Animation Is
Eating The World

Lessons from the past,
present, and future of animation.

By Michael Dempsey
Animation is the highest form of art because it involves nearly every creative process and discipline to create a final product.

ver the past two years I've spent a lot of time understanding the animation industry, including incubating, investing multiple times in, and working closely with a company. It's been a crash course in understanding creative personas, processes, technology, and the various stakeholders within media.

I write this piece with the disclaimer that there are many details I've chosen to gloss over, and others I've gone deeper on for a variety of reasons. I also write this as a non-creative within the animation world.

What the history of animation tells us is that each cycle is brought on by strong catalysts related to both macroeconomic factors that dictate the types and depth of stories that the medium calls for, as well as technological advances that create a step function change in the business.

We're now at the beginning of what I believe to be another animation boom that will be unparalleled in scalability, profitability, and global influence versus any other time in history. The history of animation teaches us lessons in evolving creation, technology, distribution, and scale that breeds new business models and more importantly new characters. The characters we fall in love with today could live on for decades as Mickey Mouse, Charlie Brown, Fred Flintstone, Pikachu, and Homer Simpson all have.

But to truly understand an industry and medium as dynamic as animation, it is important to start from the beginning.

Table of Contents

Chapter 1: The Beginning
Chapter 2: The first wave and golden age of animation (1914–1945)
Chapter 3: The Dark Age of animation (1950–1989)
Chapter 4: Modern Animation - The Renaissance (1989–2004)
Chapter 5: The Birth of Pixar
Chapter 6: The Digital Age of Animation (2004 - Present)
Chapter 7: Tomorrow's Technology
Chapter 8: Learnings, & the Future of Animation
Appendix: Important things I left out

Chapter 1

The Beginning of Animation

How Animation Works

nimation begins with the simple concept of Persistence of Vision. Persistence of Vision is the eye's ability to retain an image for up to 1/20th of a second after it disappears. This is the fundamental building block of how early animation came to be.

The earliest animation platforms started as crude hardware implementations such as the Thamutrope, and Zoetrope, which was invented in the 1860s. Shortly after that came the Flip Book (1868) which allowed viewers to "flip" through the books in order to see quick animations.

What some view as the first implementation of true animation came in 1906 thanks to the invention of the camera. Stuart Blackton drew faces on a board, took photographs of the board, and then printed those photographs in sequential order to film, making small changes with each photo. This was the birth of stop motion animation.

Stop motion animation has outlived Stuart Blackton, largely via the Claymation implementation. Claymation rose to prominence because it was incredibly easy to manipulate and move between frames, unlike flat drawings.

Gertie The Dinosaur

Five years after Stuart Blackton's work, came Winsor McCay who brought hand drawn animation to the forefront when he released Little Nemo (1911), How a Mosquito Operates (1912), and Gertie The Dinosaur (1914) which is largely considered to be the first 2D animated film.

Little Nemo was filmed under the supervision of Stuart Black and was largely made up of a live-action sequence in which McCay bets his colleagues that he can make drawings that move. He does so with 4000 pieces of rice paper.

After facing doubts from viewers on the animations of Little Nemo and How a Mosquito Operates being hand drawn, he crafted Gertie the Dinosaur which blew patrons away as the dinosaur was brought to life. With the help of John A. Fitzsimmons, McCay animated 10,000 frames for a 5 minute long film, eventually culminating in the premiere in February 1914. McCay first explained how animated films were made, before eventually introducing Gertie as "the only Dinosaur in captivity" and acting out a scene between him and Gertie.

Today only 400 original frames still exist of this classic that many believe is one of the most influential animated films of all time.

In 1918, Winsor McCay would achieve another first in the animation world with the release of an animated film called The Sinking of the Lusitania; an Amazing Adventure. The film was the first animated propaganda film that was created as a means to get people to enlist and allow the government to collect war bonds for World War I. While the film was largely a failure, it served as a case study that animation could be used for all kinds of storytelling, including conveying political messages.

Chapter 2

The Golden Age of Animation

The first technological breakthrough: Cel Animation

Cel Animation
Snow White Cel Animation Recreation

n 1914 Earl Hurd invented Cel Animation, changing the 2D animation creation process for the next 70 years.

Cel Animation consists of artists drawing animated components directly onto a piece of celluloid (cel for short), and then the cel being laid over a static background drawing. Cel animation reduced the number of times an image had to be redrawn and allowed for a significantly more efficient process, including allowing specialized teams to split up various scenes or components of each piece of content.

With a more cost effective creation method, characters like Felix The Cat and Mickey Mouse were on the rise.

The second technological breakthrough: MultiPlane Camera

Disney Multiplane Camera
Walt Disney explains his Multiplane Camera, 1957

With animation feeling increasingly "flat" at times, Disney invented the MultiPlane camera in 1933. The MultiPlane camera brought depth of field and relative movement to animation via an overly complex, massive machine, and a simple mechanic of positioning different layers of content various distances from the camera. 

The monstrosity of a machine was eventually replaced as 2D animation entered into a digital workflow in 1989 (more on that later).

The Birth of Disney & Feature Film Animation

While Felix the Cat dominated the early 1920s, allowing audiences to connect for the first time with an animated character due to Felix's strong personality, Mickey was coming, and he was bringing sound with him.

Disney, founded in 1923, is the most important company in the history of animation. For the full history of the entire Walt Disney company, read this.

After creating an all-cartoon series in Oswald The Lucky Rabbit, losing his entire animation staff to his distributor, and realizing the contracts he had didn't give him the actual rights to Oswald, Walt moved studios and restarted his animation efforts.

In 1926 he and Chief Animator, Ub Iwerks, created Mickey Mouse. As sound was proliferating throughout the film industry, Disney quickly realized that their first few Mickey Mouse cartoons weren't connecting with audiences nor distributors. Thus in 1928 they debuted Steamboat Willie, the first animated cartoon with sound.

Over the next few years Disney began experimenting with longer-form full-color cartoons, consistently winning the Academy Award for Best Cartoon from 1932 (the first year it as in existence) all the way until 1940. They won a total of 32 Academy Awards from 1932 to 1966.

All of this experimentation in the early 30s culminated in Snow White, which became the first first full-length feature color animated film, in 1937. Snow White became the highest grossing film of all-time at the time and has an inflation-adjusted domestic box office gross of $982M today.

Birth of Merchandising

At the same time that Mickey Mouse was rising to prominence in the early 1930s, Disney discovered something that would change the economics of IP holders forever: Merchandising.

It began when Walt Disney was offered $300 to put Mickey Mouse on pencil tablets, from there Mickey Mouse started showing up on everything from home goods to toys to electronics and more, eventually leading to Mickey playing a very unexpected role…Patriot.

World War II & Animation

Just as animation began to take off in the US, America was thrust into World War II, and Mickey and Friends were enlisted after a bizarre string of events.

Mickey Mouse Bonds Poster
Mikey Mouse pictured helping to sell bond stamps during World War II

The day after Pearl Harbor, 500 US troops were dispatched to occupy Walt Disney Studios in Burbank, California in order to protect a nearby Lockheed aircraft plant from possible enemy air raids. Disney was quickly approached by the US military to produce propaganda films for every branch of the military. This resulted in Disney producing over 68 hours (400,000 feet) of animation propaganda featuring largely Mickey's friends like Donald Duck in 4 years. Prior to that, Disney had maxed out at 27,000 feet per year. Many of the films can be seen here.

