Earlier this week, Noah Bradley published a piece concerning the astonishingly low wages that many artists endure. Although raising valid points, he neglects to address the multitude of factors that help create and sustain such a scenario.
Via: Blue Sky Studios
The impetus for this post was on Cartoon Brew a few weeks ago, which in turn was inspired by a book, Intern Nation, that quoted another Cartoon Brew post from a good while before that. It concerns internships, a concept that a lot of college graduates are familiar with in the United States.
Interships have become prevalent throughout many industries, not just animation. On the surface, they offer benefits that parties on both sides can stand to gain from. The intern obviously gets observational experience to put on their resume, and the company gains time as the interns perform non-project-related tasks that would otherwise consume paid employees’ time.
That is in the ideal world, however and there are plenty of stories of interns who were coerced into working long hours, performing actual work and and often for extended periods of time (many months or more).
This post isn’t so much about abuses within intern programmes, rather it is an analysis of how the prevalence of interns within the industry could potentially hurt it in the long run.
The problem is that interns, whether they do productive work or not, contort the economic realities of the industry. If an intern is strictly an intern and simply makes tea or shuffles paper about, then their impact is limited to slivers of time that the company could only reap benefits from in the very long term, read: a year or longer.
Interns involved in production, on the other hand, can dramatically distort costs because as anyone whose taken a managerial accounting class will tell you, what counts as a ‘cost’ is entirely up to management.
Take for instance an animator’s base salary. It’s paid (traditionally) on a per foot basis, i.e. the more animation produced in a given timeframe the more the animator gets paid. Now, when you look at how much it ‘cost’ to produce that animation, most people would factor in the animator’s salary and any materials used. What a lot of people neglect to consider is overhead; things like building rent, heating/cooling, electricity, etc. that were all used in production but can not be directly applied to a particular production.
Where interns distort this when they work on a production is that they create the actual work, but they only account for the costs associated with the overhead and any materials used, they don’t get paid so that cost is not accrued by the studio.
Why does this matter?
Salaries are often the largest single cost category for employers.
If a production uses even two interns on the production, the cost of said production will be proportionately lower than if two animators were hired. Now you might say that this is an isolated case, and so what if it is. However, what if it’s extended to the entire industry? If every studio decided to hire even one or two employees less than necessary per production it doesn’t take a genius to conclude that we’re talking about a lot of people.
“But certain areas wouldn’t be viably able to produce animation without interns”
This may be true, but again, interns distort costs so much, that that is precisely why certain regions cannot produce animation, or rather, cannot appear to produce animation in a profitable manner.
When it comes to the cost of production, the use of interns will naturally result in a lower overall cost, but the problem is that the difference isn’t “saved” as studios might have you believe. Their fixed costs will remain the same whether they hire the additional persons or not because they have to be paid even if no animation is produced at all! The cost to employ an animator is considered a flexible cost that is applied to the production and would (and should) be ultimately paid for by the client.
The ultimate result of utilising interns for production is that the supply/demand nature of the job market is also distorted. Anyone willing to perform work for free will displace someone who will only work for compensation. This drives the mean salary of animators lower as they are forced to work for less than they would otherwise have. The difference is, again, not “saved” by anyone, it ends up in the economy somehow, the problem is that, ethically, it is sufficiently suspect.
So the crux of the problem is that either the job market is too willing to accept unpaid labour or that the various clients out there are unwilling to pay the amount that they should for a given production.
My suspicion is that it’s a mixture of both, a vicious cycle if you will. With people willing to work for free, studios and networks can use the resulting lower costs to argue that such and such a production is only viable if interns are used. This is patently false. The cost should be what it ought to be and the client could either take it or leave it. Extracting free labour benefits them in the short term, but harrangs the overall economy and industry in the long term.
First of all, no need to worry, this isn’t going to be a lecture on economics. I hate those too. What it will though, is discuss how a studio’s stock can move relative to its releases. It’s not something that animators need to be too aware of as it doesn’t have a direct effect on their work, but it can affect how the studio operates on a higher level or indeed how decisions made in light of it can filter down to the lower ranks.
Firstly though, what does a stock’s price represent? If you said how much a company is worth, then congratulations! You’re correct! However, how do you determine how much a company is ‘worth’? Do you simply add up how many buildings it owns or how much cash it has on hand? No. It’s a bit more complex than that.
