Why Is Animation Like Software?
Software seems like a funny thing to compare animation to, doesn’t it? After all, one is mostly recreational and the other is, well, mostly utilitarian. Yet there are many common traits between the two, especially now that both are expected to be given away for free. Thankfully, someone has already figured out a way to make money from software.
This article by Ben Thompson over at Stratechery does a great job outlining why software, particularly apps on mobile devices, will forever be free. Simply put, users are much more willing to hand over the data they create than cough up their hard earned cash. Unless of course, there is a piece of complimentary hardware that will improve their experience. If there is, their wallets open up fairly easily.
So what kind of commonality is there between software and animation. The latter is certainly content, designed it entertain and maybe educate. Yet consumers perceive the cost of content the same way they perceive the cost of software; in other words, they don’t:
Consumers may not understand at a technical level what is happening when they download an app or a song, but they seem to implicitly know that they are simply copying bits, a process which has a marginal cost of zero.
Content is simply streamed or broadcast. Sure, there is a cost to access it via cable or satellite, but the cost is clearly evident in all the visible infrastructure consumers can see around their neighbourhood. They don’t see the ‘hardware’ needed to create all that content, which, in any case, is also paid for by advertising, right?
That’s why YouTube has been so phenomenally successful. In addition to the increasing quality of the content on the site is the fact that it doesn’t cost the consumer anything extra. They’re already paying for the internet connection, being able to view content through it is just another advantage of the internet over cable.
When it comes to making money, Thompson points out the obvious when it comes to software:
This is one of the primary ways that software will be monetized going forward: hardware sold at a significant margin that is justified by the differentiation provided by software.
In other words, the [paid-for] hardware will be complimentary to the function of the [free] software and also where any profit will be had.
So what can animation have that is ‘hardware’? Some are using the traditional forms of merchandise such as clothing and licensed items. But those merely connect fans to the content, they don’t improve, enhance or augment the viewing experience in any way at all.
DreamWorks Dreamtab is that studio’s attempt at integrating hardware into the enjoyment of their animated products. It’s aimed at kids though. Adults across the board are left empty-handed.
So what kind of hardware could animation studios create that would be of benefit to adult fans that they won’t find anywhere else? Pretty much any new form of screen is already ruled out; Sony remains unconvinced though (coughPSVitsacough). As is any physical form of media; Blu-Rays are the very last gasp of that business model.
The honest truth is that the answer remains, at this point, unknown, and until someone comes up with a solution, merchandise that relies on fans wanting to buy it rather than needing to buy it will continue to be the primary way that studios can generate revenue from their animation.