The streaming giant plans to reduce costly outsourcing to animation companies by bringing the process in-house as CBS TV Studios launches a production arm to dive deeper into the space.

Netflix and CBS TV Studios are building up their own Toon Towns.

As adult animation continues to explode (more than 10 new series orders in 2018 to date), Netflix is launching an in-house studio to better monetize what can be hugely lucrative programming. As it has with live-action scripted, the streamer will scale back on outsourcing the costly process to animation companies like Bento Box, which is handling the recently ordered Hoops. Netflix's studio, say sources, will animate kids programming, originals and films, working with writers including Alex Hirsch (Gravity Falls) and Shion Takeuchi (Disenchantment) to create new projects. (In a sign of the booming genre, sources say Hirsch's Netflix overall deal is worth more than $10 million per year.)

CBS TV Studios, meanwhile, is launching production arm CBS Eye Animation as it enters the space with CBS All Access' Star Trek: Lower Decks. The David Stapf-run studio plans to expand its offerings with the help of former 20th TV and Cartoon Network animation exec Katie Krentz, who inked an overall deal there in January. Rather than turning away animation pitches, as it previously did, the goal is to sell content to streaming outlets, cable and, possibly, even CBS — which hasn't featured a primetime animated series in decades. Still undecided is whether CBS will handle the actual animation itself on Lower Decks and the multiple other projects in the works.

"You can do five animated shows for the price of one live-action drama," Krentz tells THR. "The hope is one of those animated shows pops and becomes a big success with not only viewers but also merchandising." Indeed, franchises like The Simpsons spawn multibillion-dollar empires that include video games, movies and theme park rides.

The push arrives as adult animated comedies — both originals (BoJack Horseman, Paradise PD, Disenchantment) and licensed fare (Bob's Burgers, Rick and Morty, Family Guy) — are among the most streamed series on platforms like Netflix and Hulu. In fact, the latter says its viewers are watching nearly 20 hours of adult animated series per month, with Family Guy and Rick and Morty the most watched combo of shows in September.

Hulu is also ramping up in the adult animation space and will pair Rick and Morty with Solar Opposites, from the Adult Swim hit's co-creator Justin Roiland and head writer Mike McMahan. Robot Chicken, another one of the most popular acquired shows on Hulu, is also being paired with Crossing Swords, a new show from the same producers.

Elsewhere, 20th Century Fox TV this week promoted longtime animation exec Marci Proietto (The Simpsons, Family Guy). She and creative affairs president Jonathan Davis have been leading the studio's recent charge with straight-to-series orders at Apple (Central Park), Hulu (Solar Opposites), Fox (Bless the Harts, Duncanville) and Netflix (Hoops).

Says Stapf, "Things tend to get replicated when they're successful."

A version of this story appears in the Oct. 30 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.