The Secret Money Makers of the VFX and Animation Industries
If someone asked you what animation studios do, your first answer would probably that they make moving images. After thinking for a moment, you might also note that some studios also write stories and develop characters that have value as intellectual property. There is a third thing animation and visual effects studios do that is easily overlooked, which has immense strategic and economic value: they develop new technologies. This is true of animation and VFX studios throughout history, but this trend has been intensified by a “Hollywood meets Silicon Valley” way of thinking that has proliferated since the 1980s. Using data from the U.S. Patent Office and IMDB, I set out to investigate the role of technology IP in these industries.
Click on the link below any of the following images to get an interactive graph.
Findings
Looking at every patent claimed by an animation or VFX studio, it quickly becomes clear that one studio has been leading the way. Barely any studio other than Pixar was awarded patents before 2000. Yet by 2013 65 patents were awarded to various animation and VFX studios.
2004 Was the First Big Year of Patents in These Industries
Between 2002 and 2004 there was an abrupt jump is total patents earned within these industries as more and more studios started filing. The drop-off in 2015 is likely the product of bureaucratic lag time, as all entries in the patent database show the same trend.
Large (But Not the Largest) Studios Control the Most Patents
There has been a consistent trend that studios with 1001–5000 employees get the most patents. This may be a way for larger companies to maintain market dominance. R&D requires substantial investment that smaller studios simply cannot afford. These figures are also clearly influenced by Pixar’s patent dominance.
Large Animation and VFX Studios Claim Comparable Numbers of Patents Compared to Game Studios
The importance of technology IP is more obvious for an industry like the video game industry. Games are software products, after all, and larger studios frequently develop their own game engines that act as the technical substrate for several games. Yet the ownership of patents between these industries is similar when you factor for scale. Activision, one of the largest game publishers, has been awarded about 230 patents since they started in 1979. That is comparable to Pixar’s 354 and greater than Dreamworks’ 104. Take-Two Interactive, another large publisher, has 25 patents. When you consider that Take-Two and Activision have approximately three and six times the annual revenue of Dreamworks respectively, the animation industry certainly seems on pace with video games.
Conclusion
These graph do not show us all of the technological research being done by studios. For one, the patents may have been registered to larger conglomerated corporations, individuals, or holding corporations. Also, studios may choose secrecy over the U.S. patent system if they do not plan to license their technology or if they are weary of intellectual property theft, especially from countries that do not have robust legal enforcement. Even with this minimal glimpse into technological research we can see that the animation and VFX industries are very much technology industries. The importance of technology development and ownership in these industries is commensurate with more obviously tech-centric media industries like the video game industry. These findings support research I have done using studio annual financial reports for a forthcoming book, which shows the importance of R&D for large studios.
Data Sources and Methods
I started with two large lists of records from the U.S. Patent office with information going back to the 1970’s. Using the Pandas library for Python, I merged them together because one had dates, the other had patent holder names, and both had patent numbers. I then sourced a list of the largest animation and VFX studios from a website for industry jobs seekers called Studiohog.com, which used company size data from Linkdin. I used this list to search the patent database. Searching the database is difficult because it is nearly 50 years old and as a result it is very inconsistent. The names of patent holders often change in subtle insignificant ways. This required me to search by “contains,” rather than an searching for an exact match, which returned several false positives. For example, the term Pixar appears in the company name PIXART, a Taiwanese technology company. My solution for this was laboriously going through the data and pruning irrelevant entries.
Using a relatively short list of studios has its drawbacks. Because I used a contemporary list of studios, I did not record any early studios that won patents but then went out of business. As I noted, this also does not count all of the technologies companies have kept secret, or have not tried to legally claim ownership of. It does, however, show that developing and owning technologies is an important part of contemporary studio practices.
This article is part of a series on the special effects, visual effects, and animation industries. It is based on research supported by:
Le Fonds de Recherche Québécois sur la Société et la Culture Postdoctoral Fellowship
The University of California, Berkeley’s Department of Film & Media
Photo credit: Still from Spider-Man: Into the Spider-Verse (Sony Pictures Animation 2018)
