Hollywood On The Danube

The paint is peeling. Videocassettes and cartoon drawings are scattered everywhere. And Andras Erkel needs a shave. But the 31-year-old mogul seems oblivious to the disorder and to his own fatigue. Titans-in-waiting have no time to sleep. When his secretary signals that a phone call to Hollywood has finally gone through, Erkel shouts into the receiver: "Hey, dude! It's Budapest calling."

Pacing back and forth, Erkel swaps gossip with an animation-industry guru. Since his company's first break, animating an MTV promo spot, Erkel has built up a network of U.S. contacts. Now, he aims to turn his company, five-year-old Varga Studio, into a big-league European player in animation. If his own efforts were a movie, the title might be Disney East: The Early Years.

Erkel's efforts are part of a broader movement to revive the ancient link between Eastern Europe and Hollywood. Hungarian's Adolph Zukor and William Fox left home at the turn of the century and ultimately created Paramount and Fox studios. During the cold ware, other East European filmmakers rose to prominence in the West (Czech Milos Forman and Poles Andrzej Wajda and Roman Polanski among the), but Hungary's talent stayed home. One reason was that Hungary was a tad less repressive toward artists than were other countries in the bloc.

AWARD-WINNER. Now, East European filmmakers, liberated from state-run film companies, are blossoming. Erkel's partner and the studio's eponymous artistic director, Csaba Varga, 48, has won dozens of awards for short films at such events as the Chicago International Film Festival and the Los Angeles Animation World Festival. "Varga is a superb director. He has a unique creative vision. That's what businesspeople are looking for," says Terry Thoren, a Los Angeles-based distributor of short films.

Hungary's future depends on Erkel and other entrepreneurs. The average age of employees at Varga is 26. Everyone speaks fluent English, and most are trilingual. "My generation has the power to change things. We have to. If we don't solve the problems, my children won't have a future," says Erkel.

Strolling around its temporary studios, it's hard to envision Varga in the big time. The low-slung buildings resemble rundown barracks. Inside, Bulgarians, Hungarians, Romanians, Czechs, Slovaks, Lithuanians, Serbs, and Croats stare into personal computers or work on paper with pencils and paint.

All this will soon change. Using some of the nearly $1 million in venture capital he has raised, Varga is buying seven Silicon Graphics Inc. workstations.

That will make this one of the few state-of-the-art animation studios in Europe. "By merging traditional cel animation with 3-D animation or live footage, you can mix anything," says Erkel. Similar SGI hardware was used for special effects in such films as Terminator 2. Varga is also using Digital Studio, animation software made by Softimage Inc., a Microsoft Corp. unit based in Montreal. Steven Spielberg used Digital Studio to create the dino-fauna of Jurassic Park. In exchange for giving Softimage feedback on its product, Varga gets early access to new versions of Digital Studio.

With such tools, Varga can knock out a half-hour TV show in less than a month, instead of two or three. Cost savings are also impressive: One workstation can handle the animation grunt work of roughly 50 artists. Each minute of noncomputer-animated film requires more than 400 drawings. A film as lush with color and lively with action as Walt Disney Co.'s Aladdin eats up even more: 1,500 drawings per minute. With the new system, Varga artists will still have to draw each frame, but they can paint, film, and edit on the workstations.

Erkel and Varga have come a long way. Starting with $3,000 in 1988, they built up a $2 million business and have showed a profit every year despite Hungary's precarious transitional economy. More then once, Managing Director Erkel, who started in business at age 17 as manager of his brother's rock bank, yanked the company back from the brink. Early on, communist bosses, outraged that Erkel and Varga quit the state-owned Panonia production company and were planning to become its rivals, tried to freeze the pair out of the Hungarian market. Erkel and Varga then scrambled for new business in Europe and the U.S.

In 1989, they hit Hollywood. "I learned everything depends on relationships," says Erkel. Contacts from the trip led to the MTV spot and animation for a five-minute Michael Jackson music video based on The Simpsons TV series. The video hit the top 10 for 10 weeks at the end of 1990, giving Varga recognition in the world's largest animation market and helped to land funding.

KNIGHTS-ERRANT. Varga now generates 90% of its revenues outsider Hungary from short films, advertisements, and subcontracted animation work, including a recent contract with Disney to animate a 10-minute kids' TV special on recycling. Varga also has garnered 80% of the Hungarian market for animation in ads and now has 100 clients, including McCann-Erickson, Ogilvy & Mather, Saatchi & Saatchi, IBM, and Honda.

Now, Erkel and Varga want to develop more of their own artistic ideas. A team of animators headed by Zoltan Lehotay is developing Varga's first TV series. Erkel hopes to raise $5 million for the 13-episode, half-hour show, Goodknights, a modern-day takeoff on tales of knight-errantry. If it's a hit, Varga's revenues could double overnight.

But Erkel worries about Hungary. "For talented people, life is better; for mediocre people, it's worse," he muses. "Everyone works hard for too little money. But it's the only way to raise the country's standard of living." As a student, Erkel could afford to go to a restaurant every Saturday. Now, as top manager of a company, he says he can't afford a restaurant's Western prices. Management at Varga earns roughly seven times the average Hungarian wage of $200 per month; artists earn about $600 or $800 monthly.

Varga figures that he and other Eastern European filmmakers someday will move the center of gravity in their business. "There's no real life in Hollywood," he says. "It's all acting: Coffee is not coffee, sugar is not sugar. It's not real. The highest value in life is making money." If the new generation of Eastern European filmmakers can make art films that sell and break away from cliched Hollywood formula, they really could have something to teach the rest.

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