Industry Updates

Investing In The Future Of Animation

31 May 2013

By Paul Meyer, Managing Director at Luma

Being taught to invest in our future is a mantra familiar to so many of us from our childhood and adolescent years.  And along the way, so many influential people – be they parents, guardians, teachers or even early employers invest both their time and effort, playing such a vital role in helping us achieve success. 

However, as we get older and are possibly faced with our own choices around potential investment opportunities, we are often very selective as to the placement of our investment, particularly financial, as a single decision could determine either a huge gain, or possible loss.

Of course all potential investment opportunities will look good at the outset, but every investor wants his investment to be de-risked as much as possible. Digging a little deeper and finding out a little more, not only regarding current opportunities but perhaps looking further afield at new areas that are not only exciting, but proving their worth when it comes to return.

The world of animation is proving to be such an opportunity. Encouraged by the success of international animation houses such as Pixar Animation Studios and DreamWorks, many investors are considering getting their foot in the door.

But, what about our local industry? Can South African animation studios compete with their international counterparts, delivering quality product ultimately resulting in quality investment opportunities?

Yes, but only if the right investor is paired with the right studio. Only the correct partnership can guarantee a return on investment and in addition can lay a strong foundation for future successful projects. 

An excellent example of this is Pixar and Steve Jobs who put 50 million Dollars into Pixar before they made Toy Story and drove their growth, eventually making the 7.4 Billion Dollar deal with Disney buying them in 2006. 

Correct partnerships would not only create sustainable jobs and in that benefit the local economy, but go on to place South African studios on the map and allow them to compete on the international playing field. 

But the opposite can also apply. Partnerships that are not thought out and initiated correctly may not be successful. This will result in a negative impact on not only the investment community, but potentially the global reputation of the South African animation industry.  Therefore, as a potential investor, it is so important that before you invest, investigate!

Some key areas to think about/ consider before signing on the dotted line:

Producing quality animation does not happen overnight.  It takes time, skill, experience and most importantly, funding.  As an investor be wary of studios who despite having no experience in the world of animation, make great claims about how they will make the next block buster and all at a fraction of the cost.  It costs money to make money and this is particularly true in the world of animation.

Knowledge is power. The security of understanding your investment, gives you, as an investor, the surety that you are making the right choice. Animation is a niche market, one that not many understand. Therefore, as a producer I would recommend that investors do research on potential producers and directors.

Look at their track record within the animation industry. Have they produced a profitable product? Did they stay within budget?  Walt Disney was famously quoted saying ‘It takes 16 years for an artist to become an Animator.’ In order for your blockbuster to be just that, your producer/ director of the project should have real experience and not be someone who is going to build their experience with your money.

Animators by nature are creative forward thinkers, who are passionate about their art.  But it is those, who in addition to their passion are able to support their cause with concrete research and tangible results that you are wanting to invest in.

The world of animation, and movie making in general, is clearly gathering momentum – with government support through various initiatives both locally and internationally.  

The South African Department of Trade and Industry have made available a package of rebate incentives geared to both promote and aid our film and post-production industry. 

Whilst the  National Film and Video Foundation enables industry players to apply for funding focused on the areas of education and training, marketing, distribution, development and production.

This trend continues further afield in China (Chinese animation industry reached an estimated 60 billion Yuan (US$ 9.4 billion) during 2011), whose government has pledged to offer more favourable financing policies, with the aim of both improving China’s animation industry and increasing output.

The world of animation is clearly a fast growing industry supported by the local and international movie goer, industry and governments alike, making it an attractive investment opportunity definitely worth considering. 

About Luma
Luma, established in 2001, is one of South Africa’s leading Digital Content Creation (DCC) studios, servicing primarily the local advertising industry. The studio is owned and operated by Paul Meyer and Gerhard Painter who have recently received a series of local and international industry awards for character animation in commercials, photo-realistic visual effects and motion graphics design.

As specialists in this arena, the studio offers stereoscopic or 3D imaging, with shared ownership and additional offices in San Francisco and Portland, USA. Luma has produced high end games for PC, Mac, iPhone, iPad2, plus the Web and latest mobile platforms.

Luma’s reach of clientele spans Australia, India, the UK and Europe, to the West Coast of the United States and covers prestigious brands such as Aquafresh,  Microsoft, Coca-Cola, Google, Apple, Nokia, LG, Samsung, Kellogg’s, MINI, Nestlé, Garnier, Sunsilk, Toyota, Ford, Nissan and Renault.

Telephone: 011 463 5250

Dummett & Co.
Telephone: 021 418 2466