3D animation market

The global 3D animation market size was valued at USD 16.64 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 11.7% from 2021 to 2028. Increased preference to create High-Definition (HD) content, especially for video marketing, owing to its higher resolution, substantially higher number of pixels, and improved content quality compared to standard-definition content, is likely to positively impact the growth. The increased deployment of 3D animated videos to create graphic illustrations of various heavy machinery elements in the manufacturing industry is anticipated to be the key market growth driver. The augmented demand for the technology from several industrial verticals due to the increasing use of simulation in the design of industrial tools by OEMs has facilitated the penetration of 3D animation solutions worldwide. The increased deployment of simulation software and services in industries such as manufacturing, architecture and construction, media and entertainment, education, defense, and healthcare is fueling the industry’s growth.

The promising pace of expansion of the media and entertainment sector, which is one of the key adopters of simulation software, is also contributing to the growth of the 3D animation market. The photorealistic representation feature of the simulation technique is expected to surge the demand from the media and entertainment sector. Moreover, the rising consumption of media and entertainment content for kids is expected to drive the demand for 3D animated content soon. Furthermore, the rising trend of integrating 2D and 3D animation, such as implanting 2D overlays with movement in big-budget commercial videos and small-scale digital adverts, is providing promising growth opportunities to the market. The growing preference of designers to retro motion graphics for adding a nostalgic effect to videos, along with morphing of images and logos to offer smooth and swift transition is furthering the demand for 3D animation technology.

3D animation solutions are creating new opportunities in the education and academics sector by exploiting the motion and sight benefits of the technology for students. In the medical field, technology enables better learning for healthcare students by allowing the virtual assembly and study of organs in human anatomy education. Medical schools are increasingly deploying simulated videos for providing visual knowledge and a better understanding of human anatomy. Technology is also transforming the medical field by allowing medical students to carry out dissections without harming a living animal. Moreover, the deployment of 3D simulation in the healthcare sector has facilitated developments in medicines and treatments.

The significant usage of Visual Effects (VFX) across several areas, particularly the entertainment and gaming industries, has positively impacted market growth. Moviemakers, game developers, and animators are expected to increasingly use VFX technology soon. Furthermore, the emergence of Virtual Reality (VR) and Artificial Intelligence (AI) is expected to provide promising growth opportunities for the market. There has been a growing demand for immersive content for various applications, such as billboards, scientific visualization, creative arts, gaming, and simulations. Moreover, the rising adoption of 3D mobile applications and 3D mapping technology for navigation purposes is driving the market.

In the wake of the COVID-19 pandemic, several governments globally imposed curfews and levied stringent regulations on outdoor activities to curb the spread of the virus. The lockdown led to a massive rise in demand for high-quality entertainment at home, encouraging media and entertainment companies to upgrade their video content. The use of simulation technology is allowing media companies to offer viewers an advanced visualization experience to shop, learn, and work while being involved in recreational activities. Moreover, the increasing adoption of 3D modeling technology for various applications such as 3D printing, Computer-Aided Design (CAD), marketing, scientific and medical imaging, manufacturing, video games, and motion pictures is expected to drive market growth.

Technique Insights
The 3D modeling technique segment accounted for the largest revenue share of over 30.0% in 2020 and is expected to maintain dominance over the forecast period. The technique allows for the creation of digital objects capable of being fully animated, making its use crucial in the areas of special effects and character animation. Many companies in the industry are involved in transforming and developing 3D modeling applications. For instance, in March 2019, The Foundry Visionmongers Limited, a British visual effects software development company, introduced the Modo 13 version of its renowned 3D modeling package. The version featured enhanced rendering, animation, and modeling capabilities and native support for GPU rendering with AMD Radeon ProRender.

The motion graphics segment is anticipated to witness substantial growth from 2021 to 2028. The technique witnesses high demand as it offers life to animated videos. Motion graphics are widely used to track various human actions, such as lip movements and facial expressions digitally, which offer viewers a sound visual experience.

The visual effects segment is expected to observe the fastest growth from 2021 to 2028, recording a CAGR of over 13.0%. The significant use of visual effects for several applications, especially in media & entertainment and marketing, is expected to work in favor of the segment. The use of the technique in other areas, such as visual analytics, product visualization, system visualization, information visualization, and scientific visualization, is also expected to drive segment growth. Furthermore, the 3D rendering process is anticipated to witness considerable demand over the coming seven years. The technique allows the assembly of animated pieces or scenes in a sequence of individual frames that are used to generate a series of frames or video clips. Additionally, many industry participants are engaging in mergers & acquisitions with rendering companies to keep up with this growing demand. In April 2019, Maxon Computers acquired Redshift Technologies, Inc., a rendering solution provider to strengthen its product portfolio and service offerings.

