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This story first appeared in the Dec. 9 issue of The Hollywood Reporter magazine.our editor recommendsAndy Serkis on Who Sends Him Hate Mail; Why Oscar Should Rethink Animated Category (Q&A)Why 'Tintin' and 'Rango' Stand Out Among This Year's Animated Awards Contenders (Opinion) For most of Academy Awards history, animation and visual effects have competed in separate categories. But as the line between VFX and animation gets increasingly blurry, animated films like Kung Fu Panda 2 or Puss in Boots -- as well as the performance-capture-based The Adventures of Tintin -- could emerge as contenders in the VFX category. The VFX branch made a loud statement about what constitutes a visual effect in 2007 when it put CG-animated Ratatouille and motion-capture-based Beowulf on its list of 15 Oscar contenders. PHOTOS: The Big Screen's Evolution of Talking Animals So what's the difference between animation and VFX? "It's ambiguous," admits DreamWorks Animation's Alex Parkinson, VFX supervisor on Kung Fu Panda 2. "Everything you see in an animated movie is a visual effect." One notoriously tough effect to render in live action is computer-generated water -- which is also tough to animate. "The tools and techniques are exactly the same," says Parkinson. "The difference is that on a traditional live-action movie, you are matching a plate, which has its own complications, and on an animated movie, you are creating the world from scratch and defining the rules of the world a lot more." PHOTOS: 10 Inappropriately Sexy Cartoon Characters That may amount to no difference at all in the animation-acclimated eyes of VFX branch voters. The CG water in Harry Potter and the Deathly Hallows Part 2 could be judged alongside the CG water created for Tintin and Panda. Not since Tim Burton's 1993 stop-motion classic The Nightmare Before Christmas has animation earned a VFX Oscar nomination. This time, 2012 could be the year. PHOTO GALLERY: View Gallery 2010's Animated Movie Box Office Scorecard Related Topics Oscars Kung Fu Panda 2 Oscars 2012 Puss in Boots The Adventures of Tintin Animation