Outsourcing, AI may reshape U.S. animation industry in 2025: report
CALIFORNIA, UNITED STATES — The U.S. animation industry continues to dominate global box offices, with 2024 delivering hits like Moana 2 and Inside Out 2. Family films generated $6.85 billion worldwide last year, a sharp increase from $4.22 billion in 2023, signaling a strong post-pandemic recovery.
However, beneath this financial success lies a turbulent landscape shaped by outsourcing and artificial intelligence (AI), which are redefining workflows and threatening jobs.
Outsourcing pushes animation work overseas
According to a Screen Daily report, a growing reliance on outsourcing is reshaping animation production.
Studios are moving work to regions offering tax incentives, including Canada, Australia, parts of Europe, and even Asia, as California’s current tax incentive program excludes animation. For instance, Disney split the production of Moana 2 between Los Angeles and its Vancouver facility, reflecting this trend.
Steve Kaplan of the Animation Guild explained that there is “a desire to move work to states or regions that provide government subsidies.” This model mirrors animated TV production pipelines, where creative development occurs domestically while animation is completed abroad.
While the Animation Guild pushed for protections against outsourcing during recent contract talks, limited progress was made.
Still, Kaplan remains hopeful that California Governor Gavin Newsom’s proposal to expand production incentives could eventually include animation.
AI threatens jobs and creative processes
Artificial intelligence is another disruptive force in animation. A report commissioned by the Animation Guild estimates that by 2026, AI could consolidate or eliminate 21% of jobs in film, TV, and animation.
Jeffrey Katzenberg, former Disney studio head, predicts AI will drastically reduce the time and workforce required for major animated productions in the near future.
Although AI adoption is still in its infancy within the industry, its potential for upheaval is undeniable. “We have to continue to monitor how [AI] makes its way into the industry,” Kaplan warned.
The guild has laid the groundwork for addressing AI concerns but acknowledges that vigilance is crucial as technology evolves.
Sequels dominate amid creative risks
In response to these challenges, studios are doubling down on sequels and franchises to maintain box office momentum. Major 2025 releases include Zootopia 2, The Bad Guys 2, and Spider-Man: Beyond the Spider-Verse. However, critics argue this strategy stifles creativity.
“We need executives with vision who can take risks,” said University of Southern California’s School of Cinematic Arts professor Tom Sito. “A lot of executives right now are playing it safe.”
As outsourcing and AI reshape the U.S. animation industry, balancing cost efficiency with creative innovation will be key to sustaining its global leadership in the years ahead.
