Animation Industry _ An Analysis Contents Overview of the industry Growth in domestic market Porters Five Forces – Analysis of the animation industry Value Chain Analysis Alliances and Collaborations for Animation projects India for gaming analyzing the opportunities, threats an challenges Policies and Regulatory norms for the industry Animation Industry In India The Indian animation market had been fairly “static “until a few years ago and activity on this front only began in earnest in the late half of the 90s when animation studios made an appearance in the country and the industry developed a more serious ,export oriented outlook. India is now getting exposure to global opportunities that promise business for the animation industry A snapshot of the India animation market scenario in the 90’s:
Transcript
Animation Industry _ An Analysis
Contents
Overview of the industry Growth in domestic market Porters Five Forces – Analysis of the animation industry Value Chain Analysis Alliances and Collaborations for Animation projects India for gaming analyzing the opportunities, threats an challenges Policies and Regulatory norms for the industry
Animation Industry In India
The Indian animation market had been fairly “static “until a few years ago and activity on this front only began in earnest in the late half of the 90s when animation studios made an appearance in the country and the industry developed a more serious ,export oriented outlook. India is now getting exposure to global opportunities that promise business for the animation industry
A snapshot of the India animation market scenario in the 90’s: The merger of two existing and leading design studios –Ram Mohan
Biographic and United studios – made available for the first time ,infrastructure and resource required for animation .Design studios began teaming up with overseas animation firms taking the co-producing or subcontracting route ,and in this way upgraded their technical skill set
By 1993 ,there were around 15 animation studios in the country ,with three to four using IT tools and techniques . These studios were coming up in cities such as Mumbai, Hyderabad ,Chennai and New Delhi.
Leading animation studios included the Silverton Studio and Crest Communication ,both of which took on subcontracted work from US, French and British studios
Training in animation became more rampant, with organization such as the Film and Television Institute in Pune offering three year diploma program in animation
India attempted to enter the global animation market in 1997 with the setting up Heart Animation Academy ,a specialized animation school established in Hyderabad
Yet another animation training institute the Zee INSTITUTE OF Creative Arts (ZICA) in Hyderabad began offering production services using over 100 alumni
Animation Market in India
The Indian animation industry has witnessed steady growth in past and has tremendous potential to grow manifold by tapping opportunities in global and domestic animation market .Animation industry is emerging as key revenue generating segment for Indian Entertainment and Media Industry
1. Animation sector is booming with outsourced animation production service as well as developing a robust domestic market.
2. Emergence of new segments in Animation industry.
Porters Five Forces
Before a new company enters the market, it is important to understand the market forces that may affect the business and also what the effects of the force might be. Analyzing each of these forces will provide a picture of the level of competitive activity .The diagram opposite shows the combination of forces that create the competitive environment.
The market forces, combined with the environment they operate in collectively give a picture of the overall market dynamics present in the animation market place
The issues that will be discussed for each market force box are detailed below
Suppliers; who are the key suppliers? How powerful they are and what effect do they have in shaping the industry? Are they price takers or price givers?
competition and
competitors
New Entrant
Customer
Substitutes
Supplier
Environment Market
Customers; who are key customer and what is there bargaining power? Can they dictate price?
New entrants; what is threat from new entrants to the industry? Looking at it another way, what are the barriers to enter? How easy will it be for another player to come into the industry and take market share?
Substitutes; what is the effect on the marketplace from substitute products and technologies? Are there other solution that could substitute for current gaming and if so, how will they compete?
Competition within the industry; after analyzing the four forces above and within each market segment? Therefore how intense is the level of competition?
Analyzing the Animation industry as per Porters Five Forces
Suppliers :
The key suppliers in the animation industry are the animation training and education institutes whose market is expected to grow at the annual rate of 40 % from 2008-12
About 300,000 student are undergoing animation training in animation areas like film design ,game design ,visual effects ,wed animation ,2D ,3D.illustration and special effects .
For the industry to grow and move up the value chain ,a critical role will be played by the training and education institutes which will help professionals acquire technical skills.
