AI in VFX Market – Forecast (2023-2030)

The AI in VFX market size is forecast to reach USD 714.2 million by 2030, after growing at a CAGR of 25% during the forecast period 2023-2030. Due to technological improvements and shifting industry demands, the AI in VFX market is expanding for several applications. Traditional approaches can become more expensive and time-consuming as the demand for more realistic and intricate visual effects in films, TV shows, and ads rises. The VFX production pipeline can be made more productive and economical by using AI to automate and streamline some processes.

The report “AI in VFX Market – Forecast (2023-2030)”, by IndustryARC, covers an in-depth analysis of the following segments of the AI in VFX market.

By Component: Software, Services, Hardware.

By Technology: Artificial Intelligence, Augmented Reality.

By Product: Simulation FX, Animation, Modelling, Matte Painting, Compositing, Others.

By Application: Movies, Television, Gaming, Advertisements, Others.

By Geography:  North America, South America, Europe, and APAC.

• North America held the largest market share with 42% in 2023. North America is home to the majority of Hollywood and the entertainment sector. To stay competitive, big studios, production companies, and content producers in the area quickly implement cutting-edge technologies. These entities can create high-quality content quickly thanks to the application of AI in VFX.

• Over the years, the visual effects industry has experienced tremendous evolution, and the introduction of artificial intelligence (AI) has changed the game. Artificial intelligence (AI) has been utilized to enhance the overall quality of visual effects by automating some procedures. However, as AI spreads throughout the sector, concerns are raised about how it may affect VFX in the future.

• For instance, in 2023, aiming to ensure the UK's multibillion-pound television and film industry is future-proof the UK government committed nearly £150 ($188.33) million to establishing a nationwide network of research laboratories tasked with creating the next wave of special effects through the application of technology like artificial intelligence. The program, which is a part of larger initiatives to boost the UK creative economy, attempts to build on Britain's reputation for creating high-tech hits, such as Star Wars and Harry Potter.  The rise in government support and investments is also anticipated to drive the AI in VFX industry. 

Services dominated the AI in VFX market in 2023. The increasing need for visual effects in films, TV shows, and video games around the world is driving the expansion of the global VFX services market. Furthermore, the increasing usage of virtual reality (VR) and augmented reality (AR) technologies is fueling the growth of the worldwide VFX services market. Enterprises are spending heavily on AI services these days to maximize the strength of their operations. They are using the technologies to carry out operations such as forecasting, planning, and predictive maintenance, as well as customer care chatbots and other applications. The rapid growth of technology in recent years has created a new threat situation, prompting businesses to investigate innovative defense strategies. If AI is integrated into cybersecurity, security specialists will have enormous resources to defend sensitive networks and avert future data breaches.

Artificial Intelligence dominated the AI in the VFX market in 2023. AI is transforming the film industry by speeding up VFX processes, opening up new creative possibilities, and redefining the role of human creativity in the age of smart VFX. Visual effects (VFX) have become an essential aspect of practically every film, although the process was once laborious. Increased collaboration to expand the AI market size and the adoption of advanced technologies are two factors fueling the AI market's growth. 

Animation dominated the AI in VFX market in 2023. AI technology is being utilized to automate tasks like character animation and facial expressions, as well as to generate new content. For instance, Pixar's Elemental uses AI to animate Ember, a protagonist formed of flames. The team-built effects pass on every frame, which is a time-consuming operation even with the GPUs Pixar utilizes. As a result, they collaborated with a technique known as Neural Style Transfer, which allows visuals to move like voxels in animation. DisneyResearch|Studios (DRS) employs AI to reorganize the film production and distribution pipeline in order to make the process more efficient and cost-effective. Disney employs AI to generate synthetic individuals, virtual production, and deep video processing, among other things.

Television dominated the AI in the VFX market in 2023. The VFX (visual effects) market in television has been growing rapidly in recent years. With the increase in high-quality television productions, there has been a rising demand for visual effects to enhance storytelling and create immersive viewing experiences. For instance, Cinesite purchased the majority of VFX Studio FX3X in August 2022. The acquisition greatly increases and adds a deep roster of talent in creative manufacturing and VFX supervision. The ability of Cinesite to serve customers more effectively and broadly in both motion pictures and intermittent television. The rise in acquisitions and partnerships among television production houses is also anticipated to drive market growth. One of the main factors driving this growth is the increasing demand for visually stunning and immersive television shows. Audiences now expect high-quality visual effects, and production companies are willing to invest in VFX to deliver visually captivating content. Moreover, advancements in VFX technology have made it more accessible and affordable for television productions.

