Why Producing Content is Like Opening a Restaurant

How can animation be even remotely similar to opening a restaurant? One is extremely risky, is enormously susceptible to changing tastes, is faced with intense competition and….well, I suppose they’re not so different after all, are they? So if you’re producing animated content, what lessons can you learn from a restaurant and can you use them to drive success?

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Some Thoughts on Producing Animation

As I prepare to produce a series of very short, er, shorts, I find my viewpoint of animation as an art and industry being forcibly changed. Not necessarily in a bad way mind you, but rather that it’s breadth and scope have changed as the reality of production becomes my greater focus. Here’s a few thoughts in no particular order.

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Why The Intern Pandemic is Bad for The Animation Industry

Note: I simply use this to illustrate a typical animation-related internship. I do not mean to imply that Blue Sky enagages in dubious behaviour when it comes to their interns.

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.



Animation Operations and Supply Chain Management

Apologies for the profoundly boring title. Knock off the ‘animation’ at the front and you pretty much have the class I’m taking right now. It’s basically about operation decision-making within a company and how to manage the supply chain of a business (don’t get too excited, it’s an entry level course).

Therese Trujillo and Eric Robles of the Frederator/Nickelodeon Production fanboy & ChumChum with the show's schedule behind them.

It got me thinking though, when it comes to animation, the supply chain is somewhat flexible yet inflexible at the same time. It’s flexible in that if you have a bunch of great artists who can crack on with the job and churn out exactly what you’re looking for, then you might be able to squeeze things a wee bit and wrap up early. If you run into delays, that sends a shockwave down the rest of the production pipeline.

Right now, we’re looking at shoes and how they are ordered months in advance of the season for which they are intended. Not too different from animation, eh? The interesting thing about the three cases we’re looking at (Crocs, ECCO and New Balance) is that all three take quite a different approach to their manufacturing and supply chain (outsourced but flexible, vertically integrated and some outsourcing but some manufacturing in the US).

Perhaps surprisingly, animation, really has developed supply chain-wise since the hayday of Hollywood. Things have changed dramatically since then, what with the off-shoring of the actual animation in the 70s and all, but we have gradually seen a return to the rather flexible nature of doing everything in-house.

The introduction of Flash certainly helped as it made animating in the US cost-comparable. Secondly, the internet has meant that the cost benefits of off-shoring or outsourcing can be had without sacrificing the immediacy of working in a studio. Daily production can be supervised closely from the other side of the planet without much effort.

My point is that while the animation industry has not seen the kind of seismic changes (such as off-shoring) in quite a few years, there have nonetheless been advances in how animated films and TV shows are created. Increased efficiencies in this area have only lead to better quality content and lowered (relative) production costs. Just something to keep in mind.

My comment on Stephen M. Levinsons Blog Concerning Artists and The Productions They Work On

This is actually a comment I left over on Stephen’s Blog but it seems like a pretty good opinion piece that’s suitable to post here too.

Wow, that’s a lot of questions there Stephen!

Firstly, if you want to know about some of the basic principles of capitalism, I highly suggest a book on basic economics. The class I took went a long way in helping me understand some of the foundations upon which modern enterprise is built.

One of the principles that I learnt was that of opportunity cost and marginal benefit. Basically what that means is that you are willing to work at the price you work at because the opportunity costs of doing otherwise are too great. That’s not to say that you should keep working at a crappy job, but that if you believe you are under-valued, you will, not may, will look and move elsewhere.

I don’t agree with the pay of the Viacom executives, that’s just my opinion. As an engineer, I absolutely detest inefficiency and waste, so you can imagine how I might feel when I see that Vicom pays it’s execs far more than Disney while having a far lower market capitalisation. Granted, they’re different companies with different make-ups and priorities and the Cartoon Brew post did focus specifically on the numbers in light of animation, which I think skewed things a bit.

Should artists be given fair compensation for their work? Absolutely! However, capitalism is not necessarily based on merit, it’s based on risk. As a businessman, that is something you are already familiar with. Capitalism is founded on the idea that whoever takes the risk gets to enjoy the rewards. In a company or studio’s case, they are the ones putting up the capital for an animation project, and as a result, get to keep the proceeds. In most cases, they do, although it would be foolish to believe that some will not resort to shady tactics in order to keep as much of the earnings as possible.

I think the crux of your argument centres around the idea that animators do not receive adequate compensation for their work. I think they do, in light of the current level of demand and the size of labour supplies. When you look into it though, series creators normally do have rights in regards to their creations. In this regard, I think the internet will be a boon on a larger scale than what is offered by the incumbent networks.

Right now, we are right smack in the middle of a Gutenburg-esque transition in the world. The internet is only another broadcast medium albeit one that allows two-way interaction and right now, it is companies like Next New Networks who are showing the way to a successful business model in the new era. The transition will affect animation too, but the artform’s ability to transcend national boundaries with relative ease will stand to its benefit in the long term.

I firmly believe that artists and animators should have a say in how productions are run but as you posted yourself a while back, Joe Murray gets it dead on in his opinion that too nay artists don’t get the right balance between art and business, and if you’re the manager of a studio, would you want someone with know business knowledge making decisions that could affect your bottom line? I don’t think so.

My advice to you is to read (if you have not already done so) “Your Career in Animation: How to Survive and Thrive” by David B. Levy. It give a superb overview of the animation industry and offers plenty of insight into the rewards and pitfalls of a career in the industry.

By the sounds of things though, you should do just fine 🙂

All the best,