While Mickey Mouse had served as a figurehead, meaning many things to many different people in the United States, he didn't actually appear in many of the tv shows and short films related to the war. Disney was wary of putting their crown jewel in that position and instead chose to focus the films more on Mickey's friends. Donald Duck in particular was heavily utilized, with the films connecting to the troops due to both the de-sensitization they brought to war, but also because the military was having a problem with literacy at the time.

Evil Mickey Invades Japan World War 2
Evil Mickey Invades Japan

But propaganda wasn't just being made on the US side. The other side of the war was investing heavily in animated propaganda, even featuring crude versions of Mickey and Felix the Cat in some of their films, like Evil Mickey Invades Japan.

Japanese propaganda also gave birth to the first ever feature anime film, Momotaro's Divine Sea Warriors, which was commissioned by the Japanese Naval Ministry in 1945.

Chapter 3

The Dark Age

fter the end of World War II, we entered what some call the Dark Age of Animation until the late 1980s. The Dark Age of Animation would largely be known for poor animation quality (often thanks to Limited Animation, a budget-cutting technique heavily used by Hanna-Barbera), a lack of creativity featuring cartoons heavy on slapstick humor not character development, and gross capitalism within the industry as many tried to figure out the economics of animation. Some would go as far to say that cartoons had become poorly-made commercials, as studios threw any idea at the wall, hoping to sell toys and other merchandise to children that fell in love with their characters.

This behavior proliferated after the financial disaster that was Sleeping Beauty.

Sleeping Beauty was a beautifully done animated feature film that was released in 1959 and almost drove Disney to shut down their animation studio after the costs to produce animated films had ballooned, culminating in the film going grossly over budget. Luckily, just as Disney was about to give us one of the largest "what-if" moments in animation history, Xerography came along.

The Third Tech Breakthrough: Xerography

101 Dalmations Xerography
101 Dalmations suffered heavily from the cons of xerography

Xerography, a process created by Ub Iwerks, allowed for cheaper and faster animation by printing inked art directly onto the cels used in cel animation. Some credit xerography for saving Disney up until the invention of CAPS came along in 1989.

While Xerography did bring about cost efficiencies within animation, it also brought a distinct style to works made between 1961 and 1989, including thick black lines around all characters, visible pencil marks, and general laziness in the first feature film it was used on (101 Dalmatians) when many frames display far more than 101 dogs.

It has also been speculated that retrospectively, Disney has understood the poor quality of animation and largely refers to many of the films in this time period as "cartoons" and not "art". The Disney Art Stores are known to heavily feature work from the films before Sleeping Beauty and after The Little Mermaid, ignoring films in between such as 101 Dalmatians and Jungle Book.

The Flintstones Debut Adult Animation

While there were many negatives to this time, one positive (and arguably one of the most important companies of the era) was Hanna-Barbera.

Hanna-Barbera was founded in 1957 after William Hanna and Joseph Barbera created Tom and Jerry in the 1940s and struck out on their own. After great success with Tom and Jerry, an animated tv show that was largely labeled "for kids" because adult supervision wasn't needed, Hanna-Barbera took aim at primetime. In 1960 they debuted The Flintstones, a primetime animated show modeled after live-action show The Honeymooners which focused on adult topics. The show was a hit, running for 6 seasons and 166 episodes.

Hanna-Barbera's character universe

As Disney and the rest of the animation industry slumped, Hanna-Barbera was one of the only studios actively hiring, growing their stable of creators with Disney artists that were laid off from the 1950s and early 1960s. 

Hanna-Barbera went on to dominate animated television for the next few decades, capitalizing on the "saturday-morning cartoon" trend, creating shows for children including The Yogi Bear Show, The Jetsons, Scooby-Doo, and The Smurfs. They also were one of the first animation studios to utilize overseas outsourced animation through a subsidiary in the Philippines.

Hanna-Barbera was eventually sold to Turner in 1991 for $320M and finally absorbed into Warner Bros. Animation in 2001. While the original founders have all passed away, their characters have lived on, with Warner Bros announcing a new film Scoob based on Scooby-Doo, due out in 2020, as well as future films based on The Jetsons, and The Flintstones.

Chapter 4

Modern Animation

Who Framed Roger Rabbit

Who Framed Roger Rabbit Gif
Who Framed Roger Rabbit, 1988

n 1988 Who Framed Roger Rabbit was released as the first live action and animated blended feature film. To this day, it is considered one of the most important films that led to the animation renaissance as well as a technical masterpiece. The film used a combination of technical innovations and animation techniques including advanced optical compositing and rotoscoping, among many others. The VFX was done by Industrial Light and Magic and won three Academy Awards including Best Film Editing, Best Sound Effects Editing and Best Visual Effects and received a Special Achievement Academy Award.

While the storyline received mixed reviews, the film was a financial success, grossing $329.8M, despite early concerns around a budget that escalated from $30M (at the time, the most expensive animated film ever green-lit) all the way to $50.6M.

Toy Story Rough Sketch
The various mattes generated as part of the optical compositing process for Roger Rabbit

Who Framed Roger Rabbit represented a return of animation and was the catalyst to what some would call "The Disney Renaissance", a period that ran through the 90s and 2000s to bring Disney back to relevancy after a string of disappointments from the mid-50s on. 

The success of an adult-themed live-action animation feature film opened up Disney's eyes to how animation could be used to communicate to a wider range of audiences. In fact, the film made Disney so uncomfortable that instead of releasing it under "Walt Disney Pictures" they released it under the adult-focused "Touchstone Pictures".

The meshing of multiple pieces of IP from prior ages of animation also helped Roger Rabbit, as the film featured characters from multiple studios including Mickey Mouse, Donald Duck, Bugs Bunny, and Daffy Duck, largely thanks to Steven Spielberg's convincing. He was notably not able to acquire the rights for Popeye and Tom and Jerry, despite attempts to do so.

While The Little Mermaid (1989) is often regarded as the first film to truly kick off Disney's traditional animated film renaissance, Who Framed Roger Rabbit, with its heavy adult marketing focus, and clear attempt to play off of the nostalgia of animated characters that adults longed for, made way for a new set of characters to enter our lives for the next three decades.

The Simpsons & The Rise of 90s Adult Animation

Simpsons Selfie
The Simpsons is the longest running primetime scripted series ever

Around the same time that Who Framed Roger Rabbit was being made, Matt Groening was working on a series of shorts for The Tracey Ullman Show called The Simpsons, featuring a cast of characters named after his own family members.

Finally in 1989, a year after the release of Who Framed Roger Rabbit, The Simpsons was adapted into a primetime half-hour series for Fox, premiering on December 17th, 1989. The Simpsons benefitted from two key innovations that allowed it to become the first sustainable animated primetime success since The Flintstones (along with a short stint for Wait Till Your Father Gets Home) almost 30 years prior.

First, starting in season 3, The Simpsons made use of Korean animation studios for animating all of the frames in-between the keyframes of their episodes (a process called "tweening"), as well as for coloring. While the outsourcing of animation had slowly taken off in the 1970s for cartoons like Scooby-Doo and Fat Albert, it hadn't been successfully adapted to a primetime show, nor had the quality bar been as high. This drastically changed the economics as well as the throughput available for the team to do a weekly, 30-minute, high-quality animated television show.

