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Dead End: Omnibus Computer Graphics

Abstract

Omnibus Computer Graphics was a Toronto company that set out in 1986 to own the North American computer-animation business and, for about ten months, did. It bought Digital Productions in Los Angeles in June and Robert Abel and Associates in Hollywood in the autumn, paid for both with borrowed money, and closed all three studios on 13 April 1987 with somewhere between $25 and $30 million of debt. The people who walked out that day founded the companies that replaced it, and two programmers in Toronto bought the rights to Omnibus’s in-house software from the bank. They called their company Side Effects, and the software became Houdini.

A Marketing Company Buys a VAX

Omnibus did not start in computing. The Omnibus Group was a set of Canadian marketing and communications firms founded in London, Ontario, in 1972, with affiliates in Toronto, Los Angeles and Sydney. John C. Pennie joined as president in 1974. Omnibus Computer Graphics Inc. was split off in early 1982, with W. Kelly Jarmain as chairman and Pennie as president and CEO.

In 1983 it installed a DEC VAX 11/750, made what it claimed as the first computer-generated commercial in Canada, and raised $4.2 million in an initial public offering, which made it the first publicly traded computer-graphics company. The plan was three sites: Toronto for broadcast and agency work, New York for video, Los Angeles for film. They were “linked by satellite” by the end of 1984, which for months meant modems and afterwards a slow and unreliable WAN. Early production was primitive enough that one new hire remembered an animator typing in the coordinates of a horse by hand from five cross-sections drawn on graph paper.

The Los Angeles office bought the Foonly F1 and the old film recorders from Triple-I when that company closed its graphics group (see Gary Demos and Edward Fredkin), hired a research team that included Caltech programmers working with Al Barr, and started writing its own software, called PRISMS. Its first feature job was the bridge-display graphics for Star Trek III (1984). Its best-known one was the chrome spaceship in Disney’s Flight of the Navigator (1986), supervised by Jeff Kleiser, a ship whose skin reflected the landscape it flew over by reflection mapping.

The Two Studios It Bought

Digital Productions was the most technically ambitious CGI house of the period. John Whitney Jr. and Gary Demos had founded it in 1982 with Control Data money and run it on a Cray X-MP; it rendered about 27 minutes of The Last Starfighter (1984) (see The CGI Revolution). The Cray was also a large and permanent bill. By 1986 Control Data, the majority owner, wanted out of the company’s growing debt and approached Omnibus. The sale went through in June 1986, over the founders’ objections, for about $6 million backed by the Royal Bank of Canada.

Robert Abel and Associates was older and better known outside the industry. Robert Abel, who had apprenticed with John Whitney Sr. in the 1950s, founded it in 1971 with Con Pederson, and ran it from Highland Avenue in Hollywood. It had made title and graphics sequences for The Andromeda Strain and TRON, a large share of the decade’s award-winning commercials (Abel personally collected 33 Clios), and in January 1985 the spot everyone in the trade had seen: “Brilliance”, a chrome female robot advertising canned food during Super Bowl XIX, animated with an early form of motion capture. It had also been hired for the effects of Star Trek: The Motion Picture and taken off the job over its handling of the budget. In 1986 Abel sold it to Omnibus, a public company that looked like a stable buyer. The price is given as $6.5 million in September, $7.3 million in October, or $7.6 million, depending on the source.

DOA Day

The idea behind both purchases was consolidation: one parent company holding the best people, the best software and all the customers. David Sieg, vice president of research at Omnibus in Los Angeles, described what the parent company actually owned:

“The Omnibus management knew nothing about computer animation but kept muttering about ‘Economies of Scale.’ The reality was: three separate sales forces, three separate production crews, three separate facilities, philosophies, software systems, and hardware systems, none of which were likely to ever work together.”

Revenue did not arrive in time to cover the loans. Sieg’s team had shot test footage of the Enterprise for the next Star Trek film, which had a large amount of computer work in it, and the producers declined to award the contract to a company they expected to fail. “They were too scared Omnibus would go under to give us the contract that would have saved us,” he said.

