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.

The potential of the Indian Animation and Gaming Industry

Animation, simply put ‘the fine art of taking a pencil for a walk’, has today reached stupendous dimensions in its maturity and emerged as a niche industry clocking revenues of USD 80 Billion in FY 2007-08. The potential of the Indian Animation and Gaming industry is touching revenues of USD 550 Million in Animation and USD 161 Million in gaming in FY 2007-08, at a time when the world is looking towards Asia as an upcoming provider for this segment.
Few can argue against India’s potential as an Animation and Gaming hub, especially against today’s backdrop of a fast developing sector, the penetration and potential for this segment - both for cinema and television in India is very encouraging. It promises new developments in gaming and new surprises with screening in 3D and making of Hollywood VFX blockbusters.
With an objective of creating a platform to discuss, debate and preempt industry trends, NASSCOM is pleased to announce the 6th edition of its ‘Animation & Gaming India 2008’ from November 6-7, 2008 at the Hyderabad International Convention Center, Hyderabad. Over the years this event has become a premier event for this emerging sector in India, attracting the industry leaders, analysts, observers and media.
This is the opportunity for an organization to participate in one of the biggest animation events, spread over two days. Participants get a chance to interact with luminaries from the industry, listen to experts debate on topical issues and trends, witness interesting case studies and see the best of animation and gaming previews, in addition to introductions to the latest animation and gaming technologies, most of the time before it is out in the market.
The target audience for this event includes animators, producers, program directors, broadcasters, production units involved in media & entertainment, art & design schools, IT companies, investors, VC’s, government officials from Films Division/ Information and Broadcasting Departments, media etc. It will provide an ideal platform for Indian animation, gaming, electronic media, mobile and console players to participate at the event and demonstrate their competencies, strengths and capabilities.

The potential of Indian animation industry

The success of movies like Hanuman and Bal Ganesha has made production houses realise the potential of the domestic market. The Indian animation industry is moving away from being just a back office for Hollywood studios and other international production houses. It is now creating original content for the local market. With the success of animated movies like Hanuman and Bal Ganesha, production houses and studios are realising the potential of the domestic market. Apart from animated movies, animation series on television with original content have also been garnering huge TRP ratings such as J Bole To Jadu on Nickelodeon, MAD on Pogo among others.The entertainment segment of the Indian animation industry is worth Rs 1,300 crore, says a Ficci-PwC report on the media and entertainment industry. Over the next four years the growth in domestic demand for TV/Broadcast animated content is projected to grow at a compounded annual growth rate (CAGR) of 49.5 per cent. It is forcast the domestic market will be worth Rs 150 crore in 2008 and will touch Rs 300 crore by 2010. The launch of new channels almost everyday and the resultant desire to provide diversified and original content has made media houses look for original and localised content. The Turner Group is one such instance. Cartoon Network and Pogo — the group’s two kids’ channel — are growing at a rate of 25 per cent annually and to keep up the momentum the channel decided to acquire local content, early on. “We started acquiring local animated content in 2001. So far we have acquired 20 properties. When we launched Pogo, we felt there was a void in terms of animated content,” Monica Tata, vice-president, Advertisement Sales and Networks, Indian and South Asia, Turner International India said. The latest acquisition by the group is Chota Bheem— produced by Hyderabad-based Green Gold studios — which will be aired this summer. On the localisation strategy, Tata says: “We started by dubbing the programmes that we had in Hindi. The next level came with the introduction of Tamil and Telegu languages and then we started looking for content that would add value to the channel.” Graphiti is another firm that is bullish on the local market. Rather, it is one of the only firms which has been intent on creating original content. Agrees AK Madhavan, CEO, Crest Animation, who, having created some popular animation work in the international market, is now working on series for domestic market. Madhavan’s company is also focused on creating animated films.