Market Trends of Animation And VFX Industry
Television and OTT Animation Platform Segment is Expected to Hold Significant Market Share
- The increase in demand for visually captivating and high-quality content on OTT platforms has resulted in a significant growth in the requirement for VFX and animation skills. Animation and VFX have become vital components of OTT content creation, from creating lifelike creatures in imaginary series to visual effects in action-packed cinemas. The advent of streaming in OTT media has made it more convenient and easier for the broadcaster to directly showcase their content to clients without the interference of a middleman. This aids in shaping a direct relationship with customers on the OTT platforms.
- The growing number of Netflix subscribers is expected to increase the spending on animation and VFX content. With a larger audience demanding high-quality visuals, production companies are expected to allocate more resources to meet this demand, increasing spending on animation and VFX worldwide. For instance, according to Netflix, the number of Netflix paid subscribers worldwide increased from 230.75 million in Q4 2022 to 277.65 million in Q2 2024.
- To gain a competitive edge, businesses are involved in various strategies, such as partnerships, agreements, and launches, which are expected to increase spending on VFX and animation work on television and OTT platforms.
- In November 2023, Dexter Studios, a firm specializing in content production and VFX, signed a new agreement to source VFX technology for the TV series “D” with Climax Studio. The agreement, reportedly worth KRW 3.67 billion (KRW 3.51 billion for the main contract and KRW 160 million for pre-production), will run through June 17, 2024. Dexter Studios signed an agreement last November worth KRW 6 billion for the TV series “A” with Climax Studio. The new agreement comes just ten months into the preceding deal. With this new agreement, both firms will work together on a project worth around KRW 10 billion by 2024.
- Thus, spending on animation and VFX in Television and OTT is increasing due to various factors, including the growing demand for high-quality content on streaming platforms. This has increased production budgets, driving investment in visually engaging experiences.
- Additionally, technological advancements have made animation and VFX more cost-effective and accessible, enabling the creation of complex visuals on smaller budgets. Furthermore, the expansion of streaming services worldwide has intensified competition, prompting businesses to differentiate themselves with captivating content, including animated films and series. Overall, these trends fuel the growth of spending on animation and VFX in the TV and OTT industry.
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Asia Pacific Expected to Witness Significant Growth in the Market
- The writer’s and actor's strike has negatively impacted the growth of the North American animation and VFX market, resulting in a dip in spending in 2023. Several films and TV shows were delayed during the strike, significantly reducing the demand for VFX and animation work in the US and Canadian entertainment sectors.
- For instance, Paramount postponed Tom Cruise's latest venture, shifting the release of 'Mission: Impossible — Dead Reckoning Part Two' from June 28, 2024, to May 23, 2025.
- Post-strike, the demand for VFX and animation work surged in 2024 in the North American region. The increasing demand for complex VFX projects requires a larger workforce of highly skilled professionals, and the industry faces a shortage of qualified talent. However, the emergence of new visual effects studios in the region is poised to bolster market growth and navigate the complexities of the surge in VFX demand.
- For example, in July 2024, Jonah Hall (ECD) and Jason Cohon (EP) established Boma, a fully remote studio focusing on visual effects, design, and immersive experiences. Based in Los Angeles, Boma is adept at navigating the ever-evolving digital production landscape. Boma aims to deliver swift turnarounds on tight budgets without compromising creative quality. Their expertise spans visual effects, animation, editorial work, finishing, motion graphics, and creative direction. With a fully remote pipeline, Boma boasts global partnerships across three continents and leverages senior creative talent from the United States, enabling them to scale projects rapidly.
- North America is a pivotal market for Animation and VFX, fueled by its established entertainment industry, a thriving gaming sector, and continuous technological advancements. The United States hosts prominent animation studios and VFX firms, bolstering the region's global market leadership. The region is home to the biggest industry giants, such as Disney, Pixar, DreamWorks, and renowned VFX entities, such as Industrial Light and Magic (ILM).
- Moreover, North America is home to a booming gaming industry. As video games increasingly demand realistic and immersive graphics, the VFX industry is witnessing significant growth. With games evolving to be more intricate and lifelike, there's a heightened need for advanced 3D animations, motion graphics, and real-time rendering. This evolution has led gaming studios to forge deeper collaborations with VFX companies.
- For instance, in May 2024, Story Kitchen and DreamWorks Animation entered a strategic partnership, granting Story Kitchen the first-look rights for an animated film. Story Kitchen aims to secure thrilling and iconic video game intellectual properties (IP) for DreamWorks Animation, targeting adaptations for global animated audiences.
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