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Author Topic: Is animation recession proof?
Charles
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Sometimes business people come along and ask me questions about how the business works, where it's going, what I see happening, etc.

Recently a fellow got in touch and while we were talking, he mentioned that animation is seen as a recession proof business. I had to agree, from what I've seen, the downturns we've had in the biz were usually forced upon the industry by widespread exective mismanagement. I even titled one of AN's original articles back in early '99 "The False Recession". The most current widespread displacement happened a few years ago with the transition to CG animation, leaving many traditional animation artists struggling to figure out what to do next. As far as recessions go, that wasn't a market driven downturn. It wasn't a consequence of people not spending money on a particular product or in a market sector.

In fact, most of my professional colleagues and friends in the biz are working and staying pretty darn busy. So while the economy in general may be diving off the deep end, animation it seems is not only hanging in there, but growing.

There's a historical precedent in that during the Great Depression of the 1930s, the animation industry as well as the art grew by leaps and bounds.

So what do you think? Do you agree with the businessman's assessment that our industry is resistant to recession presssure?

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SNAKEBITE
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I think its recession proof, no doubt. but I do see a trend of people claiming poverty, keeping them from paying you a standard. of course one can say no to such gigs but then one might lose out on any kind of work. I also notice this in comics. although they are the most popular they have ever been as far as movies being made based off their pages, the pay scales are still the same they were 10 years ago.

Hopefully this type of conversation will lead others to inquire about such an unbalanced situation.

Because I see that no matter how the stock market is doing, animation and comic book related movies are the most popular and highest grossing. ..and yet artists are still just, gettin by.

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tstevens
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It all depends on what segment of animation you are talking about.

In the commercial field, animation is greatly effected by the ebb and flow of the economy. Advertising is often the first part of a budget to get cut which in turn means less production. For the moment, the company I work for has been able to keep work coming in but only buy cutting prices as much as 25% or 30%. So for those of us in advertising the recession has definately hit.

As for feature production I would think that in fact (as stated above) animation should do well. In hard economies people are usually looking for escapism and animation can offer that in great amounts. However, with the cost of the average movie ticket for an adult hovering somewhere around $10.00, I can see people cutting a trip to the movies out of the budget and opting for Netflix.

Historically you have to remember that very few of the depression era Disney films turned a profit upon thier initial release. Through the forties Disney had to rely on propaganda and military films to stay alive because the features were not supporting the studio (ironically, the big money losers have done the best over time). Depending on who you talk to, Cinderella was the first film to bring the studio back after the stretch of music and propaganda pieces.

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Ganklin
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i wholeheartedly disagree with this statement. the industry in NY right now is extremely bleak. nick digital closed its doors most likely forever, word world and animation collective have been significantly down sized, i don't think there are any major productions at curious pictures, and i haven't heard a peep out of cartoon pizza in forever. a few of the smaller shops i've spoken to are slower than usual as well with mainly short termed commercial work. three guys from my studio, as well as a few other people out in the other arm of my work were given the pink slip only a few weeks ago.

in january, a large majority of NY's animation work force will be out of a job with nothing major on the horizon. its a bit scary.

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Charles
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To clarify in my original post, the idea that animation is seen as recession proof comes from the perspective of the community of venture capitalists who see animation as a good investment in entertainment content considering the economic climate. The numbers on Bolt, Kung Fu Panda, animated films across the board are doing really well box office wise on a consistent basis, and critically as well. The appeal of these films and other things going on technology wise is keeping this area of the business active with chatter.

On the international scene, there's activity such as Despereaux and the Missing Lynx. India is bustling with growth and the local market in LA is holding steady for the most part from what I can tell. People having a hard time here too, but it's not like it was a few years ago for the most part, from what I can tell.

The term recession proof was used here as an indicator of the strength of animation in the film and video game markets. Didn't realize the extent of the New York situation. Maybe that's why we're not hearing much from that part of the scene.

Good luck guys, it won't be this way forever. From what I've heard in the past, the biz in New York can be rocky with peaks and gullies. There's global activity so it's not the end of things. Integrate into it as best as you can. Even folks out here are having to do other things to make ends meet if they have to.

The best thing you can do is use this period to create new things. Keep creating isn't just a mantra, it's a formula that helps out on different levels. Aside from making you feel better, you can create new content for business purposes. When new opportunity opens up you'll be ready, so use down time wisely.

What else is happening, can we have some folks in Canada check in?

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GaryClair
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I'm lucky enough to still be working (knock wood)

and btw.. Ron Paul has been predicting all of our current economic woes for years.

