Marla Rausch – The Billion Dollar 3D Animation Industry

Welcome to another episode of the Outsource Accelerator podcast this is episode number 144 and my name Derek Gallimore so today I’m really excited to be joined again by Marla Rausch of Animation Vertigo we spoke previously to Marla in episodes 138 and 141, I really commend you go back and listen to these if you find our conversation interesting Marla is a super interesting person she was born in the Philippines and is now taking on the highly sophisticated world of graphics and animation over there in the US and partly LA so really exciting conversation. Today, we talk to Marla more broadly about the development of the Philippines, the development of high skilled servicing roles in the Philippines. Really good conversation, really inspiring conversation, I certainly learned a lot. I hope you enjoy, if you want to get in touch with Marla know anymore about Animation Vertigo or just get any of the show notes then go to outsourceaccelerator.com/144 enjoy

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Derek: Ok welcome back everybody, again I’m super excited to be joined by Marla Rausch of Animation Vertigo we have interviewed, Hi Marla how are you?

Marla: I’m well, thanks Derek.

Derek: Fantastic and we have had a chat 2 times before now and we have sort of explored Animation Vertigo and i just want to talk to you more broadly about the future, the future of animation, the future of the Philippines, the future of outsourcing, so super exciting topic and I suppose initially Marla would you mind just giving the guys, the audience an introduction to yourself?

Marla: Absolutely, I’m Marla Rausch, don’t let the name fool you, i am born and raised in the Philippines, moved to the US. CEO and founder of Animation Vertigo and Animation Vertigo Asia, we do motion capture animation for film, tv and video games, we’re the ones that make fantasies come true, how’s that?

Derek: That’s a good elevator pitch, It is amazing, and I was actually you know I notice more and more animation agencies here in the Philippines of or kind of gaming or it’s becoming a huge industry isn’t it and one of the guys I spoke to he said actually that the gaming revenues are now bigger than movie revenues it’s really a massive industry isn’t it?

Marla: It’s very true, actually one of the secrets I should say I don’t know if it’s a secret, badly kept secret in the industry was that to the animation has been around in the 70’s hanna-barbera cartoons are being done in the Philippines, Flintstones and Jetsons which i loved as I child they were done in the Philippines. Scooby Doo studio animation, so it was actually something that i learned a few years ago when i was doing the company and i was like really and you know it was great because you have these massive artists in the Philippines that can do so much and they were in 2D and to this day they’re here and they’re doing a ton of work in Disney and Nickelodeon and you know the adult swim and stuff and the 2D animation is so huge market here and even more so because there’s so many more avenues for media you know now that you have Netflix and hulu and amazon there’s just so much content that’s necessary.

Derek: And like art itself, I suppose the delivery of videos is becoming more and more diversified isn’t it, like we were chatting earlier and saying now that there’s all these fancy 3D rendering is there no longer going to be the common cartoon where is, but you were saying no absolutely they’re all still valid and this is another point from the gaming guy I said now there’s all this fancy first person shooting marks with 3rd is that going to demolish  candy crush kind of 2D basic interface and he said no because there’s different taste and it really is as broad as art itself isn’t it?

Marla: it really is and you know if they ever destroy candy crush I will be crushed because that is my guilty pleasure.

Derek: wow I didn’t realize, no judgment of course but I actually don’t get the concept it’s so super simple.

Marla: it is! I stopped playing that, I’m now playing toy blast and it’s similar to that and that’s a stupid stupid silly game but I love it and I’m level 1,175 now and you know whenever there’s a tournament, I’m always participating and my husband is like you’ve got to work and I’m like yeah but I just need to finish this board so yes there is a place for every available content. It’s just about who you’re going to be attracting to that I’ve never played first person shooters, my clients are going to kill me for saying that but I get dizzy when they keep turning around but i do play the more psycho thrillers like Heavy Rain and Beyond 2 souls so I like those cause they kind of pull out your emotions which is something I like to feel in apparently in a video game.

Derek: I don’t really play any of them but in terms of kind of consumer entertainment, I know I should really get up to speed shouldn’t I, I don’t have the time actually but if you talk about consumer entertainment generally it’s just getting so broadening because you obviously have books and now they’re getting a little bit old but you have every type of kind of written content, you have movies and then you have this animation and you have all these games, it really is broadening to such an extent. so let’s talk about you started Animation Vertigo back in 2004 and you built a team solely based here, you have your kind of servicing of a very high end, high skill sector and it’s all based here in the Philippines. How do you see the potential because I am a big proponent of outsourcing here in the Philippines and i think that there is such potential for the Filipinos to make this more than just a city of call centres but make it highly highly skilled and then there’s an opportunity not only in the Philippines but also companies in the west that want high end services done for them at you know good quality and good price where do you see all these ending up in 20 – 30 years, is it one market place?

