ABSTRACT: 

Animation, covering both creative and technical aspects, has evolved from mere hand-drawn pictures to computer-generated imagery to today’s AI-generated animation. 

The first animated film Fantasmagorie was created back in 1908 by Émile Cohl. And in 1920, Walt Disney Studio was founded, which created the evergreen character Mickey Mouse. This was a major driving factor for the transformation of the animated content. 

Today, the animation is used across various industries right, from films to television, video games, advertising and marketing, educational content, industrial visualization, ecommerce, and so on. VFX, motion graphics,  virtual reality (VR), augmented reality (AR), and AI-generated animations are the technological advancement that has expanded the possibilities of the animation industry. As the demand for quality entertainment and media rises, animation will continue to remain a prime form of storytelling and visual connection.

The global animation market is poised to be a competitive sector and is predicted to evolve significantly in the coming years. But, despite this phenomenal growth, the animation industry is facing a few challenges, like production costs, competition, technical innovations, quality maintenance, copyright issues, evolving consumer demands, content generation and distribution, and much more.

GoodFirms’ research ‘Animation Industry: Past, Present Trends, and Future Predictions’ aims to present the past and current state of the industry, along with the trends that help the industry to grow. The research also attempts to shed light on the future prospects of the animation sector.

Animation has been an integral part of the entertainment industry for a long time now. Better picture quality and sound features have supported the growth of the animation industry. The increasing use of animation across several industries and the amazing results that this technology yields are helping the animation industry to increase its market share. 

Animation has come a long way, from hand-drawn pictures to computer-generated graphics and VFX. The increased sophistication in the techniques has led to higher consumption of animated content. Also, the increased number of streaming services has led to high demand for animated content. Artistry, storytelling, content, and technology have combined together and is optimizing the visual experience of the viewers. Currently, we are witnessing an increased number of companies offering animation products and services.

Along with the growing popularity of animated content, there are several challenges for the industry that hinder its growth. However, the introduction of artificial intelligence, VR animation, metaverse, and other technologies have been pushing the potential to enhance the animated content that is available today. 

The research ‘Animation Industry: Past, Present Trends, and Future Predictions’ by GoodFirms collates the various styles of animation and the current trends in the industry. It also makes an attempt to predict future developments in the industry.

Delivering stories/content in a visual and imaginative form is gaining more popularity these days. This falls under animation. It offers an exciting scope for creative businesses. The animation technique is based on the theory of ‘persistence of vision.’ It is a natural phenomenon where the human eye is characterized to see an image even when it has disappeared from view. Creatives have used this natural phenomenon to create cartoon films and shows. 

GoodFirms’ research about the animation industry tries to gain insights into the concept of animation and the various styles of animation.

The term animation is derived from a Latin word that describes it as liveliness. Animation is the use of still images to create moving visuals, an illusion of motion, along with supporting effects. 

Source: Walt Disney

With a vast range of applications, animation is a multi-billion-dollar industry that has evolved tremendously. Animation is the technique where a series of pictures is used to create a simulation of movement. It is a process of manipulating still figures to give an impression of moving images. 

Traditional animation was about hand-drawn or painted images on transparent celluloid sheets to be featured as a film. With the progress in computer technologies, these images are today, computer generated. 

The animation industry has evolved to a great extent since its arrival. The adoption of the latest technologies has made the animation industry dynamic and competitive. Animation companies have always been experimental with the various types of animation. Following is a brief overview of the types of animation.

Also known as cel animation, classic animation, and frame-by-frame animation, traditional animation was the most widely used type of animation until the advent of computer animation. The technology is a time-consuming and painstaking process.

The process of traditional animation involves a lot of human labor as each frame is hand-drawn.  Each frame is slightly different with respect to the previous one to project a natural feel of the movement of the picture. Once polished, these pictures are transferred from paper to transparent celluloid sheets called cels.

After the sequence of frames is loaded on the cels, special animated cameras are used for the photography process. (1) 

Rotoscoping is an animation technique that utilizes a still photo or moving footage for tracing and creating a finished animation scene. 

Instead of drawing pictures, tracing live-action footage can speed up the process of animation. However, the process is quite expensive. 

Earlier, the rotoscoping process was labor intensive and was a job for people with artistic skills. However, with the invention of computer graphics, it became simpler.(2)

Unlike most of the other animation technologies that are used for creating entire animated films, motion graphics are meant for shorter pieces of animation purposed for entertainment or conveying information. 

Motion graphics have a wide range of applications. They can be used in TV and film opening credits and creative adverts and are today used even in memes present on social media. Motion graphics are simply graphics in motion that involves the graphic elements placed on frames sequentially to create the illusion of motion.

