21 April 2025

French Creative Industries vs Global Competition

#creative-industries #gaming #animation #french-media #cultural-economics #global-markets #industry-trends

5 min read

France has an established reputation in gaming and animation with its 120 animation studios and 1200 video game companies ¹. It is currently the third largest producer of animated films after the USA and Japan. The industry’s latest success came out of studio Fortiche with the animated series Arcane produced for Riot Games ². Gaming is not to be forgotten, with France ranking second in the world for the production of video games, with notable success stories such as the Dishonored seires coming our of Arkane studios in Lyon ³.

Animation and gaming in France are heavily subsidized. Public funds like the CNC and regional funds supplement private investments. Tax rebates for international production can cover up to 30-40% of a project’s budget. Support also extends to education and training. So in a sense, workers of these industries could be considered partly public servants. It begs the question of why nations would be willing to invest in their cultural exports.

I would argue it’s a matter of collective pride and national identity reinforcement. We root for our creative industries. Arts celebrate human potential. National creative industries celebrate one’s country’s capabilities. This translates into soft power and global influence, which France retains a disproportionate amount of relative to its size up to this day.

However, it’s no secret that these industries have faced significant headwinds lately.

Despite government investment, producing in France is expensive. 90% of budgets are dedicated to human resources. A 2000€ monthly salary costs the hiring company 4000€ to cover social charges ⁴. Even Arcane, despite its critical success, did not break even.

Furthermore, international investments dropped sharply following a post-pandemic market correction and rising interest rates. North American investments coming from major streaming services withdrew. French company TeamTO was acquired by an Italian studio following its insolvency ⁵. Mikros Animation saw a significant drop in activity and layoffs as a consequence of its parent company Technicolor ⁶ facing financial troubles. In the gaming sector, the giant Ubisoft has been significantly downsizing ⁷ and is now splitting into parts ⁸.

Ankama director Tot explains that animation is not expected to always be profitable, but should rather be considered an investment. In their case, it is driving new players and increasing retention to their games. Similarly, Arcane is expected to support the growth of the game it’s adapted from: League of Legends. In this way, animation can be considered a large marketing effort. Marketing ROI is sometimes hard to quantify ⁹. How much of the opportunities that present themselves are an indirect consequence of brand reputation established through “non-profitable” creative flagship projects?

Despite that, international competition can’t be ignored. We are reaching the end of our first-mover advantage. We were early in establishing a network of schools and a trained workforce. But the Asia-Pacific region is increasingly turning to services, with China leading the way. In 2000 it had only 2 animation training programs. By 2009 they had 1279. In 2015 they boasted 1800+, with 45000 students entering the pipeline each year ¹⁰. I recommend checking this video showcasing an art entrance examination in China to get a hint of the scale we are talking about. The salaries I could find for an entry-level animator ranged from 13,000€ to 17,000€ in China, against at least 27,000€ in France, before payroll taxes. As a quick situation recap: China now has skills, at scale, and for cheap. Their recent animated film Ne Zha 2 ¹¹ is testament to that: 4000 professionals worked on it, for a total cost of roughly 70 million euros. For comparison, a typical Pixar or Disney production employs only around 1000 skilled artists and engineers and costs often closer to 175 million euros ¹².

In the face of these circumstances, the default path is that our industries will get outcompeted and move away to more cost-efficient countries. It has parallels to patterns observed in other industries.

These observations led Philippe Alessandri, president of “Watch Next Media,” to conclude that consolidation is a logical next step from an economic standpoint, which could unlock critical scale and global reach ¹³. Financing can also be achieved through European co-productions.

Furthermore, we are constrained to focus our efforts on the highest leverage actions we can. The industry is increasingly looking for qualified technical artists and other roles that are multiplicative in nature rather than additive. Our productions should take advantage of procedural generation, new tooling that’s emerging such as real-time 3D or AI tools, or automation. A focus on efficiency and “working smart” is unavoidable given our position.

The gaming industry has a higher revenue generated per worker than the animation industry does because of its inherent scaling advantage. Crossmedia strategies are a proven virtuous cycle. Animation can act as a marketing vehicle for gaming and vice versa. Thus, a focus on IP creation and development seems appropriate.

We should also keep solidifying our differentiating factors and branding, fighting commodification. We are known for our distinctive and varied art styles, emphasis on originality, and our expressivity. We are furthermore recognized for our narrative ambition and willingness to tackle complex themes, all the while maintaining technical excellence. We are to lean into our strengths.

TLDR: We, involved in the French creative industries, are faced with a fine balancing act to pull off. While we benefit from strong public support, our cost structure is also disadvantageous in the face of global competition. We’re likely to see further consolidation and European cross-border productions, as well as an increasing need for high-leverage technical specializations and new tooling. We have to work smart while at the same time maintaining our standards for artistry and excellence. The French creative industries may face significant challenges, but we are still host to a vibrant ecosystem of talented and dedicated artists and techies – if we can make the economics work, we will reap the reward of continued creation of awe-inspiring works of art and recognition at the global scale.