Marla: I definitely see that I think already we’re looking at a global market where you can look at you know finding services in the UK, in Serbia, in India, in China for various things and in fact when i think about when i do breaking news when i do my own ip when I start doing when i want to do my own, to create my own content, I would need to start identifying areas who are going to reach out and have them basically do certain parts of that content.  These days the idea of doing everything in 1 place is no longer financially or physically possible. It costs a lot to do what we do, it costs a lot to create the you know 200 million dollar movie so you try to find ways where you can still get great quality and not pay so much so that you don’t need to do a temple on a movie when you’re trying to create one, I see the Philippines in that but I see it as they need to kind of do something now to be able to compete it’s a market where we’re really good in talented artistically,  we communicate we speak english, we have a lot of things going for us but we need to have a stronger infrastructure, we need to have a stronger, I think we need to have a broader idea on education. We are still stuck on a 4 year course college course that will teach you everything but there should be some value in technical vocational courses that will be for highly skilled people that know they want to do at an early age and get that happening and that’s a lot of work cause it’s a culture change.

Derek: It is and I think because obviously there’s huge disparity in this society there’s they say still 80% that are unbent and you know there’s a huge sort of population that still don’t meet minimum kind of educational levels, but I do say that there is growing potential to self educate to enter the world economy if you only have access to maybe a laptop and the internet which is still the big ask for people but it’s now only around the corner isn’t it, as suppose to I think 30-40 years ago, where there was no international exchange in knowledge and information and people were there were huge barriers both from the government, the education, the border control but it is now really you know it’s so so close isn’t it but how do you see the awareness of things because i’ve spoken to a few young budding people in the outsourcing sector of people that have worked for upwork or freelancer and for them that was their portal into international earning potential, what is the awareness like do you think in the provinces of the Philippines, do you think it’s more just an awareness education piece of people realizing that actually there’s a lot of opportunity out there if they can just get across the first hurdle of turning on a computer.

Marla: I think so, I mean if there’s a lot of people that played video games in the Philippines even in the provinces they do that and  you know they understand and now would be reach of mobile gaming where you know student can actually create their own games and you know here in the Philippines I would say more metropolitan students would be because they have access to it.  Access to the internet is essential and access to good internet is critical because that’s how you get to learn there’s not a lot of educational avenues here that teaches the kind of animation that is needed sometimes being a 4 year college course in animation for example can teach you a lot of things but then it doesn’t help you specialize and it’s still different so a lot of people depend on going on the web and finding answers or looking at tutorial and looking for how to on youtube and things like that there are various software packages engines like unreal and udemy for example that offer use for education so that you can try it out and you can play with it and stuff like that but it’s tougher I would think, I was talking to a group yesterday on training in the Philippines as far as animation goes because the government was looking at what it would take to start doing a training program and animation and one of the biggest things that we said was the infrastructure, 3D animations specifically requires strong machines it requires a video card that sometimes it’s more costly than a basic machine you’ve got software packages that also tend to be costly, a lot of people trying to do the free stuff the free software packages which can help them learn but if you want to kind of compete in the market you got to need to use the software packages that everybody else uses.

Derek: and there’s quite a skill hurdle as well isn’t it because it takes quite a while to learn the software to get the skills that it is quite but I mean what you’re talking about you’re describing a very high end profession aren’t you which is fantastic if we can get all of the Philippines into high end professions but I suppose as sort of starting point if we can just kind of push more and more people into the online world into you know kind of executing the basic tasks and then there is the gradual upscaling which is far easier once their kind of in the race.

Marla: Absolutely and I think that’s absolutely right i think the access to internet, access to the web, access to education, I think it also helps when people are aware of what it means. One of the things that been discussed was there’s a difference sometimes on how people first look at training or learning for some people they realize learning is necessary so that they can get what they want, for some people they feel that unless you pay me I won’t learn that because what do i get from it if I learn that you know it comes from where you live or reside because you don’t completely understand or you don’t see what the benefit of it would be living where you are and where the access to that sort of work isn’t available so there’s a lot to look into in the Philippines when it comes to so we say growing the kind of educational growing the kind of minds that we need to have so that they can get educated.

Derek: Yeah it is i think that’s a kind of marker or result of affluence isn’t it and the people can start to take medium or longer term view and invest in themselves, whereas if there isn’t the kind of affluence and insight people are very they’re more i don’t want to be too broad brush stroke but people are more short term, it’s more subsistence living and it’s more day to day so there needs to be enablement so that people are looking, investing in themselves looking for the medium term but it is coming isn’t it and I think the government is broadly supportive in that they are offering support packages for bpo training and again it’s just for the more basic call center stuff but it gets them in the door.