The use of outsourced animation studios rose in the 90s and today is largely industry standard. In addition to outsourcing, animation studios also became more economically efficient as they moved to a digital animation pipelines, spearheaded by products like Flash, USAnimation/ToonBoom, Toonz, Maya, and more. The digitization of the animation pipeline made it so that multiple teams could be working off of the same files, outsourced animation could more quickly communicate with their US-based teams, and paired with the monetization and ad dollars that came with primetime, led to the birth of adult animated TV including shows like Beavis & Butthead (1993), King of the Hill (1997), Daria (1997), Family Guy (1997), South Park (1997), and Futurama (1999), among many others.

In addition to the clear economic model shift that allowed these shows to thrive, some also credit people like Richard Raynis, who oversaw early production and animation for The Simpsons as setting a standard for how to create a primetime, adult-centric animated TV show. What often isn't discussed during historical perspectives of this time is that along with the onslaught of successful shows mentioned above, there were multiple fast-followers to The Simpsons that quickly failed including Fish Police, Capital Critters, The Critic, and more. 

As The Simpsons rose to prominence many in the media industry believed that it was largely due to a renewed appetite for the medium of animation. What Raynis and others understood better was the blending of live-action writers/producers and animators in order to tell stories and bring these characters alive. As Mike Scully put it back in 2000:

"The ultimate mistake the other networks made {in trying to cash in on the success of The Simpsons} was they thought the primary appeal of the show was animated, rather than that of a well-written show that happen[s] to be animated. Which is why the first wave of animated primetime shows came and went so quickly, The second wave shows like King of the Hill, Futurama and The PJs have succeeded because they focus on writing and characters.
- Simpsons Archive, 2000

Today Raynis has produced almost 600 episodes of The Simpsons and consulted on Futurama, King of the Hill, Dilbert, and more.

But while tech was enabling a new explosion of animation on TV, animated films were also experiencing a rebirth of their own thanks to technology.

The Fourth Tech Breakthrough: CAPS

Disney CAPS
Disney's CAPS brought digital workflows to animated films

As mentioned earlier, Disney Animation had been struggling for the better part of three decades after Sleeping Beauty's financial disappointment and poor economics for animated feature films. Technology changed this.

In 1989, before the wave of 90s animated TV shows, Disney partnered with a new tech company to create the Computer Animation Product System (CAPS) for their feature films. CAPS allowed artists to scan in sketches from paper and then do the inking and coloring process entirely on a computer. CAPS removed the need for cel sheets, improved blending and shading, digitized the multiplane camera process, and allowed for new versions of compositing and camera movements never before seen in animation.

The first film to fully use CAPS was 1990's Rescuers Down Under but 1991's Beauty and The Beast also utilized the technology to combine CGI with traditional hand-drawn art, and introduced "2.5D" in scenes like the famous Beast and Belle dancing scene.

Disney CAPS
Beauty and the Beast heavily utilized CAPS

CAPS was used on most feature films done by Disney Animation, with the last being Home on the Range in 2004.

Despite the quality improvement, in its early days Disney was hesitant to discuss CAPS in public out of fear that audiences would view the films as less "magical" if they found out computers were involved in the creation process.

CAPS ran its course, culminating in it being phased out of feature films in 2004 with ToonBoom Harmony being used for the last few 2D animated films until 2011. The end of CAPS and 2D animation in feature films was coincidentally brought on by its original creator, a spin-out animation technology company based in Northern California called Pixar.

Chapter 5

The Birth of Pixar

George Lucas, ILM, & Ed Catmull

n 1975 George Lucas showed up at 20th Century Fox with grand ambitions to bring the next generation of visual effects to his latest film, Star Wars. His plans came to a halt when he found out that Fox's in-house effects department had been shut down.

With the news barely deterring him, Lucas founded Industrial Light & Magic (ILM) with John Dykstra, who had previously worked with Douglas Trumbull (Lucas' original desired Co-Founder for ILM) on films such as 2001: A Space Odyssey (1968) and Silent Running (1972).

After successful work on Star Wars: A New Hope, Lucas wanted to incorporate more computer generated graphics for The Empire Strikes Back and contacted a firm called Triple-I.

Triple-I had become well known within filmmaker circles upon the release of Futureworld (1976), the first film to ever feature 3D computer generated imagery (CGI). Futureworld featured a CG hand that was adapted from a short film and created by University of Utah student, Ed Catmull.

George Lucas ultimately did not choose Triple-I and instead tasked an employee to find the right talent to bring CG in-house. That employee found Ed Catmull, at that point a student at NYIT and thus the computer division of ILM was born in 1979.

Finally in 1985 George Lucas sold the CG division of ILM to Steve Jobs in order to pay for the settlement of his divorce. Jobs was interested in this division after his other company, NeXT, was struggling with rendering capabilities. With the hopes to use the CG division's advanced rendering software in NeXT computers, he acquired the group for $5M and thus, Pixar was born with Ed Catmull serving as the CTO and Co-Founder.

Pixar Is Born

Building Pixar
Building Pixar, Fast Company

Shortly after the spin-out, Jobs realized that while Pixar was quite good at making software, their true passion was for filmmaking. Pixar released their first short film, Luxo Jr, in 1985 at SIGGRAPH to critical acclaim. Luxo Jr. features the now infamous Pixar lamp as well as the "Luxo Ball" which has been featured in 15 different Pixar films over the years. Viewers were blown away by the ability of objects to shed light and cast shadows on themselves in such a realistic way, as well as with the personality that was injected into seemingly real looking lamps. All of this was made possible due to their own proprietary software, something Ed Catmull had grown accustomed to building over the past decade.

Toy Story Rough Sketch
Buzz Lightyear and Woody drawn by Bob Pauley

As Pixar continued to garner critical acclaim for their shorts, their hardware division was failing, leading to Pixar selling it in 1990. The critical acclaim did count for something though when in 1991, Disney attempted to hire John Lasseter, a current Pixar creative and former animator at Disney who had been fired for pitching a 3D animated film at Disney (and then hired by Catmull at Lucasfilm). Lasseter declined the job offer and instead (with Jobs) negotiated a joint-venture between Pixar and Disney in which Pixar would use its technology to create three 3D films for Disney. Their first film would be about a group of toys, expanding upon a Pixar short called Tin Toy (1988) and taking once again a page out of the Who Framed Roger Rabbit playbook, playing on nostalgia for adults, but this time, also making a film that would resonate with kids.

"Seeing "Toy Story," I felt some of the same exhilaration I felt during Who Framed Roger Rabbit." Both movies take apart the universe of cinematic visuals, and put it back together again, allowing us to see in a new way.
- Roger Ebert, 1995

Despite a rocky four months between Pixar and Disney, which consisted of Jeff Katzenberg (head of Disney's film division at the time) and Peter Schneider (head of Disney animation) cancelling Toy Story, Jobs trying to sell Pixar, Jobs ultimately opting to keep funding Pixar himself, and Katzenberg and Schneider finally approving a re-written script, Toy Story was released in November 1995. The film was a massive success, as it went on to win multiple awards, gross over $373M worldwide, and show Hollywood that the future of animation was 3D.

Pixar quickly went public on the NASDAQ in the biggest IPO of 1995 at a valuation of $800M.

Katzenberg vs. Disney & Pixar

Antz vs. A Bug's Life
Antz vs. A Bug's Life

In April 1994, a little over a year before Toy Story's release, Frank Wells, the second-in-command at Walt Disney, died in a helicopter crash. Upon Wells' death, Jeff Katzenberg, who an analyst had recently described as "probably 80 percent responsible" for the run-up in Disney's stock, lobbied heavily for Wells' former job. Despite his string of successes, including The Lion King, which opened in June 1994 as the highest-grossing traditionally animated film of all time, then CEO Michael Eisner did not promote Katzenberg, and instead forced him to resign in October. This led to a messy lawsuit that eventually ended up netting Katzenberg an estimated $250M settlement.

