India's animation sector moves up value chain

The industry in India is set to grow at a compound annual growth rate of 27 percent, from around US$460 million in 2008 to US$1.16 billion by 2012.
Written by Swati Prasad, Contributor

INDIA--The animated films market is growing at a fast rate in India, where in the last one year alone, nearly 85 such shows were announced.

2008 saw the box office release of several animated movies in the country, such as Roadside Romeo, Ghatothkach, Dashavatar and My Friend Ganesha 2.

Sangeeta Gupta, vice president, Nasscom, told ZDNetAsia in a phone interview: "In the last two years, the domestic market for animation has grown significantly. And so has the quality of production."

The mainstream film industry too is increasingly using animation and special effects. In the last 18 months, Bollywood has released several Hindi movies with special effects and animation, such as Drona, Taare Zameen Par, Jodha Akbar and Love Story 2050.

According to Nasscom, a total of 85 domestic animation movies have been announced over the last year and 28 are in different stages of production.

Gupta said: "Animation companies have also started focusing on building original IP (intellectual property), which they can leverage in terms of merchandising and TV broadcast revenues."

The sector is poised to grow at a healthy pace. As per a recent Nasscom report, the animation industry in India was around US$460 million in 2008 and is set to grow at a compound annual growth rate of 27 percent to reach US$1.16 billion by 2012. The market has been defined as animation entertainment (US$120 million in 2008), animation education (US$53 million) and custom content development (US$187 million) and multimedia/Web design (US$100million).

Getting quality-conscious
October 2008 saw the release of Roadside Romeo--the first 3D animation movie out of India--produced jointly by Yash Raj Films and Walt Disney Pictures. Roadside Romeo is the tale of a pampered puppy whose owners move, leaving him behind to fend for himself on the streets of Mumbai.

Bhaskar Dutt, business head of gaming business, and head of marketing at Visual Computing Labs, Tata Elxsi, said: "Yash Raj Films wanted to give Roadside Romeo a universal appeal, just like any other Bollywood flick. They wanted to prove that an animation movie can appeal to adults as well and is not meant only for children."

Therefore, the 95-minute show was made in the classic Bollywood manner, with 40 scenes and five song-and-dance numbers.

"The response for Roadside Romeo has been very satisfying," Dutt told ZDNet Asia in a phone interview, though he did not divulge the cost incurred to make the film and its gross collections. "In terms of gross revenues, the film was the highest grosser amongst all Disney animation films released in India in the past," he said.

Gupta said: "It's partnerships like these that will grow the industry." According to her, companies like UTV Motion Pictures, DQ Entertainment India, Kahani World and Rhythm & Hues are doing some interesting work. In February 2008, Rhythm & Hues won an Oscar for the Best Visual Effects for the film The Golden Compass. Rhythm & Hues India reportedly contributed to all stages of the production process and delivered roughly a third of the total work done by the parent company in the United States.

The budget constraint
Animation movies in India are made on less than one-tenth of the budget of a similar Hollywood flick. That's because even a mainstream Bollywood film does not gross collections of more than US$20.6 million (or 1 billion rupees). While Hollywood produces animation movies with a budget of US$60 million to US$80 million, these investments are justified because the receipts are to the tune of US$200 million.

Ashok Rajgopal, partner of Ernst & Young's Media and Entertainment Practice, told ZDNet Asia in a phone interview: "There is demand for animation, but the market is not large enough."

According to Rajgopal, the commercial success of animation films is yet to be tested. "If the Indian audience has been exposed to animation films like Madagascar and Finding Nemo, can they be engaged in films that are made in India at a fraction of the budget," Rajgopal questioned.

With the growth of this industry, production budgets too are expected to increase. According to Nasscom, the production budget for Indian animated movies should increase from US$2 million to US$2.5 million in 2008, to US$5 million to US$7.5million in 2012. Similarly, the average realizations for a good animation movie will increase from US$7.5 million to US$12.5 million during the same period.

One way of addressing the budget constraint is by making animation movies and serials for release in domestic as well as international markets. The television industry, according to Rajgopal, can do with some good animation serials. "Serials like Shin Chan and Ben 10 (that have been telecast in India) are not aligned to India sensitivities," he added. The Indian government had recently banned cartoon TV serial Shin Chan due to the same reason.

Bridging the skills gap
The other constraint before the industry is the lack of skills, especially in high-end animation.

Dutt said: "Growth of this industry is solely dependant on education."

Concurred Gupta: "We need to take animation to the formal education system. India needs more three-year degree programs in animation as opposed to short, six-month courses."

As of today, few institutes (such as the National Institute of Fashion Design) offer a degree course in graphics and animation. However, several institutes are launching new courses in animation and visual effects. As per the Nasscom report, the education segment of the animation industry is projected to grow at the rate of 40 percent per annum till 2012.

More than the skills, Rajgopal is of the view that the industry needs animators who also have the ability to manage projects and commercially exploit an IP. "Most professionals in the country are animators at heart, and not businessmen," Rajgopal said.

Swati Prasad is a freelance IT writer based in India.

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