Current Status of the Animation Industry in India

The animation industry in India to reach Rs 54 billion in 2014!

19 Sep 2012 animation indisutry in india, gaming market by Author

The animation industry in India is all set to blossom in the coming years. Reports by Pricewater Coopers suggest a growth of 23% in the next four years. It is a well known fact that India is a major outsourcing destination for animation work around the world. Animation industry now include gaming, creative content making, interactive web and app designing, television ads and many more. The reasons for this growth in the industry are many. Increase in budgets allocated for animation movies on an average basis proves its rising demand in the entertainment sector. Even in television, with the rise in the number of channels targeted at children, the need for animation material, especially cartoons, has increased a lot. The main reason for the high demand of Indian workforce in animation is definitely the cost advantage. The Indian animators are much cheaper than US or Korean ones and highly skilled as well. Low cost of production is sure to drive the growth. Global outsourcing of the same is sure to rise. The gaming market is also gaining a huge hold in India. The extensive animation required for the same is set to make it one of the top most growing segments within the animation industry. Games required for PCs, internet, consoles and mobile phones have become huge business categories. The sales report of the gaming consoles like the Xbox and Playstation shows the extent to which gaming has become popular among all age groups. 3-D mobile games are predicted to be the future rage among youngsters. Many companies are now venturing into this field seeing the opportunity to earn high revenue. How much visual aids help in teaching and education is known to all?. Using animation for the same is sure to click among students. A study by Deloitte and Assocham show that content development and education segments are also revenue generators in the animation field due to the corporate e-learning programmes. A steady rise of 11% is expected in this effect. Reports predict that the animation industry would grow from Rs 18.5 billion in 2009 to Rs 54 billion by the year 2014. Certainly this is good news for those who are in animation industry or who aspire to be a part of this industry!

About 20 minutes into the movie Arjun: The Warrior Prince, a courtier running a swayamvar in the Kingdom of Panchal roars: "Have the mothers of earth stopped giving birth to brave men?" That could be as much a call to arms to the dream merchants of Indian animation, as to the able-bodied men vying for the hand of the doeeyed Princess Panchali. For, only the brave will make animation movies in India given the unproven market. "We believe that Arjun sets a new benchmark both in the sheer quality of animation and, even more importantly, in the quality of storytelling. It is a film that can be enjoyed by the whole family even without them knowing

the story of the Mahabharata," says Siddharth Roy Kapur, Managing Director, Disney-UTV Studios, a Mumbai production-to-broadcasting house controlled by The Walt Disney Co. Kapur is not being gushy. Arjun has flashes of exceptional animation quality, depth of sound and even the occasional richness of narrative. But what is missing is the makings of a sureshot winner when it releases on May 25. The story of Arjun, said to cost Rs 30 crore, making it one of the most expensive animated productions in the country, shines the spotlight on the conundrum that is Indian animation. The film is the first animated production in India to be cobranded with Disney, the $41-billion US company's first deep dive into a market that has a voracious appetite for feature films - the country releases around three a day - as well as the world's largest population of children (400 million Indians are younger than 15). All this should make for a market paved with gold for the iconic diversified media company, right? No. Ask Rajiv Chilakalapudi, Chilaka to friends. The animation entrepreneur from Hyderabad may have spent onetenth Arjun's budget on his maiden film but he is no less anxious than his peers at Disney. Ahead of Chhota Bheem And The Curse of Damyaan hitting theatres on May 18, Chilaka said what gave him hope is the central character of his production. Chhota Bheem, the main role in the eponymous animation series he created for television, is one of the most successful shows for children in India. Coproduced by his company Green Gold Animation and Turner International India, it has been a regular on Turner's Pogo channel since 2008.
Siddharth Roy Kapur (Left), Managing Director, Disney-UTV Studios Photo: Umesh Goswami