Motion graphics have seen a creative revolution from the time of its origin to the digital age with technological developments. The introduction of the Apple Mac in the 1980s was a milestone enabling animators to be more innovative.(3)

Stop motion animation is a special form of animation that uses objects instead of hand-drawn pictures or CGI to create an animated film. The process is based on the snaps taken of an object while manually moving the object and playing the frames in a sequence. 

It is an advanced flipbook kind of techniques that gives an impression of a moving object. Stop-motion animation is a low-budget option compared to other technologies. However, the execution time of this type of film is quite high since there can be only 12 frames per second. 

Based on the object used for photographing, stop-motion animation is of different types. The various types of stop-motion animation are Object-Motion, Claymation, Pixilation, Stop-motion, Cutout animation, Puppet animation, and Silhouette animation.(4) 

2D animation is the traditional animation that shows images in motion in a two-dimensional environment. This type of animated content consists of length and height elements. It does not include depth. 

Traditionally, 2D animation was done with hand-drawn images. With advances in technology, animators can now use computers to create digital images. Modern 2D animation can be a combination of graphic design, voiceovers, stop motion, and motion graphics that effectively do the task of storytelling.

3D animation is the process of creating moving images in three-dimensional space. These animated products are developed using specially designed software. 3D animation is capable of adding elements like height, length, and depth to the picture.

3D animation is more expensive than traditional animation techniques while being more immersive and realistic. Some of the top software solutions for 3D animation include Maya, 3DS Max, Blender, Houdini, and Flash.

Real estate, medicine, and education are some of the industries that make use of 3D animation on a large scale.(5) 

Integration with modern technologies has enhanced the quality of animated content. 3D animation, when partnered with modern technologies, gives a more immersive effect to the video content.

Hybrid Animation

The term hybrid animation refers to the combination of 2D and 3D animation. The hybrid animation technique is a great way to bring the benefits of both 2D and 3D animation to create a unique and engaging result.

AR Animation

Augmented Reality animation, or AR animation, is a modern form of animation that makes use of a blend of the real and virtual worlds. It uses augmented reality software to create an image or a 3D object which is then combined with a physical background to create an immersive animated product.

VR Animation

VR animation is basically done by using dedicated software or tools to create a 3D environment or objects. VR animation involves the simulation of a 3D environment that is interactive. Gadgets like headsets or digital gloves aid the users in interacting with the animated environment.

The global animation industry accounted for about USD 394.6 billion in the year 2022. With a CAGR of 5%, the industry is speculated to value USD 528.8 billion by the year 2030. Among the industries served, the media and entertainment sectors had a dominant share.

North America is expected to be the main contributor to the market share during the forecast period. (6)

The key market players in the animation industry are SideFX, Adobe, Autodesk Inc., Animation Sharks, Videocaddy, Maxon Computer, and TriggerFish Studios, to name a few.(7)

(source: Walt Disney)

The animation industry has seen consistent growth over the years. Along with technological developments, the adoption of certain trends helps businesses to stay competitive. Below are a few top trends being adopted in the industry.

2D animation and 3D animation are completely different in terms of the visual perspectives they offer.  Both technologies come with their unique set of benefits and challenges. Hybrid animation is the combined use of 2D and 3D animation to give a more effective and immersive experience. Using the blend of the two technologies, artists can tell complex stories with realistic effects.

The key advantage of 2D animation is the availability of more style options and abstract elements that are not there with 3D animation. Animators can consider any of the available approaches to make the final outcome better with less expenditure. (8)

Vertical videos are generally designed for hand-held devices. Around 90% of Twitter video views come from mobile devices.(9) The figures are indicative of the fact that videos on social media platforms are mostly viewed in vertical format. Vertical videos are, therefore, getting popular among advertisers to ensure maximum visibility.

With the impact that animated content can create on audiences, adopting vertical animated videos for social media is an emerging trend for brands to have in their marketing campaigns. Vertical animation can provide artists an opportunity to create engaging ads that can make brands stand out from the crowd and convey their message effectively on social media.

VR animation is a growing trend in the animation industry. Virtual reality techniques have helped bring transformations in several industries, including animation.

The use of virtual reality in animation can bring down the production hours significantly compared to the time required when creating animated content manually. Also, the use of virtual reality animation can enhance spatial understanding and give more surreal and realistic outcomes to the animated content.

The introduction of virtual reality animation can be advantageous for animators to have a seamless production process and foster better integrations.

Depth sensors are popularly used tools for depth measurement and gaining a sense of surroundings in a 3D environment. They are 3D range finders that use a wide field-of-view(FOV) and transmit the information to the software.(10)

The sensors are engineered to create a blurred background in real-time image rendering. The technology is being used in the animation industry to help in creating immersive and realistic facial expressions and features.

The ability of depth sensors to catch the movement of objects can help in creating realistic features and postures, making them an excellent tool in the animation industry. The introduction of VR can also add to the increased use of depth sensors for animation.