He's now predicting an economic collapse in America.
http://www.liveleak.com/view?i=12a_1230157743

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Bruce
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I think it's pretty clearly recession-proof. I'm not so sure it's depression-proof. The simple fact of the matter is that we are presently in a deflationary spiral as a result of the collapse of our investment banking system, a consequence of excessive leveraging. Nobody's loaning money to anyone else, and investors are, for the most part, waiting things out on the sidelines. I note that Disney has pulled out of its commitment to co-produce the third picture in the Narnia series (there were supposed to be seven) due to costs. I suspect we'll probably be hearing about more such cutbacks as we move into 2009.
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Greg B
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So how are things at the Mouse House regarding 2D animation and the animation industry in Los Angeles in general?

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EustaceScrubb
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I hope it's recession (and depression) proof, but I don't know ...
end of 2008 is looking bleak for the U.S. animation industry.

As noted above, Nick Digital has closed down in New York and the industry in general is pretty quiet on the east coast.

http://animondays.blogspot.com/2008/12/house-that-blue-built-1996-2008.html


Laika in Portland just shut down production on their next feature film (which was to have been directed by "Mulan" co-director Barry Cook) . Laika let go 65 artists who were working on that film as well as the expected lay-offs which occurred as production on "Coraline" wrapped up.

http://www.oregonlive.com/business/index.ssf/2008/12/laika_lays_off_75_shelves_cg_f.html

Steve Hulett on The Animation Guild Blog reports that Imagi (main offices in Hong Kong, with a branch in Sherman Oaks) is possibly in trouble.

http://animationguildblog.blogspot.com/2008/12/imagi-hits-rough-patch.html


EA has recently announced deep cuts in their workforce (not sure how many of those involve animators or other artists working on games)

http://news.cnet.com/8301-13772_3-10127006-52.html

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Metsys
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I'd say it's more recession resistant than other sectors, but certainly not recession proof. Especially nowadays, there are more ways to enjoy animation cheaply or freely that haven't been available in the past that people will resort to when things get rough: Netflix was mentioned, sites like Hulu, YouTube, and BitTorrent are all options.

I'm already seeing a decline in the desire for people to want to got to the theater to see films. Many already have a decent screen and sound system at home, it costs less than half as much for a family of 5 to buy a DVD than to go see a matinee-$10 more in the evening where a family is more likely to see a movie-and it's in the privacy of your own home without cellphones, noisy people, expensive snacks, and a two-way drive to the theater. That's why studios are trying to push 3D theaters; they want people to return to the highest tier of a movie's release cycle which is about 2/3rds of DVD sales. And when times get rough I can see people becoming more social and inviting friends over to watch films, which will cut into DVD sales as well.

There will still be a demand for entertainment, but I'm not convinced that animation is in any way immune. Yes, animation grew a lot during the depression, but the way people enjoy animated films are much different now.

I've been trying to find reports on DVD sales for this holiday season. I know that electronics sales went down quite a bit, but I'm not sure if DVDs fit into that category and if so by how much.

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SNAKEBITE
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Its amazing American based companies are downsizing in the midst of animation and comic book based properties being released at a all time high..with success.

So is it that american artists and animators are losing their jobs while their companies still profit? Is so much of our work being outsourced that we are left behind?

These days I have one foot in the door one foot running the **** away..far away. I can't stand seeing all the success and us artists are being treated even worse than before.

Seems kinda standard issue ******** to me. Animation and comics has never been such a huge part of main stream media yet artists are struggling even more than before...whats up wit dat?

I know more people are working these days in some aspects, but it should be in all aspects. with decent pay.

Comic book artists are making the same page rates they made 10 years ago. I'm working on a couple of animation gigs and the pay is way low...and there was no negotiating for higher pay. either I took them or I didn't.

I guess the industry has a bad case of manifest destiny.

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tstevens
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Even with high demand there is probably more talent than the market can handle. You have to consider that sometime in the mid eighties art related jobs became very popular and schools started churning kids out at an unprecedented rate. Things like Illustration and animation became "hot" fields. Eventually you end up with a situation where there are more people entering the field than there are jobs available. However, even after you sort through the lower level talent you still end up with a lot of very qualified people fighting for a finite amount of jobs. A glut of talent at any level will always encourage lower pricing because someone is almost always willing to take a lower wage to stay working.

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SNAKEBITE
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that would explain why people aren't hiring but not why people are paying crap.

but I hear ya, competition is fierce. But I can compete, just not with the crap pay.

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Charles
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Spoke with a friend last night whom I haven't seen in a while, and I got caught up on what he knows about others in the biz. I learned of a few artists who are struggling. One hasn't worked in months and is trying to hold on to the house, others who have to leave and return to their hometowns.

This was going on back in 1999 and 2003. Still, others are finding work, making ends meet and even prospering. I guess it's the never ending story of this business and life in general.

As far as animation investment goes, I think we can expect to see more international activity.

And as Ron Paul goes, I don't understand why he didn't run as an independent, but the video from Gary's link was sobering. I recall mentioning to someone about the same time, 2002 or even 2001, that we can expect a financial meltdown someday. His father was in financing. He looked at me in shock and asked how I knew. I explained to him that it was just plain common sense. You can't keep spending from a deficit and not expect to pay the piper. Sooner or later it has to be reckoned.

