India gets animated

Indian animation is on the threshold of growth and success, but is it sustainable? Professor Debapratim Purkayastha has written a case presenting the history of the sector as well as the challenges facing the industry players.

From the times of Dadasaheb Phalke who made the first animation film in India back in 1914 using matchsticks, coins and stop motion camera techniques, the Indian animation industry has come a long way. It is now expected to record US$ 1.2 billion by 2012, a massive twenty-seven per cent increase on 2008.

“But there are several bottlenecks that the industry needs to overcome before it can reflect sustainable long term growth,” cautions Professor Debapratim Purkayastha of Icfai Center for Management Research (ICMR).

Outside partners
The real evolution of the industry started in 1950 when an outsider, Clair Weeks, an animator from Disney Studios came to India to train amateurs in the principles of classical animation. By 1970, Bhimsain and Ram Mohan, who had trained under Weeks, started their own studios.

A few good films were made in this era. But because of a lack of marketing and government support for these movies most independent animation studios diversified into other fields like ad and feature films.

The 1980’s were sluggish for the animation industry but the 1990s witnessed a recovery. While in the 50s it was the United States that provided assistance, in the 1990s it was Japan. Ram Mohan and Sako, a Japanese filmmaker, together made the animated film Ramayana- The Legend of Prince Rama, despite not getting approval for distribution from the Indian government. The film was appreciated in the international markets and brought about awareness of the availability of talent in India.

Moving up the chain
But what really got the industry going was the outsourcing boom. Production houses from Europe, America and Canada, began outsourcing the post-production (labor intensive) work to India. The cost advantage was huge. As opposed to spending US$ 250,000-300,000 now they were only spending US$ 60-70,000 for a half-hour animation film. Several companies sprung up to tap into the rapidly growing market. Despite competition from its Asian counterparts, India fared well and bagged several assignments. But it didn’t take long for Indian animators to realize that low yielding outsourced work could not contribute to the creative growth of the industry.

The success of Cartoon Network showed the way! The Indian animation industry had a big, untapped market with the children. Pentamedia Graphics took up the challenge and produced two 3D animated movies in 2002 targeting children- Sinbad, Beyond the Veil of Mists and Pandavas- The Five Warriors. Pandavas ranked amongst the first computer-animated feature films to be made in India; Sinbad, was made in the United States but produced by Pentamedia. While these films were not commercial successes, two of them were nominated for the Oscars and Indian companies were acquiring the technical excellence for future successes.

Hanuman, a Toonz production, was the first Indian-made animation that made it big with the Indian public. Following this, many studios produced animations in different languages. But supply was not able to meet demand, as the expenses, technology and scarcity of trained professionals discouraged smaller companies from venturing into producing animated films. Besides, animated films on Indian mythology limited the market for these films geographically.

It was in 2008 that the Indian film industry (Bollywood) made its entry into animation. Yash Raj Films along with Walt Disney pictures produced Roadside Romeo. This film was made entirely in India at Tata Elxi’s Visual Computing labs. Entry of big domestic players into the industry was also an encouragement for smaller studios as they brought in original/varied content suitable for a global audience and more investment.

In summary, four business models, representing different levels of value creation, have been prevalent in the Indian animation industry: the service/outsourced model, the boutique model, the collaborative/co-production model and the in-house production model (see box).

The challenges
With the groundwork already in place, experts feel that the industry is now on the threshold of success if it could resolve challenges that endanger sustainable long-term growth.The prime challenge is to bridge the huge gap between demand and supply (see box). Besides, being a budding industry it needs to bring more creative talent to the forefront if wants to survive. New courses for animation need to be introduced supplemented with animation companies providing in-house training for their employees so their skills are up to date with the global animation industry.

“Indian companies are operating in a high innovation-low risk model where entry barriers are low. Competitors can raise the bar by employing new technologies and people with improved skill sets. New competitors can emerge and change the rules of the game.  Who wants to watch a boring 2D animation movie with poor graphics, when 3D versions are available with meticulous attention to detail? So, it is imperative that animation companies who want to grow and sustain their businesses improve their skill sets and continuously introduce courses on skill up gradation for their regular employees,” says Professor Purkayastha.

The other issues at hand are content development suitable for a global audience and dependency on imported technology to produce animation movies. Importing being an expensive option, there is a desperate need to develop software that could be used to design top quality animation.

“Being a relatively new industry, the teachers and students are able to examine how the Indian animation industry has grown and evolved over the years. The students also analyze the Indian animation industry by using frameworks such as Porter’s five forces model. They further discuss how the animation companies can tap the local and global opportunities before it and finally decide which business models need to be adopted to ensure sustainable growth for the industry,” says Purkayastha.

“But most importantly the students debate whether the Indian animation companies were indeed moving up the value chain, and what its strength and weaknesses are vis-à-vis its Western counterparts,” concludes Professor Purkayastha.

Reference:
"Indian Animation Industry: Moving Up the Value Chain?"
D. Purkayastha and A. Harish
Icfai Center for Management Research (ICMR)
ECCH 209-033-1

http://www.icmrindia.org/casestudies/catalogue/Business%20Environment/BENV021.htm

By Sunaina Anand
Published October 2009