The Animator's Guild blog (TAG Blog authored by Steve Hulett) keeps a pretty good eye on the wheelings and dealings of finances in animation. They recently posted a note about the independent Imagi Animation Studio. They're the folks who brought you The Teenage Mutant Ninja Turtles movie a year ago. Their creative efforts are run out of LA, while production is based in Hong Kong (as well as outsourced to other vendors, like ReelFX). Turns out they're in a bit of a cash pinch. They need 'additional funding' just to get through production on their latest film. At their current levels my guess is they run out of money by March and they'll need to get some loans to carry them through. Well, in the old halcyon days of 2007 that'd be an easy thing to pull off. Credit was cheap and plentiful. Now? Uh.. not so much. Credit across the world has ground to a halt. Seems that offering super easy and cheap credit wasn't exactly a great idea to begin with. Who could have known that giving loans to people without the ability to repay them would result in significant financial losses? Heh. Gotta love hubris. It provides entertainment (even if in this case it's not 'cheap' entertainment).
Anyhow, I expect to see fewer and fewer independent animated films getting made in the next few years. Film projects from folks like Imagi, Vanguard, Weinstein, etc. will have a very difficult time getting funding. These films live and breathe on outside money. I don't know what Laika's finances are like, but they recently shut down their second film and laid off a number of folks. My guess is they're waiting to see if Coraline pays off. Reminds me of what happened at Blue Sky after production wrapped on Ice Age. Fox pretty much went skeleton crew while they waited to see if Ice Age would make enough money to justify keeping the studio going. I don't know if that's the case at Laika, but from this corner of the internet that's what it looks like. Phil Knight has deep pockets, yes- but he keeps those pockets deep by not spending his own money if he can help it. Which is standard operating procedure in Hollywood. Use other people's money as much as possible. That plan works when people's investments are doing well and they're looking for more. It doesn;t work so well if they've lost almost half their money in the last year and they're focused on avoiding further losses. Investors want nothing to do with risk right now, and there are few investments riskier than films. Last year I wrote that hedge funds were going to get beat up and as a result you'll see fewer films getting funded that way. Well now hedge funds aren't getting beat up, they're getting murdered. Losing tens of billions of dollars by investing in a giant Ponzi scheme (ie: Madoff- a more appropriate name never existed) has a tendency to put a pinch on the purse. Investors asking for their money back magnifies that.
The good news is that so far Disney, Fox/Blue Sky, and Dreamworks are mostly self funding enterprises. Not so sure about Sony, though. They've been wishy-wahsy on their animation studio the last year or so already. A lacklustre result for Cloudy With a Chance of Meatballs might convince them to throw in the towel. But the other big animation studios- as long as their overall film businesses make money they'll be able to make animated movies.
What does this mean for us lumpen down here on the bottom of the foodchain? Animation jobs will still exist, but competition for those jobs will heat up even more. But even if you have a larger studio gig, don't get complacent. Being in a larger studio is no guarantee, either (ask the Bolt crew). The indy film market has been a real blessing over the last 4 years to a lot of animators looking to get into film. Screen credits, experience, nice shots on the reel, opportunity, paychecks, etc. I'm guessing as the next year unfolds it will be a little tougher to get work as projects wither for lack of financing. 2010 will be worse. There's a 9-12 month lag between funding greenlight and production.
While I don't follow the games side of the biz that much, it seems to me that it will probably be the same over there. Big AAA+ titles made by the giant producers will still hum along, but smaller, less well capitalized efforts will hit a dry patch.
If you have work now, do yourself a favor. Start saving. A lot. You're gonna need it. And if you have any other employable skill, keep that sharp. You might end up doing something other than animation for a while. And keep animating- even (especially?) on your own time. Atrophy can happen pretty quickly if you're not staying in practice and you can fall behind before you know it.