The price of stock is a complex thing that takes into account how much the company owns, but also how well (or poorly) its expected to perform in the future. If a company is expected to perform well, its stock price is high or is rising. If a stock price drops, it’s an indication that the company is either expected to do worse than it was or it’s simply failing to live up to its potential. Either way, the stock price is always correcting itself as investors either bid or sell at a price they feel is the right value.
In the case of DreeamWorks, the share price is just about half of what it was a year ago. Does this mean the company is only half as good now than it was then? No, of course it doesn’t. It simply means that the outlook for the studio is a bit hazier.
A studio’s stock price is a mixture of the company’s assets, it’s revenue steams (DVDs, etc.), it potential release slate (ever wonder why studios like to announce new projects years in advance?) and its current release slate. DW’s recent slide is the result of the current release slate in the form of Puss in Boots.
Y’see, there are analysts, hundreds if not thousands of them, whose job it is to analyse a company in the finest detail. They pour over company reports, sector reports, market reports, weather data (yes, those winter storms on the East coast can have a real impact), consumer spending, you name it. Their goal is to try and predict how well a company will perform based on the data available to them. They’re the ones who compile it all and sell it to other firms or investors who will make their decisions based on the data within.
Naturally, they paid close attention to the opening weekend of Puss in Boots, and unfortunately for DreamWorks, it came up short. From the LA Times:
With a production budget of about $130 million, “Puss in Boots” generated $34.1 million at the box office over the weekend. Although it was No. 1 movie, ticket sales were well below the $40 million to $45 million that most Wall Street analysts had forecast.
The resulting compendium that Wall Street ‘forecast’ is that with a lower box office, the DVD sales will be lower as will any and all merchandise, TV rights and potential sequels. As a group of pessimists, analysts are about as big as they come.
“But so what?” I hear you say. “Stock prices only have a bearing on investors, not on the studio itself”. This is true, but, a company’s ability to borrow is heavily dependent on their future prospects, and since investors have signalled that they’re not good, DreamWorks will now have to pay more for financing.
All of this goes to the bottom line of a film, where belts might get tightened. This is where the actions of this week will be felt by the rank and file. If upper management decide to scale back budgets, then there will be very real changes made on the ground level. People may be let go, or (more likely) schedules will be shortened and films brought forward to boost takings.
What does all of this teach us? Well, it should say not to pay much attention to analysts. They’ve got it wrong before (UP, anyone?) and they’re likely to get it wrong again. They also tend to focus on the very short term. It’s rapidly becoming the case that the box office opening is unconnected to a film’s subsequent performance in the DVD market and beyond.
DreamWorks (and every other studio) is in the middle of some choppy seas at the moment, and its simply dealing with them as best it can. Having the stock price go down is not the end of the world, not even close. Besides, any real investor is looking at the long term view, and in that regards DW is doing pretty fine considering its still independent.
Over the past number of years, we’ve slowly seen animation come in from the cold as it were. Yes, Disney has had critical and commercial successes for years, but only within the last 10-15 has anyone else actually stood up and taken notice at just how profitable an animated film is. Not only does it rake in the dollars at the box office, they also tend to have some very long legs. Just look at the Lion King, 17 years old and still going strong.
Which leads to today’s post. With the obvious success of the technique, are we in the midst of an economic bubble in terms of animation? I mean, there is a difference between strong economic growth and unsustainable expansion. The question is are we in one or the other. Here’s 4 reasons for the latter point of view.
1. Revenues aren’t rising as fast as costs
Revenues for animated features have been rising at a relatively steady rate, but they have not risen at the same rate as costs. Naturally this is partly to do with the greater use of technology than in the past. CGI isn’t as cheap to implement as traditional animation, which could be shipped off to Asia for the real labour-intensive work. CGI on the other hand requires a very large upfront investment followed by the costs of the labour to utilise it.
Revenues are not rising at the same rate and the result is squeeze somewhere along the production line that will eventually reach a crunch point.
2. The Number of Players in the Market is Rapidly Growing
It’s elementary economics that once someone discovers a way to make money, at least one other person will attempt to emulate their success. Animation is no different. Today, there are no less than 4 large players (Disney, DreamWorks, Sony, Illumination) in the market and more are being added all the time.
