Animation industry may touch $950 mn by 2009

With global players like Walt Disney, Imax, Warner Bros signing contracts with Indian animation companies for outsourcing and co-production, it is expected that the animation industry in India can touch $950 million by 2009 and is expected to grow at a fast pace over the next five years.

However, outside the Industry there is scepticism about the pace of growth because of the challenges like piracy, lack of intellectual property (IP) protection rights, acute lack of resources and investments the Industry is facing.

In an interaction with Business Standard, KPMG Advisory Services (P) Ltd Director Jaiddep Ghosh said, "Although India is the largest media consuming market in the world, only 1 per cent of the US market size which is estimated at $10 billion, so far the animation is concerned, it is currently pegged at $600 million."

Commenting upon the industry market size, he said, "The Indian market size is extremely fragmented with the top players accounting for 10-15 per cent of the industry turnover. Further, most of the players are direct or indirect off-shoots of the Indian BPO boom. This legacy and low indigenous demand forced most of the players to adopt the outsourcing business model."

Prominent players include Toonz Animation, Crest Communication, Maya Entertainment, UTV Toons, Zee, etc. Also, Pritish Nandy Communication has plans for five full-length 3-D animated bollywood films and has signed a $25-million deal with Florida-based animation company Motion Pixel Corporation. Crest Animations has entered into a three-movie co-production agreement with Lions Gate, a major movie studio. Also, animation studio DQ Entertainment has made a pact with US-based Electronic Arts to work on PC games.

With these developments, it seems that things will change dramatically in the near future. Further, Walt Disney, Imax, Warner Bros are signing contracts with Indian Animation companies for outsourcing and co-production.

On being asked why just few companies in India are into animation business, Ghosh said, "Animation needs a much larger investment and longer production circles. However, it has very long shelf lives and content leverage scope. A typical animation movie may take 2 years for completion unlike general movies. Further it is labour intensive, although with the advent of computers, the work has been simplified and is a relief from the days when each frame had to be drawn by hand. It is estimated that the labour may account for 70-80 per cent of the total costs for a 2-D animation production. It is lower for 3-D animation. Further, animation products are expensive to produce, on an average animation costs 5-15 times more than a live product."

He added that the key challenges before the industry are piracy and lack of IP protection rights and an acute lack of resources, investment and government support. The slack IP laws and weak enforcement mean that studios can expect leakage of revenue at every stage.

Further, to keep in pace with technological development, companies need to invest heavily in latest technologies, he said.