Hence the suppliers have a key role to play in shaping the animation industry in the country
ANIMATION SCHOOLS
School Animation Geographical presence Animation AreasArena Animation 80 centers across in
India Animation ,Visual Effects, Gaming
Maya Academy of Advanced Cinematics(MAAC)
23 centers across in India
2D,3D,vishual Effects
International College of Animation Arts and Technology (ICAAT)
Present in Mumbai, Kolkata, Hyderabad, Delhi
2D,3D
Toonskool Present in Mumbai ,Mangalore and Bangalore
2D,3D
Industrial Design Centre IIT Bombay
Present in Mumbai Animation and Game Design
National Institute of Design
Present in Ahmadabad Animation Film Design
Takshaa Present in Bangalore 2D,3D, Illustration Anitoons Present in Delhi 3D, and Special Effects
Customers:
India ‘s animation studio are catering to the requirements of various end user segments such as:
Feature films
TV programs Advertisement/commercials Computer games Education Multimedia /web design Custom Content Development
Animation solutions are also finding a place in niches such as Film titling Special effects Wed entertainment program TV broadcast graphics 3D modeling Background development
The sector is booming with overseas entertainment giants like Walt Disney ,Imax and Sony outsourcing cartoons characters and special effects to India
With the increased scope of using animation in India and increase in demand of animated content, customers are moving from a high bargaining power to a medium bargaining power
Animated strips are being used to convey a medical related issue to the layman or to disseminate.
Ants (Animation Training School )is in talks with the traffic department and automobile vendors to prepare animation strips ,informing a new driver of the various rules to be followed and offering driving tips
Identification of Fast growing segments
The market share of segment using animation reveals that the highest growth for animation currently comes from custom content development, followers by animation entertainment, multimedia and education segments
2012 33 27 33 17
Animated strips are being used to convey a medical related issue to the layman or to disseminate.
Ants (Animation Training School )is in talks with the traffic department and automobile vendors to prepare animation strips ,informing a new driver of the various rules to be followed and offering driving tips
2008 41 26 22 11
0 20 40 60 80 100 120
Customer Content Devopment
Animation Entertainment
Multi Media
Education
New Entrants:
Entry barriers are limited by the expertise ,skills, technology and investment required for the animation industry
Hence the threat of new entrants is directly related to the number of training academies and institutes that open up and provide the relevant skill sets for the industry to exist and thrive and on the technology to enable animation development
Substitutes
All forms of media and entertainment form a part of substitutes for animation industry
Threat form substitutes are high .A high % of animation work is being used in Animation entertainment which has direct competition from
entertainment industry as a whole .There is a media companies who are vying for the same share of customer attention and viewership
Competition within industry
Main Players in the industry are
Big Animation Crest Communication Heart Entertainment Jadoo Works Maya Entertainment Nipuna Services Ltd Padmalaya Tele film Paprikaas Pentamedia Graphics Silvertoon Studio Toonz Animation India UTV Toonz Intensity of competition will be determined by the
technology ,manpower, skills ,creativity ,studio and medium of reach out to the customer
Value Chain Analysis
Development > Pre production > Production> Post Production> Distribution
Identifying existing IP or new idea generation
Asset Procurement
Funding Integration
Preparation of script
Character design
Store boarding
Layout Development
Props design
Development of specifications regarding the character
Background paint
Lnking and painting
Visual effects
Flash animation
Final sound recording
Color editing
Testing Special