When this becomes a bubble is when you see players who attempt to over-extend themselves into the market. We’re seeing this right now with various one-man bands and VFX studios that have figured they can have a go too. Of course, this is nothing new and has been happening since day dot. The difference is that the rate at which we’re seeing new entrants has substantially increased over the last couple of years. This leads us nicely to….
3. Competition is Becoming Intense
With more players in the market, this leads to increased competition in just about all aspects of the business, from artists, to technology to studio space to release windows. More competition is always welcome as it keeps everyone on their toes and ensures a more efficient use of resources. the only downside is that it also tends to weed out the smaller or inefficient guys.
Why would more competition signal a developing bubble? Well, with an increased demand and scarcer resources, costs for those resources tend to rise. Since competition is increasing at a faster rate than the market is growing, that is indicative of a bubble.
4. The Market is Limited And Changing To Boot
Right now, the market in North America is limited. The market is mature and it’s not getting bigger in the grand scheme of things. The growth markets right now are in Eastern Europe and Asia. the only problem is that those markets tend to have quite distinct cultures, and as a result, aren’t as open to Western films as the rest of the world.
Negating the fact that DreamWorks recently announced that they’re building a studio in China to capitalise on the local market, it’s clear that Western studios face a market with increased competition but not an larger space in which to grow. The result is that we’ll either see reduced revenues or studios being forced to reduce costs. Mark my words, $300 million movies are not sustainable in the long run, at least not right now.
Coupled to this, the changes in the market in general, thanks to the internet, mean that the industry as we know it may be vastly different in a few years time. The rise of streaming, the decline of traditional TV, and the new revenue streams that go along with them means that studios will have to adopt a different tune. Whether they are proactive or not in this regard will surely determine whether we’ll see the bubble burst.
Ever so slightly off-topic but still very relevant is this “sculpture” by Manuel Palou.
Yes, it appears to be your bog-standard 1 terabyte Western Digital MyBook, except that is not what makes it worth so much. It is the content stored on it that is so “valuable”.
While some over on Reddit were questioning its artistic merits (of which there are very few), this “art” should nonetheless serve as a bit of a reminder that content should not be valued at how much you wish to sell it for but how much the customer is willing to pay for it. Just because something is sold at a price does not give it “value”.
The picture also serves as a bit of an eye-opener as to how much content people can store at home these days. Way back when, you could maybe spend $10,000 on a nice record collection but you’d have to give up most of your wall space, or your basement. Now I can store the entire published works of fiction from 2003 to 2011 on my bookshelf and still have more than enough space left for much much more.
Content creators (animators included) MUST keep this in mind when posting stuff online. The internet immediately increases the supply of your product to near infinity, and as any economics professor will tell you, as the supply of a product approached infinity, the price people are willing to pay approaches zero. Embrace this by giving people a reason to give you money. Remember, anything that’s scarce is valuable, anything that’s physical is scarce.
- It provides a crisper, clearer picture than the traditional 35mm film.
- So does a HD plasma screen TV.
The bottom line: If I wanted to watch a digital film, I’d wait for it to come out on DVD/Blu-Ray. Assuming the film was digitally distributed too, I should be paying a lot less for my cinema ticket* but there’s fat chance of that happening.
This is because there is not the same financial outlays involved in shipping physical cans of films around that a traditional setup involves.
Amid over at Cartoon Brew has an insightful piece on English animator Bob Godfrey and the attempts being made to make money from his works. It plays almost exactly into my post from earlier this week on the same topic.
Amid raises some important points and theories but it is in the comments that things get interesting. The post is well worth taking the time to check out.
With the rise of the internet, the media and entertainment landscapes have been irrevocably changed. Gone are the days when getting people to see your film meant cajoling your friends down to the local cinema where your short was being screened. Today, thanks to the internet, you can throw something up on YouTube and get a million hits within an hour (if you’re really lucky, in which case, you should play the Lotto as well).
Such a scenario is great for a lot of people, certainly the viewers, but if you were to listen to the likes of the MPAA, the sky was falling down. “We’re losing money” they cry, as they trip over themselves trying to figure out ways to make money off the internet.
When it comes to animation, making money has always been a little bit trickier than live-action. For one, you can’t have your actors show up at a party and have them start gushing to everyone they meet about what a great film you made and why everyone should go and see it. Nope, you can’t do that with animated characters.