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tstevens
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Along those same lines I think a lot of people at the bottom were piecing it together long before the economists saw it coming. I first started noticing that something was terribly wrong in the housing market when my wife and I would go to open houses in the area. What we noticed was that "investors" (aka flippers) were buying more homes than families were. One realtor told us that she was seeing 20 year old kids trying to buy homes as investors. My next door nieghbor actually bought his home initially to be renovated and sold but he purchsaed at the hieght of the market. Now he has been there for over two years and has had to hold onto several other properties. Another sure fire sign that the market was turning South was when the investors began doing real estate contracts because buyers were not getting funding.

It will eventually turn around though the initial forecast of a late 09 up swing may now be hopeful at best.

As for the industry, I think a lot of the pricing structure has had a considerable amount to do with technology. While it will always take someone with talent to piece together a good image, technology has made it easier and easier. When we use to charge for a spot the prices included film, cels, paint, painters, airline tickets for post in LA, Film transfers, client lunches and on and on. Now we do the same thing in half the time with a fifth of the crew and no one leaves the building to do it! Clients know how it works and the end result is a lower cost spot. If you want to make any profit at all you cut back where you can. The only place to cut back now is on wages and salaries. I know it isn't that simple. However, you have to negotiate to stay in business.

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SNAKEBITE
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yeah, negotiate with yourself. cuz if someone is always willing to do it for cheaper and if it aint about experience, skill and talent then good luck negotiating with anyone else...especially if you want them to give you more than they originally offered.

Negotiations have changed.

Companies seem to be unwilling to pay fair pay.

Look at how our system is set up. We sign over billions to bail companies out from our pockets and they still give their CEOs bonuses..???WTF?

I know I sound like a bummer but none of this is keeping me from carving my path. I'm still hustling, I just have no illusions as to dealing with the usual suspects.

Everyone thinks the industry climate is gonna change, I think its just gonna get worse before it gets better...and the better part will be people doing their own thing. which is a good thing, I just don't see the current companies really giving two ***** as long as they can outsource.

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tstevens
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Yeah, I hear what you're saying. Trust me: we have had plenty of issues with big and small contractors, agencies, and corporations who will widdle you to the bone on price. We recently bid a small piece of animation for a company in the health product field for a fairly small amount of money and very little work. We actually backed out because the client sent us a five page document drafted by a lawyer that essentially rewrote our quote with new terms. Apparently the ad agency we were working through wanted to conceal thier cost to thier client and asked that we bill thier client directly and we rebate them thier portion (hence the reason why we recieved the lawyers agreement). Had this been a large job we probably would have called our lawyer and reviewed the contract but it was for a very small amount so we declined the job.

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SNAKEBITE
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It doesn;t need to be so complicated. geesh. I feel your pain.

Ultimately I think all of what we are seeing and experiencing is good. Its all a shift. Change. I was talking on the phone with a good friend tonight and we both were talking about being positioned. Being prepared. I personally have been dealing a lot with these types of poor attitudes for almost 12 years now as a freelancer hustling with the big boys. Putting myself in line with my direction as much as possible at the same time. I'm certainly not as far as I would like to be but my dear friend reminds me not to hold onto should of could of would ofs. Just keep moving.

But animation is recession proof. The animation worker is not. the positions are but the people who fill them are not. the money it makes is, but the amount of your check is not.

This is a medium that historically survives any economic climate to date. Although thats not to say how it survives.

thats if you work for the usual suspects... but if you make your own niche then you have more control. I hate to be a broken record but the internet is still a huge component to a solid strategy...right next to that simple little thing called content. hahahahaha, yeah, simple,

Animation is a solid investment. I think thats the point.

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SoleilSmile
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Is the animation industry recession proof? No. It's nothing proof. The only people who have job security no matter what happens are geriatric surgeons, criminal lawyers and engineers. Any job job that involves higher math and science is pretty solid.

I wish my mind didn't hit a brick wall when it sees Algebra.

Good luck in 2009 everyone.

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Charles
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At the Guild's party last month, I spoke with a friend I haven't seen in a while, who mentioned that his project was funded from a source in Europe but can't get the money to the US because of Homeland Security.

Another long time friend landed a great job at a studio in the bay area and will be moving there at the end of the month, leaving LA at least for the time being.

Just this afternoon I spoke with someone else who was working project to project in LA but landed a solid gig in the bay area with a game development company.

There's activity.

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SNAKEBITE
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I love how money going out gets government assistance and money coming in gets held up by government red tape.

great [biggrin]

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Charles
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Here's an article about how Hollywood is holding its own during these recessionary times, and how the prospects for 2009 are looking pretty good all things considered. Quality movies and 3D animated films are factoring into the equation. So are higher ticket prices.

http://movies.yahoo.com/news/movies.reuters.com/good-movies-prices-help-hollywood-recessio n-reuters

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