Animation Market Trends

Growth Drivers

• Rising investments: The market is driven by the ongoing influx of investments in developing animation technologies. Companies have identified trends including rising consumption of mainstream entertainment and the subsequent boom in OTT platforms. To gain a competitive edge, key players are strengthening their market position through investments in technology, production, and R&D. For instance, Animation UK has strategized to incentivize private sector tax investment to support the players in IP development and growth and encourage the animation sector.
  
  In May 2024, Anton Capital Entertainment infused a financing of USD 108 million to subsidize future productions. This will help the company produce ten features annually across all commercial genres at a global scale. The funding windfall comes from a group of institutional investors and Blackrock, a 6.6% owner of The Walt Disney Company. Furthermore, Animond, a prominent market investor so far has raised a funding of USD 14 million for animation production. Scholastic Entertainment in March 2024 announced a strategic investment of USD 186 million in 9 Story Media Group, Canadian animation studio.
• Growing focus on governing animated AI systems: Proposals for the governance of AI technologies in animation have proliferated in the past few years, developed by international organizations, national and subnational governments, sectoral professional associations, civil society groups, and the business community. With the release of ChatGPT in late 2022, the focus shifted to AI safety and its proponents that often presume the impending development of Artificial General Intelligence (AGI) and the need for values alignment between the interests of human stakeholders and sentient AI systems.
  
  AGI in animation is within the ambit of existing legal and regulatory policies around intellectual property law or copyright, consumer labeling, and product liability are likely to delimit the appropriate capacities of AI technologies. For instance, in the 2023 legislative session, the District of Columbia and Puerto Rico introduced AI bills, while the U.S. National Institute of Standards and Technology underscored the urgency of crafting robust federal standards for the creation of animation using AI.
• Enhanced internet accessibility: The prevalence of high-speed internet has fueled the demand for several digital and OTT (over-the-top) platforms such as Netflix, Disney+, Hulu, ESPN+, Prime Video, HBO Max, and YouTube TV. The World Economic Forum published a report in 2023, highlighting that 1/3^rd of the global population had internet access in 2022 which was about 5.3 billion people, as stated by the UN’s International Telecommunication Union. To meet such demands, there is an emergence of streaming services, online platforms, and social media such as Instagram and Facebook as important distribution channels.

Challenges

• High production cost: The worldwide animation market share is restrained by exceptionally high production costs involved in producing animated content of a sophisticated animation. This requires significant financial investments in technology, skilled labor, and software licenses, particularly in 3D and CGI. Such expense factors may make it more hindered for independent animators and smaller studios to enter the sector, which could stifle diversity in the industry by concentrating production among the major players.
• Time-consuming process: The process of producing engaging animated content requires careful planning, scripting, storyboarding, and animation rendering. This is especially required for feature-length movies or intricate television shows. Such extended production schedules may make it difficult to react swiftly to shifting market demands and cause delays in the delivery of content. Credited to this, the industry is less flexible and agile than other, more rapidly growing content production industries such as virtual production worldwide.