Business Models

Moving Beyond Generic Animation Merchandise

You’re already familiar with what I’m talking about. You know, the generic animation merchandise offered by just about every independent creator and small studio out there. The T-shirts, hoodies, mousepads (do people even buy those any more?), mugs, etc. etc. with a logo/character/catchphrase emblazoned across the front in glorious, exalted fashion. They’re a dime a dozen, and are worth about just as much. So why do so many creators continue to flog them ? How can they move ahead to things that will sell better?

Animation By-Products

‘By-products’ is a word that instantly conjurers up images of dodgy hotdogs and ‘mystery meat’. It’s got a bad rap alright, but the word’s actual/original meaning is used to describe things that were created during the production of other things and that turned out to be valuable. Hence a by-product of sugar refining gets turned into something useful like molasses. The point is that by-products can be useful and profitable, and present within the animation industry too. Here’s a few existing animation by-products and a few potential ones yet to come.

The Creative Commons Conundrum

Copyright is a concept that has, and continues to, perplex many people. The concept of Creative Commons is designed to help address many issues surrounding copyright that are often ignored to the peril of legal liability. In this new media landscape, where can Creative Commons fit into the animation industry and how can it do so while maintaining revenue sources.

French Animation on Fire But The Devil is in The Details

An article by Elsa Keslassy over at Variety delves into the growing relationship between the major US animation producers and various French producers and studios. It’s one that’s been growing for a while; pushed along by Illumination Entertainment and their two Despicable Me-shaped smash hits. It all sounds good, but as ever, there are a few caveats to the good news.

Should Filmmakers Take Vimeo’s $10,000 Offer?

Video hosting service Vimeo is tempting filmmakers fresh from success at this years Toronto International Film Festival with a lucrative-sounding offer. In exchange for $10,000, Vimeo is granted exclusive internet rights to films for 30 days (or until the $10K is paid back, whichever comes first.) It sounds like a great deal, but is it really? And if so, which side is making out?

Not One, But Two Open Source Animation Kickstarter’s Launched

A while back, independent animator and open culture advocate Nina Paley pined for an open source, 2-D vector animation program. Now her prayers have been answered; sort of. Tupi is a Kickstarter project whose goal is to create a fully functioning 2-D animation program that is also open source. But that’s not all, there’s also another Kickstarter project that aims to upend the ubiquituous animation GIF.

The Significance of ‘The University of DIC’

Over at Animation Magazine, Michael Mallory has a rather informative post about what he refers to as the ‘University of DIC’. As you should be aware of, DIC was an animation studio responsible for such shows as Inspector Gadget, the various Sonic the Hedgehog series’ and a whole host of other, primarily low budget animated shows. Despite being bought up a few years ago, the company’s influence continues to live on.

Is YouTube Starting to Suck

The very question is, in and of itself, potentially inflammatory in this day and age. YouTube is, after all, the all-but-crowned successor to the television. On the flip side, it is the bane of every network and movie studio out there; lashing out much the same as old Hollywood did when the television itself came along. Here’s the question though: is YouTube starting to suck? And when I say ‘starting to’ I mean in the slowest, most unnoticeable form imaginable, and when I say suck, I don’t mean viewers, I mean become bad. Let’s take a look.

Applying Milken’s Junk Bond Theory To Animation

Michael Milken made a fortune with junk bonds back in the 1980s. His theory was so simple, it was almost too good to be true except that it wasn’t. Basically, a junk bond is one that carries a high risk of default, i.e. the borrower doesn’t pay you back. Milken however, perceived that if you buy enough junk bonds, the ones that do pay you back will more than cover the losses from those that don’t. His plan worked far beyond his expectations and he quickly became the so-called ‘Junk Bond King’ before being brought down for some insider trading.

Comapring and Contrasting the Strategies of Major Animation Studios

Business strategy is a class that many MBA programs (including mine) require students to take. The notion is that there is little point in learning a lot of business knowledge if you cannot execute or implement it correctly. Strategy plays a large role in that regard because it gives focus to where a studio or organisation is going and how it is going to get there. Today, let’s take a quick look at the apparent strategies of the major studios and what it might mean for where they are going.