For a leading animation series, Green Gold's revenues are surprisingly anaemic: around Rs 20 crore in 2011/12, though up from Rs 4 crore in 2007/08 (see Slow Progress). The entire Indian animation industry, including work outsourced to India, in fact, is not worth more than Rs 1,130 crore, according to the FICCI-KPMG Indian Media and Entertainment Industry Report 2012. That is not even a speck on the $122-billion global market for animation and gaming; smaller countries like Korea and Malaysia have bigger and deeper animation industries. Disney alone had animation revenues of around $10 billion in 2011. Click here to Enlarge That Missing Something What ails the Indian animation industry and what keeps it from connecting with a target audience of children consuming $100 billion worth of toys, clothes, entertainment, food, and other products and services? "I think a lot of Indian animated content lacks an appealing narrative," says Rishtee Kumar Batra, Assistant Professor, Marketing, Indian School of Business, Hyderabad. Animation companies, she says, just draw their plots from mythology: Ramayana in 1992, Hanuman in 2005, Krishna in 2006, and Luv Kush in 2010. Such religion-based content may seem appropriate because there is a large Hindu audience in India, but the key assumption here, she argues, is that actual consumers, the children, want to see this type of content. "These mythological cartoons are so focused on passing on values or telling a moral tale that they forget that the core of any narrative is about arousing basic human emotions." That said, almost none among the handful of Indian animation films that tried to get away from

mythology have been successful. Neither Jumbo (2008), starring Akshay Kumar, or Toonpur Ka Superhero (2010) with Ajay Devgn, or Roadside Romeo (2008), produced under the Yash Raj banner, made waves at the box office. Some believe it was because the filmmakers failed to target their audience and market the movies right. The younger ones were unmoved by the likes of Kumar and Devgn, while older ones, who knew of the stars, found the plot too simplistic. "You have to get the product mix and attribute mix right for your intended audience," says Batra. Click here to Enlarge But others feel the problem is simpler - stories often are just not good enough. "The focus in animated films is more on the technology," says noted film director Subhash Ghai, Chairman of Mukta Arts, a film company. "The form and the colour tend to take over the art of storytelling and therein lies the problem." While Jumbo grossed Rs 2 crore and Toonpur Ka Superhero Rs 4 crore, their numbers pale in comparison even with what foreign animation pictures make in India. Kung Fu Panda, a Hollywood animated film, for instance, raked in Rs 15 crore from India alone, according to film trade information portal BoxofficeIndia.com. Pankaj Khandpur, the creative director and head of production, visual computing labs at Tata Elxsi, which has done the special effects for Arjun and prior to that Roadside Romeo, sees a vicious circle firmly in place instead of a virtuous cycle. "There is no animation market in India and because a few that were made failed there are no more being made. And television budgets are way too low to support good quality animation," he says. Quality animation movies cost between Rs 20 crore and Rs 40 crore and at least a quarter of that in case of television. Click here to Enlarge Animation movie budgets in India are often less than Rs 5 crore ($1 million) - about 0.7 per cent of what a movie like Disney-Pixar's Ratatouille cost (the movie is estimated to have made over $600 million globally). Every minute in an animation film adds 5,400 frames going by the 24 frames per second norm for films. So, a 90-minute film will have 130,000 frames in all - or 130,000 unique images that need to be rendered. "In the making of Roadside Romeo, we were building the plane and learning to fly at the same time," says Khandpur of the complexity. The effort may not have set the till ringing, but the movie was nominated in February 2009 by Hollywood's Visual Effects Society for outstanding animation along with the likes of Wall-E (DisneyPixar), Kung Fu Panda (DreamWorks Animation), and Bolt (Walt Disney Pictures). Wall-E won. There is another school of thought that believes Indian audiences are not quite ready for animation. As Disney-UTV's Kapur puts it: "Audiences in India are not conditioned to paying to watch animation on the big screen. This has been quite clearly evidenced in the poor theatrical performance of some of the best Hollywood animation titles and most of the local animation movies.'' The genre, he adds, has traditionally been kid-driven and "even today in India, these movies are called 'cartoon' movies, which only naturally is associated with kids".

Talent Mirage Perhaps Hollywood's success in animation has to do with the fact that it began making animation films long before the digital era arrived. "Mature markets like the US have a long history of animation," says P. Jayakumar, CEO, Toonz Animation India, a Thiruvananthapurambased animation major. "In India the average talent age is 25 to 30 years old, while the history of animation is also short." On top of that, India has made little effort to catch up. "Any country with a developed, vibrant digital media industry is built on the foundations of a strong digital arts education system," says Paresh Khara, Managing Partner of Singapore-headquartered Channel Works. "But in India, there is no government digital media strategy or focus encompassing education and talent development." Currently, India has just two government-run institutes that teach visual design: the National Institute of Design, Ahmedabad, and the Industrial Design Centre at IIT Bombay. Neither offers a full curriculum in animation. There are some private institutes teaching the subject, but they have neither standard curriculum nor any regulatory body to monitor them. Click here to Enlarge Despite these constraints, some private companies are bravely carrying on with their own training schools, like Mumbai's Graphiti Multimedia, headed by Ram Mohan, an animation industry veteran of more than five decades. It is, in fact, focusing on building and deploying talent in challenging areas like pre-production and design, not the traditional strengths of India. This is evident in its popular animation show Krish, Trish And Batliboy playing on Turner's Cartoon Network. Disney-UTV's Kapur believes latent talent for the animation industry to develop exists, and this is evident in the volumes of work outsourced to India. Last year's Puss in Boots was the first production in which DreamWorks relied on a Bangalore animation studio, Technicolor India, to produce a full length feature film. Likewise with the Rhythm & Hues team in Mumbai which worked on Oscarwinning Golden Compass.
Scenes from Chor Police, an animated serial

