The Philippines has been providing animation services to the world for over 20 years now.

Filipino animators were behind some of the world’s best-loved cartoons and animated films – Scooby Doo, Tom & Jerry, Addams Family, The Mask, The Jetsons, Dragon Ball Z, Captain Planet, Finding Nemo and The Incredibles – all under entertainment giants such as Walt Disney, Warner Brothers, Cartoon Network, HBO, Marvel Comics, Hanna Barbera, Nervana and producers of Japanese anime like Toei Company.

Filipino animators are also able to render graphics in different platforms for the gaming industry (Nintendo, Sega, Game Gear, Game Boy and Sony Playstation).

The promotion of the country’s animation industry is supported by the Animation Council of the Philippines, Inc. (ACPI), a 40-member association of animation companies. ACPI’s mission is to promote and market the Philippine animation industry here and abroad.

Filipinos are also beginning to develop original content animation for global markets. Their wealth of experience in the production of animation and rich cultural background have fostered the industry’s capacity of generating innovative concepts, cutting-edge design, and world-class quality. This has led to a surge in interest among Philippine animation companies co-producing international content with established global partners.

Closest competitors are India, China, Singapore and South Korea. Major export markets include the U.S., Europe, Japan and Australia.

Philippine animation services include:

- 2D animation from layouts to final composting;

- Digital Ink and paint service;

- 3D animation using the latest software like Maya, XSI, 3DStudion Max, etc.;

- Pre-production service from storyboarding, character & production design, key backgrounds and layouts;

- 3D and 2D animation for games;

- Flash animation for animated series (broadcast quality);

- Web animation;

- Gaming; and

- 4D animation

Market Opportunity

Market Size

Global animation Market, 2008 – US$68.4 BillionPhilippines Animation Industry Performance 2004-2008

Projected global demand, 2010 – US$80 Billion

Philippine forecast, 2010 – US$184.5 Million revenue; 24% average annual growth.


Presence of demand-supply gap

Large scale projects are often turned down by the smaller Philippine animation companies due to lack of capacity and resources to meet client requirements.

With a demand estimated to be US$80 Billion in 2010, the US$184.5 Million forecast for the industry is way too low.

Philippine Advantage

Established Philippine Animation Industry

With more than two decades in existence, the industry is already an established sector with renowned international clients like Walt Disney, Warner Brothers, Cartoon Network, HBO, Marvel Comics, Hanna Barbera, Nervana, Toei Company, among others.

The sophisticated talent and creative instinct of Filipino animators make the Philippines the preferred outsourcing partner of big international production outfits worldwide.

Aside from the lower cost of services, big international companies rely on Filipino animators due to their English proficiency, consistent quality and speed in delivering output, and ability to comprehend concepts and story lines better than their Asian counterparts.


Strong industry-academe-government collaboration

The industry is well prepared for rapid growth. In response to fast-growing demand for 3D animation, Philippine schools and training centers around the country have increased their capacity for educating and developing enthusiastic young animators as well as preparing established 2D animators to transition to 3D. Training is perfumed using industry-leading software applications such as Maya, XSI & USAnimation

It has partnered with the Department of Education (DepEd) Technical-Vocational Education (TVE) Task Force to train around 100 technical-vocational high school teachers from different parts o f the country in the fields of animation, visual arts and graphics design.

It has partnered with TESDA (Technical Education and Sills Development Authority) in developing the training regulations and helping in coming up with the assessment tools for schools and other institutions that plan to offer animation courses.

The industry hopes to graduate 25,000 fresh, industry-ready animators by 2010 to be able to handle the global business demand.


Technology that supports the industry

Expanding technologies on fiber and copper network, wireless technologies (CDMA, GSM, WAP, GPRS, 3G, wireless broadband), radio and VSAT.


Support infrastructure

Digital fiber optic backbone network (FOBN)

Nationwide radio microwave terrestrial network

Next generation networks (NGN), characterized by the use of Internet Protocol (IP), Multi-Protocol Label Switching (MPLS) and Wave Division Multiplexing (WDM).


