Technicolor's fade-out: India's VFX industry eyes spotlight amid uncertainty

Challenges and opportunities

"India has become a major player in VFX, with companies like DNEG, Prime Focus, Red Chillies VFX, Phantom FX, and Tata Elxsi delivering world-class work. With Technicolor shutting down, many global studios will now look at Indian firms to take over projects," said Kishor Fogla, Founder, of Yellow Slice, a design firm.

However, if Indian studios continue to rely on outsourced work without innovation, they could face the same fate, he added.

Even industry giants like Frame store, Industrial Light & Magic (ILM), and Wētā FX are facing challenges, Fogla noted.

"The industry is shifting. Studios are bringing VFX in-house, AI (Artificial Intelligence) is automating processes, and digital experiences are becoming more interactive and immersive.

For Indian VFX and digital design firms, the way forward is not just service-based execution. The future lies in owning IPs (Intellectual Properties) and digital assets—creating original content instead of always executing for others. Technicolor’s shutdown isn’t just a crisis, it’s a wake-up call," he said.

Sharing similar sentiments, Atul Thakkar, Director – Investment Banking, Anand Rathi Advisors who tracks this space said that firms solely dependent on outsourced projects may face challenges, but those that combine outsourcing with original content creation and IP development, like Green Gold Animation, are better positioned for long-term success and more resilient to industry risks. Companies like Prime Focus have expanded their presence in Hollywood, while Red Chillies VFX has built a strong portfolio through major film collaborations, he added.

Green Gold Animation is the maker of popular IP Chhota Bheem while Red Chillies VFX has been part of movies like Shershaah, Dunki and the upcoming release Sikandar starring Salman Khan. Indian VFX firm Prime Focus' subsidiary DNEG has not only worked on Hollywood titles like Dune, Oppenheimer, Interstellar, Tenet but has also won Oscars.

Thakkar said that with the growing capabilities of the Indian VFX and animation studios along with the Indian government's emphasis on the AVGC (Animation, Visual Effects, Gaming & Comics) sector, Technicolor’s potential closure will result in opportunities for India.

"India is increasingly receiving direct orders from international studios rather than projects routed through Canada, reflecting the growing trust and capabilities in Indian VFX firms. The closure of Technicolor may offer opportunities for Indian VFX and animation firms to expand their talent pools and project portfolios. Companies like Prime Focus Limited, Red Chillies VFX, and Green Gold Animation, which have a history of handling large-scale projects, could capitalize on this shift to strengthen their market positions," Thakkar said.

India's VFX & animation industry

In 2023, while demand in the animation segment shrunk, the overall VFX segment grew despite a global slowdown in demand, according to an EY 2024 report.

Indian animation industry's revenue fell to 3,600 crore in 2023 from 3,800 crore from the previous year. VFX industry's revenue grew to Rs 5,400 crore from Rs 5,000 crore in 2022, the report added.

While Technicolor’s exit may create short-term uncertainties, it also opens opportunities for homegrown studios and new entrants to expand their footprint, said Arpit Mankar, Head Non-Bollywood Category at Shemaroo Entertainment.

"Its exit may raise concerns about the sustainability of large-scale foreign VFX investments in India, but it also highlights the need for Indian companies to build strong, independent brands and move beyond service models to co-productions and IP creation," he added.

Mankar also added that the troubles at Technicolor shed light on several industry-wide challenges, both globally and in India. "The VFX sector operates in a highly competitive, cost-intensive, and rapidly evolving environment, where companies must balance creative excellence, tight deadlines, and financial sustainability. Indian VFX and animation firms face many of these same challenges. But the industry is also evolving to counter them."

India has established itself as a global AVGC powerhouse, with visual effects and animation work in blockbuster films, high-end streaming content, and AAA gaming titles, said Sandip Weling, Brand Custodian at VFX and animation training institutes like Arena Animation and MAAC. Recent successes such as Kalki 2898 AD, RRR, Brahmāstra, and Jawan underscore India's ability to create world-class content, gaining international recognition, he added.

Once an outsourcing hub, India today is co-producing and leading major projects with global studios. Several leading and major global studios are setting up their base in India and continue to invest in Indian talent, Weling noted further.

"While Technicolor has played a role in shaping the industry, its (full potential) exit does not signal a decline but rather a transformation—with Indian studios expanding capabilities, adopting virtual production, and creating original IPs," he said.