3D Animation Market

Market Overview

The global 3D animation market size was valued at USD 21,462.93 million in 2022. It is estimated to reach USD 55,349.72 million by 2031, growing at a CAGR of 11.1% during the forecast period (2023–2031). The increased use of visual effects in movies and customer demand for high-quality content stimulate market growth.

The process of bringing digital things to life by giving the impression that they are moving through three dimensions is known as 3D animation. These computer-generated objects are designed to simulate the characteristics of a three-dimensional world, even though they are displayed in two dimensions. They give the impression of moving, turning, and rotating like a physical item, enabling a 360-degree view from all angles.

 Producing animated three-dimensional visuals in a computer setting is known as 3D animation. These images were produced using 3D software, which enables animators to produce digital things that appear three-dimensional despite being on a two-dimensional surface. Animation professionals can make anything appear moving in an advertisement across three dimensions, from a video game character to an automobile. This is done using visual effects and exact timing. Initially, 3D animation was mostly utilized in video games, television, and film production. "Toy Story" by Pixar is a classic example of 3D animation. Today, a far wider range of digital environments use 3D animation. 3D animation can be used for various things, from marketing materials to medical imaging.

Market Dynamics

Global 3D Animation Market Drivers:

Increase in Use of Visual Effects in Movies

Visual effects technology is essential in a movie since it supports the plot and characters. It aids a director in effectively completing the difficult and expensive portion of the film. Additionally, it has become a vital component of the movie business because animation benefits filmmakers and audiences. For instance, the 2014 film Interstellar has 850 visual effects shots with a 5600x4000 line resolution. Digital projectors were used to make 150 shots on camera, and another 700 were made in post-production. The modern international film industry has also embraced allocating a larger budget for animation than for the cast. A movie's budget can range from USD 20 to 50% for animation or USD 40 to over USD 100 million.

Additionally, it has been noted that a single animation sequence might cost anywhere between USD 10,000 and USD 60,000. The key factors driving the market expansion are the rising demand for animation in the media and entertainment sector and the usage of VFX techniques to lower the compensation of financial professionals. The market for 3D animation is expanding due to this evolving standard of using more visual effects in films.

Increased Customer Demand for High-Quality Content

Filmmakers demand high-quality movies with realistic animations and visual effects due to increased demand from customers worldwide for engaging high-definition visual experiences. The number of movie animation shots is increasing across numerous entertainment studios. Additionally, the demand for animation and visual effects content has significantly increased to fuel immersive experiences like AR and VR.

People watch more video material outside multiplex theaters on platforms such as big-screen 4K or ultra-high-definition (UHD) TVs, tablets, and smartphones. The growing use of digital video content platforms has increased the demand for rich material and all kinds of animation, necessitating its use. This has inspired leading video streaming service suppliers to adopt cutting-edge technologies like virtual reality, 360-degree, and light-field capture, which employ visual effects. Production companies are forced to include animation in their movies and television shows due to increased content production by video streaming services. The popularity of smartphones, laptops, tablets, and smart TVs has also increased, accelerating the expansion of the digital video streaming services market. These elements fuel the worldwide market's expansion.

Global 3D Animation Market Restraint:

Presence of Free and Open-Source Animation Software

Free and open-source visual effects software is anticipated to restrain market expansion. Currently, there are several free programs on the market for 3D animation, including Hitfilm Express, Fusion 8, and Blender. Nearly 84% of the animation and VFX business, particularly in animation and visual effects, employs open-source software, according to a 2018 poll by the Academy Software Foundation (ASWF) in the US. Such freely available software thus poses a serious threat to the expansion of the worldwide 3D animation sector and significant competition for premium offerings.

Global 3D Animation Market Opportunities:

Integration of Virtual Reality (VR) Technology for Visual Effects

VR technology is quickly becoming an important tool for animation. This technology receives significant funding for gaming, advertising, and home entertainment. Animators are using VR technology to produce similar effects. Due to the growing work on more sophisticated animals and the creation of more captivating virtual worlds, 3D animation market sellers are observing an increase in demand. Virtual reality and visual effects primarily focus on creating a new environment that can astound spectators. Real-time graphics, motion capture, real-time facial capture, and camera tracking are just a few of the methods studios use to enhance their virtual production capabilities, which are also an asset for virtual reality. Virtual reality is slowly becoming a focus for most visual effects teams.