Katzenberg was hellbent on payback and quickly co-founded Dreamworks with Steven Spielberg and David Geffen after raising close to $1B from Paul Allen. Katzenberg's main responsibility at Dreamworks? Animation.

In 1995, with the release date of Toy Story nearing, Katzenberg visited with his old friend John Lasseter and asked him what Pixar's next project would be. Lasseter told Katzenberg about a film surrounding a group of insects and the world they inhabit. This film would eventually become A Bug's Life.

Later that year, Katzenberg and Dreamworks announced that it would be releasing Antz, the studio's first 3D animated film about…a group of insects and the world they inhabit.

Lasseter was furious. Katzenberg offered to push back the release date of Antz in exchange for Pixar pushing back A Bug's Life release date, which was due to go head to head with Dreamworks' first major 2D animated film, Prince of Egypt. Lasseter refused and thus Katzenberg and Dreamworks released Antz on October 2nd, 1998, 5 months ahead of schedule after Katzenberg paid PDI, the animation studio working on Antz, multiple cash incentives. A Bug's Life followed in November 14th, 1998 and grossed $363M worldwide vs. Antz's $152M.

But while Pixar had won this battle, Katzenberg bought a large stake in PDI, continued to fundraise for Dreamworks, and eventually released his masterpiece in 2001 in Shrek, which beat out Pixar's Monsters Inc. to win the first-ever Academy Award for Best Animated Picture.

Farquaad vs. Michael Eisner
Lord Farquaad (left) vs. Michael Eisner (right)

Katzenberg not only got revenge with a critically acclaimed masterpiece that grossed $484.4M (Shrek 2 went on to gross $920M, the 10th highest-grossing 3D animation film of all-time), but also got revenge on his former boss, Michael Eisner, who is rumored to bear a close resemblance to Shrek's evil but idiotic villain, Lord Farquaad. The film also took multiple shots at the historically successful Disney IP and Disney formula of fairy tale lands, princess-driven narratives, and the handsome prince saving the day (not the green Ogre).

Dreamworks Finds a New Home

In 2004 led by Katzenberg, Dreamworks Animation was spun off from DreamWorks, and went public at a valuation of $3B (compared to Pixar's $4.5B valuation at the time). In 2016 the company was acquired by NBCUniversal for $3.8B. Katzenberg left shortly after and has since started WndrCo, an upstart tech and media holding company that has raised over $1B for their pre-launch mobile-video focused app, Quibi.

Pixar's Sustained Dominance

"Every story envisioned by the Pixar team requires something that they don't know how to do, so they invent the technology that was needed. There have been more than 250 computer-animated films released worldwide since Toy Story. Lasseter attributes that plenitude in part to the choice made by the Toy Story team to worry about story more than showing off, and to concentrate on developing software to serve their ideas rather than the other way around: if Toy Story hadn't succeeded the way it did, it might not have inspired others to follow."
- How Toy Story Changed Movied History, Time, 2015

From 1995 to 2006, Pixar pumped out hit after hit including Monsters Inc., Finding Nemo, The Incredibles, and more. Finally in 2006, after drama surrounding sequels of Pixar films and a clearly declining slate of films made by Disney Animation, Disney acquired Pixar for $7.4B in an all-stock transaction. John Lasseter became the Chief Creative Officer, Ed Catmull became the President of Disney Feature Animation and Pixar, and Steve Jobs became Disney's largest shareholder.

Today, Pixar continues to push technological limits of 3D/CG animation with proprietary tools (that they eventually released) like Renderman, as well as the still proprietary Presto.  Alongside their technical expertise that continues to be at the bleeding edge of animation, their storytelling has also dramatically outpaced many other animation studios due to their ability to tell stories that are highly relatable for both young and adult audiences. Films like Wall-E have received praise for discussing political and societal issues like climate change and inactivity, while films like The Incredibles more specifically explore the difficulties of growing up, infidelity within marriage, and more.

Pixar remains the most important company in animation today, with 3 of the 5 highest grossing animated films ever and largely being credited as the cause of the end of 2D films.

The End of 2D Animation

2D Animation Market Share Fall
2D animation market share has become non-existent

After multiple hits from 3D animated films, Hollywood quickly fell in love with the format and multiple studios moved away from traditional 2D animated feature films. Along with increased compute power and hardware innovation, software tools like Autodesk Maya, Flash, and more proliferated and made 3D animation easier for a larger number of studios. This eventually came to a head when Disney announced that there would be no more 2D animation projects after the 2011 release of Winnie The Pooh.

The proof was in the numbers as from 1995 (Toy Story's release year) to 2011 3D animated films grossed $26.5B globally versus just $6.4B for 2D animation.

Chapter 6

The Digital Age

"To convince people to back your idea, you've got to sell it to yourself and know when it's the moment. Sometimes that means waiting. It's like surfing. You don't create energy, you just harvest energy already out there."
- James Cameron, 1995

CG & Animation

he turn of the millennium brought a wave of improved 3D and CG technology that we've seen proliferate through fully animated properties as well as live action visual effects. This can be attributed to a mixture of things including an insatiable desire on the consumer side for higher quality CG content, a continuation of Moore's Law, and James Cameron.

Final Fantasy Spirits Within
James Cameron working on Avatar

In 2001 we saw the first feature-length film to attempt photorealistic CG humans with Final Fantasy: The Spirits Within (a film that went $67M over its initial $70M budget). 

A year later Lord of the Rings: The Two Towers utilized real-time motion capture for the first time in a feature film. But all of this paled in comparison to what James Cameron was dreaming about.

Building the parachute on the way down with James Cameron

james cameron avatar
James Cameron working on Avatar
"When you're making a movie that costs $200 million… your target audience is people with a pulse and $15 - or even just $15."
- -James Cameron, 2009

James Cameron's obsession with technology, perfection, and thus, massive risk-taking in filmmaking has been well-documented. In 1977 Cameron quit his job as a truck driver and entered the film industry after seeing Star Wars. He worked his way up from a miniature model maker to special effects and design work, culminating in a special effects director role in 1982 (which he was fired from). Cameron had always been obsessed with science fiction and wrote the screenplay for The Terminator (1984) after dreaming about the story while he had food poisoning, eventually releasing the $6.5M budget film to an over $78M worldwide box office success.

After a string of successes, Cameron took the biggest risk of his career with Titantic in 1997. Cameron's perfection led to him deep-sea exploratory filming, expensive large-scale sets, and other boundary-pushing digital effects done by Digital Domain, a VFX company Cameron helped start in the early 1990s. Titanic became the most expensive film ever made at the time, with a budget that ballooned all the way to $200M. The bet paid off and Titanic went on to make $1.8B and win 11 Academy Awards.

In 1994 Cameron wrote an 80-page treatment for an epic science fiction film that he planned to make after the completion of Titanic in 1997. He planned to release the film in late 1999 but after Titanic, he realized that the visual effects technology was not yet ready to achieve his grandiose vision of an entirely CG world with hybrid human-CG actors. Cameron would wait over 10 years (or as he would later argue for legal sake, 50 years) for the technology to catch up to make his dream into a reality, eventually beginning preliminary work on what would be known as Avatar in 2006.

