If you thought that the Indian IT industry was restricted to the traditional software services and BPO segments alone, think again! For, a bunch of highly talented companies are sharpening their pencils and navigating their mice to etch India’s image in the highly competitive global animation space.
The woman turns and slowly jumps off the top of the cliff, floating in the air as gracefully as an eagle until the mist envelopes her and she is hidden from the eyes of the camera. This is the last scene of the Oscar-winning action thriller Crouching Tiger, Hidden Dragon. "Impossible," your mind says, as you watch the amazing scene unfolding in front of your eyes. How is it possible to shoot a sequence like that? Even the most accomplished of stunt masters can’t possibly fly! You experience similar emotions of disbelief while watching equally action-packed Hollywood blockbusters like Spiderman, The Matrix, Mission Impossible, Fight Club and Hollowman.
Though Hollywood has been using special effects for quite some time, it is only recently that Bollywood has taken to special effects in a big way, thanks to the demand from Indian audiences to be entertained with the same breathtaking effects in the larger-than-life images produced by Hollywood. Today, more than 10 percent of our desi films resort to animation—or ‘special effects’, to use the more popular ly accepted term—to draw in the crowds. Examples include popular hits like Zubeida, Abhay, Aks, Raju Chacha, Mission Kashmir, etc. But animation, as a concept, is not something that is new to India. In the late 80s the Ahmedabad-based National Institute of Design invited professionals from the West to train Indian animators in various aspects of the art as well as technology. Despite these initiatives, no serious efforts were made till the next decade to cultivate animation as a serious industry.
Cut to Bollywood, circa 2001. In Lagaan, India’s entry for the Oscars, clouds appear in the sky just when needed and it starts to pour as if on cue. The scene is too perfect to have been shot in a studio somewhere in suburban Mumbai. The maple-leaf transition in Mohabattein, another Bollywood blockbuster, is one more instance of how nature seems to bend to the wishes of the director. There are numerous other examples of the unbelievable being made believable in films, be it in Hollywood or Bollywood. How is this possible, one may well ask. After all, actors and stunt masters have their limitations! The answer is animation. There was no woman floating in the clouds in Crouching Tiger, nor were shots taken of live clouds moving across the sky in Lagaan, nor were actual maple leaves blown around using blowers in Mohabattein. All the shots described were actually images created on the computer. And no, not all these high quality images were produced in some hi-tech digital lab in the West. Mumbai-based Maya Entertainment played a significant role in the production of recent Hollywood special effects blockbusters like Star Wars: The Phantom Menace, The Mummy and Stuart Little. So have scores of other animation studios spread across the country, including internationally acclaimed ones like Toonz Animation, Pentamedia, Crest Communications, UTV Toons and JadooWorks.
Genesis
In India we have seen animation being used to create content for ad films and commercials. Says Raman Madan, business manager for animation at Discreet India, "Animation in India was pioneered by the Indian advertising industry. Today, we see this industry resorting to animation in a big way to capture the viewer’s imagination." Television channels have been the other major exponent of animation. Mumbai-based Maya found a niche for itself in the channel ID space. Channels like Sun, Sony, Star and Zee are some of the channels that use animation for promos, automated real-time graphics and montage sequences. But reluctance on the part of producers to invest in an art form with no clearly defined audience saw animation being relegated to the occasional minute scenes in Bollywood action thrillers. But this mindset underwent a change with the success of Cartoon Network in India. The latter half of the ’90s saw a proliferation of animation studios across the country, especially in the southern cities of Hyderabad, Chennai and Thiruvanthapuram. This was when the industry developed a more serious, export-oriented look. The 90s also saw the merger of a few animation studios like United Studios and Ram Mohan Biographics, which provided the industry with the requisite impetus for growth. Another strategy followed by existing players was to partner with design studios in the West and take up co-production and sub-contracting activities.