Marla: Yes, I was quite actually happy to hear that we were invited to have this conversation that they were looking at animation and gaming as another venue of BPOs that they see it as a source of revenue that not only call centers can offer but then this is the potential this is the future that we can also provide as an industry. I think that with the world changing, it’s view as far as it’s market and you know needing more channels because these days anyone with a phone is now basically a pair of eyes that you can actually connect to so they are a different place that advertisers and marketing and tv shows can actually be broadcast and these people can be reached out through that content that you need you know sometimes the 3 minuter or you know animated 3 minuter for oh my god what was it the somebody told like jokes or something cause every day just turn this on and this is an app that just tells you jokes, that was funny you know and it’s all animated I don’t know if it is trademark you know but.

Derek: Yeah incredible isn’t it, i mean i do think there is support there is awareness but again i mean if you consider animation being both the gaming crossing the gaming but also the movie industry and it kind advertising really it’s huge sector isn’t it and the IBPAP which is the you know bpo association or the primary one they do have an animation section and there is also the animation council of the Philippines, so do you see the Philippines as being pretty progressive there in the top end like they’ve really chased down this opportunity?

Marla: I do i really think so there’s a lot of our associations and organizations that kind of build that kind of work together now like the game developers association of the Philippines the ACPI the animation council of the Philippines that do their best so that they can take advantage of what’s available as far as government grants let’s say or government help and then also reaching out to various industries outside of the Philippines so that there can be some shared of knowledge, some shared you know collaboration and then also the opportunity to pitch and to go to conferences and summits that they can talk about and show off what they can do and that’s also supported by some agencies of the government. They’re very very aggressive at that and I think they should be and they try very hard to get the government to understand what it is we are trying to do because like you said the industry that we are in is quite different from the call centers and the back end offices and things like that because it is very much the end to end they know exactly how to start it and you know how to end it.  Animation is artistic and creative and technical and there is no measure that’s going to allow you to say okay this is exactly what that means. I was finding myself it was kind of funny when I was explaining what i did to government official cause he was trying to understand so earnestly of what it was that I did and i just i was at a lost because I was like uhhh ok let me show you a video because that’s a best way to explain it and I had to show him a video and you know he was like oh that’s what you mean so it’s the cartoon i was like well that’s not a cartoon it’s actually a 3D animation and that’s different from a cartoon and you know if you’re starting from that you know explanation there’s still a long way to go.

Derek: I think the difficulty rises when things become more and more specialized and more and more kind of esoteric like if you’re in bricks and more to business making cars everyone can kind of can touch it feel it and understand it but the less tangible your product becomes and also if you’re kind of spanning the globe and serving different customers and people just kind of stare blankly, I thought deep in the Philippines like who aren’t obviously involved in the outsourcing sector and i say i’m involved in outsourcing and it’s about serving foreign companies, you know assisting them with their back end as the concept of outsourcing and people just kind of don’t get it, they don’t understand the kind of shared services concept or outsourcing and maybe you know coming back to your point it’s kind of harder to get people to buy in, harder for people to support stuff if they kind of can’t touch it feel it and really understand it.

Marla: Exactly so we the associations here try to explain it, try to show it like when they do any of the summit that they try to pursue. I think the associations tried to encourage the government official to sponsor particular summits so that they can go there so that when they go there they see and yesterday when I was talking to them I said you know the 3D animation industry is projecting to be about 28.31 billion dollars in 2020 and the video game industry is projected at about $1.7 billion in 2020 and they said like how much of that market is the Philippines doing and you know the association actually laughed a little bit and said we’re not even 1% of that, you know we’re not even 1 and there’s that big huge market out there and they were surprised because they honestly I think they thought that we were a major player already doing what we were doing and the truth is you know somebody got super excited because there was like potential for 20 million dollar contracts that came in to the Philippines and we are all looking around and said who got that one who’s 20 million dollar contract is that one cause I’ve never seen that I don’t know what that is so you know to be supported in the Philippines by the government, the government needs to understand what it is that they are supporting and like you said unless it’s you know here, this is what we do it becomes difficult.

Derek: And I think the Philippines needs an awareness of this online one world opportunities because it’s you know very difficult for the Philippines to enter into car making or US healthcare because they’re not there where is it’s a completely even playing field, in the animation business you know whoever does the best job will get the job and people have an affinity to design here you know they’ve got a very western sort of origin cultural fit so there’s just huge opportunity isn’t there and it’s just not animation but it is all of these services high skilled functions.