Disney

As obvious as this may seem, Disney’s strategy when it comes to animation is not as friendly to the technique as they would have you believe. Are they making a lot of it? Sure, but what is the strategy behind it?

Disney executives would like you to believe that as the guiding light of animation for much of the 20th century, they are ushering it into the new era. In fact, the opposite is true. Disney animation in it’s traditional (non-CGI) form is dead (at least theatrically), and what remains is, for all intents and purposes, a pale facsimile.

I do not mean this statement to be profane in any way; plenty of talented artists continue to be employed at Disney. Their strategy though, has long shifted from being the pioneer of animation, to making the quick buck. Hitherto the purchases of Pixar, Marvel and Lucasfilm.

The apparent strategy is to simply buy companies with existing hit properties and milk them instead of creating risky original properties instead. Sure Frozen is semi-original, but it uses the well-worn fairytale story as a crutch; Wreck-It-Ralph relied heavily on existing video game characters. The rest of Disney’s slate of projects looks incredibly thin compared to the corporate subsidiaries and numerous articles abound as to the demise of the Disney studio proper.

DreamWorks

This studio’s strategy is by far the most entertaining at the moment. Moving in all directions into TV, technology, internet video and theme parks, Jeffrey Katzenberg is making a determined effort to give his studio the chops to survive on its own.

The question is, what kind of organisation will eventually result? While it is clear that DreamWorks needs to diversify in order to survive, it is not so clear where they will end up.

The notion of the diversified conglomerate not unlike other studios is the obvious choice, but DreamWorks is making a push on the technological side of things too. Clearly it intends to be more than a an entertainment company even if that remains its focus.

The other option is that of a takeover. It is rare for a CEO to run their company for the sole purpose of being taken over, but it is clear that a company that appears to be growing is much more valuable than one that has just one core business. Ergo the more businesses that DreamWorks is in, the more money a buyer will have to cough up when the time comes to write the cheque.

In any case, a diversified, independent DreamWorks appears to be the goal, at least for now, and their strategy of diversifying as quickly as they can seems to support that idea.

Sony

It would be easy to take the rash approach and say that Sony intends to make more Smurfs sequels, but the studio itself seems to be quite content to reside within the larger Sony corporate ecosystem. Their films are successful and make money and as long as head office is satisfied, they should have little to worry about.

Where Sony is going is hard to say; the studio is a department instead of a company and Sony itself has been paralysed for the last decade or so; incapable almost of the ingenuity and technological brilliance which permitted it to dominate the electronics landscape.

It’s safe to say that Sony Animation exists to make movies and make movies alone. It is perhaps the truest form of corporate animation studio today.

Blue Sky (FOX)

Despite too many successful Ice Age sequels, the Connecticut studio suffered a tad when its original epic, ‘Epic’ didn’t quite light the box office on fire. The studio is also in a bit of a quandry insofar as parent FOX distributes DreamWorks films as well. Thus far there appears to be no sense of favouritism but it does mean that Blue Sky may start to see more direction from FOX.

As of now, the strategy must be to simply make great films; on par with Sony, but in a distinctly more precarious manner in light of FOX’s relationship with DreamWorks.

Illumination

Bringing home the bacon with Despicable Me 2 ought to keep this studio in the good graces of Universal for a few more years at least. Another corporate possession, Illumination seems content to put out animated films and nothing more.

It’s strategy is unknown, but Universal would be unwise at this point not to expand it’s operations (into TV or otherwise), especially in light of DM 2.

Conslusion

It’s incredibly tough to determine which studio is following the best strategy. They are, after all, following paths which suit them or are chosen for them. In the long run. even given DreamWorks precarious position as an independent company, theirs is the strategy that I would bet on. They are not simply making films or figuring out how to make easy money. Nope, they are doing that but also setting the company up for growth. With that in mind, they look set to continue their growth despite setbacks in theatrical animation.

