Demand for animation is on the rise. A 2019 report from Dublin-based analyst Research and Markets found that most animation industry segments globally are growing at a 2% clip, year over year. The size of the streaming market for this content in particular is increasing at an 8% annual rate, with Disney, Apple and WarnerMedia all set to join mainstays Netflix and Amazon in the next year. Worldwide, the SVOD market for animation was valued at US$2.9 billion in 2018, while the global industry is projected to reach US$270 billion in total value by 2020 (up from US$259 billion two years ago).
Meanwhile, as more kids and families turn to streaming, the North American box office continues to struggle. According to tracking site Box Office Mojo, revenue dropped nearly 10% for the first half of 2019, versus the same time a year ago.
Despite the losses, Disney continues to dominate, commanding nearly 40% of the domestic market share in the wake of its US$71-billion acquisition of Fox. And with The Lion King, Frozen 2 and Star Wars: Rise of Skywalker set to launch later this year, analysts predict the House of Mouse could earn more than US$9 billion at the global box office in 2019.
For independent animation producers, Disney’s dominance makes it harder to compete for theatrical windows. It’s a big reason why SVODs have become an attractive option for companies without the US$100-million-plus film budgets and marketing resources that Disney, Pixar and DreamWorks can afford.
As a result, indie prodcos have been increasingly investing in titles that play particularly well on streamers in a bid to capture the mid-size market the Hollywood behemoths have left behind.
UK-based visual effects and features animation studio Cinesite, for example, makes CG-animated movies in the US$20- to US$40-million range. Since it launched in 1991, the company has provided VFX service work on a range of kids and family movies, including the Harry Potter franchise and Disney’s Avengers: Endgame.
With studios in Montreal and Vancouver, Cinesite moved into animation production in 2016 and has a trio of CG projects in production—The Addams Family for MGM, a feature inspired by the international stage show Riverdance, and Extinct, a movie about a pair of fluffy, time-travelling creatures.
Though Cinesite isn’t abandoning theatrical distribution, head of animation Eamonn Butler says it’s hard to ignore the flexibility that SVODs provide. This is especially true of Netflix, which continues to grow a diverse original animation features slate under kids and family VP Melissa Cobb, he says.
“There are only a certain number of weekend windows you can buy theatrically, and the space is crowded. Then, you are pitted against the next Star Wars or upcoming blockbuster,” says Butler. “Streaming services are enticing because they help support the huge appetite for content right now, and they aren’t limited by release dates.”
Cinesite has worked on 3QU Media-produced Gnome Alone, a film distributed as a Netflix Original in 2018.
To help cut through the clutter, Cinesite makes movies that don’t target the broadest possible demographic.
“When I worked at bigger studios like Disney, I learned that it takes a long time to make a film that appeals to everyone,” says Butler. “You can end up beating the risk out of a project, and it becomes difficult to make it feel relevant. Our strategy is to target a smaller and more specific demographic, budget accordingly, and then other audiences will find the film.”
For example, Cinesite’s Riverdance (working title), which features original music from the stage show’s Grammy-winning Irish composer Bill Whelan, targets fans of live musicals. UK-based Aniventure (which has a first-look deal with Cinesite) and Irish prodco River Productions are partners.
“With Riverdance, it’s been an interesting creative challenge to hit the musical beats of the stage show, but within the framework of a new narrative story,” says Butler. So far, there has been early interest in the title, but the company is not ready to name prospective buyers.
Butler says staying profitable and getting the most out of budgets while scaling up is tricky, but the company has found ways to use limitations to its advantage.
“Sometimes budgetary and time constraints can force you to be extra creative,” he says. “For example, if you have to write a shorter script with fewer characters, it means you can develop them more. The same thing applies if you have fewer locations. Problems arise when people want to make a Pixar type of movie, but with only a fifth of the budget. That’s not going to work.”
Another independent company embracing the new landscape is Mediawan’s ON Entertainment (The Little Prince, Playmobil: The Movie). With locations in Paris, Montreal and LA, and average film budgets ranging from US$67 to US$84 million, ON is also looking to get more out of its feature productions on SVOD platforms.
“Movies that don’t have the potential to go to theaters will be on Netflix or Amazon. [The SVODs] are opening new markets that didn’t previously exist,” says co-founder Aton Soumache.
The challenge, he says, is for ON to keep the quality of animation and writing at a high level, while also adapting to changing market demands.
“It’s a very competitive landscape. Access to talent and money is difficult,” says Soumache. “It’s also very hard to produce a movie if it’s not a well-known brand.”
So the French indie is doubling down on building franchises to compete on both theatrical and streaming releases. ON is ramping up for the worldwide theatrical release of Playmobil: The Movie later this year. Based on the 45-year-old German toy line, the film marks the directorial debut of Lino DiSalvo (head of animation on Disney’s Frozen), and is coming off its June premiere at the Annecy International Animated Film Festival. It opened the fest this year, a distinction usually reserved for movies from bigger studios like Pixar or DreamWorks.
ON’s Montreal studio is also co-producing Ladybug & Cat Noir Awakening (working title), an original animated feature musical for teens based on the popular Miraculous: Tales of Ladybug & Cat Noir property from LA’s ZAG. Expected for 2021, the movie will be directed by Jeremy Zag, producing alongside Soumache, with eOne’s Sierra/Affinity handling sales and distribution.
While Netflix has yet to officially sign on for the film, the Tales of Ladybug and Cat Noir TV series is available on the platform in more than 120 countries worldwide, including in the US. The brand’s expanding licensing and merchandising program features toys and a live stage show.
“It has quickly become a worldwide brand, so we are looking forward to expanding its reach,” says Soumache.
How Sierra/Affinity will sell the film remains to be seen. Like Butler, Soumache still sees value in theatrical distribution, but standing out as an independent in the big theaters is becoming harder and harder.
“Now, it is so competitive that theater experiences need to be events,” he says.
As a result, moving beyond the screen has become an important factor for small- and medium-sized indies. For example, while widely known for stop-motion movies like Wallace & Gromit: The Curse of the Were-Rabbit and Shaun the Sheep, UK indie Aardman is pushing to become a more multi-platform company.
In May, Aardman partnered with Dutch fairytale theme park Efteling to develop Fabula, a nature-themed 3D movie, with additional 4D effects. Built with a US$3.9-million budget, the attraction will feature a pre-show, a main show and a play area for kids to explore savannas, oceans and jungles. The experience is expected to open in November, and is Aardman’s first 4D film for one of Europe’s biggest theme parks.
“Because the market is crowded, we are looking to develop content in a more holistic way,” says executive director of rights and brand development Sean Clarke. “The new tech could potentially be used to enhance a movie release or lead into one by launching a film in a theme park.”
In terms of streaming, Aardman’s individual studio and distributor partners—including France’s StudioCanal (Shaun the Sheep)—own respective SVOD rights to its films and determine how they are sold and packaged.
On the theatrical side, Clarke says the studio remains confident in the films it releases, but admits there is always an element of risk.
“Everything is predicated on the first three days of the opening weekend and there are so many things that are out of our control, whether it’s the competition or the weather,” he says. “Certain ideas will always work best on the big screen, but other ideas may need a different non-theatrical route.”