"There's a term in Hollywood for Cameron's style of directing…They call this 'building the parachute on the way down.'"
- Bruce Davis, Executive Director of Academy of Motion Picture Arts and Sciences

Cameron continued to push the envelope of technical possibilities in film across motion capture (or as Cameron would create, performance capture), real-time rendering, and CGI with Avatar.

Cameron wanted to improve upon the past decades worth of technological development by blending human actors into their CG characters, mapping their emotions in real-time, and allowing him to see how their acting performed in the entirely CG world of the film in real-time. To do so Cameron worked with Peter Jackson's Weta Digital to create a new device that would incorporate every facial movement into the hybrid CG/3D character with minimal post processing.

"…the process of motion capture served only as a starting point for animators, who would finish the job with digital brush strokes. "Gollum's face was entirely animated by hand…King Kong was a third or so straight performance capture. It was never automatic." This time, Cameron wanted to keep the embellishment by animators to a minimum and let the actors drive their own performances." - Joe Letteri, Weta Digital effects master

Avatar Technology
Avatar: Motion Capture Mirrors Emotions

After seeing early renders of their first attempts, he complained about uncanny valley effects and Weta spent an entire year perfecting Cameron's invention with improved algorithms that would allow for raw motion capture data from the rig to render into a realistic, hybrid character. The results were groundbreaking.

Leading up to its release, rumors were flying about the film's near $300M budget (an additional $150M was spent on promotion) and concerns around any original story being able to reach the high bar for such a budget, even with Cameron attached. Avatar premiered on December 10th 2009 and went on to be the highest grossing film of all-time, doing $2.79B at the box office (Avengers: Endgame recently took 2nd place from Titanic at $2.77B).

Like Toy Story did for 3D Animation, Avatar is often considered one of the most important films in CGI technology history. As time has gone on, we've only seen these pioneers like Pixar and others continue to push the limits through the 2010s. 

James Cameron is currently working on four consecutive sequels to Avatar due for release in 2020, 2021, 2024, and 2025, at a collective budget of over $1B.

What parachutes he is building on the way down is anyone's guess.

Today's Technology

toy story dog 1 vs cat 4
The dog in Toy Story 1 (left) vs. cat in Toy Story 4 (right) shows the technical progress made by Pixar

Since Avatar, we have seen a steady progress of CGI technology innovation. The Lego Movie (2014) was widely praised (ironically) for its photorealism of entirely CG lego characters. Earlier this year the internet recently collectively freaked out about the staggering progress in physics simulation and photorealism for a Toy Story 4 (2019) cat. Pixar had been building towards this in public through simulations of hair physics and rendering since the creation of the hairy Sulley from Monsters Inc., to Ratatouille's simulation of hair when Remy jumps in water, and through Merida from Brave's large red hair. The team at Pixar has covered their technical progress across multiple research papers

Andy toy story progress
Andy from Toy Story 1 vs. Toy Story 4

Pixar has taken a similar approach when it came to modeling humans. The team rarely showed full humans in the original Toy Story, but as their technical abilities progressed through their next four films from 1995-2004, they were able to fully feature humans for the first time with The Incredibles' release in November 2004.

Lion King 2019 CGI
The Lion King is entirely done via CGI

Later this year we'll see the live action remake of The Lion King (2019) (as Disney continues to trot out once profitable or popular 2D animated film remakes) which has started a debate about what constitutes "live action" anymore.

While The Lion King is no longer 2D animated, it is entirely done via CGI as tech has continued to blur the lines between animation and live action, or as Sean Bailey, President of Production at Walt Disney Studios put it:

"It is a new form of filmmaking. Historical definitions don't work. It uses some techniques that would traditionally be called animation, and other techniques that would traditionally be called live action. It is an evolution of the technology Jon used in Jungle Book.

While these properties all continue to push the envelope on blurring the lines between what's real or not, perhaps none has done so more aggressively than Netflix's series of shorts Love Death and Robots (2019).

Led by David Fincher and Tim Miller, LDR is a tour de force of state-of-the-art and experimental animation, featuring 13 studios and animators from nine countries.

Lucky 13 Netflix
Lucky 13, FXGuide

One of the shorts, Lucky 13, has been applauded for its incredible photorealistic CG animation which featured face scanning, a proprietary facial rig, and intense photorealistic environments which allowed the team to "cross the uncanny valley".

The Witness, Netflix
The Witness, Inside The Animation

Another episode titled The Witness, utilized a piece of software from the fashion industry (along with keyframing) to create an aesthetic and physics surrounding clothing that led the internet to accuse the filmmakers of lying about their lack of use of motion capture and live action actors. Creator Alberto Mielgo described it in detail below:

"The characters were animated naked, and then we started putting clothes on top…We used a software called Marvellous Designer. It's a fashion software that was originally created to help designers to create their clothes, but it has a brilliant way of simulating clothes. However, the program is not ready for a pipeline inside of it, so it's not the main program that people use. It's my favorite for the look of it, and I pushed my team to use it. We created a pipeline that doesn't actually exist, and that's why people are in shock because they've never seen clothes move that well." IGN, 2019

LDR wasn't without its issues, specifically surrounding claims of sexism, excessive nudity, as well as complaints about the actual stories. Despite these shortcomings it was the result of something larger happening within animation; a shifting distribution model, expansion of capital, and perhaps more opportunity for experimentation. 

Today's over-the-top (OTT) players are the 10,000 pound gorillas in the room, and while the animation throne of tomorrow could start with Netflix and possibly end with Disney+, two decades before BoJack Horseman was a twinkle in Netflix's eye, we had Cartoon Network.

Cartoon Network

After Turner Broadcasting acquired a portfolio of animation IP from MGM/United Artists as well as the entire Hanna-Barbera catalogue for $320M in 1991, they created Cartoon Network. The creation of Cartoon Network in 1992 helped push forward the idea of single-genre television channels (a contrarian bet that Turner had already had success in with CNN). This single-genre television channel strategy led to package deals within cable, driving the adoption of Cartoon Network and making it the fifth most popular cable channel in the United States in 1994.

With the new distribution, Hanna-Barbera's new division, Cartoon Network Studios was founded to create new shows exclusively for their network. Descriptions of this division sound a lot like Netflix today, as the division was known for offering creative power, high budgets, and even used data on short films to understand which pilots to create and spin-off as entire series'. Most notably, Dexter's Laboratory was the first spin-off, but other hits followed including Johnny Bravo, The Powerpuff Girls, and Courage the Cowardly Dog.

In addition to original content, Cartoon Network is widely credited for being the first company to successfully bring anime to the US, offering new distribution to cable TV via their Toonami block in 1997 for shows such as Sailor Moon and Dragon Ball Z.

Adult Swimg Characters
Adult Swim was responsible for the reboot and popularity of many shows.

The dedicated audience that would show up to Cartoon Network any time of day, craving cartoons also led to the rejuvenation of multiple properties via its Adult Swim (AS) programming block. After the rise of adult animation in the 90s, Cartoon Network launched Adult Swim (AS) in 2001, originally airing Sunday from 10pm to 1am ET (it now airs daily from 8pm to 6am). AS was created to capitalize on the fact that at this time almost one third of their audience was adults.

By 2003, AS had become a place for reruns of animated series that had been cancelled and none was more popular than Family Guy. Peter Griffin and his family premiered on AS on April 20th, 2003 and boosted viewership of Cartoon Network by 239%. After one year of running Family Guy reruns on the network, Fox brought back Family Guy. The same thing happened 4 years later when Futurama (which at that point had been on AS for 4 years) was revived after being cancelled by Fox in 2003.

