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2011 Global Entrepreneurial Company of the Year Award - Animation Software

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Toon Boom receives the 2011 entrepreneurial company of the year award for animation software.

Toon Boom receives the 2011 entrepreneurial company of the year award for animation software.

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  • 1. BEST PRACTICES RESEARCHEntrepreneurial Company of the Year AwardAnimation SoftwareGlobal, 2011Frost & Sullivan’s Global Research PlatformFrost & Sullivan is in its 50th year in business with a global research organization of 1,800analysts and consultants who monitor more than 300 industries and 250,000 companies.The company’s research philosophy originates with the CEO’s 360 Degree Perspective™,which serves as the foundation of its TEAM Research™ methodology. This unique approachenables us to determine how best-in-class companies worldwide manage growth,innovation and leadership. Based on the findings of this Best Practices research, Frost &Sullivan is proud to present the 2011 Global Entrepreneurial Company of the Year Awardin Animation Software to Toon Boom.Key Industry ChallengesMarket Penetration in a Concentrated Market is a Challenge for Smaller CompaniesFrost & Sullivan’s analysis shows that the otherwise crowded global animation market withover 30 vendors is a highly concentrated one with the top three comprising nearly 67.0percent of the market share in 2011. It has been that way for several years now. The toptwo companies not only have the largest market shares, but also strong brand names anda broad product range that allows them to address multiple types of customer challengesand growth opportunities at home and in international markets. The success of these twocompanies is based not just on those factors; they offer high-quality feature-rich productsat competitive prices as well.This scenario represents forbidding challenges for the rest of the vendors. In acompetitive, yet concentrated landscape, it becomes important to acknowledge a companythat has demonstrated growth driven by product innovation, marketing andimplementation of well-rounded strategy to strengthen its position in the market.Responding to Multiple Customer Segments with Relevant Feature Upgrades andAdding Innovative Features in a Consistent Manner is an Ongoing ChallengeWhile professionals as a customer segment still account for majority of the revenues inthe animation market, the prosumer and hobbyist segment have become essential togrowing revenue over the past few years. However, this also implies a significantchallenge of catering to product upgrade requirements of multiple, and different kinds ofcustomer segments. While the professional segment drives much of the innovation infeatures, the hobbyist/prosumerist segment also increasingly demands advanced features© 2011 Frost & Sullivan 1 “We Accelerate Growth”
  • 2. BEST PRACTICES RESEARCHfor creating complex animation with 3D products. Incorporating new features forhobbyists/prosumers and professionals simultaneously is a daunting task and a challengeon company resources.Notwithstanding the challenges, there are some important areas of growth related toopportunities in emerging markets, as well as verticals such as the education market,expansion into visual effects, and the lucrative market of content consumption on mobiledevices.The ‘Entrepreneurial Company of the Year’ Award underscores the steps taken by ToonBoom to address these challenges and opportunities as a core part of its growth strategy.Impact of Entrepreneurial Company of the Year Award on Key StakeholdersThe Entrepreneurial Company of the Year Award is a prestigious recognition of Toon BoomAnimation Inc’s accomplishments in the Animation Software market. An unbiased, third-party recognition can provide a profound impact in enhancing the brand value andaccelerating Toon Boom’s growth. As captured in Chart 1 below, by researching, ranking,and recognizing those who deliver excellence and best practices in their respectiveendeavors, Frost & Sullivan hopes to inspire, influence, and impact three specificconstituencies: • Investors Investors and shareholders always welcome unbiased and impartial third-party recognition. Similarly, prospective investors and shareholders are drawn to companies with a well-established reputation for excellence. Unbiased validation is the best and most credible way to showcase an organization worthy of investment. • Customers Third-party industry recognition has been proven to be the most effective way to assure customers that they are partnering with an organization that is leading in its field. • Employees This Award represents the creativity and dedication of Toon Boom’s executive team and employees. Such public recognition can boost morale and inspire employees to continue their best-in-class pursuit of a strong competitive position for Animation Software.© 2011 Frost & Sullivan 2 “We Accelerate Growth”
