Animation and Vfx Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

Animation and Vfx Market Size & Share Analysis - Growth Trends & Forecasts (2024 - 2029)

The Animation And VFX Market size is estimated at USD 176.08 billion in 2024, and is expected to reach USD 310.97 billion by 2029, growing at a CAGR of 12.05% during the forecast period (2024-2029).

The animation and VFX market is experiencing significant growth, primarily driven by the growing demand for high-end visual effects and animated content across the gaming, TV, and film industries, rising technological advancements in the VFX and animation sectors, and changing consumer preferences regarding immersive and high-quality content. New developments are shaping the global animation and VFX market, with the increased use of augmented reality (AR), real-time rendering, and virtual production techniques.

Key Highlights

• Further, specific end-user industries, especially the film sector, are witnessing increased production values and budgets. This surge is attributed mainly to the expanding international distribution, partly facilitated by digital theatres. There's a growing willingness among writers and directors to adopt scripts that demand VFX. Consequently, production companies are chasing ambitious projects, necessitating VFX and streamlined platforms for realization. They have also diversified the genres of content being produced. These dynamics have significantly fueled the expansion of the VFX and animation market.
• Hybrid devices, merging functionalities like stylus-supported tablets for digital animation and laptops with 3D capabilities, are experiencing notable growth. These devices offer animators and VFX professionals the flexibility to create and render intricate designs efficiently. Such demand is especially pronounced in entertainment, gaming, and advertising sectors, where real-time rendering and animation quality are most important.
• These hybrid devices simplify the design, development, and execution of animations, eliminating the reliance on standalone high-end systems. Their inherent mobility and cloud-based software foster global team collaboration, accelerating production cycles. Consequently, there is a surging demand for software solutions and services that facilitate 3D animation on these platforms, propelling growth in the overarching animation and VFX market.
• Visual effects (VFX) have become essential in the entertainment industry, especially in film, television, and gaming. Studios increasingly invest in VFX to craft stunning, realistic visuals that elevate storytelling. High-budget films and TV shows, especially in action, fantasy, and science fiction, lean heavily on VFX to satisfy audience demands for quality and immersion.
• Animation and VFX companies face direct revenue impacts due to piracy in software and media. The unauthorized distribution of films, games, and software results in substantial financial losses. Such losses ripple through the animation and VFX sectors; when studios and production companies see their revenues dip, they often cut back on spending for visual effects and animation services. As profits reduce, companies become wary of investing in expansive VFX productions or hiring specialized talent, hindering market growth.
• Beginning in May 2023, the writer's and the actor's strike in July 2023 significantly influenced the global VFX and animation market. The writer's strike marked the most significant disruption to US television and film production since the COVID-19 pandemic. As the longest and most expensive strike in Hollywood's history, it led to widespread delays and disruptions across numerous TV shows and films. The subsequent actor's strike in July 2023 continued this trend, negatively impacting the broad entertainment industry.
• The writers' and actors' strike postponed or canceled numerous film and TV projects, directly impacting VFX and animation studios. These studios depend on a consistent flow of content, and the strike disrupted their production pipelines, resulting in reduced demand for VFX and animation work, negatively impacting the growth of the market.

Animation and VFX Market Trends

Television and OTT Animation Platform Segment is Expected to Hold Significant Market Share