Today, Cartoon Network is competing head to head with a plethora of new entrants within animation for both original content and syndication rights. This next age of animation could end up being an existential threat to the company that capitalized most on the 90s renaissance. But Cartoon Network's new distribution method and genre-focus foreshadowed what was coming as viewers became insatiable for vertical-specific content and commerce.

Today's Streaming Boom

The evolution of distribution methods has created an influx of capital.

I don't feel the need to rehash the digital streaming boom and its impact on entertainment broadly. The graphic above accurately displays the progression of distribution from TV to the internet and the money that has followed. But while Netflix was a first-mover, the economics of more players has only led to a further explosion of demand for content, and animation is core to that demand.

The increasing number of players from tech platforms to startups like Jeff Katzenberg's Quibi to traditional studios like Disney getting into OTT distribution, should lead one to only expect the demand for original animated series to increase.

Growth in streaming demand for animation
Source: LA Times

With an economic model surrounding subscriptions and scale, Netflix has taken note of the importance of animated content as it both travels incredibly well globally and has significant retention dynamics. Specifically, 60% of Netflix subscribers watch kids and family programming, and families cancel at half the rate of other subscriber cohorts.

This has resulted in 11% of Netflix's original content budget ($1.1B) being spent on animated original content in 2018, a figure they expect to increase to 15% ($5B) by 2022.

All of this demand is being felt on the creative side of the business which has led to the streaming services offering up to $1.2M per 30-minute episode, a figure that is double that of traditional players. In addition, companies like Netflix are giving up merchandise rights and in cases like Quibi, are even giving up long-term exclusivity of IP. The power dynamic has certainly shifted where content (and its creators) in some ways are king.

On the creation side, animation production companies have grown revenues at staggering rates. Most notably, Technicolor's visual effects division which is expected to do about $1B in revenue this year, was doing only $35M a decade ago.

While many of these figures are related to television, the dollars are also flowing on the film side of the business for 3D animation, as 2019 could be headed for a record year at the box office. In 2016, 3D animated films such as Finding Dory, Secret Life of Pets, Moana, and Zootopia grossed a cumulative $2.2B at the domestic box office, a figure that could be beat in 2019 with a slate of Toy Story 4, Frozen 2, and Secret Life of Pets 2. If Lion King is included in this category statistically, 2019 will almost certainly pass $2.2B.

How can the industry fulfill demand?

With a seemingly sudden influx of demand over the past few years, the industry is struggling to keep up. Vince Pizzica of Technicolor says that the limiting factor today is availability of talent.

George Elliot, the head of Elliot Animation recently said in an Information article that he had turned down hundreds of millions of dollars of work because of a shortage of talent.

As we've seen with prior animation industry cycles, technology has created step-function changes in the industry at each inflection point. Whether this was during the golden age that benefitted from the advent of cel animation, the Dark Age which achieved scale from Xerography, the Renaissance which greatly increased pace and economics due to CAPS and digital ink and coloring software, tomorrow's animation industry will also benefit from a technological shift, and perhaps in an outsized way.

Chapter 7

Tomorrow's Technology

"Never in the history of cinema has a movie been entertaining to an audience because of the technology…It's what you do with the technology that makes it so special"
- John Lasseter

Face Tracking & Animation

hen looking at the future of animation we must look at "near-future" and "far-future" enabling technologies.

In the near-future we'll start to see technologies adapted from other industries enter into proper animation pipelines. This has manifested itself in things as widespread as technologies now seen in our mobile phones like face tracking, to our favorite video games like game engines.

Face tracking (and motion capture) has quickly commoditized away from just high-end, expensive tools all the way to camera-only solutions enabled by computer vision and machine learning. As consumers today, we animate 3D characters via our iPhones as well as collection of apps with just a camera (and in some cases a depth sensor). Both 2D and 3D animation teams are starting to do this more and more, bringing live actors into the animation process and significantly reducing the burden on animators.

Simpsons Live Switchboard
The Simpsons Live switchboard for Homer's body movements.

Fox alongside Adobe piloted this technology in 2016 with Simpsons Live. The Simpsons's team used Adobe Character Animator to rig Homer Simpson, pair him with a switchboard of head animations, and answer questions live from the audience using a live actor directly animating Homer on TV. Hilariously enough, in a 1997 episode of The Simpsons, Homer is told about how live animations for cartoons would be nearly impossible.

They have since taken this a step further by animating Cartoon Donald Trump and Cartoon Hilary Clinton on Stephen Colbert's show.

The ability to bring animation (the actual act of creating movement) and performance capture to real-time environments, with largely commodity hardware, enables a scale of creation that could be likened to the leap of original animation to Cel animation.

Real-Time Rendering

Digital production pipeline
A traditional digital production pipeline, visualized.

When reading about the production of the various 3D animated films of the years, one often hears about the time it takes to render each of these film's scenes.

The original Toy Story featured a 117 computer render farm that ran 24 hours a day and took around 800,000 machine hours to render, or 45 minutes to 30 hours per frame, depending on the complexity. In 2011 a Pixar employee said it took them about 2–4 minutes per frame, and today it would likely be able to be done in faster than real-time.

However while rendering old films has gotten easier, the films have gotten significantly more complex for studios such as Pixar, which claims Toy Story 4 took anywhere from 60 hours to 160 hours of rendering time per frame. But what if we can sacrifice some of this level of obsessive detail in exchange for reduced render time?

The digital production pipeline shown above is incredibly linear which leads to a lot of work being done before anyone gets to see a near production-quality level image late in the process. This leads to an issue where changes can become incredibly time consuming and difficult to make during the production process for 3D animated content. And while large studios like Pixar, with lots of resources (both capital and computational) will always push the envelope of quality, sacrificing nothing, and thus utilizing those vast resources, as many animators will tell you, not all content needs to be Pixar visual quality.

Over the past decade we've seen game developers continue to push the limits of their graphics capabilities on their hardware. This paired with the major game engine companies gaining experience working with real-time 3D CGI, some are starting to experiment with utilizing tools like Unity and Unreal in animation.

Featuring real-time rendering, a creator is able to see more representative images of their content in real-time. In addition, these engines have built-in packages surrounding things like object simulation (water, clothing), lighting, as well as post-production effects like depth of field and visual aberrations.

Filmmakers aren't all flocking to these game engines just yet, (though a modified Unreal Engine was notably used to render K-2SO in Rogue One: A Star Wars Story, as well as a scene in Finding Dory) but they could represent a way to achieve far greater scale and pace of creation. And already creators have made waves including people like Peter Monga, a New Zealand animator who is making a 3D animated series by himself using Unreal Engine.

Using Machine Learning to Scale Creative Processes

Digital production pipeline
An early pass of automated colorization of Astro utilizing an implementation of Style2Paints

Shifting to the further-future of enabling technologies, there has been lots of innovation over the past few years with machine learning models being used to help automate/augment creative processes. Machine learning has the ability to give scale to multiple parts of the animation process from inking of images to coloring to actual animation. We've seen lots of research come out of academia over the past 3 years as things like Variational Autoencoders (VAEs) and Generative Adversarial Networks (GANs) have become increasingly easy to work with and more people have recognized the value that ML could bring to animation.

At Shadows, the company I helped start through Compound (and which is led by Dylan Flinn and Corey Campodonico), we've spent a lot of time building, adapting, and experimenting with these tools. This includes the image above, which is an implementation of Style2Paints, an automatic line art colorization model, that we used to test automated colorization of Astro and Ralph early on.

