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!

Start Your Animation Studio In 6 Easy Steps!

The inclusion of this ad is explained at the end.

Yes! Start your very own animation studio is 6, yes, 6 easy peasy simple steps! Soon you’ll be on your way to Walt Disney-esque fame and fortune, or John Textor-like infamy and ridicule (if you prefer). Why have a boring office job, when you can be making cartoons! Funny, hilarious, maybe even serious ones! Your adoring public is awaiting! Don’t delay! Start today!

OK, enough of that nonsense and onto more serious things. Yup, animation is certainly booming. Everyone and their Mum seems to be getting into the business; either starting a studio or setting out their stall over on YouTube. So it should come as no surprise whatsoever to see that borderline spam site eHow (no, I won’t link, even Google will only help you begrudgingly) has a nice [snicker] guide to setting up your animation studio in 6 steps. Let’s deconstruct it.

Here’s the pitch:

Animation services are in high demand right now. Not only do film makers use animation services to create animated movies, but they also use them for special effects. Computer and video game manufacturers also utilize animation services to enhance their products.

Totally true, right? That’s why the industry as a whole has been expanding over the last 15 years. Then we get to the hook:

With such a high demand for animation this is an industry that is in desperate need of additional service providers, because of this you can turn your artistic abilities into a six or seven figure business.

That’s right, you too can build a $10 million business in one of the most competitive industries in the world.

From here, we go into the actual 6 steps. Step 1:

Find a niche for your animation business. You can focus on animation for commercials, animation for computer games, animation for video games, CGI animation for special effects or you can focus on producing animated shorts or features. The focus that you select will impact which supplies and equipment you use for your new animation business.

Hmmm, that’s a wee bit vague, but then again the industry is quite broad. Let’s see what step 2 says:

Buy equipment. You will need a quality computer system with extra hard drive space to store your animation, digital cameras, lighting equipment, animation paper, cellulose, paint, pencils, general art supplies, drafting tables, light tables, sound equipment and editing equipment. You will also need to buy enough licenses for your animation software to facilitate the size of your animation staff. Some animation software products that can be used include Toon Boom and Xara 3D.

A.K.A. Buy some stuff! Computers! Digital! 3-D!!!

Hire and train your staff. This is a step you can skip if you will be starting out as the only employee in your company. However, when you grow to hire a staff, you will need to make sure that each individual understands the code of ethics associated with your business. You will also need to make sure each is trained in the animation software the business uses. Fortunately, many animation software companies offer user training programs for employees to take advantage of.

Yeah, you probably should train yourself first, and you’ll probably want to hire trained staff so, y’know, they have a clue about what they’re doing. Then again, you could always hire interns

Develop a demo for attracting new clients. This demo needs to demonstrate your full range of animation services. Get the demo down to under three minutes long, while still keeping the images crisp, entertaining and cohesive.

Soooooo, spend money in the hope of acquiring business. Hmmm, surely you would start off small and build a reputation through hard work and excellent customer service and content, no? No? You’d rather blow all your seed capital on a demo that won’t earn you any experience points? Okie dokie then.

Acquire licensure and insurance. You will need professional liability insurance, commercial property insurance, a business license and a copyright for all intellectual property.

Very important these, especially the copyright, which you must acquire despite being granted it automatically. Also don’t forget to register and trademark the shit out of any names, logos, mascots, t-shirts and/or answering machine messages so you can sue the crap out of some poor sod and be rightfully compensated.

Launch your animation company by pitching your services to a target market. For example, set up a website to promote your services, purchase television and radio advertisements, or set up meetings with computer, video game and movie production studios to pitch your services. You may also benefit from hiring an agent to promote your services for a ten percent fee.

I love this last one. Basically it pulls the old “build it and they will come” schtick, which we all know works out well for anyone who’s tried it. Yup, nowhere does it talk about capital; where to get it, how to raise it and how to put it to work. In other words, the green stuff that enables you to do all the above.