Click here to Enlarge Other global production houses like Walt Disney, IMAX and Sony, too, have been outsourcing portions of their animation work to India. Other than the talent, there is near-indifference from the government which has not taken any steps to boost the industry: there are no tax breaks and no subsidies. This is in stark contrast to other countries where governments promote indigenous animation efforts. Says Khandpur: "In countries that have a strong animation industry like France, Italy and Australia, it is mandatory for broadcasters to have local content which is not the case in India." Which is why, it is much easier for a children's channel in India to license an international programme than to pursue local content. "Thus, 90 to 95 per cent of animation shows Indian children watch are either American or Japanese," says Ashish Kulkarni, CEO, Big Animation, a Anil Dhirubhai Ambani Group company. This comes at a time when the cost dynamics are already making things unfavourable for India. "India is not the only destination today for outsourced animation work in the Asia Pacific region," says Monica Tata, General Manager, Entertainment Networks, South Asia, Turner International India. "There are

other countries that offer the same, if not better, quality work and better prices." Even some shows with Indian content are now being partially put together elsewhere. Tata points to the show Roll No. 21 her company produced. "It is an Indian show, developed and created in India, but the final execution was done by a company called Animasia in Malaysia.
India is not the only destination today for outsourced animation work in the Asia Pacific region: Monica Tata

We will go wherever we get the best and most efficient content at the best possible price," she says. Regardless of where it is made, the drive among international broadcasters to build local content in emerging markets is evident. Turner, for instance, now owns several properties such as Arjun, Balla Bowl, Team Nirvan, Kumbh Karan, Tripura, Sons of Ram, My Name Is Raj, Johnny Bravo Goes to Bollywood, and Kul Veera, among others. Arnab Chaudhuri, executive director, Creative and Content, Disney Channels, says in addition to the eight local shows already beaming on his company's channels, more are "slated to premiere across the summer period; Luv Kushh, Feluda and Suryaputra being a few examples". But it is feature films that will, if at all, change the animation landscape of India. So, if Disney-UTV's Arjun hopes to ride on its narrative and visual effects, the small budget Chhota Bheem film intends to cash in on its popular television show. Says Tata Elxsi's Khandpur: "I am waiting for one animation film to succeed because then you will get a spate of 10 animation films that are made in India." Much like the Pandava brothers, the animated characters of Arjun and Bheem, animators hope, will help break through the chakravyuha, or maze, the industry finds itself in today.

State of Indian animation and FX

Indian animation, VFX and post production companies are starting to make a mark on the global scene but they lag when it comes to technology usage. India's share in the global animation and VFX sector is still in single digits. Unless adequate investments in technology are made, this wont change. By Venkatesh Ganesh According to a recent report by FICCI-KPMG on the media and entertainment industry in India, 2010 was a better year for this sector than 2009. Nasscoms 2010 report on the Animation and Gaming Industry in India stated that the Indian animation industry was expected to grow at a CAGR of 22% to reach $1 billion by 2012. While this is a fraction of the $60 billion software exports market, the Indian animation sector is slowly carving out a niche for itself in the global market. In 2010, the animation, VFX and post production industry witnessed a growth of 17.5% over the previous year, clocking revenues of Rs 23.6 billion, according to the FICCIKPMG report. Animation grew 10% to hit Rs 10 billion in revenue, VFX grew by 42% and post production by 17%. This is testimony to the fact that the industry has finally gained a foothold of sorts on the world stage. Big picture Meanwhile, for the first time, several Indian television properties have been distributed globally. Animated movies like Little Krishna have made their way to a global audience.

