December - 2008 - issue > Animation
Prospects for Animation & Gaming Industry in India
AO Kuruvila
Thursday, December 4, 2008
The Indian animation industry revenues were estimated at Rs 1,595 crores in the FY 07, a growth of 24 percent over the previous fiscal year, with the entertainment segment contributing nearly 68 percent of the total market in India. Exports accounted for more than 70 percent of the revenues in 2006. Segment wise, animated feature films and TV broadcasts were mainly offshore work from North America and Europe, while visual effects was largely a domestic phenomenon, i.e.
Bollywood.
The Indian gaming industry was estimated at nearly $48 million in 2006. Currently, mobile and console gaming together contribute nearly 75 percent of the total gaming market in India. The white sale market (for PC & console gaming) was estimated at about $4-5 million in India. The online gaming industry in India, on the other hand, also did well with an estimated worth of Rs 24 crore. However, nearly 20 percent of this revenue went directly to international players not based in India.
A recent report on the Indian entertainment & media industry estimated the Indian animation industry at Rs.11 billion in 2006, which is forecast to grow at CAGR of 22 percent and reach Rs 29 billion by 2011. The Indian gaming industry was estimated at Rs. 2 billion in 2006 and is forecast to reach Rs. 28.5 billion by 2011 at an impressive CAGR of 68 percent.
The global animation market (demand perspective) was estimated at $59 billion in 2006 and is expected to reach $80 billion by 2010. The global market for animated content and related services is estimated at $25 to 26 billion (developers perspective) and is forecast to cross $34 billion by 2010.
The worldwide gaming market (demand perspective) stood at $21 billion in 2006 and is expected to reach $42 billion by 2010, growing at a CAGR of nearly 19 percent over 2006-2010. The worldwide gaming content market (developers perspective) was estimated at nearly $7 billion in 2006 and is expected to cross $13 billion by 2010, registering a CAGR of 17 percent over 2006-2010.
Even at these impressive growth forecasts, the Indian animation and gaming industry will account for less than 2 percent of the worldwide market in 2010, clearly indicating a significantly larger opportunity.
SWOT OF INDIAN ANIMATION & GAMING INDUSTRY
Strengths
Quality benchmarks
Rich mythology and historical heritage
Almost 60 percent production cost savings
English speaking talent
Weaknesses
Lack of creative skills
Educational/ training institutes
Risk averseness, especially to local content
Funding problems
Salary issues
Constant retraining
Opportunities
Special effects in Bollywood
Merchandizing
Mobile gaming
Simulation
Mobile video
Interactive web environment
Threats
Competition from Taiwan, Philippines, Korea, China
Ever changing technology
Lack of awareness in foreign countries
SNAPSHOT OF PROJECTS
International Longform projects
Jakers, Pet Alien, Pet Pet, Freej, King, Ozzie Boo, Maggie, Skyland, Willo The Wisp, Legend of The Dragon, etc.
International theatricals
Hoodwinked, Narnia, Skyland, Sylvester’s Missing Pebble, etc.
International direct to DVD
Tinkerbell, Strawberry Shortcake, Bratz, Jack Frost
Indian IP Longform
J Bole Toh Jadoo, Thakurmar Jhuli, Chota Birbal, Vikram Betaal, Akbar Birbal, Chota Bhim, Liono Ke Sapney,
Indian IP theatrical
Hanuman, Bhagmati, Krishna, Legend Of Buddha, Hanuman 2, Adlab’s Superstar, B.R Chopra’s Krishna, Synergy’s Friends Forever, Imediafactory’s Magik, Mayabimbham’s Iyer The Great, Dawsen’s Shakuntala…. etc
Indian IP direct to DVD
Oh God Ganesha, Twinkletoons, Akbar Birbal, Sahibzaadey, Ramanujaacharya, Aesop’s Fables, Panchatantra
Indian short films
Printed Rainow, Bad Egg, Haptics, Crime Time, Mukand & Riaz, Canvas, Horn Ok Please
Indian TV commercials & identities
Birthday Bhoot, Simpu, Poga, Santa Banta, Lady C, Half Ticket Express, Amaron, Chintamani, Chunnilal, Buladi
EXPORT TRENDS
Revenues generated by Indian animation & VFX services to international clients are $130 million
Revenues generated by Indian Game Development Services PC & Console to International Clients are $6 million
Revenues generated by International consumption of Indian Mobile Game development and IP are $2 million
Overall revenues through production services for international market are $130 million
Revenues earned from Indian Animation via International Co production value creation are $80-120 million.
Revenues earned from Indian Game Development via International Co production value creation are $80-128 million
GLOBAL ANIMATION & GAMING INDUSTRY
Global Animation Industry
The global animation market (demand perspective) estimated at US $59 billion in 2006 and is expected to reach $80 billion by 2010. Global market for animated content and related services is estimated at $25 to 26 billion is forecast to cross $34 billion by 2010.
Major Markets
European Market: The UK is supposed to be the largest European producer of animation. It has many animation producers with an established international reputation. It is responsible for worldwide television hits like Thomas the Tank Engine, Wallace and Gromit, Bob the Builder, The Animals of Farthing Wood, Dangermouse, and many others, and feature films such as Watership Down, The Wind in the Willows, Chicken Run and Christmas Carol - The Movie, to name but a few.