sound Effects
Music Scoring
Editing
Promotion ,distribution
Video/DVD release
Cinema and TV screening
Majority of animation studios in India are involved in doing pre-production and post _production work for foreign animation studios
Many domestic studios have established in- house production Big Entertainment does complete production work for both domestic and
international players Domestic animation studio are now focusing on creating their own
Intellectual property Rights (Hanuman ,Ganesha) which would enable them to increase their revenues through character licensing and merchandising
GAP
There is an untapped potential in the development and distribution Stage .However, some Indian animation companies are moving up the value chain by developing original content
PlayersName of the company
Location Capacity(amount in terms of millions ,INR)
Funding
Big AnimationADA Group
Pune Parent Company –Reliance Big EntertainmentThe Reliance ADA group has sealed its $825- million deal with Steven Spielberg’sDream work Studio with investment banker JP Morgan syndicating $325 million debt
Bangalore Total Revenues 1.81Operational Profit (loss)-0.36Net Profit (loss)-2.58
Pentamedia Graphics Subsidiary of computer software company Pentafour
Chennai Total Revenues 39.8Operational Profit (loss)15.24Net Profit (loss)6.14 (2008)
Parent Company Pentafour
Silvertoon Studio Animation Firm
Mumbai
Paprokaas Animation Firm
Bangalore
Players
Name of the Company
LocationCapacity (amount in terms of millions INR)
Funding
Toonz Animation india
ThiruvananthapuramMarketing office in London ,California, Singapore and Australia
UTV TOONZAnimation division of UTV Software Communications
Mumbai Parent Company UTV
Classic Animation Studio
Alliances and Collaborations for Animation Projects
Name of the company Alliance /CollaborationCompact Disc India Ltd (CDIL)
Compact Disc India Ltd has teamed up with Pele, the legendary soccer player, to develop a 3D animation feature film on the game of soccer. The partnership
with Pele is based on revenue sharing at different level .The film is budgeted at UD$63 million, and the project includes an animation feature, multi-platform games .licensing and merchandising (L&M). among other components .Investment of US$20 million will be made in the animation feature,US$23 million on gaming (console .PC, online and mobile games) and US$10 million each on L&M and marketing
Chandigarh- based compact Disc India (CDI) has plans to set up an animation studio in Vietnam ,for which it would be raising $10 million debt from Los Angeles-based I Media Ventures for this Purpose
Toonz animaton india Toonz Animation india moved into the 3D CGI feature film production with the Life Adventures of Santa Claus .Its parent company Toonz Entertainment entered into an agreement with Gang of & Animation and Hyde ParkEntertainment (Ashok Amritraj’s company )to produce the 60-80 minute feature targeted at families worldwide.the entire production of the film will be carried out at Toonz Animation
Toonz Animation and Chandamama , age old creators of legendary storybooks, have joined hands to produce a 3D animated feature film has on the stories of Chandamama .Toonz will finance the project ,currently pegged at around Rs 20 crore , and will also undertake the entire production at its facility in Techno Park ,Trivandrum
DQ Entertainment (DQE) DQ Entertainment (DQE) has partnered with Tuner Entertainment Networks Asia (TENA) for two exclusive animated features .As per the deal ,Turner ‘s kids channel Cartoon Network will air DQE produced animated series Balkand and Ravan in 2009 ,TENA has already acquired 21 animation series from the Indian region
Sanraa Media Limited Chennai – based software firm sanraa Media Limited (earlier known as Sanra Software ) has signed a co-production deal
With leading global production company Endemol for the production of 3D animated series (26x22) Titled the 99 ,the series is based o illustrated comic by the same by the same name ,owned and published by the Teshkeel Media Group ,Kuwait .
