THE Philippine animation industry could grow to optimum levels if fiscal incentives, training, consolidation and entry of large third-party studios are present, a study by Tholons Inc. bared.
“Tholons remains optimistic on the delivery capabilities of the Philippine animation industry, and the market opportunities present for the sector. However, Tholons proposes that in able for the industry to accelerate the pace of change and development—decisive [and immediate] interventions must be taken by all concerned industry stakeholders,” the company said.
In its “Industry Sector Update: Philippines Animation Industry” report, Tholons said it forecasts a 6.6-compounded annual growth rate in the Philippine animation industry revenue in five years beginning next year.
The India-based outsourcing consultancy firm forecast revenue to hit $145 million next year if the animation industry receives fiscal incentives and training programs.
Tholons forecast the industry to post a $132-million revenue for this year, an incremental rise from the $131.5 million the animation sector posted last year.
“This was roughly the same figure reported in 2012 and projections for 2014 show a similar total,” the company said.
Tholons added that revenue figures from 2011 to 2014 “indicate stagnant movement, while growth from 2008, show a tepid 10-percent increase in revenue generation.”
“Both trends are indicating a growth plateau.”
Citing data from the Animation Council of the Philippines Inc. (ACPI), Tholons said revenue generated by the industry last year came largely from freelancers ($11.6 million), schools ($2.5 million) and vendors ($2.5 million).
The company said this revenue and revenue-share situation would remain if “little or no developmental intervention is provided to the industry.”
“This scenario somewhat mirrors and extends the industry’s current developmental path, where the sector and industry players are left to fend for themselves to fuel growth.”
Tholons calls this as a “passive” scenario, wherein “external intervention, whether from government or private sector, are minimal.”
“The ecosystem is composed of few large players, a multitude of smaller providers, and the largest players are often captive [in-house] studios. Local and/or original content is not created as funding is scarce. Independent service providers [freelancers] are also a faster growing segment than the formalized group, with freelancers offering a wide-gamut of animation and creative-related outsourced services.”
The company said this scenario would have an expected revenue per full-time employee (FTE) showing the beginnings of a steady decline, “as the growth of supplier markets globally, from both freelance and formalized segments, increases.”
Citing ACPI, Tholons said total industry headcount was estimated last year at standing nearly 9,500 FTEs, composed of freelancers, school-based animators and vendors. Most of these, to note, are employed by the 56 registered member-companies of ACPI.
“Continuing the growth patterns of the previous five years, revenue growth in the long term for the ‘Passive Scenario’ is flat.”
An alternative scenario is one that is progressive, according to Tholons.
But to accomplish this—to accelerate the pace of change and development—“decisive [and immediate] interventions must be taken by all concerned industry stakeholders.”
“There must be a concerted change in mindsets, where the focus graduates from ‘potential and opportunity’ toward ‘action and accomplishment.’”
Tholons added: “Without this required shift, the developmental path of the industry will continue to stagger on its tepid pace.”
Tholons recommends the Philippines review its “old mantras and, if not applicable in today’s creative outsourcing market, discarded.”
“The adage of having an ‘inherently creative and artistic’ talent pool, are fast becoming irrelevant,” Tholons said in its report.