The mid-90s also witnessed a plethora of training institutes, like the Film and Television Institute in Pune, Zee Institute of Creative Arts and Heart Animation Academy in Hyderabad and many others, being set up in all major cities in the country. Today these institutes are helping build the manpower base for animation studios. Though these studios initially contributed towards creating 2D animation, the trend is slowly shifting towards training in 3D animation as well. Companies like Toonz and Pentamedia, which earlier focused on 2D animation, have gained world recognition for their work in this area. Companies in the West are outsourcing a lot of 3D work to Indian companies like Chennai-based MUV Technologies, JadooWorks, UTV Toons and Digital Art Media.
Says K Chandrashekhar, general manager and head of MediaWorks at Tata Elxsi, "Currently, the animation market in India is limited to ad commercials and simple effects in feature films. The real big opportunity lies in fully animated feature films like Stuart Little, Shrek, Ice Age and Monsters, Inc. Children in India love cartoons just like children do elsewhere. For Indian filmmakers, this is a goldmine waiting to be tapped." According to Deepa Sahi, CEO of Maya Entertainment, currently, 48 percent of global animation is done in the US, roughly 26 percent in Europe (mainly France) and 26 percent in Asia (mainly Japan and Korea).
High stakes
A report released by Andersen Consulting states that the Indian animation industry, currently pegged at $550 million, is slated to clock a growth rate of 30 percent annually in the next three years and is expected to reach $15 billion by 2008. The study further reports that in the next three years India would receive more than $2 billion worth of animation business. The reason stated for this optimistic outlook being that the international animation industry is increasingly looking towards countries like India to cut costs and increase profits. The world has accepted India as a low-cost high-quality country delivering quality work, be it in software services or IT-enabled services. The goodwill created by IT companies seems to have rubbed off on the animation industry as well. With costs of real sets, studio space and outdoor locations skyrocketing, we can look forward to not just the US but other countries like Canada, UK and the rest of Europe looking towards India for low-cost, high- quality output. These feelings have been echoed by Indian studios as well. Says Chandrashekhar of Tata Elxsi, "The limited exploitation of the true potential of animation in India has contributed towards Indian studios addressing the international market for 2D and 3D animation."
Nasscom, India’s IT window to the world, has on the other hand divided the opportunities presented by animation into two different segments—those services that are targeted at the entertainment sector and those catering to the non-entertainment (industrial and commercial applications) sector. Though no exact statistics are available, Nasscom has estimated the overall global animation market to be around $45 billion. This number is expected to jump to anywhere between $50 billion to $70 billion by 2005. But Deepa Sahi, CEO of Maya Entertainment, though optimistic, is a bit more conservative in her outlook. Says she, "The international animation industry will be worth $40 billion within two years time and India, with its two genetic talents of art and mathematics can capture a major chunk of this business." She adds that India can and will become the global hub for animation provided that the government extends the same support it did to the IT industry.
The Nasscom report further states that within animation production services, the segment likely to create the most demand is the entertainment industry. Entertainment is expected to account for around $37 billion of the overall animation production services demand by 2003, up from an estimated $32.4 billion in 2002.
Market research carried out by Pixel shows that demand for production in the non-entertainment section is worth $14.7 billion. Of this, India accounts for a minuscule percentage of the total pie. The Arthur Andersen report indicates that total animation production by Indian companies was around $600 million in 2001 and is likely to go up to $1.5 billion by 2005. Pixel further estimates global film and television programme production to generate a demand for animation production services to the tune of $17.5 million this year, up from $15 million in 2002.
Domestic reality
The Nasscom report states that the Asia-Pacific region has bagged a larger piece of the animation production pie during 1996-2002. The region has various advantages when compared to other countries who might possess the technical skill sets. Not only do animation studios in this region offer services at lower costs on account of availability of highly skilled but cheaper manpower, but also lower cost computer animation platforms and production facilities available in this region further drive down cost of setting up requisite infrastructure. Says P Jayakumar, operations director at Toonz Animation India, "India is becoming a popular destination for animation, the major factor behind this phenomenon being the low cost of production." When the low cost of labour and infrastructure offered by India is combined with the fact that computer-based animation offers film makers 30-40 percent cost reduction over traditional animated films, the overall resulting saving is tempting indeed. Computer-based animation ensures that only one-third of the staffers are required. Also, the digitally stored characters and backdrops can be recast inexpensively into sequels. Says Madan of Discreet, "Companies abroad have realised the huge cost advantages offered by India. Most of them are looking at expanding operations. their revenues have been dipping over the years though the amount of work continues to remain the same. Hence, most of these companies are scaling up their operations. An expansion also calls for cost cutting. This ensures that the West will outsource animation work to countries like India, Australia and Philippines."
