Will FOX Succeed In the Online Arena With Animation?

Via: Wikipedia
Via: Wikipedia

It’s no secret that FOX has long been the dominant player of all the mainstream networks when it comes to animation but with audiences slipping away to the internet, what are they to do? Well, the apparent answer is to open up a new studio and attempt to compete with the likes of Frederator’s Cartoon Hangover.

The Gist of It

The Animation Guild is reporting that the new studio is currently in full swing and has about a hundred people working there at the moment. As part of the previously-announced extension of the Animation Domination block of shows into Saturday nights, the network also took the extra step of setting up a dedicated production house. (Non-union of course, hence TAG’s gripe.)

The studio is producing not only the content for the programming block (as in, Axe Cop and High School USA!) but is also busy cranking out animated GIFs such as the wonderful specimen you see below.

Via ADHD
Via ADHD

Where Things Get Interesting

Although this could be just another run-of-the-mill story about a new development in animation, where it takes an interesting turn is not where you would expect. Namely, FOX purposely kept production close to home:

Fast reaction time is another key to the ADHD approach. Instead of farming out animation work to Asian firms, with a lag time of at least six weeks, the team in Hollywood can shoot out topical spoofs to stay in the social conversation.

Fox’s toons prepare episodes well over a year in advance, said Reilly. “With ADHD, I can say something today and we can have something tomorrow.”

It’s nice in a way to see FOX accepting the need for speed in the online youth media market, and addressing it by employing talent close to home. It marks a potential bright spot in the otherwise gloomy animation industry that has had too many stories of layoffs over the past few months. Although pay is obviously not the highest, there is still potential for that to change if demand heats up thanks to a success or two.

That said, in contrast, Cartoon Hangover, instead of maintaining a studio for quick stuff, instead hires freelancers. Granted it isn’t as steady as regular employment, but if FOX did the same, they could pay animators more since the overhead of a studio wouldn’t exist.

The other interesting thing is how FOX sees the money streams:

Reilly declined to discuss specifically what kind of coin Fox is pumping into ADHD, saying that it’s not insignificant. The project will run at a “very mild deficit” for about three years before it gains ad traction, he said.

What I would like to know is why it will run a deficit for all those years. Online content has proven to be profitable already; surely it shouldn’t take an established player like FOX three whole years to make money. Of course, I’m also curious why ads are being given such weight; again, there are plenty of other revenue sources available that could suffice.

Lastly…

Before we reach the thrilling conclusion to this post; it really says something about animation as a form of entertainment that FOX sees it as the least risky way to get a foot in the door of online streaming. Can it really be that the ease of creating [quality] animation combined with its popularity among the key 18-34 demographic? It would certainly appear that way:

That noted, Reilly is convinced the model is an efficient way to develop quality content, and he’s eyeing other genres Fox might choose to replicate ADHD. “The cost structure of this stuff by its nature is different from TV,” he said. “The digital world continues to explode. It’s fun. And it has promise.”

Let’s see how this pans out. If it works, expect others to follow.

PS. Notice how FOX is about a year behind online-native efforts? Yeah, me too.

 

AwesomenessTV Proves Its A Winner

AwesomenessTV

About a year ago, I pondered which animation-based YouTube channel would succeed. Still later I looked at whether or not AwesomenessTV was the prototype for YouTube channels. I wrote at the time that:

If AwesomenessTV can create a viable funding model and retain an audience, we might have a winner on our hands.

As it turns out, I was right! The company has just been snapped up by DreamWorks Animation for at least $33 million.

The deal is an important one for a number of reasons but the chief one to take away is that this is a serious investment in terms of both audience and talent on the part of DreamWorks.

On the talent side, AwesomenessTV has a subscriber base of 14 million 500,000 up from a comparatively paltry 11,000 in just 9 months. That’s truly explosive growth and it’s natural that DWA will want to have a front row seat in that. Secondly, acquiring the team behind the channel will ensure that its growth is imbued with the same hands that have guided it so far. A wise decision on the part of DreamWorks.

The audience side is where the real investment is though. With 14 million consumers and a direct line to them, DreamWorks stands to exponentially increase its exposure. The hidden fact is that you can expect a lot of data to flow up from those subscribers which leads us nicely to the truly intriguing (and overlooked) aspect to the deal.

Teenagers!

Yes, teenagers! AwesomenessTV is aimed directly at them and I will eat my hat if the vast majority of their subscriber base aren’t in their awkward years or damned close to them. You know which other animation studios actively court teenagers? None! Disney tends to ignore teens in favour of the more moldable tweens, Nickelodeon doesn’t put a profound effort into anybody above the age of 12, Cartoon Network is just about the only network that has a presence in the teen market thanks to [Adult Swim], but they have no theatrical film division. Oother large-scale animation studios like Sony, Blue Sky, etc. play similar games; they all cater to younger audiences only.

Is Jeffrey Katzenberg subtly attempting a coup d’état of sorts of the teen market with animation? It’s certainly possible. AwesomenessTV has a history of animated content and animation is what DWA is good at, so it would seem reasonable to see the former leverage the high quality content of the latter and for both to grow their audiences as a result.

Going even further, you could parlay those teenage animation fans into adult animation fans. That’s not a far stretch especially given that the animation age ghetto currently occupies the very age group that AwesomenessTV caters to.

How will it pan out? It’s hard to say, but I was right before so can only hope that I’m right again 🙂

Your thoughts?

More Evidence Of A Theatrical Animation Bubble

PPG-Bubbles
Animation+bubble = Bubbles!

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!