“Production is the holiday, finance is the hard bit”. An expert panel at the Animated Encounters festival explored preparing for international markets and quickly focused on the structure of financing, with international co-production labelled as “the relationship of last resort” despite being almost the only way of financing animation of any scale.
But even with the acknowledged difficulties in adding co-production partners, from managing relationships to impacts and compromises on editorial, there was a pragmatic recognition that to make a large animation at present requires some kind of subsidy or soft finance to close the budget gap due to the expense of the medium.
This was highlighted by the panellist from Cartoon Network who stated that his commissioned programmes will nearly always have one partner from a country offering a tax incentive, for example France, Ireland or Canada. Other UK producers I have discussed this with also contrast their attempts to leverage rights and relationships against the ability of French or Canadian partners to bring major finance. In addition countries such as Abu Dhabi and Singapore have the potential to offer significant investment in order to generate advantageous activity for their homegrown industry.
This position has reignited a debate within animation (with parallels in the film world) on the viability of a UK business where soft finance distorts the market and results in the reluctant offshoring of jobs and production revenues – but is the only way to get a programme made given limited commissioning income potential at home.
A newly formed group, Animation UK, recently wrote to Nick Clegg highlighting that the UK industry was facing a serious problem, “losing jobs, intellectual property and money paid in taxes” due to its inability to compete internationally against subsidised producers from, for example, Canada. As well as the economic impact of a shrinking industry and talent drain to global competitors it also highlighted the cultural impact – where British children are watching, in the main, imported content.
But in the short term it seems highly unlikely that the UK Government would consider a tax break for animated content, and the industry will continue to increasingly reflect the converging world.
The ability of animation to “travel well” and translate across secondary platforms (mobile, publishing, merchandise etc) is already internationalising the industry. And whether co-production against rights, local incentives or cost control through outsourcing (i.e. to China), in some ways it is becoming the media most reflective of a globalised economy – with all of the opportunities and threats which go along with that.