India For Animation- analyzing the opportunities ,threats and challenges
InternalFactors
Positive Negative
Strengths Weaknesses
1. Low cost of animation services2. Attractive destination for
outsourced animation production for international players
3. Increase in institutions providing animation education
4. Well equipped animation studios
5. English speaking talent 6. Growing awareness of
Indian Animation talent Amongst international studios
1. Manpower shortage 2. Protection of intellectual
property3. Attrition and poaching loss of
experienced professionals4. Very little awareness of career
in animation5. Minimal government support
or incentives6. Funding problem ,Salary issues
& constant retaining of professionals
ExternalFactors
Opportunities1 Increasing awareness of Indian
Animation talent amongst international studios
2 Increasing animation budgets3 Increasing acceptance of
animation content in domestic entertainment
4 Increasing capex on building woeld class animation studio
5 Tremendous opportunity of tapping international animation market
Threats1 Competition from other
countries like Taiwan,Philippines.Korea and China
2 Ever changing technology3 Lack of awareness in foreign
countries4 Inadequate funding for capex
and investment in manpower 5 Lack of support from
government
Factor aiding growth of domestic animated film production
Increase in domestic demand for animation India is the second largest entertainment industry in the world , after
Hollywood Animation studios in India are creating content for domestic market
also and not dependent merely on the outsourced work A long standing tradition and availability of mythological content is a
huge source for idea and story themes for animated film
Success of animation films like “Hanuman” “My Friend Ganesha” and extensive use of animation in recent Bollywood movies such as Krrish and Dhoom 2 is a part of the changing landscape
A number of animation studios have set up hi-tech studios equipped with state of the art hardware and software to execute domestic projects
SWOT
Number of domestic animated movies in 2008
movies Announced under production0
10
20
30
40
50
60
70
80
90
Indian emerging as animation outsourcing hub...
Significant lower production cost compared to other countries is driving outsourced /offshore work to India
India has a large number of qualified and employable professionals who are proficient in English language
About 300 animation studio in India are constantly improving on the skill set required for doing outsourced animation work
Cost advantage is also a major factor for global entertainment firms coming to India. Animation can cost about USD125 an hour in US against USD25 an hour in India
Initially outsourcing work involved low – end bulk work , but Indian animation companies have worked their way up the ladder and are now working on high – end animation
US
India
0 50 100 150 200 250 300
100
15
175
25
upper range Lower range
Increasing Character Licensing Business in India
Supplemental revenue from animation and character licensing is also growing and becoming more common
Merchandise licensing business in India has been growing at more than 50% in the last three year and total character licensing sales are estimated at USD 100mm in 2009
The generation next kids who have given choice with countless number of TV channels , access to internet and mobiles are being targeted by cartoon developers through brand and collaborations
Domestic Player DetailsBig Animation 1. Sold Indian satellite TV rights for Little Krishna ,a 13-episode
animation film series to leading children’
2. Bought the right to develop an animated television series on content from the Indian publication Chandamama ,which is owned by Geodesic
25 episodes featuring popular characters and stories of Chandamama will be developed and ready in 2-3years
Diamond comics Recently made a deal with Licensing solution provider to market their famous characters to be used in animation films marketing campaigns and merchandising in children’s properties – clothes ,toys, stationary , etc.
Domestic Player DetailsDisney Consumer Product 1. It occupies the foremost position in India ,with Mickey and
Minnie alone generating 43%of its revenueKing Features Syndicate
1. A merchandise licensing firm of Hearst Corporation , that owns the characters like Flash Gordon ,Popeye and Betty Poop has entered India
2. It is in talks with Indian corporate for licensing deals in food and beverages , kids apparel and footwear, stationery and toys ,home décor and furnishings and the warless / mobile sectors
High initial investment, shortage of talent, and concerns about IP protection are key challenges
High set up and production cost Animation movies require large investment for producing , which is
the main reason why many producers in India are not coming forward to make animation movies
It cost between USD 3-5 mn to set up a mid –sized studio in India The budgets for animation movies in India would be ranging from 15
– 25 mn USD which is very high when compared to normal Bollywood movies
Manpower shortage The growth in India animation industry is hindered by lack of
skilled manpower, mainly due to lack of facilities and preference for traditional career options
Only about 10,000 professionals are working in this techno creative animation field
As the demand for animated content increase , lack of professionals with desired skills sets will hinder the expansion plans of animation studios
Protection of intellectual property Protection of their intellectual property has always been a
concern for outsourcers to India India needs to strengthen its IP policy and ensure that
companies operating in the outsourcing sphere take stringent steps to take care of clients IP rights
In less than a year, the town of pune has emerged as a serious animation and gaming industry hub
A number of animation and gaming have mushroomed in the city Nvidia Graphics has set up its operations and rapidly expanding
Jump games has set shop to develop mobile gaming Verisoft is into testing gaming software and Has 50 people
dedicated to testing the latest gaming software Auryn Aniamtion Studios, involved with films such as Titanic,
Shark Tales, Stuart Little and Spiderman, has set shop in pune .Two more are set to launch operations in the city.