  • 3. BEST PRACTICES RESEARCH Chart 1: Best Practices Leverage for Growth AccelerationKey Benchmarking Criteria for Entrepreneurial Company of the Year AwardFor the Entrepreneurial Company of the Year Award, the following criteria were used tobenchmark Toon Boom’s performance against key competitors: • Growth Strategy Excellence • Growth Implementation Excellence • Degree of Innovation with Products and Technologies • Leadership in Customer Value • Speed of Response to Market NeedsDecision Support Matrix and Measurement CriteriaTo support its evaluation of best practices across multiple business performance categories,Frost & Sullivan employs a customized Decision Support Matrix (DSM). The DSM is ananalytical tool that compares companies’ performance relative to each other with anintegration of quantitative and qualitative metrics. The DSM features criteria unique to eachAward category and ranks importance by assigning weights to each criterion. The relativeweighting reflects current market conditions and illustrates the associated importance ofeach criterion according to Frost & Sullivan. Fundamentally, each DSM is distinct for eachmarket and Award category. The DSM allows our research and consulting teams toobjectively analyze each companys performance on each criterion relative to its topcompetitors and assign performance ratings on that basis. The DSM follows a 10-point scalethat allows for nuances in performance evaluation; ratings guidelines are shown in Chart 2.© 2011 Frost & Sullivan 3 “We Accelerate Growth”
  • 4. BEST PRACTICES RESEARCH Ch a rt 2: Pe rfo rma nce -B as ed Ra ting s f o r D e c is io n S u p po r t Ma t r i xThis exercise encompasses all criteria, leading to a weighted average ranking of eachcompany. Researchers can then easily identify the company with the highest ranking. As afinal step, the research team confirms the veracity of the model by ensuring that smallchanges to the ratings for a specific criterion do not lead to a significant change in theoverall relative rankings of the companies. Ch a rt 3: Fro s t & Su lliva n’ s 10- S te p Proc e ss fo r Id e ntify ing Aw a rd R ec ip ien tsBest Practice Award Analysis for Toon Boom Animation Inc.The Decision Support Matrix, shown in Chart 4, illustrates the relative importance of eachcriterion for the Entrepreneurial Company of the Year Award and the ratings for eachcompany under evaluation. To remain unbiased while also protecting the interests of theother organizations reviewed, we have chosen to refer to the other key players asCompetitor 1 and Competitor 2.© 2011 Frost & Sullivan 4 “We Accelerate Growth”
  • 5. BEST PRACTICES RESEARCH Ch a rt 4: De c is ion Sup p o rt M a trix f o r Entrepreneuria l Company of the Year Award Measurement of 1–10 (1 = lowest; 10 = highest) Award Criteria Growth Strategy Excellence Products and Technologies Degree of Innovation with Growth Implementation Leadership in Customer Speed of Response to Weighted Rating Market Needs Excellence Value Relative Weight (%) 20% 20% 20% 20% 20% 100% Toon Boom Animation Inc. 9.5 9.0 8.5 9.5 9.0 9.1 Competitor 1 8.5 8.5 8.3 9.3 8.0 8.5 Competitor 2 7.5 7.5 8.5 8.5 8.0 8.0Criterion 1: Growth Strategy ExcellenceFrost & Sullivan’s research reveals that Toon Boom Animation adopted a well-roundedgrowth strategy to capture opportunities in the animation software market. For the pastseven years, Toon Boom has consistently added products to broaden its offerings,emphasized and refined its key differentiating features, expanded into verticals other thanmedia & entertainment, and continued to strengthen its position in emerging markets.Canada headquartered Toon Boom’s revenue is primarily driven by international markets,both developed and developing economies. It has been present in emerging markets forsome years now, but in 2010-2011, it increased its efforts to capitalize on the growingdemand in those markets.Compared with its competitors, Toon Boom exhibited focused multi-dimensional strategiesto meet its objectives. Consequently, Frost & Sullivan’s independent analysis shows thatToon Boom Animation has been able to post double-digit growth rate annually for the pastthree years. Toon Boom’s compounded annual growth rate in the overall (2D and 3D)animation software market was among the highest from 2008 to 2011.Criterion 2: Growth Implementation ExcellenceToon Boom has been swift and meticulous in the implementation of its above statedstrategiesThe company expanded its product line to enable it to compete in new verticals and/oraddress new customer segments, and, alongside consistently added refining features to© 2011 Frost & Sullivan 5 “We Accelerate Growth”
  • 6. BEST PRACTICES RESEARCHupgrades. The Harmony Solution is its primary high-end animation product focused onprofessional studios. To implement its decision to expand into other verticals and addressother customer segments, Toon Boom added Animate for entry-level professionals; ToonBoom Studio for students, teachers, and hobbyists; Flip Boom Doodle, Flip Boom Cartoon,Flip Boom All-Star and Animation-ish for hobbyists and prosumers of all skill levels. Thelatter group of products includes very easy to use animation software for creatinganimations such as greeting cards, websites, presentation, school projects, etc. While thecompany encourages colleges to train students on Harmony, they offer a suite of productsfor school education- kindergarten through twelfth grade-such as Flip Boom Classic(primary school), Flip Bloom All-Star (middle school), and Toon Boom Studio (secondaryschool). Toon Boom also enables quick sharing of animations on social networkingwebsites.Toon Boom also offers storyboarding and comic strip creation software tools. Based