Toon rise

From contract work at cheap rates to original content has been a global leap.

TheIndian animation industry "" a PricewaterhouseCoopers (PwC) report puts it at Rs 12 billion "" which took root and nurtured itself on cheap contract work, is maturing. Increasingly, animation studios keen to emerge as serious global players are seeing the value in original content creation.

Box office successes of full-length animation trailblazers Hanuman and Krishna proved there was money to be had locally. Now there's a slew of Indian-made content being designed for both local and foreign audiences.

Trivandrum-based, $12 million Toonz Animation has, in the last three years, changed its business model from being services-dependent to a stage where contract work makes up only 10 per cent of its work. And it has its hands full with a 78-episode original television series deal with Hallmark and a 3-D original animated television series deal with BBC.

In most cases Toonz invests financial capital. "In the case of a co-production deal with Marvel Comics that's been pre-sold to BBC, we're investing E 6 million. It's heavy investment but with a strong distribution or broadcasting partner, it's a no-brainer," says P Jayakumar, CEO, Toonz Animation.

Producing original content for the big screen was seen as riskier than television, but not anymore with global co-production partners willing to come in for half the risk. Kahani World just announced a co-production film deal with UK-based Virgin Comics, that director Shekhar Kapoor is part of. The film, to be released in 2008 with a budget upwards of $8 million, is called Secrets of the Seven Sounds.

"Studios have begun to realise that supply bases based on cost alone are shaky. The West will always have new choices," says Biren Ghose, CEO, Kahani World. Operating out of India and Canada, Kahani World only ever produces original animation content.

Film production houses are also testing animated waters. UTV has announced an investment of Rs 135 crore towards the production and distribution of five animation films between now and 2010. Adlabs set up a separate animation division last year, and is working on its first 3-D animation feature film, Superstar, due for worldwide release in 2008.

And while globally, most IP creation is based on the co-production model (60-70 per cent, according to Ghose), one brave Indian animation studio is going it alone. Media Factory India, that has until now done only commissioned special effects projects, has lined up a $5 million project, Magik "" "India's first 3-D character animated film project," according to Aashish Chanana, CEO, Media Factory India.

Chanana is optimistic about being able to sell the production to a large foreign studio. "Even if we sell rights to them for $20 million, we make a profit before release. And they make money because good animation films costs any where between $30-100 million in Hollywood."

Ghose still sees the distinct advantage in the co-production model. "It does not dilute your rights, it just means you're sharing the risk profile," he says. Toonz has also signed a three-picture deal with Paramount, a vital partnership, it believes, for the future potential of the distribution of its films.

While most films are slated for international release, and some for simultaneous release in India and Hollywood, the industry does recognise the growth of distribution channels in India. Hanuman set the ball rolling with Rs 5 crore in revenue from just the Home Video stream. Chanana, who's been doing the film festival circuits, believes distribution in the West is simpler.

But there is a catch. Costs associated with producing films for the local market are significantly lower than films slated for international release. "If it costs me Rs 13 crore to produce Hanuman II for the local market, it would cost four times that for foreign audiences."

While homegrown animation heroes are all very well, the question is: do these Indian characters work in IP creation for global audiences? Superstar, for instance, is based on the likeness of south India's popular star Rajnikanth. Secrets...and all of Kahani's other animated characters are designed as Indian icons but have global appeal.

"It's not difficult to bridge both markets," says Jayakumar, "if we create contemporary characters, there is huge potential for revenue generation from in-film product placement." Chanana says Magik's characters were designed not to be identified as Indian. "Animation films can be truly borderless."

If PwC's estimate of the industry's worth at Rs 42 billion by 2009 is to be proved correct, this pace of activity will have to be kept up. It helps that more studios are able to attract private equity funding to scale up their operations.

"Private equity traditionally didn't look at this sector because scaleability and consistency were always question marks, but now there is a clear line of sight for the industry," says Ghose. "Now when I go to Cannes, I don't feel dwarfed by the Karan Johars," laughs Chanana.