Anirights Info media Of Reliance Group and Anibrain Digital Technologies have also chosen to house their expansion projects in pune
Toolbox Animation Studios has been set and run by Chetan Deshmukh in pune
Many of the gaming and animation studios have decided to either move from other cities to Pune or to set up their expansion projects at pune
Also, animation studios in pune as compared to others in nearby cities are better in terms of space .layout and comfort for the artist.
The city has some of the most well equipped animation studios. Pune’s Big Animaion studio is massive with a built up area of
60.000 sqft ,which will focus on original Indian content in animation
The studios is into the process of setting up multi –feature film pipelines for both domestic and international market in 2D and high –end 3D.Big Animation is channelizing its energy and funds towards acquisition and development of proprietary products and tools to create a one of its kind IP value chain
The studio is equipped with a Dolby digital sound auditorium , a 35 mm Barco projection unit, the ones used at INOX cinema halls .The auditorium also has an acting floor for animations, separate sound recording studios and sculptor’s room
On the technical side ,Big Animation function on 64Bit architecture, it has a foundry big Iron RX network switch, one of the fastest in the world and a Blue Arch storage rate. Each workstation is equipped with specialized PCs worth Rs50 to 60 million.
Over the years pune has witnessed an increase in the gaming education, preparing skilled manpower
There has been an increase in institutions providing animation and gaming education, preparing skilled manpower
The best animation and gaming schools from across the globe are setting up schools in pune to train manpower for the industry
Also there are several computer institution and art colleges in pune for companies to get an easy access to talent
DSK Supinfomcom has set up a Rs 250 core hi-tech 20-acre campus at Phursungi , near pune
FTII India offers a one and a half year Certificate Course in animation and computer graphics
The Anil Ambani group has forayed into animation education by launching the Big Animation Infoainment and Media school or Big Aims, a training institute in pune
The latest announcement by the information& Broadcasting Secretary of setting up a government training institute in the city could set the pitch for the industry to grow
There has been an improvement in the animation course content provided
Seamless Education Academy or SeamEdu have been offering courses in different way. They have a commercial tie –up with animation studios like Toolbox and Rhythm and Hues and the students are given opportunity to work on some commercial project to gain hands on experience .With the visiting faculty including the likes of Shelley page of Dreamworks,the students are directly seeing world class experts
Also ,seam Edu is one of the institution to have introduced a cource on acting for animation. Students are given training on voice culture to help them learn jow a character emotes
Another private institution ,DSK Supinfocom International campus at Loni, some 30 kms from the city ,is offering a certificate course of supinfocom , a recognized French institute in animation and gaming.
MCCIA proposes to introducing courses of short duration ,bringing together trainers, local studios and buyers on a common platform and forging commercial links with overseas markets such as china ,Japan. Korea, the US and the UK among other initiatives.
IT policy anticipated to support development of animation and gaming industry in the city
IT Policy With state government coming out an IT policy that lays
special emphasis on the animation and gaming industry, private educational institutes have introducing courses for animators. Pune is gearing up tp witness $5 billion worth of business from animation and gaming in the next five years.
The new proposed IT policy makes special mention of animation ,visual effects, gaming and comics with an assurance from the state government that it will set up a development center to provide the infrastructure backup. This will include studio, art gallery and animation film production facilities .The policy also talks of setting up animation and gaming parks on the lines of software parks
The latest addition to boost this boom is the Mahratta Chamber of Commerce, Industries and agriculture which has started talking to some of the industrialists to encourage them to reservr some special economic zones (SEZ) for animation and gaming industry
Developed IT Existing developed IT in the city would be an aiding factor in
the growth and development of the animation and gaming industry in the city
Close Proximity to Mumbai Close proximity to Mumbai will help utilize the talent pool
( comprising of script writers, musicians and voice artistes)Available in Mumbai who are required on contract basis for projects in pune
