threat of new entrants

When discussing thread of new entrants, then it is important to look at the industry’s entry barriers and the reaction from existing competitors. Some of the major influences on producing is the initial financial outlay for production. Films, both animated and live-action, demands large investments, typically over $100 million, and often a lot more. This represents a large entry barrier.

In the film animation segment, then 3D software is both getting easier to use, more available, and cheaper. This represents shrinking entry barrier for newcomers, and would make the animation industry more attractive in the longer run, because the investments and learning curves would be lower.

Another important entry barrier has earlier on been the educated workforce needed for making animations. But the gaming industry has had influences on this area. The revenues in the gaming industry have in the recent years succeeded in outperforming the movie and entertainment industry. With the new industry having yearly revenues of over $130 billion, then there have been created a new demand of educated 3D animators for creating the computer games. This have affected the film animation industry as well. The workforce have been cheaper and more available, and more focus have been placed on the general animation industry, both for movies and games. This represents a shrinking entry barrier towards the movie and entertainment industry.

A more general acceptance towards niche productions have been emerging in the recent years. With festivals around the world, headed by the Sundance Festival, the international audience has been focusing more and more on niche and low cost productions. The audience has become more accustomed to foreign productions, as an opposite of traditional Hollywood productions. This makes it easier to receive international success without having big budgets or international superstars starring in the productions, which again makes it easier to enter the industry.

Distribution channels like iTunes and the internet makes it possible to des like easier to distribute the productions out to the target audience, again without having access to a great distribution network.