Component Insights
The 3D animation software segment accounted for the largest revenue share of over 50.0% in 2020 and is expected to retain its dominance over the forecast period. This growth can be attributed to the ability of the software to create virtual objects that appear real & tangible and its significant demand in 3D animated movies and games. The segment includes Software Development Kits (SDKs), packaged software solutions, and plug-ins. The wide-scale deployment of animation software in the gaming industry is anticipated to boost segment growth. Furthermore, the deployment of simulation technology software by many companies in the field of marketing and advertisement to gain a competitive advantage is expected to further the demand for the software over the forecast period.

The hardware segment captured a considerable revenue share of the market in 2020. It comprises motion capturing systems, video cards/GPUs, workstations, and other equipment. Continuous upgrades in hardware and the rising use of technology in medical forensics are driving the growth of the segment. The service segment is expected to benefit from the rapid penetration of technology in the education and training services sector. The segment includes support and maintenance, development and integration, consulting, certification, and product training services. The increase in demand for professional gaming developers, animators, 3D modelers, and graphic designers is expected to drive the segment growth.

Deployment Insights
The on-premise segment accounted for the largest market share of over 60.0% in 2020 as many key companies in the VFX and visualization business are extensively deploying on-premise solutions. On-premise storage depends on the company’s infrastructure to manage or operate data, offering greater data security and cost-saving opportunities. Owing to these benefits, many large enterprises deploy on-premise solutions.

The on-demand segment is expected to witness the fastest growth from 2021 to 2028, registering a CAGR of nearly 13.0%. This growth can be attributed to the rapid adoption of cloud technology by animation producers. The advanced features of cloud rendering allow the server to automatically process rendering once a user uploads their creation. Moreover, processes are completed in a shorter period in on-demand solutions, freeing up storage space. Many companies are adopting cloud rendering technology as it is becoming popular among end-users because of its resource and time-saving benefits. However, the on-demand rendering process faces challenges such as data transfer latencies, security, and software availability, which technology providers are continually investing in to overcome.

End-use insights
The media and entertainment segment accounted for the largest revenue share of around 35.0% in 2020 and is expected to maintain its dominance over the forecast period. This growth is attributed to the rising demand for photorealistic representation in movies and commercial videos. Rapid developments in simulation technology are allowing potential customers to get a more realistic feel and comprehensive visualization experience.

The education and academics segment is anticipated to observe significant growth due to the development of various training applications, software, and e-learning platforms deploying simulated content and videos in the curriculum. Many educational institutions plan to incorporate simulation technology into their education systems, offering students an advanced learning platform. For instance, Scientific Animation Without Borders (SAWBO), a Michigan State University program, plans to incorporate scientifically accurate 3D animation technology for educational purposes.

The manufacturing segment is expected to observe the fastest CAGR of nearly 13.0% from 2021 to 2028. The architecture and construction segment is anticipated to witness substantial demand due to the rise in the adoption of CAD software for architecture, construction, building, and designing processes. Furthermore, the simulation technology is likely to be extensively deployed in the healthcare sector, particularly in medical education, patient communication, and marketing. The rapid adoption of the technology in learning and training dissection in biology and human anatomy drives the segment growth. Besides, the deployment of 3D animation technology in the government sector is expected to expand at an estimated CAGR of over 11.5% from 2021 to 2028.

Regional Insights
The North American region accounted for the largest revenue share of around 40.0% in 2020. This can be attributed to the presence of several key consumers such as Fox Studio, Disney, and Nickelodeon in the U.S., and the widespread adoption of 3D animation technology & increasing investment in R&D processes by leading players in the regional market. Europe is anticipated to witness a substantial rise in the deployment of simulation technology. This growth can be attributed to the growing demand for the technology in gaming and entertainment sectors. Continuous advancements in technology, along with the increased preference for animated and graphic content, especially in Germany, are driving the regional market.

The Asia Pacific region is expected to observe the fastest CAGR of nearly 13.0% over the forecast period. The rising adoption of innovative 3D technologies in several application areas is driving the growth of the regional market. Research studies conducted in India, Japan, and China to support animation studios are also helping the regional market gain momentum. Within the region, the Japanese market captured a significant revenue share owing to the deployment of the simulation technology across the country’s well-established anime market. Moreover, the vast availability of a skilled workforce in the Asia Pacific region amounts to a low cost of production, therefore driving the regional market growth. Grand View Research