By March 1987 Omnibus was in default on its loan agreements. On 13 April 1987 it closed Omnibus, Digital Productions and Robert Abel and Associates on the same day. About 150 people in Toronto, Los Angeles and Hollywood lost their jobs, and the industry called it DOA Day. The formal bankruptcy followed in May. Sources disagree on several of the numbers: the debt appears as about $25 million and as $30 million, and Digital Productions’ Wikipedia entry has the doors closing in October rather than April. The account given by the people who worked there is April.

Where Everyone Went

The collapse emptied the American CGI market of its three largest commercial studios in one day, which is one reason Pixar and ILM found so little competition in the years that followed. It also sent a few hundred experienced people out to start again, and several of their companies lasted longer than Omnibus had.

  • Whitney-Demos Productions was already running; Whitney Jr. and Demos had left Digital Productions after the sale.
  • Rhythm & Hues was founded in Los Angeles in 1987 by six former Abel employees, John Hughes, Pauline Ts’o, Keith Goldfarb, Cliff Boule, Frank Wuts and Charles Gibson. It won the visual-effects Oscar for Life of Pi and filed for Chapter 11 on 11 February 2013, two weeks before the ceremony.
  • Wavefront Technologies had been founded in 1984 by Bill Kovacs, an Abel alumnus, with Larry Barels and Mark Sylvester. In 1988 it bought Abel Image Research, the software division of Kovacs’s old employer. Silicon Graphics merged Wavefront with Alias Research in 1995, and the combined Alias|Wavefront shipped Maya (see Dead End: Silicon Graphics).

Side Effects

Kim Davidson and Greg Hermanovic had met at HCR, the Toronto software company founded by Ron Baecker, and joined Omnibus in 1984 and 1985. Hermanovic was director of research; Davidson programmed and was director of animation. Between them they had written much of PRISMS. When Omnibus went under, the Royal Bank of Canada, its main creditor, held the rights to the code, and in 1987 the two bought them from the receivers.

They started a production house called Side Effects, which later split into a production company (renamed Spin Productions to end the confusion) and Side Effects Software, which sold the tools. PRISMS was written in C and built around procedural operators: a model was a chain of operations, such as surface operators (SOPs), that could be edited at any point and re-run, rather than a fixed mesh. Its core program, Action, was released in 1988. At SIGGRAPH 1989 in Boston, the first PRISMS user group had twelve people in the room, two of them the founders.

The Academy gave Davidson, Hermanovic, Mark Elendt and Paul Breslin a technical award, presented in 1998, for the procedural modeling and animation components of PRISMS. By then its successor already existed. Houdini 1.0 was released in 1996, rebuilt in C++ around the same node-based, procedural design; Houdini was also the first major 3D package ported to Linux (see Linus Torvalds and Linux). Digital Domain used PRISMS on Titanic (1997), and Houdini carried most of the effects shots in Contact the same year.

SideFX, as the company now calls itself, has since collected further Academy technical awards and, in 2018, an Academy Award of Merit for Houdini. It is still in Toronto, and Kim Davidson is still its majority owner and chief executive. The Omnibus name survives as well, at an Omnibus Japan that outlived its parent.

Dead End: Why It Failed

Omnibus did not fail because computer animation had no market. Its customers were real, and the same people went on to serve them profitably from smaller companies within a year.

Debt against uncertain revenue. Both acquisitions were financed with bank loans, and Digital Productions came with its own: Control Data sold it to escape the debt the Cray had left behind. Omnibus took on that debt, a second studio and a loan in the same year.

Nothing to consolidate. A merger saves money when the merged parts can share something. Three studios on different hardware (VAXes in Toronto, a Cray in Los Angeles, Abel’s own systems in Hollywood), with different software and separate sales teams, shared a letterhead. Any saving required first moving two of the three studios onto the third one’s tools, and there was neither money nor time for that.

A reputation spiral. Film contracts are signed months before delivery. Once the industry suspected Omnibus might not last, the large jobs that could have paid the loans went to other houses, which made the failure certain.

Hardware as a fixed cost. The Cray that let Digital Productions render The Last Starfighter was a large monthly bill whether or not there was a film to render.

📚 Sources