But Chandrashekar maintains that the Indian animation industry is still at a nascent stage and only in the initial stages of being recognised by the international market. "What is critical from a long-term point of view is that existing players ensure that they deliver internationally acceptable quality of output and thereby keep the overseas producers interested in India."But, according to Chandrashekhar, of the three stages of the animation production process, the overseas production company retains control over quality as they do the pre- and post-production themselves. The work outsourced to India is currently relegated to the lower end of the value chain. Says Madan, "Most of the work being outsourced to India, in 2D, involves low-skill activities like clean-up, in-betweening and, to some extent, modelling. Once the creative credentials of Indian studios are established, studios abroad wouldn’t be averse to outsourcing even story-boarding and other such pre-production activities."
In the mid 90s, when animation work was first outsourced to India, the existing players tried to rake in as much business as possible at the expense of quality. This diluted Indian animation studios’ promise of low cost but high quality work. Madan and Chandrashekhar agree that this perception created due to the indiscretion on the part of a few players is undergoing a slow change. And with competition from countries like China and Philippines on the rise it is important not to repeat mistakes committed by earlier players, and also to ensure that quality of output meets international standards.
Opportunities galore
Decreasing margins and an increasing public demand for entertainment content has production houses looking for maximum cost benefits. The increased pressure on revenues has left only one way open for such companies—outsourcing. And this represents a huge growth opportunity for the Indian animation industry. The areas of growth are plenty: 3D animation for movies, animated television serials, special effects and games—one of the fastest growing segments in the animation industry. Opines Jayakumar of Toonz, "The rapidly escalating cost of producing action movies is pushing studios toward animation. Moreover, computer-generated animation is getting better and cheaper all the time. Competition has thus increased, as more and more studios are cranking out children’s films to try and get a piece of what’s long been considered the most lucrative part of Hollywood."
Even Canada is a major outsourcer of animation. Compared to other countries, Canada has the maximum number of TV channels that show only animated content 24 hours of the day, a clear indication of the country’s preference for animated work. Says Jayakumar of Toonz, "We expect the amount of work from Canada to increase dramatically once the animation trade treaty between Canada and India is signed." Indian studios have also been witnessing an increasing amount of outsourcing from the Middle East and European countries like France, UK, Spain, Italy and Germany. Another growth opportunity is the Internet. According to industry reports, the multimedia business (computer graphics, and Internet-based entertainment and CD-ROMs) employs around 1,30,000 people in Los Angeles alone, compared to 2,42,000 people in movie production in the whole of America. The chief constraint at this point of time is bandwidth. According to Pravin Dudhe, CEO of Octopus Entertainment, once bandwidth constraints are resolved, the Internet will be one of the biggest growth opportunities for the animation industry. Octoplus is already in gaming technology, one of the few companies in the country to venture into this highly skill-oriented sector. Says he, "Interactive entertainment is opening up vistas for animation houses in the field of game production. The US is the largest gaming market in the world. The market size is $10 billion; which is more than the box office collections in the US." He also adds that high-end game technology has a huge market globally, requiring both software and animation.