oncustomer feedback, it recently acquired a comic strip product Comic Boom, which allowsusers to create four-panel stories or messages and includes pre-made templates. Again,the final product can be published online. These related products enable Toon Boom tohave a broader and comprehensive product line.Frost & Sullivan believes that Toon Boom’s most successful growth strategyimplementation has been in its efforts to support and leverage the increasing demand ininternational markets, especially the emerging markets. Frost & Sullivan recognizes thatToon Boom started with a strong presence in China, Korea, Taiwan, and the Philippines,and then expanded into India, Africa, Middle East, and South America, and more recentlythey have begun to address opportunities in the Caribbean in countries such as Trinidadand Tobago, Jamaica, Barbados, Guyana, and Grenada.It has created a greater push for use of its products in colleges for formal training and haslent its expertise and knowledge to new animation studios in enabling them becomeworld-class studios to initially create outsourced animation work and eventually their owncontent. They coordinate information exchange sessions between studios in India andNorth America. For instance they coordinated an information exchange sessions betweenstudios in India and Hollywood. Not only is it responding to the demands in thesemarkets, but also creating awareness with regards to best practices of animation creation.Toon Boom has established strong in-person relationships in these markets andunderstands the nuances of the local demand trends as well as the challenges of theemerging animation studios. In October 2011, Toon Boom announced that GMT TriadMedia Solutions Pvt. Ltd., an animation studio based in India, had adopted the Toon BoomPipeline, which would include the following products Storyboard Pro, Toon Boom Managerand Harmony.Competitors one and two have leveraged their respective core expertise to respond tomarket trends and continue to monitor market trends for future strategies, but compared© 2011 Frost & Sullivan 6 “We Accelerate Growth”
  • 7. BEST PRACTICES RESEARCHwith Toon Boom, their response could be viewed as being based on existing strengths.Their strategy has not created new areas of excellence or expertise for the companies.Criterion 3: Degree of Innovation with Products and TechnologiesFrost & Sullivan finds that innovation in product features or consistent upgrade of productswith new, relevant, and innovative features is one of the most important competitivefactors in this market. Hence, all three companies have been very responsive andcompetitive with regard to this parameter.Toon Boom added some important innovative features in a timely manner that haveenabled it to address a broader range of opportunities - it strengthened its product lineManager that allows for very efficient virtual collaboration on global projects; it enabledthe import of 3D objects into its pipeline to allow for the creation of “mixed media” (2Dand 3D objects) animation; and, also allowed for manipulation of objects in 3D space.Both these introductions enable Toon Boom to respond to trends related to creation of ananimation project in multiple geographic regions and the use of mixed media for a desiredlook and feel and flexibility in costs.Toon Boom’s most important innovation is perhaps related to the methodology itdeveloped to determine the number of people needed in a production pipeline and exactlywhat their productivity will be; it is easy to tell that this feature enables for a better andmore efficient planning of projects.Toon Boom continues to work with its three close technology partners – Nelvana, WaltDisney, and Apple to refine their products and add innovative features in response tocustomer demand and market trends.Criterion 4: Leadership in Customer ValueFrost & Sullivan’s research reveals that Toon Boom creates value for its customers in threeways – one, by providing extremely feature-rich high-end products; two, by focusing onease of use and creativity in its hobbyist, student, and teacher products; and three, bylending its deep and broad understanding of the animation technology and customerrequirements. These three factors, in fact, tie directly into Toon Boom’s growth strategyexcellence. Its experience in this market has enabled it to establish a very distinctapproach to geographic expansion, unlike many other companies that have resorted toeither online retail or channel partners solely for creating presence in other regions. ToonBoom understands that in addition to formal channel partners, a company needs tounderstand production challenges and local demand trends in a region to be able toaddress the growth in those regions.Frost & Sullivan’s competitive benchmarking in the Animation Software Market clearlyshows that competitors one and two address customer value differently and in the case of© 2011 Frost & Sullivan 7 “We Accelerate Growth”
