How Netflix Is Building Its Own Animation Studios to Compete With Disney

Netflix is buying and building animation studios across the world — in the United States, Canada, and Australia — to make its own animated films and TV shows. The goal is to compete directly with Disney and Pixar, which have dominated animation for decades.

Until recently, Netflix relied on other studios to make its animated content. Now it is assembling teams and facilities in multiple countries. This shift signals that Netflix sees animation as central to keeping subscribers engaged.

The Animal Logic Acquisition

Netflix's biggest move came in 2022 when it bought Animal Logic, a 30-year-old Australian animation studio. Animal Logic has worked on films like "Happy Feet" and "The Lego Movies."

By buying the studio, Netflix gained immediate access to experienced animators, proven workflows, and technical equipment. Building these capabilities from scratch typically takes years. Animal Logic has offices in Sydney and Vancouver, which means Netflix can now produce work around the clock by handing projects between time zones as one team finishes and another begins.

Netflix is currently working with Animal Logic on films like "The Shrinking of the Treehorns," directed by Ron Howard, and "The Magician's Elephant." These films will show whether the acquisition was a smart investment.

Partnering With Japanese Animation Studios

At the same time, Netflix struck a deal in April 2022 with Studio Colorido, a major Japanese animation studio. The agreement covers at least three feature films, including "Drifting Home," which came out in September 2022.

The partnership reflects a practical choice: anime — Japanese animation — requires different skills and cultural knowledge than Western animation. Rather than trying to build that expertise from scratch, Netflix decided to work alongside Studio Colorido while maintaining creative control over the films. Studio Colorido stays independent, but Netflix co-produces and learns how Japanese animation actually works.

How the Pieces Fit Together

Netflix now operates two separate animation divisions. One handles episodic TV series for all age groups and genres. The other focuses on feature films designed for worldwide release. Films like "Leo," "The Sea Beast," and "The Mitchells Vs. The Machines" came out of this structure.

Netflix maintains studios in Burbank, California (close to entertainment executives and creative talent), Vancouver, Canada (where government tax incentives and decades of animation experience exist), and Sydney, Australia (which serves the Asia-Pacific region and offers similar advantages). Think of it like a factory with production lines scattered across the globe — each location has local talent and government support, but they all feed into the same company.

Why This Matters

The broader context here is that streaming services are building their own content in-house rather than buying it from others. Netflix started down this path in 2013 when it began making original drama and comedy. Animation is simply the latest step.

Animated content holds value longer than live-action shows or films. A well-made animated series can attract viewers for years or even decades. That makes it a valuable asset for a streaming service — it keeps pulling in subscribers long after production costs are paid off.

Netflix also benefits from being able to release animated content worldwide at the same time. Traditional movie studios release films in theaters in different countries on different dates. Netflix can simply upload the same film simultaneously to the entire world, which changes how projects get designed.

The investment required to operate animation studios — fast computers for rendering, specialized software, skilled artists — creates a natural advantage for companies with deep pockets. By building these facilities, Netflix is essentially creating a moat around itself, much like Disney already has.

Netflix's strategy of spreading operations across multiple countries also makes the company less vulnerable to local disruptions. If labor becomes scarce or expensive in one city, Netflix has options in others. It also positions the company to navigate the complex international tax rules and financing arrangements that surround animation production.

In my view, what Netflix does with these studios over the next few years will determine whether this was money well spent. The real test is whether the films and shows generated from this infrastructure will actually attract and keep subscribers — not just whether the facilities can produce technically proficient work. Animation is expensive, and there is no guarantee that Netflix's in-house product will outperform content licensed from other creators.