Ideal locations

Metro Manila, Metro Cebu and the Next Wave CitiesNext Wave Cities for Animation Philippines

Around 165 read-to-occupy IT Parks and Buildings all over the country


Human resources

Availability

More than 490,000 college-degree graduates in 2008, 66.6% of which have course suitable for the IT/BPO or cyber-services sector

Annual growth rate of tertiary level graduates is estimated at 3.8%


Quality

3rd largest English-speaking country in the world

72% of the population fluent in American English

Highly educated, flexible, productive, loyal, dedicated workforce with excellent work ethics and attention to detail

Ability to comprehend concepts and story lines better than Asian counterparts.

Filipino animators are known for their creativity and innovative, which are looked upon in high regard by international clients.

Costs advantage

Average annual salary of IT professionals in the Philippines handling various types of IT job functions is the most competitive in Asia.

Cost of bandwidth went down by at least 8.5% in the last 5 years.

Industry Potentials

Growths

Number of industry players

- From 35 small and medium animation studios in 2007 to about 50 in 2008, or an increase of about 43% in 2 years.

Investments (in terms of project cost)

- BOI-registered Animation projects: Since 1987, investments reached Php 100.331 Million.

- Dominated by American and Japanese investors.

Employment

- 8,000 full-time employees (FTEs) as of December 2008 accounting for 2.15% of total IT/BPO FTEs in 2008

- Average annual increase of 25% in employment generation from 2004-2008.

Revenue

- US$120 Million revenue generation in December 2008 accounting for 1.98% of total IT/BPO revenue in 2008

Average annual increase of 24% in revenue generation from2004-2008.


Contribution to the economy

Percent to total exports

- Animation accounts for 0.24% of total Philippine exports in 2008.

Government Support

Enabling laws/policies

• Medium-Term Philippine Development Plan 2004-2010

- Reduction of connectivity cost

- Development of ICT Human Resource

• Executive Order No.561 dated 19 August 2006 creating the Philippine Cyber Corridor, an ICT belt stretching 600 miles from Baguio City to Zamboanga designed to provide a variety cyber-services at par with global standards, and supported by a $10 Billion high bandwidth fiber backbone digital network

• 2010 Investment Priorities Plan providing fiscal and non-fiscal incentives to:

- Business Process Outsourcing or voice and non-voice IT-enabled services that include animation.

- Creative industries or non-BPO IT-enabled services that include development of original content for video games and game development.

• Allocation of Php 350 million scholarship funds for the training of near-hires in IT/BPO.

• Data Privacy Bill proposed in Congress to ensure protection of personal information in the ICT systems in government and private sector

Development plans and programs

Philippine Road map 2010 aiming to capture 10% of the global off-shoring and outsourcing market share by 2010.

Adoption of Service Science, Management and Engineering (SSME) curriculum in colleges and universities nationwide to develop the critical mass of skilled manpower needed to sustain Philippine leadership in global O&O industry.

Incentives

Fiscal

• 4 to 8 years Income Tax Holiday (ITH);

• Special 5% tax rate on gross income after the lapse of ITH (for IT Park/Eco-zone locators);

• Tax and duty exemption on imported capital equipment (for IT Park/Eco-zone locators); Duty-free importation of capital equipment (for BOI-registered firms under E.O. 528);

• Exemption from 12% input VAT on allowable local purchase of goods and services, e.g., communication charges (for IT Park/Eco-zone locators);

• Additional deduction for labor expense.


Non-fiscal

• Unrestricted use of consigned equipment;

• Exemption from wharfage dues and export tax, duty, impost and fees;

• Employment of foreign nationals;

• Special Investors Resident Visa


Cost of Doing Business

Salaries and wages (average monthly, Php)

• Animators/Graphic artist – 20,000-25,000

• Digital media specialist – 15,000-20,0000

Rentals, lease, acquisition (average)

• Office space rental – NCR: Php 500/sq.m.; Regional/Provinicial: Php 250/sq.m.

• PEZA-accredited IT Building lease – US$300/station/month (24/7) including TELCO, back-up power generator, security surveillance system, etc.

• PEZA lost lease – US$0.40/sq.m.