Ralph Line Art Inking
Automated line art inking done to Ralph by Shadows

We've also run experiments with our own in-house algorithms, building a model to automate the inking process of other characters, being able to go from rough sketch, to clean, inked line art in seconds, giving our artists better speed to creation.

On the creative side we've seen researchers and companies build tools like these across the entire animation stack.

Despite many interesting implementations within research communities, the current bottleneck for experimentation across many of the machine-learning heavy approaches has been with training data. Specifically, for something as stylistically dependent and diverse as 2D animation, we've largely seen universities and researchers working on animation problems through the lens of Anime-style art. In fact, there is now an entire github repo dedicated to ML, for Anime papers. Anime has a gold standard dataset with 3.33M+ images and 99.7M+ tags to work from called Danbooru, but as we see an increased emphasis on creative ML, I believe we'll start to see more datasets published featuring western animation. In addition, things like domain transfer have allowed engineers to get good results out of pre-trained models with less novel data.

As ML continues to progress we can take a step further into the future and perhaps one day even start to heavily modify or potentially replace human creativity. 

AI generated faces morphing through latent space via Gfycat

Examples of this include earlier papers like Yi Jin's 2017 paper Towards The Automatic Anime Characters Creation with Generative Adversarial Networks which was the earliest paper that utilized GANs to generate high fidelity heads and faces of anime characters. We've now seen this progress with full-body anime character generation models, models that turns humans into anime style art, and more.

At Shadows, we even ran an experiment that generated new characters based off of some of our favorite animation styles and TV shows, to mixed success.

Simpsons Gans
Using GANs to generate images from The Simpsons Ideo, 2018

The generation of new characters with existing datasets outside of anime have also started to emerge. An example of this is when researchers utilized GANs to create new Flintstone scenes based off of text descriptions:

Flintstones scene generation GAN
Using GANs to generate novel scenes of The Flintstones from captions. Paper Here.

On a long-enough time horizon we could see this extending to pure storytelling whether that's through existing writing tools such as OpenAI's GPT-2, other models trained off of a corpus of a writer's data, and everything in between. The character design, creation, and storytelling process will become more heavily technological, it's just a matter of how "in the loop" will humans be forced to be vs. spending time on the actual creative thought processes that drive these decisions.

New Technology Comes From Within

The history of animation also teaches us that as new technologies develop, it is often built from within and then democratized over time. The various creative entities touching each side of film and TV have all started by building tools in-house that they needed to get their job done and push a technical limit, and then eventually opened up this software. 

Digital Domain gave the world Nuke, Pixar did the same with Renderman, and USAnimation eventually evolved into Toon Boom. That said, Pixar has notoriously kept Presto proprietary as they value the custom look and feel of its assets that make audiences recognize a Pixar film from just looking at it.

Chapter 8

Learnings & the Future of Animation

nderstanding the past and present of animation teaches us a few core lessons that seem to continually repeat in the booms and busts of the industry.

New Mediums Breed New Characters

New Mediums breed new characters
With each medium and era shift, new characters are born. Source: Dylan Flinn

As we look at each given era or cycle of animation, we start to see new characters and new IP born. Historically, these new mediums have brought new characters, and moving forward these new characters will bring new stories. 

Different characters give stories or absorb stories based off of what the world and thus the audience needs. During World War II, the country needed some levity from their beloved characters as we stared down the largest attack ever on US soil. In the 1990s and 2000s our country quickly was pushing social norms on public expression and found animation as an avenue to discuss difficult topics. Creators like Matt Groening, Seth MacFarlane, and Trey Parker/Matt Stone recognized the power and effectiveness of relaying these messages through their characters and their stories. And no matter what, as has been shown countless times over again, people will always want nostalgia.

The Next Peak of Animation

Bojack Horseman, Disenchantment, Big Mouth
Netflix shows Bojack Horseman, Disenchantment, and Big Mouth

You're going to get different kinds of animation for different kinds of audiences…Traditionally, adult animation has been for the young male audience. There's no reason why that should be. As that starts to pry open, you're going to see more experimentation of [whether] we can have animated shows for different types of audiences." 
- Raphael Bob-Waksberg, BoJack Horseman, on what's coming next in animation, Hollywood Reporter

This next peak of animation comes as creators start to realize that audiences are able to finally not recognize "animation" as an industry but instead as a medium for storytelling. Creators can now use this medium to their advantage versus as a limiting factor to push messages (and toys) to children on Saturday mornings.

The cultural relevancy of The Simpsons grew due to its early willingness to touch on political and taboo issues that few shows would. South Park took this a step further pairing the absurdity of the children with hyper-relevant, even more risque content. Today, a new wave of shows like BoJack Horseman and Big Mouth are able to use the connection that audiences create with animated characters to their advantage to highlight realities of life ranging from alcoholism to depression to puberty. Just as The Flintstones pushed boundaries by showing a man and woman in bed together, each of these shows (as well as films like The Incredibles, Wall-E and Inside Out) have garnered acclaim for pushing the boundaries of animation.

"Our goal is to tell stories that no one has seen but that everyone will remember." Netflix Animation
Miles Morales Spiderverse
Miles Morales from Spiderman: Into the Spiderverse

And this is merely the beginning of such a trend. The increased capital floating around the animation world will certainly lead to more content, but it also will lead to more diversity, leading to content for animation-starved, historically underrepresented (or niche) audiences versus a most-common-denominator approach for the past century. This has proven successful (albeit not without criticism) already in the past two years with the main characters of Spiderman: Into the Spiderverse (Miles), and Toy Story 4 (Bo) both being from historically underrepresented profiles within animation. Not only does the capital influx push the stories themselves but also as we saw with Love, Death, and Robots, the creative ambition of the new platforms can lead to experimentation even on the visual and technological aspects of animated content.

Disney Princess Selfie
A selfie from Wreck It Ralph 2 of Disney Princesses

One can compare this new wave of OTT players and their animation aspirations to the verticalization of TV channels that Turner embarked upon that led to the growth of Cartoon Network. Audiences will come for the show (Family Guy) and stay for the network (Cartoon Network). In some ways Netflix made this bet when they first commissioned House of Cards, and future networks will do the same. And these networks are large, powerful, and omnipresent with unparalleled scale of distribution.

New Distribution Methods Breed New Monetization

As new distribution methods and business models emerged throughout the history of animation, new scale and monetization opportunities opened up for IP owners.

Starting with the 1930s when animation moved from pre-feature film shorts to entire TV shows creating increased scale and a new monetization path for the early studios of the 1930s, to the wide-scale merchandising done in the 1960s-1980s, to the creation of Cartoon Network and Nickelodeon in the 1990s to the rise of DreamWorks Animation's IP allowing them to strike a deal with Nickelodeon in 2006 to develop their animated films into weekly series, and now with the future of companies like Katzenberg's mobile-focused Quibi allowing creators to have their cake (money for content creation) and eat it too (non-exclusivity, merchandising rights).

The invention of the internet, wide-scale high-speed connections, and smartphones have created a new wave of distribution methods and has infiltrated our lives at a level that no amount of television or traditional media distribution has before.

As consumers fill every void of their time with digital interactions and consumption, characters' reach only continues to increase. Netflix CEO Reed Hastings famously named Netflix's major competitor as sleep when he said:

"You get a show or a movie you're really dying to watch, and you end up staying up late at night, so we actually compete with sleep…And we're winning!", Fast Company, 2017

While we continue to fill this void with seemingly new apps every day, in reality the same major players (Facebook, Snapchat, Amazon) are commanding the majority of our attentive time, and they all have media plays that are heavily purchasing animated content right now. But what happens when the creators utilize this mass distribution to their advantage?