The rapidly-growing domestic market is another major growth opportunity. The Indian film industry is purportedly the largest in the world in term of number of movies. And if the trend in Hollywood is anything to go by, special effects is bound to play a more important role in forthcoming movies. We are already witnessing a transition towards this, with more and more Indian studios opting for special effects to draw the crowds in. Many companies like Toonz, Maya and Pentamedia have also got into the production of animated versions of Indian fables and folk tales. There is definitely no dearth of stories—Tata Elxsi recently released Krishna Leela, Maya completed a 54-part science fiction series titled ‘Captain Vyom-The Sky Warrior’, while Toonz is in the final stages of completing its series on ‘Tenali Raman’. Cartoon Network is also planning to launch a series of programmes from adaptations of Indian fables and mythology.
A challenge a day
Says Dudhe, "The Indian animation industry is still at a nascent stage. Till now there has not been a single animated movie made in India and launched in the international market; nor has any Indian company been able to bag any project worth the name." He cites the highly competitive international market as the chief cause for this state of affairs. Both South Asian countries as well as East European countries have ample experience to back themselves while pitching for Hollywood animation contracts. Their experience also enables them to produce quality material while sticking to deadlines. Also, all these countries are extremely cost competitive. India still has a long way to go in terms of technical proficiency. No wonder then that all major animation houses like Disney and Universal are outsourcing their animation needs to these countries.
"India still has a long way to go to measure up to the quality levels of studios in Philippines, Korea or Taiwan. The industry in these countries has years of experience backing them, while in India, it’s relatively new," opines Jayakumar.
Adds Chandrashekhar, "In order to make inroads in the animation industry it is important to combine quality of work with reliability and time factor. The common assumption is that India cannot produce good quality creative work." The question that often seems to be asked is how reliable are they? We need to factor in creative quality along with the cost advantage if we want to make any lasting impression on the industry. Also, as Dudhe says, there are two very positive factors in favour of India—a highly skilled English speaking graduate workforce and its proven success in the IT industry.
Another major problem seems to be the lack of any structure in the industry. Animation movies are normally bought by the channels. But the lack of a structure has ensured many unregistered users. The cost of making animated movies is phenomenal. And the unstructured format leads to heavy losses. But with the set top box coming in, channels will make more money through distribution than through ads. This is expected to provide a boost to this growing industry.
Another factor to be considered is to understand what the international audience looks for. Different audiences from varied cultures appreciate different styles of animation. You have the typical ‘Disney’ type characters that are widely appreciated in India, but would be a damp squib in the US market, who like the more contemporary style. You have the Japanese style, the European style among others. To understand this aspect and to use creative talent and technology to deliver to these markets is what is needed. This and other constraints usually faced by the Indian animation industry viz. management, bandwidth, creative talent and financial stability to sustain long projects, is what will propel us into the global animation market.
The biggest hindrance to growth seems to be lack of skilled manpower. We need to set up more professional institutes on the lines of an IIM or IIT to train interested candidates. And there also needs to be a stringent selection programme in place to ensure that only the really able are selected. Though there are various institutes catering to this segment, Madan feels that most instructors themselves are still not sure enough of the subject matter.
In India, the high cost of setting up infrastructure and the high costs involved in producing a full-fledged 3D animated movie (as opposed to a traditional movie)is yet another reason for the slow uptake of animation in India. Animation is very expensive to produce, far more expensive than live action films. Since it’s expensive to produce, it’s hard to get advertisers to pay the higher prices. But companies like Toonz have developed a formula, which allows them to produce the series at one-fifth the costs normally associated with this kind of work. Other than this, especially considering the troubled times we are living in, it is imperative for Indian design studios to find ways to make potential clients feel comfortable about communication and security issues. Most of the clients are wary about the security issues, especially after 9/11.
India faces severe competition from China and Korea. They have been more organised in their pursuit of overseas animation projects and have tremendous support from their respective governments in terms of finance and infrastructure. The Japanese government agencies even sponsor overseas studio executives for visiting their exhibitions. Sahi believes that India has at least a five-year window to make its mark. But she warns that if we do not wake up to the danger, the spotlight will shift to China. But Dudhe believes that India can be provide better quality products than China. India can also play on its advantage of understanding Western humour due to proficiency in English. This trait comes in handy while trying to animate a gag.
