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| Animation firms buck slowdown, see increase in orders | |
| Upasana Kaur / Mumbai June 28, 2009, 0:36 IST | |
70% of animation studios' revenue comes from outsourced work.
The Indian animation sector, it appears, has not been hit by the slowing economy. Rather, major players like Maya Entertainment, Tata Elxsi Visual Computing Labs, Toonz Animation India, DQ Entertainment International and Avitel have seen a rise in the number of deals in the recent months.
For instance, Mumbai-based Avitel first post-production studio in India with an estimated net worth of Rs 750 crore. It has orders worth Rs150 crore. Avitel’s animation turnover is projected to shoot up to Rs 50 crore in 2009-2010, an increase of 400 per cent from last year’s Rs 13 crore.
Pradeep Jain, chairman and promoter of Avitel Post Studioz, feels the slowdown has been good for the animation industry in India as US studios looking to cut cost are shifting work to India.
“What this slowdown has done is to open the pre-production side of the business to Indian players. The Indian animation industry so far was restricted to the production side of the business, thus targeting only half the business. The current meltdown has opened doors for us to step into the pre-production side of the business also.”
Maya Entertainment, a leading animation studio, is another example. Jai Natrajan, Group Executive VP, Business Development and Marketing, said, “During the second half of the last fiscal, when the economic meltdown hit hard, we signed two large TV serials internationally. We recorded 30 per cent growth during the period. We also got Rs 25 crore worth of outsourcing orders.”
The Indian animation industry is currently pegged at Rs 1,740 crore and of the total revenue generated by the studios, over 70 per cent is derived from outsourcing, says the Ficci-KPMG Media and Entertainment Industry report 2009.
Analysts note that other than the cost advantage that India offers, studios here are coming up with world-class projects. A point in case being “Roadside Romeo”. Visual Effect Society had nominated Tata Elxsi for animation work in the film, along with movies like Wall-E, Kung Fu Panda and Waltz with Bashir and Bolt. The cost of producing a full-length animated movie in the US is $100-125 million, as compared with $25-30 million if work is outsourced to India.
Unlike the IT industry, where decisions have been slow and existing clients have not ramped up, the animation industry has seen the opposite. “We received repeat orders from our existing partners as well as several new productions,” said Sumedha Saraogi, vice-president, Management Office, DQ Entertainment International.
Saraogi agreed that while deal sizes had remained the same, the quantum of work had risen. “The deal size could vary depending on the format and the length of production as well as the scope of work that is outsourced. On an average, the deals are from Rs 4.7 crore to Rs 24 crore ($1-5 million),” she said.
Analysts agreed that while the outsourced business had not been impacted, a lot of changes had been introduced in the deals. “In many cases, prices have been renegotiated. Where one cannot do that, firms are looking at reducing cost. Firms may look at reducing the number of takes for creating a character or reduce the number of characters in the project. But one positive that has happened for the industry is that a number of small players that had mushroomed during the hype period have had to close down due to pricing pressures.”
“We have also signed co-production agreements for several 2D/ 3D projects. So, we have not been much affected by the ongoing crisis, except for some minor delays in fund flows,” said P Jaykumar, CEO, Toonz Animation India.
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