 

 

How Difficult is it to Set Up an Animation Studio Today?

Via: Cartoon Brew
Via: Cartoon Brew

A while back I published a rather sarcasm-filled piece that highlighted the apparent ease with which someone felt that you could get an animation studio up and running. Quite simply, the source explained things in a far-too-easy manner. Today though, we’re taking a more serious approach to how difficult (or rather, how easy) it is to get an animation studio up and running in 2013.

What IS An Animation Studio?

The first thing to consider is exactly what counts as an ‘animation studio’. We’re long past the point where a true studio was a group of artists working in a shared space on projects of a certain duration. With modern technology, it is very much possible to be a one-person studio or to operate in a virtual studio environment separated from colleagues by thousands of miles.

Let’s say though, for simplicity’s sake, that you wanted to set up a ‘traditional’ studio; i.e. a shared space housed in a building that people commute to. Is that still a realistic goal or has that ship sailed thanks to costs?

It’s hard to say, but there is certainly still a lot of value (monetary and otherwise) to having everyone in a single place at the same time. Marissa Meyer is famous for eliminating Yahoo’s telecommuting policy and forcing people back into the office.

Are the costs still significant? Yes! However, that is not to say that they are insurmountable. In reality, they are no more expensive than for any other office, and cheap space should be easy to find no matter where you are.

Are they Still Viable in the Internet Age?

One of the complaints about the internet age and its effects on content is that it simply doesn’t pay enough to make an investment in a studio worthwhile. That seems like it’s true, but in fact, it has little to do with how much the animation itself pulls in as it does how much total money the studio brings in.

Productions may or may not be revenue spinners in the way they have been through licensing and so forth, but they are still the primary generators of revenue for any studio. The goal is to get a number of them going at the same time so that revenue streams are relatively stable over a prolonged period of time. In such instances, a traditional studio should be absolutely viable in the internet age.

Why They Have To Start Small

Everyone starts a studio with grand ambitions. While Disney never seemed to display them, it is fairly certain that he knew how big his studio would eventually become. He started with only a handful of people churning out shorts at breakneck speed and barely managing to break even in the process.

History is littered with plenty of examples of studios that started out big and failed entirely. Don Bluth leapt from Disney and started into his own features. He ultimately failed. DreamWorks very nearly suffered a similar fate; bolting out the gate with blockbuster films that were identical to what Jeffrey Katzenberg had produced at Disney. Those nearly brought the studio down before it caught a break with Shrek; a cheap film that made a lot of money. In the end, that studio had to shrink before it could grow.

Any new, startup studio, needs to start small. How small? Well in one of my Animation Scoop pieces, I theorised whether it would be possible for a feature film to have a genesis in an animated GIF. It would be a long and winding road for sure, but the concept is certainly possible given the right tools and people.

In a more realistic sense, short or very short films would be the ideal starting point; growing as the audience does. One big hit ought to be enough to spur production on a second, concurrent series. Once that’s in place, you can really get going in terms of improving the quality of the content and the amount of effort that goes into it.

Will Features Remain the Ultimate Goal of an Animation Studio?

Features have long remained a goal for animation studios for the simple reason that they exemplify and personify a significant amount of effort. Shorts and TV series are different beasts, but they do not seem to represent the marathon that is feature film production. The glamour and allure of Hollywood, the Academy Awards and vast profits seem to remain the goal of many who enter the business.

That isn’t to say that features will disappear; far from it. However new studios will have to find a way to produce top-quality features that are economical to make. If revenues from other areas of the business are steady, then that shouldn’t be a problem, but betting heavily on a large production would be unwise,

Will Anyone Ever Topple Disney?

Sure, someday someone will figure out a way and do it. Pixar nearly did but they let themselves get bought out. Given another few films, they could easily have toppled Walt’s studio as the animation studio to beat.

So what are you waiting on? Get out there and found your studio!