More Evidence Of A Theatrical Animation Bubble

Back in October 2011, I took a look at four indicators that appeared to demonstrate that we were in a theatrical animation bubble. While those four factors are still very much relevant in 2013, let’s focus on one of them, namely the number of players involved. That factor alone should be cause for concern that we’re getting ever closer to a theatrical animation bubble.

The Current Players

For years, Disney pretty much had the theatrical animation market to itself. Sure there were a few minor players now and again (Don Bluth, Steven Spielberg, etc.) but for the best part of the last century, animated feature film = Disney.

That all began to change in the 90s as more studios latched on to the profitability and longevity of animated films. That period continues through to today with the  studios below planning to release films in 2013:

• Pixar
• DreamWorks
• Sony
• Blue Sky (FOX)
• Disney Feature Animation
• DisneyToon
• Illumination (Universal)

That’s a fair number of studios simply producing films. On top of that, they are actually releasing nine films. Now that’s just your large American studios, on top of that, there are films being released around the world that may or may not make it to these shores (although yours truly hopes that Song of the Sea certainly does.)

Nine Films? Can that be considered crowded? That’s a good question and the answer is, maybe. Animated films have shown remarkable resilience in the market but only if their perceived quality is high. CGI was a bulletproof format until it became ubiquitous. Today, mediocre CGI films can have a tough time just breaking even. DreamWorks’ recent Legend of the Guardians is proof of that.

The Current Signs of a Bubble

What prompted today’s post was the announcement that Warner Bros. has made a move to explore feature films again by tapping a number of talented individuals to operate as a sort of think tank for ideas. While Warner did have a theatrical division at the turn of the millennium, it has decided not to go that route again (a tacit admission that they screwed it up last time), opting instead to use an outside studio for actual production.

While the Warner move should be welcomed, it does make cause for concern that at this point, there will be eight entities vying for a similar number of young eyeballs that there was 10 years ago when only half those studios were in the marketplace.

With more players comes more competition, and with that comes the possibility of spiraling costs and compromises on quality. I don’t mean to engage in fear-mongering, far from it, but we should be considering these things while times are good, because they will help prepare us for when those times when the chips are down.

Poorly performing films already result in layoffs, what happens when that affects more than one studio at the same time?

The Deciding Factors

The first thing to consider is that the amount of free time people have isn’t rapidly changing. It is gradually increasing, but there hasn’t been any massive changes over the last 40 years or so (at least in the US.)

Secondly, theatrical films, or more accurately, feature films, must contend with lots of other competitors at multiple stages of their commercial lives. At the cinema, they must compete with other uses of people’s time. At the store, they are competing against other DVDs, and when they finally make it to TV, they could be up against the latest reality TV show. Cinema’s themselves, though long used to competing with the likes of television, must now also grapple with the fact they they are no longer the sole place to see the latest films.

Lastly, quality will have a massive bearing on whether we are in a bubble or not. The year 2012 was a good one for the the north American box office but it was driven by only a few large hits, a worrying sign that smaller films aren’t picking up the slack when it comes to dropping cinema attendance.

On a related note, we should keep in mind that the box office is far from the only thing affecting the profits of feature films. Things like home video as well as TV and streaming rights all have a role in how animated feature films perform. However, history indicates that Hollywood studios remain inexplicably fixated with box office grosses and continue to measure a film’s success by that yardstick more than any other.

The Mitigating Factors

Managing the bubble is tough. Profits are being made, wages are relatively decent and consumers continue to watch animated films. As far as the indicators go, it’s a good time to be getting into the market. However, as we all know, the housing market was also a great thing to get into, until it suddenly collapsed in 2008.

Ideally, we need to see either less output on the part of the studios, or more opportunities to watch them. Seeing as the number of screens and the amount of free time consumers have aren’t changing as rapidly as the market is rising, we’re eventually going to see a crunch. That means output is going to have to be reduced.

“But Charles,” I hear you say, “Pixar, Disney, Sony, Blue Sky and Illumination only release one film a year, how can they cut back?” That’s true, but remember, in the 60s and 70s, Disney only put out an animated feature once every three years. Dark times they were, but economics dictated such a schedule and the studio survived (barely.)

That leaves DreamWorks as the only large studio pumping out more than one film a year. Although that’s all part of Jeffrey Katzenberg’s current strategy, there’s a good chance we’ll see that number dropping in the near future as that studio’s library gets up to an acceptable size.

Will The Theatrical Animation Bubble Pop?

I sincerely hope not, and audiences have shown a remarkable fondness for animated features on a level that they have never enjoyed before. It would be devastating in plenty of ways if the [good] momentum that has built up over the last 20+ years was lost. For now, keep an eye on the numbers, and hope that they remain good.

Do you think the bubble will pop? What can be done to ensure it won’t? Let us know with a comment!