Over the past few years there has been a lot of discussion about the animation bubble in Canada, and the booms and busts the industry seems to go through every 7 years or so. This last boom, it could be argued, lasted well over a decade. However , such growth is not without substantial risks. The industry has long argued that one reason why the local animation industry has lagged behind its counterparts across the globe is its inability to compete against low cost animation from Asia. The government, in a bid to address this disparity, has enacted a law requiring broadcasters in Canada to acquire 50 percent of their animation content from local animation studios.
The response appears to have been substantial. According to figures, the total animation content procured from local studios rose from $10 million in 2001 to $180 million in 2011, with no letup anticipated in the next decade. The software tools available today, mostly Flash, allow smaller companies to produce animation at a rate that was not conceivable even 15 years ago. Because of this major shift, entire productions, TV series, and features are being produced almost entirely in house using a crew that is almost entirely Canadian — a smart thing to do because it allows the broadcasters to take advantage of the lucrative Canadian and provincial tax credits available for just this kind of production. As promising as this is for local studios, this increased patronage poses dangers for them, too.
First, local studios risk expanding too fast and overextending themselves financially, since most are small concerns unlike their Asian counterparts. They often need to make substantial capital investment in building technology capability in order to handle the larger volume of work. If, thereafter, the content fails to work with the audience and further episodes get cancelled, such firms can face potentially crippling losses.
A second risk is that these studios will end up creating work that is too specific to local audiences. Given the increased dependency on local broadcasters, the studios run the risk of creating content tailor made for local audiences rather than remaining culture neutral. This substantially reduces the ability of their products to sell beyond local boundaries.
Third, a local studio that secures the contract from one large broadcaster often runs the danger of becoming — and remaining — dependent on that single broadcaster. Even in the best of circumstances, fierce competition from Asian studios makes it difficult for small studios to broaden their customer base internationally: When such firms have nearly guaranteed orders from a single local benefactor, complacency from their current success may arise.