So How Do Animation Studios Make Money? – The Answer

You may have delved into how animation studios operate and witnessed the amount of effort into every animation project and wondered, “How do animation studios make money?” You may have wondered, “How do animation studios make money if this has happened to you?”

You are most certainly not alone in your feelings. While millions of people love viewing animated films and television shows, only a small number of them are familiar with the fundamental processes of the animation business.

We must also consider that several animation studios exist and that they do not all function in the same manner.

This is particularly true since increased internet visibility and remote cooperation opportunities have provided these studios with new avenues for raising funds for their projects.

We’ll look at a number of those choices today and the more conventional methods of generating revenue for studios.

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Selling Projects to Distributors 

Okay, this one is perhaps the most obvious of the lot. Animation studios may make money by selling their work to distributors, streaming platforms, and other third-party businesses.

Work on an animated film may begin before the film’s production company has sold the concept to anybody. The prospect of releasing the picture independently has been discussed, although independent releases often draw a very tiny audience.

Selling a film to a large corporation, on the other hand, could result in a significant increase in the number of people who see it, as well as the giant corporation paying the animation studio a considerable sum of money for the project. However, the exact amount would be negotiated based on the studio in question and the projected viability of the film.

For example, if an animated picture is in the midst of production, a more prominent firm may give more funds to guarantee that the studio can finish the movie.

This is, by far, the most popular method of generating revenue for animation companies.

Crowdfunding

Crowdfunding is one of the financing methods available to animation companies nowadays. Sites like Kickstarter and Indiegogo allow producers to propose a project and ask ordinary people to contribute money to help finance it.

Crowdfunding would be a far better choice for a completely new animation company than for an established firm with many name recognition.

In another way, Studio Ghibli should refrain from launching a crowdfunding effort. They have various options for getting the money they need, including their savings.

On the other hand, if a small group of amateur animators wants to make their first feature film and needs funding, they could quickly get the funds they need, if not more, from internet admirers.

Merchandising

Have you ever heard the advice that you should purchase their t-shirt rather than their music if you want to support a band?

This reflects an awful reality for people and businesses in the creative sectors. Making something and selling it isn’t always the best method to gain money from your efforts.

Musicians and animation studios often need to collaborate with many more organizations that handle distribution, streaming, and other services. Those larger companies nearly always get the better deal.

As a result, even if a consumer pays $10 to watch a movie by their favorite animation company, the studio may only get $3 or less. Revenue sharing differs significantly from one company to the next.

But all of this suggests that many animation studios will need to find new ways to commercialize their work, and merchandising is one of the most effective ways.

If there are cute characters in a popular animated film or television show, making merchandise based on them is a terrific idea.

Depending on how the studio makes and distributes the product, they may be able to earn more money from it than they did from the original release.

Let us use Studio Ghibli as an example once again…

Ghibli is one of the most well-known animation companies globally, and many fans believe its classic films to be timeless.

Furthermore, many of those great films include adorable, well-designed characters that are both charming and aesthetically attractive.

This is the best formula for merchandising success:

1. Millions of people adore these films and personalities.

2. When designing items, there is a wealth of source materials to choose from.

3. Because a large percentage of the following is now older, they are more likely to have more cash to spend on items.

Commissioned/Sponsored Work 

For smaller animation studios, I am starting another feature-length film directly after finishing a feature. 

Depending on how the previous movie performed, the studio might not even have enough money to start a new project. 

So what can a studio like this do to bring in some more cash? One standard answer to this question is taking commissions or completing sponsored work for various clients. 

Have you ever seen an animated commercial or just a commercial or website with animated elements? 

Even relatively small jobs like these can bring in lots of money for an animation studio that needs a cash injection. 

There are so many small animation jobs out there, and if an animation studio can point to some high-quality work that they’ve done in the past, they’ll have an easier time courting clients. 

If clients are satisfied with their work, it could lead to some very positive word of mouth, leading to even more commissions. Animation studios can survive entirely on these kinds of jobs, and in fact, there are some studios out there that specialize in this type of work from day one. 

While commissioned work for advertising or branding may not be the most creatively satisfying animation project for some animators, there’s no denying that this can be yet another way to make some money, especially in between larger projects.

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