The battle of the dimensions
India has traditionally been into 2D animation. Even today most of the work being outsourced to India involves 2D animation. In order to get hold of 3D work we need to prove ourselves first by completing a major project. Other than bit roles and in ad films we haven’t seen any serious 3D work being done in India. The future is 3D and if we want to survive the rat race we need to ramp up our skills. But this doesn’t necessarily mean that 2D is going to die a slow death. Says Madan, "I don’t think 3D will overtake 2D animation. They will survive together quite well as there is a market for both. 3D is becoming very popular with action series and special effects. But the recently a few animated Disney features done in 2D were incredibly successful at the box-office. What will determine their popularity will be how good the story is and how well the film is executed." Agrees Jayakumar, "2D has never gone down. It is still growing at a steady pace. The fact is that 3D has been picking up. So in comparison the market for 2D seems to be on the wane." But there is no denying the fact that a lot of 2D work is being migrated to 3D. A lot more 3D work is now coming to India. Companies like Maya and Chennai-based MUV Tech-nologies, JadooWorks, UTV, Toons, Digital Art Media (DGM) are all focusing on 3D work today.
The reason for the lack of initiative on the part of Indian entrepreneurs to adopt 3D seems to be huge investments required in terms of infrastructure and manpower. This is one of the key reasons why we haven’t seen any full-fledged 3D films coming out of Indian studios. Explains Madan, "With reference to overseas projects for a full 3D film we are still a long way off. We could bring out domestic movies if someone would foot the bill. But most companies are looking at the international market."
The future is animated
At present a major part of the work being outsourced to India involves 2D animation. Though India has made a mark for itself in this arena, international trends point towards 3D and post-production. Currently, the design and conceptualisation is done at the client’s place; and only the execution part is being outsourced. But with most companies in India almost on the verge of successful completion of various 3D animation projects we should see more high-end work being outsourced in the near future. A few companies have got together under the banner of ASIFA, an international animation association, to help establish Indian animation. Currently, there are 75 members representing over a dozen studios. The challenge at this point of time is to improve the visibility of Indian animation around the world. Another organisation is being formed in an attempt to pool the collective resources of Indian studios to make a global statement.
India’s biggest competitor at this point of time is China in terms of cost benefits offered to the client. Though we have the English-speaking advantage over them, Sahi believes that if we are not on our toes we just might find ourselves losing our early mover advantage. With respect to other countries, though India offers better cost advantages, we are still bit players in the global animation arena. Though Philippines, Korea and Taiwan charge a premium, most outsourcers still prefer these countries as they offer better quality and service than Indian companies do. If Indian companies want to survive in the global arena, we need to ramp up the quality of our output and convince customers of the reliability of our service.
Conclusion
A report published by Nasscom says that the animation production industry in India has the potential to grow into an industry geared for exports. According to the report, Indian design studios are gradually establishing their credentials overseas, gaining valuable experience and building their skill sets. The report predicts that if certain incentives are provided, India can not only catch up with competitors but can easily move ahead of them.
Considering the level of optimism in the industry and the gargantuan rate at which we have been growing, the future of animation in India definitely seems bright. Major studios abroad have their attention focused on how Indian studios are managing the work currently outsourced to them. As Madan says, once we have a few projects delivered we can prove ourselves.
Says he, "We do need to upgrade our skill sets constantly. We need to learn more about the importance of quality and production value, we need to appreciate the importance of deadlines. Only then can we hope to participate in the global arena. Clients are conducting tests before outsourcing work to any studio. The quality processes have now become very stringent. Only on successful completion of sample work is more work outsourced to the studio." So if we lose out we have nobody to blame but ourselves.
We are slowly moving up the value chain. Says Jayakumar, "We have had a few bad experiences in the past because of which the industry suffered a set back but now we are getting back on our feet." Adds Madan, "India is on a fast track. Growth in the last three years has been phenomenal. But only time will tell what we can achieve because none of the projects outsourced to us have been completed as yet. We haven’t even seen the tip of the iceberg."
This article first appeared in Express Computer.
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