How is Hollywood’s budget crisis fueling Canada’s animation boom?

As streaming giants cut spending and Hollywood recovers from the 2023 strikes, one sector of the industry continues to thrive: animation. Nowhere is this more evident than in Canada, which offers a fully established industry and a wealth of talent – ​​all at an affordable price.

Animation insiders north of the border say they’ve seen an uptick in activity thanks to cost-conscious producers looking for more bang for their buck — not to mention other advantages like currency savings (the Canadian dollar is currently 74 cents to the U.S. dollar), speed, efficiency, and local talent with a Experience and proximity across the border from Los Angeles.

“Now that budgets are down, we need to get back to our creative approaches on how to achieve a look and result on screen that works within a given budget,” says Michael Hefferon, president and chief operating officer of Vancouver-based Mainframe Studios. THR.

After years of working with Hollywood gave Canadian animators global ambition and scope, the industry now sees itself as part of the solution as the era of peak television begins to wane. In fact, given the high cost of live-action content, Canadian animators can deliver the kind of high-end shows viewers have come to expect without the exorbitant budgets that prestige television typically requires.

“Instead of playing the size game and spreading your chips across multiple pieces of content, (producers) are multiplying fewer projects with the spectacle that viewers demand today. They’re more powerful than ever,” says Jonathan Bronfman, co-founder and co-president of Monsters Aliens Robots Zombies (MARZ), a technology and visual effects studio. Based in Toronto: “You create a scene using visual effects and animation.”

“Canada has been elevated as a destination of choice because people are looking to put quality over quantity, create successful brands, and do it on a budget,” adds Gene Twiner-McCarron, CEO of Vancouver-based animation company Atomic Cartoons, a subsidiary of Canadian content giant Thunderbird Entertainment. And get your display faster, we have a history of doing quality work, plus we provide financing to make sure it’s affordable for everyone.

This focus on quality can be seen in… Rocket saves the day, a 45-minute PBS Kids special from Atomic Cartoons for kids and families. The show is adapted from Tad Hills’ best-selling book rocket The books for young children learning to read have a full-fledged TV series in development and a possible animated feature in the future.

Taking advantage of Canadian animation tax credits – available at a rate of 25 per cent on qualifying labor expenses – is also in the mix as US entertainment giants embrace new business models.

“With Hollywood trying to figure out exactly what direction to go with content — with theatrical content, with streaming content, with originals and franchises — a natural part of that discussion is Canada with its tax credit and the incredible talent pool that Cinesite works with,” says Bradley Wald, CEO. For operations at the Vancouver-based VFX and premium animation house.

Cinesite Studio in Montreal became the production center for artists working at Walt Disney Animation Studios. Ewaju, a six-part Nigerian series arriving on Disney+ on February 28. The project marks the first time Disney Animation has tapped an independent studio to work on the type of content it typically produces in-house.

“We have such strong, capable companies that are world leaders in animation, as well as educational institutions that nurture talent into their pipeline,” says Karen Thorne-Stone, president and CEO of Ontario Creates, which markets the province to Hollywood. “And we do productions all over the world, not to mention our local productions.”

Canada also offers an international co-production financing model that allows local animation studios to share risks and rewards with foreign partners on content with global appeal, with each bringing in soft funds.

For example, Canadian company Mercury Filmworks is working with UK-based Serious Kids for co-production A mouse named Julian, a computer-animated film about a shy mouse who befriends a fox. Heath Kenny, Mercury’s chief content officer, says Canadian animators work quickly: “In general, people are looking for smaller orders simply because they need a faster turnaround so they can test the content on their platforms and see if they want more.”

The quality over quantity approach also extends to features. Toronto-based Guru Studio has picked up a book property in development as a potential movie franchise. “There’s a concerted effort for us to go toward high-quality work and not focus so much on volume coming out of a period where there was high volume,” says Frank Falcone, Guru’s president and creative director.

On the other end of the spectrum, Canadian toy maker Spin Master and Nickelodeon Films are developing the film Paw Patrol 3the next feature based on the popular TV show (animated by Guru Studio) and scheduled for a theatrical release in 2026 by Paramount.

But Jennifer Dodge, president of Spin Master Entertainment, says that despite all the positives within the Canadian animation sector, the general decline in spending from Hollywood has forced her and others to chart new digital paths for its animated content pipeline. “I think Spin Master is in a very fortunate position in a very difficult time,” she says. THRadding that in today’s risk-averse climate, her company can no longer look to a giant like Nickelodeon to launch start-up projects, as it did early on with paw patrol.

Spin Master recently produced an anime series Unicorn Academy For global partner Netflix. The series includes specials, TV episodes, music videos and more released over the course of two years – with a toy collection and video game as well. Significantly, Netflix allowed Spin Master to premiere the initial TV special on Roblox and stream excerpts from the film on YouTube and countless other content on social media platforms. “It’s about meeting the audience where they are and knowing how to do it,” Dodge says of generating buzz beforehand. Unicorn AcademyPremiering on Netflix in October.

The lack of a Canadian animation giant like Pixar or Disney Animation also forced local studios to collaborate on tentpole films to ensure they were completed on time and budget. Netflix Spongebob Square Pants film Rescue Bikini Bottom: Sandy Cheeks movie It involved three Ontario studios joining forces, with Sinking Ship Entertainment and Pipeline Studios contributing full CG animation and Spin VFX to complete the live-action VFX portions.

“Unstable times sometimes lead to really interesting creative challenges,” says Matt Bishop, partner and producer at Toronto-based Sinking Ship. “We have great digital infrastructure in the county so we can all share files, we can all work and collaborate.”

Ontario Film Commissioner Justin Cutler praised the teamwork on the film SpongeBob Spinoff as one of the largest animation projects to be completed in the province. “This is evidence that most companies are looking for high-quality, cost-effective places to do this work,” he says. THR.

Elsewhere, animation studio Stellar Boar is turning scripts into screen content in St. John’s, Newfoundland, as that province ramps up its production to compete with Toronto and Vancouver. “A big part of working in this industry is being able to stylistically adapt to whatever is presented to you,” says Curtis Ryu, CEO of Stellar Boar. “This breeds creativity and interesting decision-making.”

And nothing says quality better than the National Film Board of Canada, whose animated shorts have garnered 78 Academy Award nominations and 12 wins (its last win in this category was for Turrell’s Cove). Danish poet in 2006). Despite all the activity within Canada’s animation sector, the industry’s true potential has yet to be truly tapped, says Marc Bertrand, a producer at the NFB’s French animation studio.

“What’s sellable is usually series and features,” he says. “But we want to explore uniqueness, try different stories, different techniques, push boundaries — and then share the films with Canadian producers and the world.”

This story first appeared in the February 7 issue of The Hollywood Reporter magazine. Click here to subscribe.