Regional Analysis

Based on region, the global 3D animation market is bifurcated into North America, Europe, Asia-Pacific, Latin America, the Middle East and Africa.

North America Dominates the Global Market

North America is the most significant global 3D animation market shareholder and is estimated to exhibit a CAGR of 10% over the forecast period. Due to the extensive use of visual effects and animation in Hollywood films, as well as the presence of significant animation vendors, the region is predicted to lead the market. The most inventive technique utilized in theaters to make scenes more realistic is visual effects. Incorporating live-action material in films is driving up demand for visual effects. The region's 3D animation industry is growing due to developments in the entertainment sector, increased demand for hypothetical and fictitious content production, a requirement for high-quality material, and the popularity of animated movies, TV shows, and gaming.

Furthermore, the presence of many studios in North America already using visual effects is a key element driving the regional market's growth. Furthermore, the thriving animation industries in Vancouver, the United States, and Montreal and considerable government funding for film production services in Canada will likely drive market expansion. Furthermore, the early use of modern technologies such as AI and machine learning in 3D animation movies by various film and advertising firms to provide better visual effects to customers is expected to drive market expansion.

Asia-Pacific is anticipated to exhibit a CAGR of 12.6% over the forecast period. The demand for 3D animation features, such as the modification and enhancement of live action, fuels this industry. Additionally, the number of partnerships between Chinese businesses and foreign VFX firms is anticipated to grow, driving this region's market. Due to ongoing market conditions and governmental regulations changes, the Chinese 3D animation business is constantly developing. To work on Chinese movies and keep up with market changes, animation studios for the Chinese market want to have offices there. However, China's budget for animation is now not very big. However, the Chinese market is expanding significantly.

Additionally, the Indian VFX business has moved away from traditional outsourcing methods and toward approaches emphasizing co-productions and owning intellectual property. This increases the demand for 3D animation even more. Animation programs like 3D Max, Maya, After Effects, and Nuke are used in this area. The visual effects industry in India had a rapid expansion, and it is still doing well and profiting from a well-developed ecosystem. Additionally, the expansion of the industry is fueled by animation content on Over-The-Top (OTT) platforms in India.

Europe has emerged as one of the fastest-growing regions in the global market. GDPR is predicted to restrict cloud software adoption in this region. Due to tax benefits for movies and high-end televisions, animation studios are moving to Europe. Animation is essential to filmmaking, and tax breaks from many nations are expected to bolster the sector. The growing popularity of animated films drives Europe's visual effects software business. Several VFX artists have opened studios in this region. Dell Inc. in Europe recently opened a VFX studio to supply creative images and content to all their workstations. France is challenging the UK for the top European animation and visual effects powerhouse. Tax rebates for animated film production in the UK and Germany additionally boost the European 3D animation sector.

In LAMEA, the rise of the 3D animation industry in Latin America is driven by increased production of special effects movies in countries like Argentina and Brazil. The area has seen several technological developments. The multinational co-productions that Latin American filmmakers are launching with the United States and many European nations are expected to boost the 3D animation sector in this region. For creating visual effects, 3D animation, and other economically viable artwork in the Middle East, many artists are switching from their conventional painting approaches to 3D animation programs. Due to the rapid growth of the building sector and the availability of free-to-air private TV channels, the demand for animation and visual effects artists is particularly notable in architecture and TV programming. Despite trailing other regions in adopting animation software, LAMEA has significant untapped market potential, which offers enormous opportunities to expand animation software.

Segmental Analysis

The global 3D animation market is bifurcated into component, deployment mode, technology, and industry vertical.

Based on the component, the global market is bifurcated into solutions and services. 

