Industry Overview

Animation BPO that is, Business Process Outsourcing in the global animation industry is valued at a staggering US$ 68.4 billion. This figure is expected to rise to almost US$80 billion by 2010. On the other hand, the projected growth in two years’ time is around 16.5%.

The increase in demand can be attributed to the continued production of animation in the entertainment sector which accounts for 74% of total revenues in the global animation industry. In 2006 for example, the entertainment sector of the animation industry generated about US$43.7 billion out of the total US$59.1 billion. This per cent in share is expected to climb up to 77% in 2010, creating bigger and healthier opportunities for animation services particularly in the entertainment sector.  (Source: NASSCOM, 2007)

The continued demand in the global animation market has allowed the Asia-Pacific region to further emerge as a premier destination for animation outsourcing. The major players in the region include China, India, Singapore, South Korea and the Philippines.

The Indian Animation & VFX Industry
    

The Indian animation industry on the other hand was estimated to have a value of US$ 354 million in 2006 and is estimated to reach about US$ 900 million by 2010. With about 300 Indian animation studios, approximately 70% of the industry’s total revenues come from outsourced services. The industry in India currently employs about 12,000 people with nearly 3,000 working as freelance animators.

The Indian animation industry has managed to position itself to be a major market player in the animation outsourcing industry with only 12,000 employees working full-time for the industry. A key factor for this is India’s significant cost advantage coupled with strategic investments in the country’s animation infrastructure.

Gaming and Animation

Even as a consultant is finalising a detailed report for setting up a National Centre for Animation, Gaming and Visual Effects, a high-level task force is dwelling upon various issues following an assurance by Information and Broadcasting Ministry earlier this year to give priority to this sector.

The Planning Commission has already allocated Rs 520 million under the 11th Plan period (2007-12) for the Centre, as the private sector has complained of a shortage in manpower in this sector which is growing at a fast rate. The Planning Commission wants this Centre to be on a public-private partnership.
 
The 13-member task force headed by I&B Additional Secretary Rajiv Takru set up recently will evolve a methodology to ensure the widest possible consultations on a 14-point charter in the terms of reference and submit its report within six months from the date of its first meeting, which was held earlier this month.

The Task Force includes Mahesh Samath (Walt Disney India), Ashish Kulkarni (Big Animation Reliance), Tapash Chakravarty (DQ Entertainment), Rajesh Rao (Dhruva Games), Vishal Gondal (UTV India Games), AK Madhavan (Crest Animation Studios), Jaspreet Bindra (Microsoft), Munjal Shroff (Graphiti Multimedia), S Nagarajan (Visual Computing Lab, Tata ELXSI), and Leena Jaisani (FICCI). The Director (Films) is the member secretary and the Joint Secretary (Films) DP Reddy is a member.
 
The committee will examine various aspects including existing co-production treaties and promoting the locally produced animation content in foreign markets. In keeping with a demand made early this year by Minister Ambika Soni to the Finance Ministry, the Task Force will examine the possibility of entertainment tax exemption for children and animation feature films for 10 years, service tax exemption to studios developing original contents, rationalized customs tariff for the  gaming  industry, promotion of indigenous  digital content education and entertainment for masses, and setting up of multiple parks for the sector on the SEZ model.

Meanwhile, it is learnt that The Standing Committee on Information  Technology which deals with issues related to Information and Broadcasting had earlier estimated that the Centre's share would be around Rs 750 million.

Earlier, a Committee set up by the Ministry had estimated that on an average, at least 3000 trained personnel would be needed every year for the burgeoning fields of animation and gaming, and the  special  effects is also expected to grow at similar levels. The Committee had been set up to identify new opportunities in the areas of Information, Communication and Entertainment where the State needs to play a pro-active role.

In its report on the growth of the animation and gaming segment, the KPMG had earlier this year said the Animation and special effects segment, at Rs 3.2 billion, posted a 13.6 per cent growth in 2009. The industry is expected to grow at a CAGR of 18.7 per cent in the next five years to reach Rs 46.6 billion by 2014. This growth is going to be triggered by the increased consumption of animated content, focus on IP creation and growth of 3D formats.

Gaming has shown a 22 per cent growth in 2009, and is expected to grow at a CAGR of 32 per cent in the next five years to reach Rs 32 billion by 2014.

In the report presented at FICCI FRAMES in March this year, KPMG said "Console gaming currently constitutes the largest share of the pie, but going forward mobile gaming platform is expected to eventually surpass levels of  console  games. The growth in this sector will be backed by the increase in number of casual and active games, arrival of 3G, availability of localized content, growth in ad funded gaming platforms and greater awareness of products and services."