Germany remains a difficult market to enter although some producers have made inroads with co-producing partnerships and by gaining access to the German media funds. Some other genres rely on the cable/satellite realm where reasonable license fees can be found for a limited amount of product. The markets in Italy and Spain are similar. There are limited opportunities available and the language barrier does make versioning a concern.
The Netherlands and Scandinavian countries can provide a good opportunity for the placement of completed programming. The broadcast budgets tend to be smaller and therefore there is less commissioned domestic programming and more demand for acquisitions. The license fees are generally very reasonable and the gatekeepers are quite accessible.
Eastern European territories have traditionally been acquired as a group by one broadcaster or distributor for a small fee or sold country by country for very small license fees. However, a number of distributors see Eastern Europe as a more realistic source of revenue, now that their economies are picking up. It is similar to the South American territory in this regard.
United States: The US market for film and television represents the world’s only “free” market for creative production. The substantial population of the US sustains a domestic film and television industry without need for legislation or other government involvement. US broadcasters are often able to wholly commission programming and when their license fees fall short, producers are often able to secure private sources of revenues or distribution to round out their budget.
Asia: Most of the countries in Asia represent very low license fees; however, they are generally hungry for product. Some sectors of the industry feel that Asia is poised for an upswing and that the programming trade will take off on a new level. As it stands, the largest single license fee likely to be realized out of Asia is in Japan. There are opportunities for pre-sales as well as finished product acquisitions on all broadcast tiers. Singapore, Hong Kong, Korea and Thailand are becoming relatively good sources of sales revenues for children’s and factual programming.
Australia: The market in Australia is very similar to the Canadian market. There are strict content regulations and production is government subsidized. License fees for acquisitions are on par with those in Canada. New Zealand is much the same, although license fees are lower and the opportunities are fewer.
Middle East and Africa have recently become good sources of sales for children’s and family programming although the revenues are modest.
Emerging Markets:Russia, China and Korea are emerging markets for animation content.
Global Gaming Industry
Price Waterhouse Coopers’ media outlook report forecasts major growth for the video game sector worldwide. By 2010, the worldwide video game market should grow to $46.5 billion, at an average 11.4 percent compound annual rate.
The estimated $8.4 billion U.S. video game market of 2005 likely will grow at a slower clip than other sectors, at 8.9 percent, to hit $13 billion in 2010, lagging behind the Asia Pacific region and the combined region of Europe, the Middle East and Africa (EMEA)
Major Markets
United Kingdom: More than 65 million games were sold in the UK market alone during 2006 – a 7 percent increase over that in 2005 and worth an estimated £1.36 billion.
Korea: The South Korean gaming market increased to more than US $2 billion in 2007 – a rise of about 18 percent from its current size of $1.7 billion
Japan: The Japanese market is probably the most mature. In 2003, it was over US $8 billion and it was projected to grow at 20 percent annually until 2008
United States: The US computer and video game software sales grew by 6 percent in 2006 to $7.4 billion – almost tripling industry software sales since 1996.
Some interesting facts about the US market
* Sixty-nine percent of American heads of households play computer and video games.
* The average game player is 33 years old and has been playing games for 12 years.
* The average age of the most frequent game buyer is 40 years. In 2006, 93 percent of computer game buyers and 83 percent of console game buyers were over the age of 18.
Germany is the second most important video game market in Europe. It was worth around Euro 1 billion in 2002 increasing by 8 percent over the previous year, with a turnover at the same level as DVDs and videos. Sales of necessary hardware such as consoles and PCs were of the order of nearly Euro 4 billion. The market has an estimated 1.5 million customers.
France is the third most important computer game market in Europe with a turnover of Euro 990 million in 2002. French publishers have a global market share of 15-20 percent; although their share in the domestic market has been smaller there are two major hubs, Paris and Lyon, and three leading publishers: Infogrames, Ubisoft and Vivendi Universal Games.
Spain: The Spanish game market has grown rapidly and its revenues were Euro 800 million in 2003, up by almost 13 percent from the previous year. Consoles and console games dominate the market with sales of Euro 675 million, 85 percent of the total up, 15 percent, and action games are popular.
Australia: Australian annual entertainment software sales are worth $800 million (Bishop, 2003). Melbourne is the regional centre for computer game development and serves as the Asian and South - Pacific headquarter for leading publishers Infogrames, Acclaim Entertainment and THQ.
STRATEGIES & RECOMMENDATIONS
The co-production model should be utilized for gaining international exposure and an entry in to untapped markets
More work should be done in pre- and post-production and the industry should move ahead in creative and artistic skills
Since animation IP development has huge cost implications, Indian studios can come together (just like their counter-parts in Europe) to produce and market Indian IP on global scale.
CONCLUSION
The confidence level in Indian animation circles is soaring. Foreign players are increasingly investing in the country, while Indian players are expanding overseas. Growing opportunities abroad, a co-production model, increasing collaboration between training institutes, local content development, and some recognition of content developed in India were some positive developments. Challenges like this can be overcome by the synchronized efforts of all stakeholders.
The author is Deputy Director-Research, World Trade Centre (WTC), Mumbai. The author can be contacted at wtcevent@vsnl.net
