Global Industry Growth of VFX and Animation, Despite Recent Closures, Unveiled in the World Atlas
Growing VFX and Animation Industry in London Amidst Challenges
The VFX and animation industry in London is currently experiencing positive growth and increased support, thanks to new UK tax incentives that enhance financial benefits for VFX productions.
As of January 1, 2025, the UK's Enhanced VFX Incentive offers a higher Audio-visual Expenditure Credit (AVEC) rate of 39% compared to the standard 34%, with VFX spend excluded from the usual qualifying spend cap. This incentive aims to strengthen the UK's competitive edge in visual effects by making London a more attractive location for high-end VFX work.
In animation, London's industry remains robust with strong educational foundations. Escape Studios, a prominent training institution based in London, has been ranked fifth in the UK and highly in Europe and internationally for animation education in 2025. This indicates a skilled talent pipeline feeding into the local industry.
However, the sector faces challenges such as major broadcasters like Sky ending commissions for original children's content, which could impact the children's animation segment. Despite such setbacks, advocacy groups like Animation UK continue to push for industry growth and resilience.
Recent accolades for student and independent VFX projects, such as the London-based short films "Mini Mail" and "Socks To Be You" winning awards, highlight the vibrant creative environment and emerging talent in London’s VFX scene.
London is more than twice as large as its closest European rival, Paris. The UK Screen Alliance has found that 71% of its member companies have seen an increase in sales enquiries since the introduction of the VFX uplift. The data was collected quarterly from 120,000 professionals associated with 2,450 studios.
The global VFX and animation workforce saw a growth of 9.3% in the second half of 2024, followed by a contraction of 7.6% in the first six months of 2025, resulting in an annual net industry growth of 1%. With the introduction of the VFX uplift, VFX companies are showing increasing confidence in a return to sustained growth in excess of 5% over the next 12 months.
The impact of the tax incentives in the UK is yet to be fully felt, with improvements only just becoming apparent. The UK Screen Alliance considers the VFX and Animation World Atlas as an invaluable data source for the industry. Neil Hatton, CEO of UK Screen Alliance, stated that the UK's VFX industry has an unrivaled reputation for success and innovative crews.
Despite the recent job losses at The Mill, MPC, and Jellyfish Pictures, resulting from the Technicolor collapse and leading to the loss of around 500 jobs in the UK, London remains the largest city hub in Europe, providing employment for 10,564 people in the sector.
The UK screen sector has responded to the government's Creative Industries Sector Plan. The VFX and Animation World Atlas has released its 2025 edition, which is available for download at www.vfxatlas.com. The UK is now viewed as a priority destination for VFX by many productions due to its competitive tax incentive.
In summary, the London VFX and animation industry is actively growing and adapting, largely buoyed by government incentives and strong education, despite some market headwinds in children's media content.
- The enhanced finance incentives in the UK, such as the higher Audio-visual Expenditure Credit (AVEC) rate for VFX productions, have led to technology advancements within the VFX and animation industry in London, aiming to make London a global hub for high-end VFX work.
- Amidst challenges in children's media content commissions, London's VFX and animation industry continues to have a competitive edge due to strong educational foundations and skilled talent pipelines from institutions like Escape Studios, promoting future technological developments in the sector.