Marla: Yes and I think because worldwide we’re more and more we’re creating global markets where the boundaries of what we share and what we don’t share is more and more minimized we’re looking at something where we’re not just sending out simple services not simple but simpler services and we’re starting to do more complicated things and we’re starting to broaden what it is that we can share and what we can do in outsourcing I can see in 20 years for example that it’s almost like the industries in the US when you’re talking about manufacturing and you know where it starts to go out because the cost is more efficient there and we need to adopt and you know it changes because the education grows and what is available as far as provision of services, here is now even better it’s scary for a lot of reason I’m sure Derek you know that’s why you’re called the terrorist sometimes but it’s scary for some people because for some people that means their jobs .

Derek: And just for that in context, sometimes we do market, well we do market out in the US trying to encourage people to outsource and there’s a lot of kickback there in that people call us terrorist because they don’t support the concept of outsourcing but also you know funnily enough they have one of their sort of secondary or big arguments as well is that outsourcing is slave labour and there are people sitting in the Philippines in sweatshops being abused for only 3-400 dollars a month and you know again it’s an education piece that this is offering huge opportunity because people have now white collar jobs they can stay at home instead having to migrate overseas they can go up the education and career ladder and you know they’re just seem so much sort of prejudice against this kind of concept of outsourcing and as you see in manufacturing you know trying to start it with very basic manufacturing and they weren’t any good at it and now they are better at making iPhones than anyone in the US would be and it’s a similar sort of evolutionary upscale isn’t it?

Marla: Exactly and with technology and with the computer and the internet I mean 20 years ago we weren’t in that situation, 40 years ago that was unheard of and now it’s even faster because now things are developing faster than it’s ever developed and things are being created to make things even faster so I can’t say that it takes 20 years to have that kind of skill level actually transfer to another market but it certainly behooves us to try to find everyone actually to try to find new ways to contribute to society and not rely on old industries you know, old industries will always be there because we need to have goods and services of you know trucks and deliveries and things like that but we also need to look into more how can we better it what can we do to make things more efficient because that’s what everybody is looking for.

Derek: Yeah there’s a huge potential isn’t it I was talking to Chris Urbano an Australian guy who lives here in the Philippines on a previous podcast and he was saying that there is he’s a little bit sort of pessimistic on the future of the Philippines because a lot of the industry a lot of the income a lot of the land is controlled sort of a 100 families and there’s a bit of oligarchy but they actually do not have any control over outsourcing, they don’t have any control over the new economy and I see this is an opportunity for Filipinos to enter the world economy without any of this manicals and limitations and restrictions because everything was previously owned by the oligarchy so i see it as a huge opportunity.

Marla: I see it as you know if there was a way to get something sort of similar to what happens in Silicon Valley where you have really smart people doing startups that are pretty impressive that can change the entire industry and then get them funded and get them going. I think those are where we need to kind of focus because you’re right there is a select number of people that control the basically the economy of the Philippines and every industry and this is something that is kind of different because it’s not or not yet unless they get into it but you know it’s an opportunity for startup companies to develop like there’s a few already that started up in the Philippines that’s making some waves it’s not a lot yet i think there’s about 2 or 3 that’s gotten pretty huge funding to be able to…in hiring and it’s pretty interesting because it’s just growing and

Derek: Yeah well there’s Nix Nolledo of Xurpas and he’s doing really well he’s the first publicly listed, I mean he’s very broad tech basically but yeah incredibly effective guy he’s really making a mark for the Philippines and another friend of mine here actually in Manila and I think this is more a secret but less so now of course he has URL for Philicon Valley which is Silicon Valley spelled with a ph and you know he’s really trying to promote the Philippines as the next Silicon Valley which you know again people should strive for this to be the case not just say you know this is in the Philippines it will never be the case I think here’s a lot of opportunity but as you say it is still a very young sector and there isn’t the same maturity obviously as Silicon Valley but you do see Hackathons , you see a lot of startups, you see pitch comps and stuff, so it’s coming.

Marla: Yes and i think it’s faster the development would just be faster than it used to be so yeah, so you’re interviewing a lot more people now.

Derek: Yes, I hope so it’s incredible to sort of open the kimono I suppose on the true Philippines and explore the full potential but Marla thank you so much for your time it’s been incredible to explore all of these with you and if anyone wants to get in touch with you or want to know more about animation vertigo how can they do that?

Marla: Please come and visit us at our website www.animationvertigo.com we’re also on facebook and linkedin and twitter and feel free to reach out to us at [email protected] we’re happy to answer questions.

Derek: Amazing thank you so much, Marla.

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Derek: That was Marla Rausch, I really enjoyed my conversation there if you want to get in touch with Marla or want to know any more about Animation Vertigo then just go to our show notes which is at outsourceaccelerator.com/144 and of course if you want to ask us anything then please just drop as an email to [email protected]