An animation studio bets on the iPhone

Bigby, a new character from animation studio Worldwide Biggies

Bigby is an 8-year-old crimefighter whose nemeses are pirates and dragons.

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NEW YORK (Fortune) -- At first glance, Albie Hecht's office is cluttered with toys -- a plush gorilla from the Mario Bros. video game, vinyl figurines from the toy line Kidrobot, to name a few. But in fact, they're all relics of the animation industry, where Hecht, 56, made his name launching such mega-hit children's shows such as Nickelodeon's "SpongeBob SquarePants," "Dora the Explorer," and "Blue's Clues."

And now he's set to innovate again. But this time, it'll be on an even smaller screen -- the iPhone.

In January, Hecht's four-year-old independent studio, Worldwide Biggies, will debut Bigby, a new cartoon character that -- rather than premiering as a half-hour weekly animated series on television -- will make his first appearance as an iPhone game app.

Produced in partnership with online gaming giant Addicting Games, the Bigby game is based on an 8-year-old crime-fighting genius, who wears a bear suit, fights off pirates and dragons, and only eats chicken parmesan.

The game is targeted to kids between the ages of eight and 17, and it allows users to create their own characters, join Bigby's League Against Pirates and Dragons (his version of the LAPD), and watch video clips of Bigby interspersed throughout gameplay -- all on the iPhone.

"We want to create a full cycle of user engagement with this property," says Hecht, "from linear and passive to interactive and user-engaged."

Many studios have explored the mobile space, but most have only exploited it by hosting user-generated animation contests or airing one-off "mobi-sodes." But Hecht is betting that his company's -- and his industry's -- entire business model will soon be dependent on mobile development.

"There's been a couple of things that have always made me successful," Hecht says, "and one of those things has been following the audience. You need to look at what kids are talking about, and it's all online. The measure and metric of success today is going to be user engagement."

According to Worldwide Biggies' "Transmedia Bible," that user engagement means a product that allows users to watch, explore, play, connect, collect, and create.

Hecht argues that he's able to offer all of this on the iPhone because it's "becoming the gaming platform for the backseat" -- namely, the one parents of Bigby-aged consumers will be pacifying their children with -- and it's the best mobile device for Bigby because of its high quality video capability.

Of course, Hecht doesn't intend to limit Bigby to the iPhone. He's adamant about starting there, since he believes the mobile space is the best place to launch, incubate, and grow a modern animated franchise, but he's under no illusions that it's the path to big money.

So Bigby will also be available online, and ultimately, says Hecht, the character's success will depend on how well he translates to television or film.

Industry analyst Jack W. Plunkett, of Plunkett Research, says that inverting the business model could be the best solution for the struggling television business.

"The whole industry is going through a metamorphosis," Plunkett says. "Animated films reap profits with product distribution, but now this company (Worldwide Biggies) is going up the back end of the chain, minimizing risk and possibly becoming richer."

If it works, Plunkett says, it could spur a slew of new mobile-focused startup studios, transforming the animation business in much the way Pixar's success revitalized the animated feature film business a decade ago.

"One of the reasons animation has been so successful is that it's so prevalent," Animation Guild spokesman Steve Hulett says. "Animation can be sold in all different platforms. It's evergreen, recyclable. And this [model] is trying to capitalize off that opportunity."

Hecht and Worldwide Biggies investors (Greycroft Partners, NBC Universal, Platform Equity, Hearst Corporation, and Prism VentureWorks) have put about $150,000 into Bigby, but that's chump change to big television studios. Costs for half-hour animated series vary; it can be as low as $150,000 an episode to as much as $3.5 million for one episode of "The Simpsons." (Producing a children's animated series normally costs $200,000 to $400,000 per episode.)

But however inexpensive Bigby may be in the television world, how will it rise to the top of a heap of 50,000 iPhone apps -- and growing? Hecht hopes that working with Addicting Games, which already boasts a strong mobile presence, will be instrumental in that area.

"Like anything in show business," says Harvey Deneroff, professor of animation at Savanna College of Art and Design, "everything is risky."

But after successful stints launching Spike TV and serving as president of entertainment at Nickelodeon, where he used the web to launch the hit animation character Jimmy Neutron, Hecht thinks he knows a thing or two about the future of animation.

And his optimism shows in his office. As disorganized as it may seem, there's one deliberate feature: Hecht's "inspiration wall." Directly across from Hecht's desk, the wall already features what he calls two of his biggest pieces of inspiration -- a distinctly escapist enlarged photo of a beach pier and a Barack Obama "Hope" campaign poster. Bigby isn't up there yet, but considering the display, Hecht places a palm-sized Bigby figurine on his desk, so that -- from his perspective -- it completes the picture.