• The increase in demand for visually captivating and high-quality content on OTT platforms has resulted in a significant growth in the requirement for VFX and animation skills. Animation and VFX have become vital components of OTT content creation, from creating lifelike creatures in imaginary series to visual effects in action-packed cinemas. The advent of streaming in OTT media has made it more convenient and easier for the broadcaster to directly showcase their content to clients without the interference of a middleman. This aids in shaping a direct relationship with customers on the OTT platforms.
• The growing number of Netflix subscribers is expected to increase the spending on animation and VFX content. With a larger audience demanding high-quality visuals, production companies are expected to allocate more resources to meet this demand, increasing spending on animation and VFX worldwide. For instance, according to Netflix, the number of Netflix paid subscribers worldwide increased from 230.75 million in Q4 2022 to 277.65 million in Q2 2024.
• To gain a competitive edge, businesses are involved in various strategies, such as partnerships, agreements, and launches, which are expected to increase spending on VFX and animation work on television and OTT platforms.
• In November 2023, Dexter Studios, a firm specializing in content production and VFX, signed a new agreement to source VFX technology for the TV series “D” with Climax Studio. The agreement, reportedly worth KRW 3.67 billion (KRW 3.51 billion for the main contract and KRW 160 million for pre-production), will run through June 17, 2024. Dexter Studios signed an agreement last November worth KRW 6 billion for the TV series “A” with Climax Studio. The new agreement comes just ten months into the preceding deal. With this new agreement, both firms will work together on a project worth around KRW 10 billion by 2024.
• Thus, spending on animation and VFX in Television and OTT is increasing due to various factors, including the growing demand for high-quality content on streaming platforms. This has increased production budgets, driving investment in visually engaging experiences.
• Additionally, technological advancements have made animation and VFX more cost-effective and accessible, enabling the creation of complex visuals on smaller budgets. Furthermore, the expansion of streaming services worldwide has intensified competition, prompting businesses to differentiate themselves with captivating content, including animated films and series. Overall, these trends fuel the growth of spending on animation and VFX in the TV and OTT industry.

Asia Pacific Expected to Witness Significant Growth in the Market

• The writer’s and actor's strike has negatively impacted the growth of the North American animation and VFX market, resulting in a dip in spending in 2023. Several films and TV shows were delayed during the strike, significantly reducing the demand for VFX and animation work in the US and Canadian entertainment sectors.
• For instance, Paramount postponed Tom Cruise's latest venture, shifting the release of 'Mission: Impossible — Dead Reckoning Part Two' from June 28, 2024, to May 23, 2025.
• Post-strike, the demand for VFX and animation work surged in 2024 in the North American region. The increasing demand for complex VFX projects requires a larger workforce of highly skilled professionals, and the industry faces a shortage of qualified talent. However, the emergence of new visual effects studios in the region is poised to bolster market growth and navigate the complexities of the surge in VFX demand.
• For example, in July 2024, Jonah Hall (ECD) and Jason Cohon (EP) established Boma, a fully remote studio focusing on visual effects, design, and immersive experiences. Based in Los Angeles, Boma is adept at navigating the ever-evolving digital production landscape. Boma aims to deliver swift turnarounds on tight budgets without compromising creative quality. Their expertise spans visual effects, animation, editorial work, finishing, motion graphics, and creative direction. With a fully remote pipeline, Boma boasts global partnerships across three continents and leverages senior creative talent from the United States, enabling them to scale projects rapidly.
• North America is a pivotal market for Animation and VFX, fueled by its established entertainment industry, a thriving gaming sector, and continuous technological advancements. The United States hosts prominent animation studios and VFX firms, bolstering the region's global market leadership. The region is home to the biggest industry giants, such as Disney, Pixar, DreamWorks, and renowned VFX entities, such as Industrial Light and Magic (ILM).
• Moreover, North America is home to a booming gaming industry. As video games increasingly demand realistic and immersive graphics, the VFX industry is witnessing significant growth. With games evolving to be more intricate and lifelike, there's a heightened need for advanced 3D animations, motion graphics, and real-time rendering. This evolution has led gaming studios to forge deeper collaborations with VFX companies.
• For instance, in May 2024, Story Kitchen and DreamWorks Animation entered a strategic partnership, granting Story Kitchen the first-look rights for an animated film. Story Kitchen aims to secure thrilling and iconic video game intellectual properties (IP) for DreamWorks Animation, targeting adaptations for global animated audiences.

Animation and VFX Industry Overview

The animation and VFX market is fragmented, with several small and medium-sized vendors alongside several large established vendors. The market studied is evolving with continuous solution introductions, which gives a competitive advantage to vendors operating in the market and allows them to stay ahead. Also, continuous innovation in offerings and functionalities creates differentiating advantages for vendors.

Some of the major market players have differentiated solutions and services. The small firms in the market generally do not provide varied solutions. For small firms, exit is relatively easy compared to larger firms because of the lower investment costs incurred. Notable market players are 3D Matchmovers, Rocket Science VFX, Blue Bolt, Trixter GMBH, and FX3X, among others.

Overall, the intensity of the competitive rivalry is high in the market studied and is expected to be the same over the forecasted period.

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• The market estimate (ME) sheet in Excel format
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