The bottom line and reason for this post? The ad at the top gives a clue; people buy this kind of scammy advice! They buy it all the time! They see the dollar signs and the promise of a quick buck, and they get in there and have a good go at screwing up the industry for the rest of the folks busting their backs to make a living, or spend all their free time hustling to get new work.

It doesn’t take a genius to see the news reports of Pixar and Dreamworks’ mutli-million dollar grosses to convince greedy folks that yes, there is money in animation.

Who ultimately gets hurt (and yes, people do get hurt), it’s the actual animators and artists these clowns hire (or not) and either don’t pay them, or promise “exposure”. Let this be a warning: know thy enemy, he is the person who read those steps and attempts to hire you.

Can the Toyota Production System Be Applied To An Animation Studio?

Yes, it sure can.

For your reading pleasure and perusal, may I present the draft version of the white paper that aims to introduce you to the production process that is in many ways, revolutionary.

The Toyota Production System has long been used to streamline workflow processes at the Japanese car manufacturer. Since it’s introduction, it has been transferred to many other kinds of business, even a hospital!

Seeing as an animation studio is also a production outfit, I decided to explore whether TPS could be realistically applied to one. The answer is yes, and this paper is the result of my investigation.

Since it is only the first draft, please feel free to write in, comment, critique, criticise and offer improvements.

You can download a PDF version here.

Could The Toyota Production Process be Applied To An Animation Studio?

Via: Edmunds Inside Line

The title of the post is a serious question. Would it be possible to take the world-renowned Toyota Production System and augment it so that it works within the confines of an animation studio?

Before you comment, take note that it has been applied to a hospital in Seattle, so yes, it can apply to service industries too.

Consolidation of Animation Studios

Animation, being an industry the same as all the other ones (per se), has gone through the usual rounds of consolidation over the years. Like most new technologies, it starts off with one or two guys in their basement or garage who then grow into small business who then either grow large, get bought by an established company attempting to cash in/expand into the market, or, they merge with competitors.

The established studios were (with the exception of Disney) at one time or another independent studios. Perhaps the most famous of all, Warner Bros, started off as Schlesinger Productions before being sold. The same goes for the Fleischer Brothers’ studio, although in contrast, they were eventually forced out by the management at Paramount. Interestingly, Walter Lantz was the exact opposite, having been established as Universal’s animation unit before being spun of by Lantz and going on to find fame with Woody Woodpecker.

Do such consolidations and acquisitions improve the industry as a whole? There are certainly economic benefits to be gained by merging or having a corporate parent. However, often once a studio is bought, creativity can become stifled and interference from above can lead to devastating results.

The overall health of the parent company can be an issue to. Mr. Warburton remarks in the book Animation Production: From Pitch to Production by Dave Levy (him again!) that at one point when he was pitching to Hanna-Barbera, the executive he was working with clearly had no idea what animation was, furthermore, he was part of a revolving door at what was Turner Networks but was being merged with Time to form the disaster that was to become Time Warner AOL. History is being repeated as we speak with Pixar. Even now, the influence of the folks in Burbank is being impressed upon the Emeryville studio in terms of what he next couple of features will be.

There is another option that is fortunately being quite successful and that is the independent studio paired with an established Hollywood one. Two great examples are Dreamworks and Blue Sky. The former has a deal with Paramount and has been very successful over the last decade or so even if they tend to squeeze every drop out of their properties. Blue Sky on the other hand, while similar, has a deal with FOX and while it has had slightly less success (relying quite heavily on their Ice Age series) it has released some decent movies such as Horton Hears a Who and the anticipated upcoming film, Despicable Me.

TV animation is somewhat more diverse as a result of lower budgets. Independent studios have had numerous successes over the years. be it A.K.A with Ed, Edd & Eddy or Marathon with Totally Spies. With this in mind, it is no surprise that the more interesting animation can be found on the small screen, where experimentation carries less risks and the audience is of a somewhat narrower demographic.

My point is that studios consolidating can be a good thing, especially if it is good for the industry as a whole. Poor management can devastate a studio and its output. As corporations continue to try and find their way in the new media age, animation may prove to be a key battleground that will be interesting to watch.