From creating cartoon shows to now having varied applications, animation has seen growth over time. One of the major applications of animation is in the field of marketing. Animated videos have proved to be an effective video marketing tool.

2D animation has therefore been a popular trend among marketers to promote a product or service. With a seamless combination of text, graphics, and voice-overs, 2D animation is also an economical option. 

Animated videos have the potential to grab attention and create better engagement for consumers in shorter time frames which has led to a rise of 40% in businesses incorporating 2D animation into their marketing campaigns.(11)

According to research conducted by Sharethrough, 75% of people watch mobile videos with their sound turned off.(12) With videos being viewed without sound, the importance of the text in the video is emphasized. 

Kinetic typography has therefore gained importance in the case of animated videos. Kinetic typography is an animation technique that involves moving text.

Kinetic typography is a major element in retaining viewers’ attention and also a great way to enhance the visuals of the video. Moreover, it is a good tool for explaining complex information effectively to the audience.

Whiteboard animation is the animation technique that is used to create a video giving the impression of an artist drawing images on a whiteboard. With simplified graphics and images, whiteboard animation videos are capable of delivering messages that are easy to understand.

These videos are a go-to option for companies that are looking for a way to explain high-tech products or want to explain a critical process that requires consumer attention.

Whiteboard-animated videos are simpler in the way they look and can offer to be good for creating explainer videos. The popularity of these videos is rising with the higher adoption of these videos by brands like TED and the BBC in their campaigns.(13)

Animation is a great way to connect people and has sometimes been more effective than writing live-action films. Due to the impact that animation can have on a number of industries, the animation industry has gained a lot of significance. Apart from the entertainment industry, the animation industry has a role to play in various other sectors.

It is predicted that the employment of animators and special effect artists will rise by 5% by the year 2031.(14)

Brands have been using animations for marketing from the very beginning. The animations that were earlier shown on television are now being used on various other platforms.

The unique storytelling that can be achieved through animation is very immersive and cost-effective compared to live-action videos. Animation video marketing can help brands promote products and services and even create brand awareness. 

The marketing campaigns of businesses can include explainer animation videos and brand animation in the form of 2D and 3D animations with the unlimited possibility of creativity. (15)

Recent times have seen major transformations coming in the education sector. The introduction of animation technology is one transformation that is being widely adopted.

Animated education material is a great aid in engaging students to develop their interests in certain subjects. Animated content is also a way to explain complex topics in an easy manner. The post-pandemic period especially has seen a rise in the adoption of animation technology in the education sector.(16)

Healthcare is an industry that is ever-evolving. There are several technological improvements in the sector that add to the betterment of healthcare facilities. 3D animation or animation in the healthcare sector helps to communicate complex information to healthcare practitioners as well as people with less medical literacy.

With several kinds of videos like explainer videos, promotional videos, social media campaigns, and training videos, animation videos play a vital role in this industry. Animated content in the healthcare sector is an effective medium to overcome language barriers, explain complex concepts in simple terms, and convey necessary information effectively.(17)

The fact that 3D medical animation videos offer 19% higher understanding than standard surgical videos proves that animation can be beneficial for making complicated concepts easy to understand.(18)

Animation has been effectively used in video games for a long time now. 3D animation is widely used in video games to create backgrounds and game characters to give a unique experience to gamers. 

3D animation gained popularity in video games when sophisticated and powerful gaming consoles were introduced in the mid-1990s.(19) With proper research and experimentation, the use of 3D animation in video games can provide an immersive experience to gamers.

Animations have grown in popularity in the world of architecture. Especially computer generated 3D animation is an important tool in the architecture business for grabbing clients’ attention. 

Animation helps architects give their clients a realistic view of the building that will be completed in the future. Creating miniature models with the help of 3D animation is a growing trend in the real estate industry.

The integration of augmented reality and virtual reality has made 3D animation more effective in architecture and engineering. Animation is also used by interior designers to give the clients an idea about the interiors of buildings and improvise the designs beforehand.(20)

The animation industry is dynamic and has a wide range of applications in various industries. The industry has a lot of hurdles to overcome to witness consistent growth. Some of the challenges that the industry faces are mentioned here.

High Demand for Animated Content

With the rising amount of online content that is consumed, the demand for animated content has increased. With the rising use of animation in marketing videos, there is a rise in the demand for unique videos that can help engage customers and lead to an increased conversion rate. 

Also, creating animation videos can be time-consuming. Production of quality content within the available time is a challenging situation for animation companies.

Staying up-to-date with Latest Technology

The animation industry is fueled by evolving technology. With the evolution of technology, animators have been able to go from hand-drawn images to now 3D animation that is more immersive and realistic.

The rapid changes in technologies like Virtual Reality, Augmented Reality, Blockchain, metaverse, and 5G are some of the major drivers of the animation industry.(21)

These rapid changes in technology have to be addressed by animators to be competitive. It is always a challenge for animators and artists to stay up-to-date with the latest technologies to stand out in the crowd.

