Europe Toons In

As producers and distributors descend upon Annecy to tout their new projects, Mansha Daswani checks in with some of the region’s leading IP owners about the health of the animation sector.

Europe’s animation business is certainly not immune to the seismic shifts reshaping the global kids’ sector, from a change in priorities at the streamers to macroeconomic headwinds to children just not consuming content as they used to. However, the executives I surveyed for this piece indicate that the region has a fair bit going in its favor, including a robust pubcasting ecosystem that continues to commission high-quality fare for kids and a reliable government funding infrastructure.

“I think there’s a growing confidence in the European animation industry and a wish to foster and encourage more great, ambitious content and local talent,” observes Emmanuèle Pétry, producer and head of distribution at Dandelooo.

“Overall, European animation is gaining recognition for its unique storytelling and artistic quality, resonating with children and family audiences worldwide,” agrees Oliver Grundel, Director Junior at ZDF Studios. “There’s a noticeable trend toward more inclusive and culturally rich content, along with a growing interest in educational and environmentally themed animation.”

Sophie “Kido” Prigent, head of distribution at HARI, notes that European producers continue to succeed glo­bally with animated projects, especially known IP like the com­pany’s own Grizzy & the Lemmings. However, content creators are still feeling the pinch from the global slowdown in the industry.

“Service work flourished in Europe during and post-Covid,” Prigent continues. “Some studios increased their capacity to respond to the initial orders and general market trends, but they are now impacted by the budget cuts and fewer commissions from the U.S. players such as Disney, Netflix and Warner Bros. Discovery.”

Given a commissioning cutback driven by the global streamers, “many producers have turned back to public and private broadcasters and co-producers to finance their shows the traditional way,” explains Morgann Favennec, deputy managing director at Mediatoon Distribution, the distribution arm of Média-Participations. “Co-productions have always been the DNA of the group between French-based Ellipse Animation and Belgian Belvision. Adding a new member to the family, Studio Campedelli in Italy, reinforces this strategy even more.”

European pubcasters are increasingly pooling their limited resources to get shows off the ground. “For many, European PSBs have been the steadiest partners lately,” says Prigent. “They are still considering fresh original content and innovative storytelling. They are also on the lookout for hits and are strong partners for consecutive seasons if the show delivers good ratings, as competition is fierce and linear viewing figures are in decline.”

Grundel expresses a similar opinion: “To manage the costs of premium content production, there’s a noticeable trend toward increased collaborations and co-productions. Co-productions will remain key to our business, allowing us to combine resources, expertise and creative talent for more ambitious projects.”

Pétry adds that Europe’s public broadcasters are “fully aware of the financing challenges producers face and are now savvy on developing and producing series that work along their mandates. We have reached a kind of ‘golden age’ on the editorial side that nicely balances PC requirements, S&P rules and humor.”

Unlike North America, the region also boasts a well-developed system of tax breaks and funding programs such as Creative Europe MEDIA.

“The government funding ecosystem has been crucial in helping European animation companies navigate the current market challenges,” Grundel says. “Various funds and grants from national and regional governments and initiatives like Creative Europe provide essential financial support that helps studios mitigate risks and maintain production levels. This funding is particularly important in the face of economic uncertainties and the increasing costs of high-quality animation production. Government support has allowed our partners and us on several projects to continue innovating and producing content that might otherwise be unfeasible due to financial constraints.”

“Producing new shows would be possible without their support, but the level of quality would be very different, and thus the exportation potential much lower,” says Favennec.

The Upside Down River would not have been financed if MEDIA did not exist,” Pétry says. “We are very thankful and proud to be European. It’s the same for our French CNC, which many countries envy; our audiovisual and cinema industry would not be the same without this virtuous system.”

ZDF Studios’ Grundel adds: “More countries are deploying animation tax incentives to attract co-production opportunities. These incentives make producing animation in certain regions more financially viable by reducing the overall production costs. Countries like France, Ireland and Spain have been particularly proactive in offering attractive tax credits and rebates. These incentives attract foreign investment and encourage local talent development and employment. As a result, we are more inclined to consider these locations for our projects, benefiting from both the financial incentives and the burgeoning local animation ecosystems.”

But the region’s producers need more support, HARI’s Prigent says, “given the difficulties of the international market now. Subsidies for versioning in different languages, for example. Or for greater access to ratings that aren’t shared and are costly to access via organizations such as Nielsen and Médiamétrie.”

The market is tough right now, especially when it comes to getting new ideas off the ground.

“The streamers have strongly decreased original commissions in animation, and there are more and more companies trying to produce animation,” Dandelooo’s Pétry says. “It obliges the producers to turn back to the ‘old model’ based on the public systems. France Télévisions receives between 800 and 1,000 offers every year, and the BBC tells me 20,000 per year! To stand out, our projects must be exceptional and essentially need to be ‘must-have’ for broadcasters. This emphasizes the importance of quality and originality in producing animated content to secure commissions in this competitive landscape.”

Prigent says the market is “tighter” amid increased competition for limited slots. “It’s easier for IP owners who have established relationships with broadcasters and where there is a history of strong IP performance. That can be tough for newcomers.”

ZDF Studios’ Grundel adds, “Budget constraints have led broadcasters to become more selective in their commissioning choices. Collaborations and co-productions have also become key strategies to secure commissions and share the financial burden. It has been more challenging and has perhaps taken longer than usual. Still, it hasn’t been impossible, so we are happy to say that we were able to maintain our number of project developments in the challenging past years.”

The other silver lining is a bump in acquisitions as broadcasters and platforms find ways to do more with less. “There has been a noticeable increase in the acquisition of existing animation content,” Grundel notes. “Broadcasters and streaming platforms are looking to fill their programming schedules without bearing the high costs of new productions. If cost-cutting becomes necessary, series reruns could also be an alternative. This trend has led us to prioritize offering renewals on expiring licenses to our partners and pointing to our robust library of high-quality, marketable, localized content that can be easily acquired and distributed. Acquisitions offer a more immediate and cost-effective solution for content providers, allowing them to quickly meet audience demand while maintaining a diverse and engaging programming slate.”

Indeed, having a diverse catalog of scale is increasingly important in an environment like this one. “Because of mergers and buyouts and cancellations by streamers, demand focuses mainly on IPs and well-established (with multiple seasons) brands, making introducing new projects a little more challenging,” Mediatoon’s Favennec says. “We are in a good place as the group counts 85 companies, the majority of which are publishing houses constituting a real IP treasure.”

Channels and platforms “are relying on proven hits, franchises, long-standing brands and reboots,” Grundel says. “This trend benefits established IPs. However, maintaining a balanced portfolio requires nurturing new IPs that have the potential to become future classics.”

And on that front, Annecy/Mifa hopes to deliver this year as it cements its position as a key platform for launching new projects and nurturing the content creators of tomorrow. “We have 4,000 animation students coming to Annecy,” says Mickaël Marin, CEO of the Annecy Festival. “We want to have them in the event because tomorrow they will be in the industry as the next producers, animators and directors.”