Value Chain and Value Structure

In the UK, animation firms are structured in a variety of ways. Some of them have adopted vertical integration where the whole process of animation production is done within the same studio; one example is Aardman Studios where the pre-production process of designing and model making the puppets is done by the studio members as part of the process of animation (Aardman, 2013).

On the other hand, some studios work in networks due to their limited capacity for production. Therefore, they are structured in a horizontal integration, and the studios

outsource parts of the process, such as pre-production or post-production processes, to another local or foreign studio. For instance, Chapman Entertainment productions commissioned a pre-production process, which included designing and model making from Mackinnon & Saunders, who are one of the world’s leading puppet making businesses (Mackinnon & Saunders, 2013). In addition, some animation studio that provide outsourcing services for production processes, such as 3Line Media animation.

In terms of animation industry value structure, in the UK, the value structure has more complexity than in the other countries studied in this thesis, as many different organisations are involved in it. In the UK, some animation studios own the rights to content, such as Aardman Animation, which owns the rights to Wallace & Gromit and carries out all of the process for production including pre-production, production and post-production. However, some animation productions were original generated by an entertainment production company that then owns the brand but is not involved in the technical tasks of animating and finishing the animation content. An example of this is V&S Entertainment, which owns Rosie, a British animation series that was animated by AProduction Animation Studio, based in Bristol, and produced by the CBeebies Channel (V&S entertainment Ltd). Furthermore, an animation production could be owned by an animation studio that partners with a broadcaster to facilitate production, such as Sarah & Duck, which was created and developed by Karott Entertainment Animation Studio and produced by the BBC.

4.4.4 Clustering

The media industry in the UK has a strong pattern of geographic concentration. Firms within the media industry favour locations with existing networks as they have similar production system characteristics as well as similar specialised functions, and thus as well as promoting dense inter-firm networks and relationships, physical proximity assists the efficiency of transactions and information exchange between firms (Scott, 2005).

Around 70 to 90% of total UK employment within different media industries is clustered in London; however only 33% of animation firms (with around 1,500 employees) are located in London, which nevertheless represents the largest industrial cluster in the UK animation industry (Skillset, 2010). In particular, firms tend to concentrate in a specific area in London called Soho, where there is an industrial cluster for the media industry that includes suppliers, producers and distributors for various media industry sectors such as music, publishing, and film as well as the animation industry (Nachum & Keeble, 1999). An important factor that has made Soho a favoured choice for media firms is the location of the three main broadcasters in the UK, the BBC, ITV and Channel Four, in this area. Therefore, many small and medium sized companies have established in Soho, including pre-production and post-production firms (Pratt, 2010). London also has a number of higher educational institutions offering courses related to the subject of animation.

The second largest concentration of UK animation studios is clustered in Bristol, where the most famous British animation studio, Aardman, is located, alongside a considerable number of smaller studios. A total of around 800 people work within the

animation industry in this area (Skillset, 2010). Bristol is also known for its documentary film industry. A significant factor that assisted Bristol’s development as a cluster for the animation industry was the establishment of the BBC Animation department in Bristol, as this encouraged the animation industry by launching an initiative in 1991 that targeted independent animation companies and aimed to commission, produce, and co-produce high quality animated films (Burns, 2005).

Again, Bristol has a number of education institutions that offer higher and further education courses related to animation such as films, televisions, media, multimedia, graphic design, computer animation, and game design (Burns, 2005). In particular, the University of the West of England is considered to be a centre of animation excellence (UWE, 2014). According to Louise Jennings, marketing office at the University of the West of England, "Students are attracted to Bristol and our courses partly thanks to the reputation of the professional training courses we run but also because of the reputation of Bristol as a centre of animation" (Burns, 2005). A consequence of the talent graduating in Bristol is that more firms establish themselves in the area to gain access to this talent pool (Burns, 2005).

The third largest cluster in the UK animation industry is concentrated in Manchester (Hume & Sizer-Coy, ND). According to Westly Wood, who is a producer and director at CITV: “Manchester is quickly becoming the capital of animation production.” Wood believes that the important factor that give Manchester a reputation for animation and has led to the establishment of many animation studios is the success of Cosgrove Hall Films, a British animation studio established in 1976 (Cullen, 2014). Wood explained “By growing such a big media/animation company within the area and because they were obsessive about developing and training talent,

Cosgrove Hall Films has become the cornerstone to the creative and digital world as we know it – particularly animation,” (Cullen, 2014). Another factor that is now assisting the concentration of the animation industry in Manchester is MediaCityUK, which was opened at 2011 with key broadcasters such as BBC and ITV, who are considered to be significant commissioners and producers, as its occupants (MediaCityUK, 2014). MediaCityUK also hosts a Salford University campus where over thirty undergraduate and postgraduate courses related to media industry are taught, which allows students and staff to use the latest industry standard equipment and access professional studios and labs (University of Salford, 2014). As well as Salford University, Manchester has another higher education institution that offers courses related to animation, Manchester Metropolitan University (MMU, 2014). This combination of suppliers of qualified labour has made Manchester an appropriate location for animation enterprises.

4.4.5 Market Division

This section will sketch the market divisions for the animation industry in the UK, with regard to techniques and functions.

In terms of technical market divisions, most of the UK animation firms produce 2D and 3D animation. The 2D work may be in the traditional cell animation format or in the form of CGI. Several stop motion techniques that use clay or puppets are also used (Kenny and Broughton, 2011). According to interviews conducted for this study, some studios specialise in one technique such as 2D or 3D, while other studios combine different techniques.

In terms of functional divisions, according to the Skillset report (2008), the majority of animation studios are engaged in production for television, including advertisements, music video clips, and television series for children and adults. The second largest group feature films, while a number of studios produce visual effects and commercials for the Internet (Skillset, 2008).