The solution segment dominates the global market and is projected to exhibit a CAGR of 10.8% over the forecast period. CGI and live action are used in 3D animation to create realistic scenes, effects, and shots that would otherwise be impossible or dangerous to achieve. Additionally, it saves money by cutting down on shooting expenses. As a result, 3D animation solutions make it possible to create visuals to change or improve a movie or other moving image that cannot be achieved by live-action photography. It facilitates the blending of actual filming with fake or animated imagery. Matte painting, 3D modeling, motion tracking, and rotoscoping are a few of the required methods. Research in visual effects and collaboration with key actors to make 3D workflow effective are some of the crucial business tactics for improving 3D animation. These strategies will lead to better final products.

Additionally, businesses hope to offer tools that will allow users to tweak or automatically change already created content's appearance, motion, and scale to better suit the production needs of animated content. Additionally, the demand for cloud-based 3D animation throughout the projection period is anticipated to present profitable prospects for the market's expansion.

Based on deployment mode, the global market is segmented into on-premises and cloud. 

The on-premises dominates the global market and is predicted to exhibit a CAGR of 10.5% during the forecast period. The on-premises deployment approach allows for the installation of software. It is the running of applications on systems that are already on-site rather than at remote locations like a server room or cloud. This approach best suits internal private data applications requiring large transfers and activities. Customers use in-house servers and computer infrastructure to install and run on-premises software. Installing on-premises software necessitates significant financial commitment because it needs qualified IT employees for upkeep and support.

Since the full piece of software is installed on-site at a company, on-premises software is regarded as being more dependable and secure. Due to the costs involved with the demand for IT infrastructure, such as servers, the organization's internal computing resources, and the need for IT professionals for support and maintenance, on-premises software is generally more expensive than cloud-based services. However, because this software controls data and operations, enterprises implement apps through on-premises software.

Based on technology, the global market is bifurcated into 3D modeling, motion graphics, 3D Rendering, visual effects, and others. 

The 3D modeling segment owns the highest market share and is predicted to exhibit a CAGR of 9.3% over the forecast period. A computer graphics approach known as 3D modeling is used to create a 3D digital representation of any object or surface. Additionally, 3D modeling is employed in many business verticals to represent objects and visually propel the market's expansion. Through several tools and techniques, such as spline curves, 3D primitives, and non-uniform rational basis spline (NURBS), 3D modeling creates a three-dimensional representation of a physical item.

Additionally, the development of 3D-capable smartphone displays fuels the expansion of 3D modeling. Due to the use of 3D modeling in numerous Hollywood blockbusters in North America, the demand for 3D modeling is also rising.

Based on industry vertical, the global market is divided into education, media and Entertainment, healthcare, construction and manufacturing, retail, and others. 

The media and entertainment segment is the most significant contributor to the market and is estimated to exhibit a CAGR of 9.8% over the forecast period. The media and entertainment sector is always working on animation projects to improve the visual effects for viewers and broaden their audience. The acceptance of photorealistic portrayal of movies has also expanded the use of 3D animation in the media and entertainment industry. Due to the rise of numerous animated films that are drawing large audiences, the media and entertainment sector is one of the industries with the fastest-growing segments.

Additionally, one of the key factors propelling the market's expansion is the increase in consumer demand for VFX, AR, and visual effects—additionally, numerous mergers and acquisitions by various significant competitors to increase their fuel the market's expansion. For instance, Dream Animation SKG Inc. was purchased by NBC Universal in North America in August 2017. This purchase benefited NBC's consumer product, licensing, and television production businesses. Therefore, the market has a good chance, thanks to these variables.

Recent Developments

• May 2023- Vizrt Group announced the sale of the 3D computer graphics tool LightWave 3D to a team led by Andrew Bishop in the United Kingdom. Bishop and his team, who have over 30 years of experience in the animation and VFX industries, have now stepped forward to build the LightWave 3D program.
• November 2022- Beyond Sports, a business specializing in producing 3D animation using real-world data, has been acquired by Sony. With this acquisition, the company can now reportedly provide a comprehensive metaverse experience for sports competitions, replete with technology from other companies currently in its portfolio.