North American AI in VFX market generated a revenue of $61.5 million in 2023 and is projected to reach a revenue of $272.5 million by 2030 growing at a CAGR of 24% during 2023-2030. Technological innovation is centered in North America, especially in the United States. Numerous top IT businesses and research institutes that are at the forefront of AI technology development are located in the region. The integration of AI in VFX is facilitated by the partnership of these organizations with the entertainment sector. On 19th January 2023, Monsters Aliens Robots Zombies (MARZ), the visual effects (VFX) studio and AI technology firm that helps Hollywood create feature-film level VFX on TV schedules, introduced Vanity AI, its first AI for VFX solution. Vanity AI is the first fully automated, end-to-end artificial intelligence (AI) solution for Hollywood visual effects (VFX).

In 2022, Wonder Dynamics, an American media tech business, launched a production tool enabling filmmakers to achieve blockbuster-level VFX at a low cost. It makes it easier to generate creative content by leveraging AI and cloud technologies. On 25 May 2022, Autodesk announced an investment in RADiCAL, a New York-based creator of an AI-powered 3D motion capture system built in the cloud. This Autodesk investment will fuel RADICAL's efforts to enhance its market-leading AI to service a growing community and assist professional animation and VFX processes.

Drivers – AI in VFX Market

An important trend contributing to the growth of the AI in VFX market is the adoption of modern technologies by creators. The creation of high-quality scripted media has been facilitated by the usage of cloud services for content creation has increased the need for visual effects and animation. With the use of these technologies, artists may produce more captivating effects faster and more effectively. The market for AI for visual effects is expanding rapidly due to the growing demand for high-quality video in the film industry. Filmmakers strive to incorporate inventive shots that are unfeasible to shoot in real life due to safety concerns. This draws viewers, which contributes to the growth of the visual effects industry Globally. AI tools in VFX are being used by filmmakers to tell their stories

In May 2022, DNEG, a major visual effects and animation business, officially launched a new studio called Toronto Visual Effects and Animation in Toronto's King West sector, employing approximately 150 people.  It is still hiring for this new studio and is considering expanding it further dependent on client demand for its premium animation and visual effect services.

The creation of multiple training programs, software, and e-learning platforms that incorporate simulated information and videos into this region's curriculum is predicted to fuel significant growth in the education and academic market. Many educational institutions want to incorporate simulation technology into their educational systems, allowing students to learn in a more advanced setting. The adoption of animation and VFX solutions is primarily driven by two developments. Some end-user sectors, particularly film, are experiencing an increase in production value or expenses. This is mostly due to increased international distribution as a result of digital theaters. Second, writers and directors are more willing to accept scripts that require VFX. As a result, production companies are increasingly seeking larger projects that can only be completed with VFX and simplified platforms. They have also expanded the types of content that are released.

Through the use of animation and VFX in TV, advertising, and gaming, there is a spike in 3D-UHD animated movies in theaters. Outsourcing of VFX procedures is also increasing due to its cost-effectiveness. Thus, the emphasis on the "kids" genre, as well as the expanding popularity of video streaming, are expected to drive market demand in emerging nations. In July 2022, Netflix bought Animal Logic, the world's leading independent animation studio. For almost 30 years, Animal Logic has created award-winning designs, visual effects, and animation. This acquisition would improve existing business and increase long-term capability in the animation industry, providing members throughout the world with superior entertainment.

Employees are finding it tough to stay up with advances in VFX technology. The required expertise must be updated, and market courses do not update their content on a regular basis, resulting in a shortage of qualified persons with applicable certifications and requirements as technology improves day by day. Keeping up with technology challenges is having a detrimental impact on the visual effects sector. A lack of technical and creative ability is lowering the number of qualified candidates for open positions. Professionals with the necessary degrees, work experience, and skill sets are asking for large pay packages. As a result, VFX studios and post-production companies are unable to hire qualified artists. The hiring procedure is heavily reliant on online sites. Job openings are either posted on the company's website or a related career website. To fill these positions, VFX companies seek artists from other nations. The number of VFX-related job openings is growing, yet VFX businesses are struggling to break even on blockbuster films. As a result, VFX companies are unable to meet the expanding needs of film studios, stifling global market growth.

Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the AI in VFX market. in 2023, The major players in the AI in VFX market are Framestore, Animal Logic, Loom AI, Rodeo FX, Industrial Light & Magic, Weta Digital, Pixomondo, Adobe, Others.

 In June 2023, through a collaborative project, Omnicom Group Inc. and Adobe have further enhanced the partnership, enabling their shared clients to benefit from enterprise generative AI capabilities. Omnicom is the first holding company with access to Adobe Firefly models. Using Omni data, the open operating system from Omnicom, and Adobe Firefly creative generative AI models, Omnicom can produce on-brand content that aids marketers in coordinating better results.

 In July 2022, Netflix, the massive streaming service, revealed, that it had purchased Animal Logic, an animation studio located in Sydney, Australia. Animal Logic has previously worked on films such as "Happy Feet." In order to strengthen its capacity for producing animation from start to finish, Netflix will benefit from this. As stated in the company's statement, Netflix hopes to expand on the success of animated movies like "Over the Moon," "Klaus," and "The Sea Beast" by giving them more visibility.