So let’s assume that your film is on the internet and people can watch it for free on YouTube. How can you earn money from it? The answer is surprisingly simple.
Know the difference between what is scare and what is not. People will pay for scarce things, but not for something (or a substitute product) they can get for free relatively easily.
Having your film online is not making it scarce, in fact, it’s making it about as plentiful as you can get. Even if you took it down, it would continue to live on for years, decades even in cyberspace.
There’s a good chance that you’ll have to figure out what it is about your film that is ‘scarce’. Is it the physical drawings used in the film? It might well be. Bill Plympton draws everything on paper and if you were at MoCCA this past weekend, you could have bought one from his latest short, The Cow Who Wanted to Be A Hamburger.
Physical objects relating to a film will always be scarce as they are harder to duplicate and there is often a limited supply out there. That’s why you see cels from the likes of The Little Mermaid selling for $1,200 or more. There’s only one of that particular cel out there and that’s how much people are willing to pay for it.
If selling the original art doesn’t appeal to you, you can always create some more! If you decide to sell, say, a DVD, why not throw in a quick sketch, like Tomm Moore did with The Secret of Kells. If you go the T-Shirt route, why not sign your name on it or something like that. Consumers love something that appears to be unique, that they have the only one or one of the few of in the world.
I know I keep coming back to the idea of scarcity, but that really is the secret to making money from your film. If you figure out what is in limited, supply about it, then you are in a position to start making money from it.
It’s not secret I like Tangled. It’s fun and although the story and characters are slightly less than mirror-polished, it’s an engaging film that manages to astound with it’s visuals, as Jim Hull managed to put it on twitter:
It’s true, the visuals are stunning and its the main reason I like the film. However, I am one of those folks that has an old-style TV. You know the ones, with a square screen and that take up as much space in the living room as an elephant. Am I behind the times? Yes, I am and I realise it. However for me, if it came down to it, I would rather spend the couple of hundred dollars on a flight to Ireland than a new TV. It’s not that I don’t like watching the boob tube [snicker], it’s just how I prioritize things.
Despite the fact that I like the movie, I was disappointed by the Tangled DVD. The only extras included on the disc are some original “storybook” version of the film’s opening and a countdown of films that makes Tangled the (supposed) 50th feature released by Disney.
Here’s my problem, and it’s likely to be your problem too. Why the heck would you pay $14.99 for a DVD with basically just the film on it? If you’re a truly insane or disadvantaged in who supplies your DVDs, you would have to pay the $29.99 that Disney recommends!
First of all, $14.99 is expensive, even for a DVD (when stores can sell CDs profitably for half the price, you know there’s something up). The extras included were and are available online so you do not gain anything by having the DVD. The ultimate insult is that for an extra fiver on Amazon.com, you can get the Blu-Ray/DVD combo pack but that is a matter of economics and I’m sure most people plumped for that version despite the fact that it offers only a few more extras and even then only on the Blu-Ray disc, the DVD is exactly the same as the stand-alone version.
So ask yourself: “why should I pay money for a plastic disc with just the movie on it? Why not save my money and download it from the internet? It’s not like there’s a lack of choice there”:
I do not advocate downloading films from the internet. The practice is quote/unquote “illegal” and if the MPAA thinks they’ve caught you, it can be a legal nightmare trying to get it sorted out. If you have ethical feels about it, there are always plenty of free (as in speech) and public domain films out there just gagging for your attention.
The point is, why on earth would I fork over a pile of money for something I can just download from the internet (legality aside)? It doesn’t make any sense to sell films like that any more because there is absolutely no incentive to the public to buy the film. If it came with some kind of extra that I could not download form the internet (read: a physical item) than there is a chance that people would be much more likely to purchase it.
I think that’s something that content producers cannot get their heads around. People no longer consider content a physical good whose reproduction can be controlled. People today (myself included) generally assume that if we can get it from the internet, then it probably should be free (there’s an economics background to this that can wait for another day, but trust me in the meantime).
Just to add insult in injury, there was a time when DVDs came stuffed to the gills with extra features. Since the introduction of Blu-Ray, we’ve seen those features gradually get pulled as the studios have attempted to incite use to get Blu-Rays instead. Unfortunately a new HD TV is a heck of a lot of money to spend and a few extras that I used to be able to get aren’t going to be the deal-breaker for me.