Today's Monetization & Astro

Meet Astro. Astro has an instagram account that he uses to document his life and tell stories. Astro also has previously sold t-shirts and a sticker pack, released music on Spotify, and even started a charity. Also, unlike many of the characters that came before him, he is able to interact directly in a 1–1 manner with his audience through text message, DM, or wherever they want. Astro's potential for scale and monetization is unparalleled.

Astro's scale, connection, and monetization is multi-platform and multi-disciplinary.

And giants like Amazon recognize this:

…certain shows could also help other aspects of Amazon's business. For example, "Pete the Cat" is based on a popular series of children's books, which are sold on Amazon. Music from "Pete the Cat" can also be streamed on Amazon Music.
"For the right property, it could live in lots of different areas in Amazon,"
- Melissa Wolfe, Head of Kids Programming, Amazon | LA Times, 2018

Animation is Influential

Bart Simpson, Mickey Mouse, Pikachu, Hello Kitty, Winnie The Pooh
These are some of the most influential and highest grossing media franchises of all-time.

In 2002 Bart Simpson was the only fictional character named on Time's 100 mosts influence people of the century.

More people recognize Mickey Mouse than Santa Claus in the United States.

The 4 most successful media franchises ever are all animated. From Pokemon ($90B revenue) and Hello Kitty ($80B), two properties that showed the early peaks in global characters, to Winnie The Pooh ($75B) and Mickey Mouse & Friends ($70B). 

The ultimate power and value of animated IP historically has been under-appreciated. Animated characters have the ability to tell relevant versions of the same story over multiple generations, like say that of a young boy in America in the case of Bart, or a group of toys trying to stay relevant in a changing world in the case of Woody and friends in Toy Story

These types of stories are allegories that allow this IP to mean something, or many things, to a wider range of people, for a longer period of time than most live actors are ever able to. Their stories, connections, and personalities are enduring.

Hatsune Miku
A photo of a Hatsune Miku concert

They also increasingly have the ability to tell the stories of their audiences. In 2007, Hatsune Miku, an animated pop star by Crypton Future Media was created using Yamaha's vocaloid software. While her voice is modeled after a certain actress and her personality is dictated by her creators, her music and surrounding storyline is largely crowdsourced. The stories she tells, emotions she conveys, and content she creates, enabled by technology, means something different to everyone. Hatsune Miku is quite literally telling a different story imagined by a different person each time. Or as Linh K. Le puts it in his paper on the rise of Hatsune Miku:

"When these songs are performed on stage, fans feel as if they are celebrating the success of someone they see as being one of them. In this perspective, Miku is not so much a virtual pop-star but rather a symbol of the collective efforts that culminated in a concert-style celebration."

Hatsune Miku is rumored to have sold over $1B worth of merchandise since her inception.

Technological innovations on the creation side and distribution side of the business are only going to continue to increase, allowing for deeper, more targeted content to be created and scaled across economic models that will work for both individual creators and large studios. The same growth mechanisms that have resulted in the rise of massive technology companies, at a faster rate than ever before, and at unparalleled scale and efficiency, will apply themselves to the animation industry. It is very possible that we look back at this time as having a massive misunderstanding of the potential influence that animation can have, and the value associated with that influence.

But while each technology breakthrough leads to new mediums which leads to new characters, in the end, the animation industry will live and die in the hands of creatives telling stories. The types of creatives that are continually willing to push the boundaries, build a parachute on the way down, and tell a story.

"The most powerful person in the world is the storyteller. The storyteller sets the vision, values, and agenda of an entire generation that is to come.
- Steve Jobs

Written by: Michael Dempsey


Important things I left out

While writing, there were multiple points that for whatever reason did not make it into the main piece. Including:

Warner Bros Cartoons

Warner Bros

I give far too little context on Warner Bros relative to their overall success within animation. After incredible success as the Warner Bros Cartoons studio, they shut down in 1969 due to the rising costs of animation we saw in the 60s and 70s. Their success is due almost entirely to the Looney Tunes universe and after a reboot, Warner Bros. Animation reopened in 1980. With a history largely rooted in short films, they moved into TV animation in 1986 and began adapting tv shows from the IP from their sister company DC Comics such as Batman, Superman, and the Justice League. After the success of The Lion King, they made their first feature film, a live action/animation hybrid featuring Michael Jordan called Space Jam. The animation group intends to make what's old, new again by releasing a Space Jam sequel featuring Lebron James in 2021, as well as a new series surrounding the Looney Tunes later in 2019.

The Hays Code

Mickey Mouse Bonds Poster
Source: Cartoon Brew

The Hays Code was a set of film industry moral guidelines that started to apply to animation heavily in the 1930s. Because of the prohibition of explicit material in all films, animation creatives got heavily censored and some believe unfairly targeted because the medium was incredibly child-friendly. Some believe that this was the origin of how animated content was largely stuck as a child-centric medium for decades until The Hays Code ended in 1968 and films/tv were allowed to portray more adult content.

The Disney Union Strike & Animation Residuals

Working conditions for labor within animation have continued to be an issue, however the unionization and strike in 1941 of Disney's animators was devastating. Disney famously gave this speech to his employees after the artists attempted to unionize in an effort for more equal pay.

"In the 20 years I've spent in this business I've weathered many storms. It's been far from easy sailing. It required a great deal of work, struggle, determination, competence, faith, and above all unselfishness. Some people think we have a class distinction in the place. They wonder why some people get better seats in the theatre than others. They wonder why some men get spaces in the parking lot and others don't. I have always felt, and always will feel that the men that contribute most to the organization should, out of respect alone, enjoy some privileges. My first recommendation to the lot of you is this; put your own house in order, you can't accomplish a damn thing by sitting around and waiting to be told everything. If you're not progressing as you should, instead of grumbling and growling, do something about it."

The speech did not work, led to massive layoffs/a talent exodus which resulted in a fall in quality at Disney as the studio lost over 400 employees.

In 1969 Hollywood animators also demanded residuals similar to those that voice actors and writers got for their content. They lost and to this day animation artists still do not get residuals on their work.

Pacific Data Images (PDI)

PDI was a computer animation production company and one of the other main pioneers of computer animation with Pixar. PDI spent most of their early history doing work for network TV productions and visual effects until 1990s when they entered into character animation. Similarly to Pixar, they got started making a series of critically acclaimed shorts, before eventually doing 3D character animation for Daffy Duck and Homer and Bart Simpson in 1995. After a decade of searching for a partner to make a feature-length film with, they found an energetic and possibly desperate Jeff Katzenberg (via Dreamworks) as a partner, to make the movie Antz. Dreamworks bought a 40% stake in PDI as part of the partnership, and followed that up with Shrek in 2001. Eventually the company was rolled into Dreamworks Animation and became PDI/Dreamworks. After a series of failures for Dreamworks Animation, the company downsized and completely shut down PDI/Dreamworks in 2015.


Nickelodeon followed a very similar path as Cartoon Network both in the way that it brought us some of our favorite animated TV shows ever like Doug, Ren & Stimpy, Rugrats, Hey Arnold, Rocket Power, SpongeBob SquarePants, and more. The funny fact about Nickelodeon was that while it started as a "kids only" channel in 1972, it didn't have original animated programming all the way until 1991!