Intellectual Property Protection

Intellectual property rights play an important role for animation studios to keep their creative works unique. 

Intellectual property laws enable creators to copyright their creative works that prevent the unauthorized use of animated characters. IPR protection is a critical factor for the growth of a production studio.

The Walt Disney Company owned around 2225 active patent families that were protected by the U.S. patent office by October 2020.(22) The figures show the significance of copyrights and their protection for animation giants.

The enforcement of these laws can get challenging, especially for smaller companies. IP protection is a crucial factor and needs to be understood for better usage of the laws. 

It can be challenging for companies to invest huge amounts to gain copyrights or patents. Also, tracking the infringements of the creative works might become a  challenge.

The animation industry has seen many changes since the time it came into existence. Although the quality of animation content available today is excellent, the industry has a scope for more changes. Following are a few potential changes that can be seen in the animation industry. 

Video streaming platforms came into existence with the introduction of YouTube. The trend was later followed by the formation of giants like Netflix, Hulu, Hotstar+, and many more. 

During the Covid19 pandemic, the streaming service platforms were given a boost. The varied content offered by these platforms fuels their growth. The animation industry is expected to see an expansion of these services, which will demand quality content to be streamed. The pandemic period saw around 7 million consumers quit traditional cable TV during the year 2020 while opting for streaming services. (23)

It was speculated that Netflix would spend around USD 5 billion on animated content, while the amount would be USD 1.86 billion for Amazon Prime Video. The investments can be expected to rise even further in the coming years.(24)

The future holds potential for the expansion of streaming services which can enhance growth opportunities for animation content creators.

Artificial intelligence and machine learning are new-age technologies that are assisting in the advancements of many industries, and animation is one of them. 

AI has a wide range of applications in animation. The integration of AI and ML in the animation industry has the potential to improve the quality of animated content to a huge extent. Artificial intelligence can be used to curate more realistic characters for effective storytelling.

Animators can harness the power of AI for performing tasks like analyzing and replicating lighting effects for a better visual experience allowing more time for the animators to the creative aspects of the production process.(25)

Technologies like AI and machine learning can be helpful in developing ways to curate better and more personalized content.

Like many other sectors, the entertainment industry was also hit during the pandemic. While the world was completely locked down, the production of film and television shows had come to a standstill. 

Virtual production was a way that came to the rescue of production houses. The trend of virtual production is associated with the use of characters or sets virtually. 

Virtual production can be an excellent development in the animation industry. The technology can assist animation producers in creating content while keeping finances and time constraints in check.

The global virtual production market is expected to see growth at a CAGR of 18.2% from the year 2023 to the year 2030.(26)

Animation is a collaborative process. With technologies using cloud-based rendering, cloud-based storage, and virtual production, production studios have come across the benefits of collaborative work. Besides, outsourcing is cost-effective and can even be helpful in dealing with the time-constraints.

Asian countries have been among the favorites for outsourcing animation work due to their cost-effectiveness when compared with their Western counterparts. There has also been a change in working patterns due to the impact of worldwide lockdowns. With the many benefits that production houses have leveraged from outsourcing work across the globe, collaborations are expected to rise globally in the coming years.(27)

• The animation uses a series of images to create a simulation of movement.
• Traditional animation, also known as cel animation, consists of hand-drawn images with slight differences in the series of images.
• Motion graphics are meant for shorter pieces of animation purposed for either entertainment or conveying information.
• Based on the objects used for photographing, stop-motion animation can be categorized as Object-Motion, Claymation, Pixilation, Cutout animation, Puppet animation, or Silhouette animation.
• 3D animation is designed to add elements of height, length, and depth to the animated clip.
• It is expected that the Animation industry will grow at a CAGR of 5% to reach a value of USD 528.8 billion by the year 2030.
• The use of a combination of 2D and 3D animation is the latest trend in the animation industry to bring the benefits of both techniques in one creation.
• The increased use of mobile phones has led to the adoption of vertical videos.
• Around 69% of US consumers view videos muted.
• Whiteboard animation is a good choice when the aim is to explain high-tech products or critical processes.
• The pandemic period witnessed around 7 million consumers quit traditional cable TV during the year 2020 while opting for streaming services.
• Integration of AI and ML in animation can bring personalization and improvement of the content

Animation is one of the most dynamic and versatile industries. The market share of the industry has constantly been increasing due to its number of applications in diverse industries.

Animation is a powerful tool for storytelling and is therefore being used by several industries today to convey messages. With the widespread use of animation in the education, digital marketing, and architecture industries, animators have a strong scope for growth in the future.

While there are some critical challenges that obstruct the development of the industry, newer technologies can fuel the pace of industry growth.

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