  • 8. BEST PRACTICES RESEARCHtheir strategy it is restricted in its comprehensiveness; Competitor 1 has focused on easeof use of its products, but it is limited in terms of types of customers it focuses on and thevertical segments that it has targeted. Competitor 2 has relied mostly on its producttechnology capabilities to create customer value.Criterion 5: Speed of Response to Market NeedsAlong with innovation in products and technologies, speed of response to market needs isextremely critical in the animation market. The market’s concentrated nature andcompetitive nature require that companies respond to trends in a timely manner. ToonBoom’s growth strategy and product innovations are prime examples of its ability torespond to market needs in a speedy manner. Toon Boom has been in the animationbusiness for more than ten years, and in the past decade it has continuously added orupgraded products in a proactive and timely manner. In Frost & Sullivan’s opinion, ToonBoom has accelerated its efforts to strengthen its position in emerging markets andmaking its product more suitable for 3D production or 2D/3D productions. Itsdevelopment of the 3D storyboarding product, in 2011 proved to be a quick response tocustomer demands.The timeliness of these actions is critical. Frost & Sullivan estimates Asia-Pacific region togrow at a compounded annual growth rate of 11.8 percent, the highest among all thegeographic regions. And Toon Boom’s dedicated focus on this region will leverage theincreasing demand from this sub-continent.Competitor 1 has introduced features that respond to its core customer segmentrequirements. Competitor 2 expanded its product features capability to address demand inthe visual effects segment.ConclusionViewed comprehensively, Toon Boom’s strategy is to position itself as a leading vendor ofdigital content creation tools and not just an animation software company. Animation isstill its core expertise, but it is employing this expertise for expansion into other verticals,customer segments, and related applications. To accomplish this objective, Toon BoomAnimation has taken several steps on multiple levels – products, technology, verticals,geographic presence, and even its organizational strategy (it has 46.0 percent immigrantemployees in the company and covers 21 languages). Toon Boom Animation has been aleader in the 2D animation market, but looking forward it is well-positioned to leveragecreative mixed 2D and 3D opportunities as well the growth in markets such as India andChina in Asia-Pacific; Frost & Sullivan firmly believes that the company is poised tostrengthen its competitive position and gain further market presence in the globalanimation market.© 2011 Frost & Sullivan 8 “We Accelerate Growth”
  • 9. BEST PRACTICES RESEARCHBased on the aforementioned criteria, Frost & Sullivan is proud to present the 2011 GlobalEntrepreneurial Company of the Year Award in Animation Software to Toon Boom.The CEO 360-Degree Perspective T M - Visionary Platform for GrowthStrategiesThe CEO 360-Degree Perspective™ model provides a clear illustration of the complexbusiness universe in which CEOs and their management teams live today. It representsthe foundation of Frost & Sullivans global research organization and provides the basis onwhich companies can gain a visionary and strategic understanding of the market. The CEO360-Degree Perspective™ is also a “must-have” requirement for the identification andanalysis of best-practice performance by industry leaders.The CEO 360-Degree Perspective™ model enables our clients to gain a comprehensive,action-oriented understanding of market evolution and its implications for their companies’growth strategies. As illustrated in Chart 5 below, the following six-step process outlineshow our researchers and consultants embed the CEO 360-Degree Perspective™ into theiranalyses and recommendations. Chart 5: The CEOs 360 Degree Perspective™ Model© 2011 Frost & Sullivan 9 “We Accelerate Growth”
  • 10. BEST PRACTICES RESEARCHCritical Importance of TEAM ResearchFrost & Sullivan’s TEAM Research methodology represents the analytical rigor of ourresearch process. It offers a 360 degree view of industry challenges, trends, and issues byintegrating all seven of Frost & Sullivans research methodologies. Our experience hasshown over the years that companies too often make important growth decisions based ona narrow understanding of their environment, leading to errors of both omission andcommission. Frost & Sullivan contends that successful growth strategies are founded on athorough understanding of market, technical, economic, financial, customer, bestpractices, and demographic analyses. In that vein, the letters T, E, A and M reflect ourcore technical, economic, applied (financial and best practices) and market analyses. Theintegration of these research disciplines into the TEAM Research methodology provides anevaluation platform for benchmarking industry players and for creating high-potentialgrowth strategies for our clients. C h a r t 6: B e n chm a rk i n g Pe rf o rm an c e w i th TE AM Re s ea r chAbout Frost & SullivanFrost & Sullivan, the Growth Partnership Company, enables clients to accelerate growthand achieve best-in-class positions in growth, innovation and leadership. The companysGrowth Partnership Service provides the CEO and the CEOs Growth Team with disciplinedresearch and best-practice models to drive the generation, evaluation and implementationof powerful growth strategies. Frost & Sullivan leverages 50 years of experience inpartnering with Global 1000 companies, emerging businesses and the investmentcommunity from more than 40 offices on six continents. To join our Growth Partnership,please visit http://www.frost.com.© 2011 Frost & Sullivan 10 “We Accelerate Growth”