way to go, and Imagi International was born.
Eight years later, Imagi is working with Warner Bros. and the Weinstein Co. on the latest version of Teenage Mutant Ninja Turtles, due in the Spring of 2007. Imagi sold its American partners by telling them that the Kaos could deliver a completed film for $35 million, a fifth of what US animators would charge.
This didn't mean the results weren't world-class, according to Dan Fellman, president of domestic distribution at Warner Bros. pictures.
"When I made the deal, we only saw like a minute of animation," he says. "I've seen about 45 minutes in the last couple of weeks, and I'm really pleased with what they have done."
Despite such good fortune, Imagi isn't sitting pretty yet. It posted a $17 million loss in 2005, mainly due to an overdue tax bill. But Michael Kao isn't unhappy about ditching plastic trees. Boto International, currently owned by the Carlyle Group, posted a $29.3 million loss in 2005.
"Today, if you are still doing manufacturing for Christmas trees, you die," Michael says.
