Animation industry to grow at 27% CAGR

The animation industry in India is set to grow at a Compounded Annual Growth Rate (CAGR) of 27 per cent to touch $1,163 million by 2012, according to a Nasscom report. The industry is expected to end this year at $460 million. Custom content development is the largest segment as of today, with an estimated industry size of $187.5 million, followed by animation entertainment at $120 million. Multimedia and web design contributes another $100 million, while education is pegged at $53 million. The animation industry in India is set to grow at a Compounded Annual Growth Rate (CAGR) of 27 per cent to touch $1,163 million by 2012, according to a Nasscom report. The industry is expected to end this year at $460 million. Custom content development is the largest segment as of today, with an estimated industry size of $187.5 million, followed by animation entertainment at $120 million. Multimedia and web design contributes another $100 million, while education is pegged at $53 million. The share of education segment is expected to increase from 11.5 per cent to 17.5 per cent from 2008 to 2012. There is immense demand among students to enroll in long-term, skill development courses to pursue a career in animation. Also, as new technologies keep emerging, there is a constant need for skills upgradation courses. The industry expected to go through consolidation with smaller players being acquired by the bigger companies. There are a total of 85 domestic animation movies that have been announced over the last year and 28 are in different stages of production. Over the next two years, 15 animation movies are expected to be released. Animation companies have also started focusing on building original IP, which they can leverage in terms of merchandising and TV broadcast revenues. The report suggests that the production budget for animated movie will increase from $2 million-$2.5 million to $5 million-$7.5 million. The average realisations for a good animation movie will increase between $7.5 million to $12.5 million. Nasscom expects the gaming industry to grow at a CAGR of 50 per cent to touch $1060 million by 2012. The sector will end this year at $212 million. Mobile companies will undergo structural changes to address production slippages, falling revenues and the higher revenue shares retained by telecom operators (up to 65 per cent). Better quality mobile games and enhanced skill sets will result in a rise in mobile game outsourcing deals. Higher revenue shares, third-party contracts and end-to-end development of mobile games will lead to better revenue realization for mobile game developers. The release of locally developed games with international appeal will open up new target markets for Indian mobile gaming companies. Development of domestic localised PC games is expected to pick up. Due to stringent antipiracy measures and a reduction in the affordability gap, the sale of legitimate PC games is expected to increase. Outsourcing deals, especially in the end to end production domain, is expected to rise significantly.