With less features on the DVD and with a nominal difference in price, why the heck would I buy the single DVD? If I just want to see the film, there is a heck of a lot of reasons why I should just go and download it or watch it through other means and I’m pretty sure that’s what plenty of folks are doing to the detriment of the studio and the artist who work in the industry.
Exhibit A, this quote from an article by Mark Harris in GQ Magazine (I profusely apologise, I would never consider linking to, much less blogging about, an article from such a rag unless it is under exceptional circumstances similar to this one) which came my way via Marco Arment.
As recently as 1993, three kid-oriented genres—animated movies, movies based on comic books, and movies based on children’s books—represented a relatively small percentage of the overall film marketplace; that year they grossed about $400 million combined (thanks mostly to Mrs. Doubtfire) and owned just a single spot in the year’s top ten. In 2010, those same three genres took in more than $3 billion and by December represented eight of the year’s top nine grossers.
Let me posit something: That’s bad. We can all acknowledge that the world of American movies is an infinitely richer place because of Pixar and that the very best comic-book movies, from Iron Man to The Dark Knight, are pretty terrific, but the degree to which children’s genres have colonized the entire movie industry goes beyond overkill. More often than not, these collectively infantilizing movies are breeding an audience—not to mention a generation of future filmmakers and studio executives—who will grow up believing that movies aimed at adults should be considered a peculiar and antique art. Like books. Or plays.
Where to start? If you have read the rest of the article, you will know that is a passionate lament about the slide of the quality of Hollywood films over the last 40 years or so. He talks about the seismic shift towards more family friendly films and how they are strangling the mature films that he decries as a rare find today.
In my (admittedly) hard-headed Irish opinion, it’s a complete load of bullshit that smacks of both desperation and a complete misunderstanding of the facts. He focuses solely on content and uses that as a crutch for why films made for adults are becoming more and more scarce. Harris bemoans the fact that R rated films have to be made on a relatively small budget. He goes so far as to say:
The economic pressures the studios are facing aren’t just an excuse—they’re real. Movie-ticket sales may be reasonably strong, but any number of economic forces are conspiring against the production of adult dramas. They don’t generally have the kind of repeat-viewing appeal that would make them DVD smashes. They often end up with an R rating, which puts a ceiling on their earning capacity and makes a modest budget absolutely essential. Oscar nominations or even wins can no longer be relied upon to goose a quality film’s revenues.
The kicker to the entire article is that it seems like one big advertisement for Hollywood, in particular the large studios.
Studios make movies for people who go to the movies, and the fact is, we don’t go anymore
Duh, no shit sherlock. It costs a fortune to do that and the films are generally not that great. Besides, I can’t watch the film in my underwear or drink beer at the cinema, which I can at home (not that I actually do, but it’s nice to have the option).
Harris completely (and I mean utterly) misses the point, which is that animated films have become successful over the last number of years because they’re great films, and their suitable for all ages too!
He fails to mention the seismic shift in cinema over the last number of years, namely the rise of the internet and the total failure of Hollywood studios to adapt a new business model. They keep spending tons of money suing fans that completely pisses them off and make life difficult for them to enjoy what they love.
Harris’ position is that because animated films are successful at the box office, they will eventually push out “real” films that are ultimately less profitable to make because they are appropriate for a smaller audience. As any business student can tell you, that’s basic economics. If a film is suitable for a larger audience, it will of course, make more money. That is a simple fact that has been true since the dawn of time. The only difference is now there are many more animated and family-friendly films being made than in the past. A fact that zooms straight over Harris’ head.
Overall, this article was not worth blogging about because I have only served to call attention to it and the nonsense contained within. The only reason I do so is because it is featured in GQ magazine, one that I can only presume people other than myself read and respect. As a result, I cannot allow such readers to believe that what the article says is the truth.
Animation is an artform for filmmaking. It does not purport to usurp the crown of the classic American dramatic film. It is also not guilty of ‘gaming the system’. many have tried that game and failed miserably. Hollywood as an industry is in a time of great upheaval and those who do not adapt are getting left behind. it is these tragglers that Mark Harris is lamenting, because there continues to be plenty of fantastic, dramatic films being made outside the system, and their often much better for it. This includes animation, the supposed slayer of the industry.
So don’t blame animation and children’s films for the demise of Hollywood, it’s their own damned fault.