Call it a slice of luck or sheer coincidence, 2010 happened to be the biggest year for animated movies in Hollywood (that trend is being reversed when it comes to 3D releases). Six out of the top ten box office grossers globally were animated movies with the likes of Shrek 3, Despicable Me and Toy Story 3 dominating the collections. Circa 2000, international film production houses began outsourcing post production work like color correction for an animated character, 2D animation and rendering work to Indian companies. This used to be executed through the work-for-hire model where production services involved the assignment of production work by an overseas company on contract to an animation production studio in India.
"Currently, industry watchers Flash forward to last year and Indian companies had set up estimate that 70% of Indian films are state-of-the-art studios driven in part by domestic demand for using VFX." special effects. Currently, industry watchers estimate that 70% Ashesh Jani Partner, of Indian films are using VFX, commented Ashesh Jani, Deloitte Haskins & Sells Partner, Deloitte Haskins & Sells. VFX refers to computergenerated imagery (CGI), compositing, title design and animatronics.

In 2010, Paprikaas Studios was acquired by Technicolor for its capabilities in the sphere of visual effects as well as for compression and authoring services. Prime Focus recently bagged a Rs. 200 crore deal from a leading Hollywood studio. Consequently, the company opened a new facility in Chandigarh primarily for 2D-to-3D conversion and it will hire 3,000 employees in the current year; a new facility in New York will double its employee strength. Companies such as Reliance Mediaworks, Pixion and others also undertook capacity expansion. In April, this year, DQ Entertainment signed a co-production agreement with France-based Method Animation for a new 3D HD series known as Robin Hood: Mischief in Sherwood targeted at children with an estimated global production budget of 8.5 million. This was not a one-off deal. A few months back, DQE signed a co-production agreement with ZDF Enterprises, Germany, for a second season of the 3D HD animated series Jungle Book, budgeted at 9 million. In a similar agreement, TV Mania has obtained the rights to manufacture and distribute Jungle Book apparel and accessories for babies, kids and teenagers over a two year period. DQE will receive a royalty on sales generated from this agreement in addition to a minimum guaranteed amount. Reliance Mediaworks expanded its 3D services, offering 3D alignment, image and detail enhancements, grain and noise management and on-set consulting and other associated services last year. Continuing with its expansion plans, the company opened a dedicated film and media services facility in London in January 2010. This facility will offer front-end processing, restoration, 2D-to-3D conversion and post-production services to broadcasters and studios. It acquired the assets of ilab UK Ltd., one of only two film processing facilities in London. Prime Focus is betting on 2D-3D conversion and VFX this year. The consumption of 3D is growing at a robust pace across films, broadcast, commercials, Web and mobile, said Merzin Tavaria, Co-founder and Chief Creative Director, Prime Focus.
"The consumption of 3D is growing at a robust pace across films, broadcast, commercials, Web and mobile." Merzin Tavaria Co-founder & Chief Creative Director, Prime Focus

The company recently bagged a deal to convert Star Wars: The Phantom Menace into 3D. The work will be done from Hollywood with parts outsourced to India. Shemaroo is betting on digital restoration. We have a huge library and are already in the process of restoring them to digital formats across all kinds of media including DVD, online and Bluray,said Smita Maroo, VP Animation, Shemaroo Entertainment.
"We have a huge library and are in the process of restoring these films to digital formats across various media including DVDs, online and Blu-Ray." Smita Maroo Vice President - Animation, Shemaroo Entertainment

Despite this growth, the technology usage of Indian companies "Most CTOs are not able to predict their storage growth accurately pales when compared to that of US studios such as resulting in frequent upgrades of Dreamworks or Pixar. Most CTOs are not able to predict their storage hardware." Bobby Mon storage growth accurately resulting in frequent upgrades of Head - Enterprise Business, SMB, Dell storage hardware. It also ends up creating performance India bottlenecks as just adding storage capacity doesnt always address an applications performance requirements, said Bobby Mon, Head - Enterprise Business, SMB, Dell India. IT organizations need a solution to challenge the status quo of devoting a significant amount of their budget to maintenance as this isnt a sustainable practice. Currently, storage vendors opined that they still saw DAS usage coupled with that of low-end workstations. With multiple projects to be delivered, managing animation workflow and access to it is resulting in demand for scale-out NAS environments, said Sunil Brid, Area Sales Director - India, Malaysia & Singapore, Isilon Systems. Many Indian animation companies are going in for SAN.
"The domestic media & entertainment Some are more bullish about this industry sectors prospects. sector that includes film and television The domestic media & entertainment sector that includes film and the offshoring segment is driven and television and the offshoring segment is driven by different by different needs." needs. The former, is being bolstered by the Indian appetite for Syed Masroor Head - Professional Services & Preentertainment with the need for higher quality visuals driven by Sales, NetApp India & SAARC global exposure. The latter will grow on the back of overall success in offshoring thats compounded by the new opportunity that the Cloud presents, said Syed Masroor, Head - Professional Services & Pre-Sales, NetApp India & SAARC.

