Gaming & Entertainment: Animated Entertainment

In our annual survey last year, Dataquest predicted that the gaming and entertainment (G&E) sector would be the next poster boy of Indian IT. G&E was residing on the same point of the growth curve where software services was during the mid-90s. The growing maturity showed by the sector, both on the offshore outsourcing and domestic front, during FY 2005-06 proved our foresight was not misplaced.

Any analysis of this sector distinctly demarcates between entertainment and gaming segments. But they share many common trends. These include positives like exploring expansion opportunities abroad and moving towards in-house production model, as well as concerns like shortage of quality manpower, lack of quality training institutes and appropriate recognition for the sector.

Indian players made a beeline for acquiring companies overseas to add capabilities as well as scale up their operations The domestic market showed immense promise on the visual effects and animated feature film fronts The entertainment industry contributed the maximum to the overall animation market, TV broadcasting providing the lion's share Telecom service providers across the world provided the strongest impetus to the Indian game development companies

Riding the Crests and Troughs
Like software services, Indian players in this sector too, ventured abroad through the acquisition of foreign studios. These acquisitions helped Indian studios add pre- and post-production services to their portfolio and gain existing clients. Chennai-based Pentamedia Graphics, acquired the US-based Improvision, which is involved in production and distribution. Mumbai-based Prime Focus picked up UK's VTR Group, a media service company, while Crest Animation, Mumbai, acquired Rich Animation in the US to exploit the company's experience in full-length animation movies. On the gaming front, Dhruva Interactive, Bangalore, actively scouted for acquisitions in Eastern Europe and China to expand its production capacity.

Indian companies also moved towards in-house production model from the earlier scenario when the IP rested with foreign production houses outsourcing to India. This fundamental shift helped Indian studios move up the value chain to perform the role of producer and publisher. This shift also generated high returns as different sources of revenue such as merchandising emerged out of the IP. Indiagames, Mumbai switched from the earlier outsourcing business model to acquiring licenses and developing mobile games like Spiderman. Toonz Animation, Kerala, produced a 26-episode TV series called Tenali Raman.

The scarcity of skilled personnel was a major concern for both entertainment and gaming sectors and inhibited the growth of the industry. While India needs at least 10,000 animation professionals-not just technical professionals with rudimentary graphics knowledge-only 3,000 skilled personnel are available. The gaming industry employed 600 people when the demand was for 1,200 and is expected to grow to 2,000 this year.

The major factor leading to this gap in the demand and supply of skilled manpower was the lack of specialized training institutes. India has had no government support on animation training except for the National Institute of Design in Ahmedabad. Barring a handful, like the Maya Academy of Advanced Cinematics (MAAC) or Zee Institute of Creative Arts (ZICA), no quality private training is available either.

Due to the fragmented nature of the sector, all Top 5 players are in the sub-40 crore revenue range. Though the quantum of offshore outsourcing is much higher than domestic VFX revenues, a fragmented industry results in four out of the top five (except Crest Animation) deriving most of their revenues from the domestic market

The government apathy has also ensured public reluctance to consider it as a career. With hundreds of studios across the country, the industry is highly fragmented.  Hence unlike IT services and BPO, it cannot raise its grievances in one voice. FY 2005-06 witnessed activities to redress these concerns. To attract the best talent, the industry started by building up a brand image, identified key centers as hubs, and launched forums and associations to give the industry a common voice.

Due to the presence of several studios, Mumbai has become the default hub of both the entertainment and gaming sectors. Chennai, Hyderabad, Thiruvananthapuram and Kolkata have emerged as smaller centers. Both NASSCOM and FICCI tried to woo the stakeholders. Various associations such as iGITA (Indian Games Industry and Trade Association), and FICCI-Visual Effects Community (VEC) were formed in 2005-06.

The Animators
India is finally coming of age as an animation outsourcing hub. This can be seen by global leaders like Dreamworks and Walt Disney planning to set up their captive centers here or at least enter into JVs with Indian firms. Rhythm & Hues did so with its captive center for VFX in Mumbai. The quantum of offshore projects had a disproportionate TV broadcasting bias with broadcasters such as BBC, Animax, Nickelodeon and Disney, all outsourcing to India. This contributes to 64% of the overall animation pie.

 

   Report sourced from www.ciol.com