The French studio Xilam Animation, known for series like Oggy and the Cockroaches, Zig & Sharko, and Karate Sheep, has experienced a drastic 41% drop in its revenues during 2024. This crisis reflects the impact that the animation industry's recession is having on various studios around the world.
The Causes of the Crisis in Animation
Xilam Animation's CEO, Marc du Pontavice, attributes this sharp decline to the sudden reduction in demand for animated content, a problem affecting the entire industry.
The main streaming platforms have shifted their focus in recent years. Previously, they prioritized expansion, investing huge sums in content production and acquisition to attract new subscribers. However, market saturation has led to a strategic shift: they now seek profitability, cutting costs and reducing investments in children's animation.
"The animation market has changed drastically, and studios must adapt to a new business model where profitability takes precedence over expansion."
The AnimFrance union had already warned about this trend, but the speed and magnitude of the change caught many studios by surprise, and they now face serious difficulties.
Xilam Tries to Maintain Financial Stability
Despite the crisis, Xilam has managed to maintain its profitability thanks to strong performance in catalog sales in the second half of the year. According to the company, revenues from licensing and distribution of content only fell by 11%, compared to the overall 41% drop.
The studio has also implemented cost cuts and resource optimization, with the goal of saving 3 million euros annually. Additionally, Xilam highlights that it has no debts, which gives it some flexibility to face the crisis.
Plans for 2025: Diversification and Reconstruction
For 2025, Xilam will seek to rebuild its order portfolio, leveraging the strength of its brand and its key position within the global animation industry. Its strategy will include:
- Greater balance between commissioned work and own productions.
- Reduction of dependence on external services, which in 2024 accounted for 70% of its revenues.
- Investment in original content to differentiate itself in an increasingly competitive market.
According to Marc du Pontavice, the studio has the capacity to recover as soon as the market allows, although he acknowledges that 2025 will still be a challenging year.
Uncertainty and Stock Drop
Despite Xilam's efforts to reassure investors, uncertainty persists. The company has warned that, due to the lack of clarity about the market's future, its results could be affected by adjustments in the valuation of its catalog and acquired assets, such as Cube Creative.
As a result of these announcements, Xilam shares fell by more than 30%, reaching a price of 2.47 euros, far from its all-time high of 69 euros in 2018.
An Uncertain Future for the Animation Industry
The crisis in the animation industry continues to affect renowned studios like Xilam Animation, which faces a sharp drop in revenues due to cuts in children's content production by streaming platforms. Although the company maintains financial stability and seeks to diversify, 2025 will remain a challenging year, with uncertainty about market recovery.