How Companies Keep Their Costs Down: Outsourcing
Because the number of channels is growing proportionally faster than the number of viewers, each channel gets a smaller piece of the audience. As channels earn income from subscriptions or the size of the audience they can sell to advertisers, it means that their income goes down. That leaves them with less money to pay for programming.
Producers get paid less for animated TV shows than they used to. If you’re not a multinational corporation that can put your show on many channels internationally to make up the difference, you have no choice but to try and reduce how much you spend to make a show. The two ways animation producers do this are to outsource or co-produce.
Outsourcing means sending parts of the production to countries with lower wages. In animation, this has been going on at least since the 1960’s. The producers of Rocky and Bullwinkle sent work to Mexico at that time.
The upside to outsourcing is that the production saves money. However, there are many downsides. Usually, a producer will invite several subcontractors to bid on the job. This will force down the price, as the subcontractors know they have to bid low in order to win the work. It doesn’t matter if the show becomes a hit, the subcontractor only gets paid once for the work. Therefore, it’s in the subcontractor’s best interest to spend as little as possible on the work in order to maximize the profit. The producer wants the best possible show for the money; the subcontractor wants the cheapest possible show for the money. Usually, neither party ends up satisfied.
Another problem is that the subcontractor is usually 10 or more time zones away from the producer. If the subcontractor asks a question, the answer usually doesn’t arrive until a day later. Often, it’s easier to do the work wrong and fix it in retakes than to slow down production to wait for an answer.
Subcontractors often take on more work than they can handle and end up subcontracting the work yet again. This leaves even less money available to do the job and lengthens the lines of communications even more.
Cheap work and poor communications sometimes threaten delivery dates. In order to hit a delivery, quality is often compromised. If a delivery is missed, it costs the producers money.
Because the point of subcontracting is to save the producer money, the producer is always looking for a cheaper supplier. As the world economy changes, it means that animation work migrates from country to country in search of cheaper labor. Animation has moved from Japan to South Korea to Taiwan to the Philippines and now is being done in India and China. Each country gets 10-15 years before its economic growth makes it too expensive to do animation. Then the work goes somewhere cheaper, where the artists are not as experienced and so quality initially goes down.
It’s not long after a country trains its workforce and starts turning out good work that the work disappears. There are Chinese and Indian artists who are being born as you read this who will grow up hoping to work in animation and who will find that the jobs are gone by the time they finish school. Artists, no matter what country they live in, always end up the victims of outsourcing animation.
Next installment: Co-production