How Netflix Built Its Own Animation Studios to Compete With Disney

Netflix has spent the past few years building a network of animation studios across three continents — acquiring some, partnering with others — in a direct bid to compete with Disney and Pixar. The goal is simple: produce top-quality animated films and shows without relying on other studios to do it.

The company now operates animation teams in Burbank, Vancouver, and Sydney. These aren't just satellite offices. They function as full production studios, handling projects from early concept sketches through final delivery. This global spread mirrors where animation talent has naturally clustered over the last two decades.

The Animal Logic Acquisition

Netflix's biggest animation move came in 2022 when it bought Animal Logic, a Sydney-based studio that had been around for 30 years. Animal Logic, run by co-founder Zareh Nalbandian, had worked on films like "Happy Feet" and "The Lego Movies." It also operated a secondary office in Vancouver.

Buying an established studio gave Netflix something that takes years to build internally: working production pipelines, specialized software, proven processes, and teams that already knew how to move a project from start to finish. Having studios in two key time zones also meant Netflix could keep animation work moving around the clock, which has become standard practice for big projects.

Netflix and Animal Logic are now working together on films like "The Shrinking of the Treehorns" (directed by Ron Howard) and "The Magician's Elephant." These will be the first major films from the combined operation and will show whether the acquisition was worth it.

Japanese Animation Through Partnership

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

This move reflects something important: anime requires different skills and understanding than Western animation. Rather than try to build that expertise from scratch, Netflix partnered with an established Japanese studio. Netflix helps produce and finance the films, gaining insight into how anime studios work, while Studio Colorido stays independent and keeps creative control. It's a middle ground between buying a studio outright and simply paying to distribute someone else's film.

How the Production Network Works

Netflix now splits animation work into two main groups. One handles animated series for all age groups and genres. The other focuses on theatrical-quality films designed for worldwide distribution. The company has already released animated films like "Leo," "The Sea Beast," and "The Mitchells Vs. The Machines" through this setup.

The three locations serve practical purposes beyond just having more studio space. Vancouver sits in a region with tax incentives and a long history of animation work for major studios — lots of trained people live there. Sydney offers similar advantages in Asia and the Pacific region. Burbank keeps Netflix close to Los Angeles talent and gives executives a place to oversee projects directly.

Why This Matters

This strategy follows a pattern Netflix has used before. Back around 2013, the company moved from just buying and showing other studios' content to making its own shows and films. Now it's doing the same thing with animation: identify a type of content where the big studios have all the power, then build the ability to make it yourself.

Animation is especially attractive for streaming services because animated shows and films stay popular for years or even decades. A live-action series might feel dated after a few seasons, but a good animated film can draw new viewers long after it premiered. That means the money Netflix spends on animation keeps paying off for a long time.

There's something else worth noting about Netflix's approach. Traditional studios care most about box office numbers in their home country. Netflix, being a global service, designs animated projects to be released everywhere at once, all available on day one. No staggered rollouts by region, no waiting for theatrical releases.

Looking ahead, Netflix's willingness to buy entire studios and commit to long-term partnerships suggests the company sees animation as central to its future — not just a side product. The technical side of animation, from the massive computers needed to render scenes to the specialized software, requires serious investment. That investment creates a real barrier: only well-funded companies can do it at the scale Netflix is attempting.

By operating studios in different countries, Netflix also gains the ability to navigate tax laws and international co-production rules that have become central to animation financing. Each location gives Netflix options for structuring projects in ways that make both creative and financial sense.

Animation talent remains concentrated in a few cities around the world. Netflix's multi-location strategy lets it tap into different creative communities while not depending too heavily on any single city's labor market or wages. That matters particularly when the industry faces labor shortages or cost spikes.

How well this strategy works will ultimately depend on one thing: whether Netflix can keep making animated films and shows that get people to subscribe and stay subscribed, while also building a back catalog that justifies the long-term investment.