Despite the growth in computer animation, global revenues have declined, says Robi Roncarelli, editor and publisher Pixel |
Chennai: Reversing the earlier trend, the year 2002 saw the global animation industry logging a negative dollar growth in value terms despite the growth in the number of minutes of animation production.
According to industry tracker and president, editor and publisher of Pixel magazine, Robi Roncarelli, there are now signs of the industry logging value growth as well. He has come out with his latest computer animation industry survey, The Roncarelli Report on Computer Animation Industry - 2003.
Based in Canada, Roncarelli says, globally the computer animation industry has seen considerable changes essentially due to advances in technology, the global economic climate and an increase in the relative amount of lower cost production centres outside the US.
"The net effect is that while computer animation production in terms of minutes is growing in an accelerated manner, the sliding production cost has resulted in the industry value sliding slightly down," he explains.
According to Roncarelli, in 2002 the global computer animation industry declined in dollar value by 0.51 per cent to $27.09 billion worth of commercial animation and visual effects - $13.8 million lower than in 2001.
Roncarelli discusses the prospects of the computer animation industry in the light of the negative growth. Excerpts:
According to your survey the global computer animation industry has registered a negative growth in 2002. Is that going to be the future trend?
The industry as a whole (3D- and 2D-animation put together) posted a negative growth. 3D production accounts over 90 per cent of the total computer animation production while 2D has a very specific and limited uses. If one considers segment-wise growth, 3D computer animation had a marginal growth of 1.62 per cent i.e $25.3 billion in 2002.
Even though positive, the industry dollar value in the 3D segment by itself, still delivers the lowest growth ever experienced by the industry. However, considering the number of minutes of computer animation production, the global computer animation industry still shows relatively strong growth despite the pressures of the continuing soft global economy.
Has there been an increase in jobs if the total number of minutes of animation production have gone up?
Respondents to our ongoing Computer Animation Producers Survey indicate that the average number of jobs performed per company was down approximately 10 per cent in 2002 compared to 2001. Production houses are making increasing use of various production tools, datasets, and plug-ins to speed production times and keep their costs as low as possible. The use of 'motion capture', model scanning devices, facial animation and lip-syncing software are gaining in popularity, both to save time and money, and also increase production quality and realism. Entry level salaries generally dropped slightly during 2002.
How many minutes of animation was produced?
While we can quite accurately ascertain total production dollars, it is physically impossible to track the exact number of minutes of computer animation produced. However, we can monitor sufficient computer animation production facilities to be able to develop trend lines for minutes of computer animation produced. They have been, and still are, increasing at an appreciable rate.
What is the trend in production volumes in different geographic regions? Do North and South America continue to lose ground to producers in the Asia-Pacific region?
That has been the general trend for the past couple of years. However, there have been some fluctuations between the other two regions that we track. The Asia-Pacific region recorded a slightly reduced share in 2002, with the gainers being the UK and Europe. These share fluctuations are mainly adjustments that occur with some regularity between these two geographic regions - the general long-term trend being that the UK and Europe will hold relatively steady, as the North and South America region looses share to the Asi-Pacific region.
What causes these geographical fluctuations?
The long-term trend of the North and South America region losing share to the Asia-Pacific region is the result of several factors. Foremost is the increased use of computer animation for local productions in those Asia-Pacific countries.
For instance India has a large, established, domestic film industry, which is now using computer animation and visual effects regularly in many of its productions. The high-end production work for films now being done in New Zealand and Australia do not fall into this category. Many major films and television programmes now regularly have their computer animation and visual effects produced by a combination of production companies in several countries. This is done mainly to take advantage of particular capabilities these companies have to offer, rather than a cost saving measure, although their costs usually can offer some production dollar savings.
Is the geographical distribution pattern for 3D- and 2D-computer animation identical?
Even though 2D-computer animation production has a large offshore component, it is a small market compared to the potential for offshore 3D-computer animation production.
Hence there are considerable differences in the geographical distribution patterns for 3D- and 2D-computer animation production, with the North and South America region being much stronger in the 3D-production segment. However, there is a growing appeal among North American film and television programme producers for potential cost savings offered by offshore production in the face of tighter production budgets. This has yet to become a defining factor.
Are there any changes in the computer animation industry user category?
The user industry could be classified into 14 categories. Six-user categories fall under the entertainment segment while the other eight are in the corporate / industrial segment. Although they are smaller in number, the overall importance of the six entertainment categories far outweighs the aggregate of the eight corporate and industrial categories.
During 2002, the entertainment segment for computer animation production accounted for 69.3 per cent of the total production volumes, while the corporate and industrial segment accounted for the other of 30.7 per cent.
However computer animation use by the entertainment segment in 2002 is actually a three percentage point decline from year 2001 levels.
Compared to performance in 2002 we see that the share of computer animation in advertising had come down. The share of animation in TV broadcast, too, was down, though animation for film and television programme production held even, while in games, web animation, personal and business uses it increased slightly. Animation for educational uses remains strong.
What is your forecast for the sector as a whole?
From a global standpoint, we believe that the current trend in geographic distribution will continue into the near future. The computer animation production shares represented by the UK, Europe and North and South America regions will continue to be slowly eroded as production increases in the Asia-Pacific region. Despite this, North America will continue to be responsible for almost half of all 3D-computer animation production volume for the foreseeable future.
Windows XP Pro will continue to increase its dominant position in the computer animation production industry while Windows XP Home's share should only erode slightly in the near future. The Macintosh platform will continue to vie with Windows XP Home for second place among system-in-use numbers during 2004.
The Unix-based platforms' market share will continue its downward spiral, already being relegated to specialty computer animation platform status. In addition to the onslaughts of the Intel and AMD-based platforms, running Windows XP Pro, the availability of these lower cost, powerful platforms running a widening range of Linux-based computer animation software, is very appealing, both technically and from a cost standpoint, to traditional Unix-based production facilities.
The broad-scale entertainment use segments will remain relatively stable within itself, and in comparison to the corporate and industrial communication segment. The games and internet / web use-categories are definite growth areas. Film and TV production use will remain high, but will soften slightly as other entertainment uses expand their share.