State of IT adoption Data volumes in this sector are growing at about 50% per year and companies are considering adopting solutions around data and information archival, data dedupe as well as virtualization. Last year was an inflection point for companies in this sector. Companies were working on 10-20 projects and this resulted in them having to upgrade their IT infrastructure and adopt cluster approaches, said Vikram Bhatia, Senior Product Manager, Windows Azure Cloud Platform Microsoft Corporation India. Microsoft HPC solutions have been deployed at all of the major studios. DQ Entertainment is a marquee client that has a 500 node render farm with a Gigabit Ethernet fabric that reduces render times, improves workflow and increases design throughput as per Microsoft. With the i7, animators can create characters on machines that have higher clock speed CPUs for specific applications and 64 GB SSDs; some VFX creators are using up to 64 GB workstations with 10Gbps Ethernet, said Ramaprasad S, Country Business Manager-MNC Accounts, Intel South Asia. Reliability and scalability are important factors as creative teams should not be bogged down in dealing with these issues, opined vendors. The need for hardware infrastructure outstrips the IT budget and companies are considering virtualization, said Bhatia. The majority of Indian entertainment companies might be way behind when it comes to technology adoption, but some niche VFX companies servicing giants like Disney are beginning to ramp up their infrastructure, said Gaurav Mendiratta, Founder, nyootv.com. Then there are players like Reliance MediaWorks setting up studios in LA and, as a result, more sophisticated work is coming their way. The Indian animation and VFX sectors growth prospects
Year Animation (in billion Rs.) VFX (in billion Rs.) Post production (in billion Rs.)

2009 2010 2011 2012

9.2 10.1 11.4 13.1

3.2 4.5 6.0 7.5

7.8 9.1 10.9 12.8

Source: FICCI-KPMG report

Reel ahead The animation and VFX industry is expected to grow at a CAGR of 18.5% to reach Rs 55.9 billion by 2015. The animation sector is expected to touch Rs 20.8 billion by 2015 with growth largely driven by the services market for the next two years, post which IP creation is also expected to see a significant pickup, according to a FICCIKPMG report. Technically, India is facing a major challenge to overcome and build an efficient pipeline of projects, said Jani. Indian studios are taking up VFX work and are investing in technology and manpower to match up to the West. Bollywood is also jumping onto the 3D bandwagon after seeing the global success of Hollywood films in this format. Prime Focus will now be working on its first 3D project in Bollywood with UTV called Joker. Prime Focus would take responsibility for servicing the entire production and post production requirement of a slate of UTVs films. Deals like this could be the sign of things to come. The adoption of dual socket workstations, cluster nodes, high capacity IO storage, interconnect, disk IO etc. are on the rise, commented Intels Ramaprasad. However, the journey has just begun and the biggest challenge that lies ahead for Indian companies is to keep this momentum going. Todays filmmakers are more educated and aware about the ways in which they can use VFX to achieve their creative vision. Going forward, growing demand for content, increasing investments in training talent, growing comfort of Indian production houses with VFX, continued growth in outsourced work, conversion of 2D to 3D formats and emerging digital platforms are expected to help the industry grow, he said. Others like Shemaroo are betting on HD. We see HD as the wave of the future and are making investments accordingly, said Maroo. Moreover, video player technologies have been changing. Five years back, we had HTTP streaming and that was it. Then Adobes RTMP player came about followed by RTMPe and then HTTP Live streaming by Apple. Now we are evaluating several encryption technologies for HTTP and some 3D video players for nyootv.com, said Mendiratta. The challenges in the first decade of the millennium seem to have been addressed. However, translating this into delivering consistent results would be determined by the way that technology will be used- whether for restoration or for conversion to 3D. IP creation and investing profits back into technology would differentiate companies. The next decade could well be make or break time for the industry.