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MUMBAI:
The animation industry in India is set to grow at a Compounded
Annual Growth Rate (CAGR) of 27 per cent to touch $1,163 million
by 2012, according to a Nasscom report.
The
industry is expected to end this year at $460 million. Custom
content development is the largest segment as of today, with
an estimated industry size of $187.5 million, followed by
animation entertainment at $120 million.
Multimedia
and web design contributes another $100 million, while education
is pegged at $53 million.
Nasscom
chairman Ganesh Natarajan and Global CEO Zensar said, “We
realise that it is critical to nurture the animation and gaming
industry to ensure further growth. The fiercely competitive
global market place calls for disciplined effort as well as
policy measures in this direction. Providing tax breaks and
holidays to animation and gaming development studios, setting
up education centers, cutting import duty for gaming consoles
as well as equipment or software required for game production
and setting up special zones to create an entire ecosystem
will go a long way in accelerating industry growth."
In
2012, custom content development is expected to remain the
largest segment, though its percentage share will come down
from 41 per cent to 33 per cent. This decrease is almost completely
due to a corresponding increase in the share of animation
education market, which is growing at a CAGR of 40 per cent
from 2008 to 2012.
The
share of education segment is expected to increase from 11.5
per cent to 17.5 per cent from 2008 to 2012.
There
is immense demand among students to enroll in long-term, skill
development courses to pursue a career in animation. Also,
as new technologies keep emerging, there is a constant need
for skills upgradation courses.
The industry expected to go through consolidation with smaller
players being acquired by the bigger companies.
There
are a total of 85 domestic animation movies that have been
announced over the last year and 28 are in different stages
of production. Over the next two years, 15 animation movies
are expected to be released. Animation companies have also
started focusing on building original IP, which they can leverage
in terms of merchandising and TV broadcast revenues.
The
report suggests that the production budget for animated movie
will increase from $2 million-$2.5 million to $5 million-$7.5
million. The average realisations for a good animation movie
will increase between $7.5 million to $12.5 million.
With
Indian animation movies releasing in international markets,
the revenue mix will see a change. Currently, box office returns
in India account for 60-75 per cent of revenues while satellite
TV rights make up 15 per cent, merchandising 15 per cent and
home video 5 per cent. In the next two to three years, box
office will account for 40 per cent of the total revenues,
while 20 per cent will come from satellite TV rights, 15 per
cent from foreign consumption, 10 per cent from merchandising
and 5 per cent from home video sales.
Animation
will be used in digital advertising. Increasing use of animated
content will be witnessed in advertisements on internet and
mobile. The custom content companies will increasingly service
the foreign market. They may undertake acquisitions or enter
into alliances in order to establish presence in the foreign
countries, the report said.
Nasscom
expects the gaming industry to grow at a CAGR of 50 per cent
to touch $1060 million by 2012. The sector will end this year
at $212 million.
Nasscom
president Som Mittal said, “The world is looking towards
India as a gaming and animation hub and we believe that India
is well placed to leverage this opportunity. Some of the inherent
factors that have contributed to India’s rise in the
animation and gaming space are availability of the right skill
sets, growing maturity of animation studios, increase in number
of co-production ventures, development of intellectual property,
growing consumer demand from the domestic market and of course,
cost attractiveness.”
Mobile
companies will undergo structural changes to address production
slippages, falling revenues and the higher revenue shares
retained by telecom operators (up to 65 per cent). Better
quality mobile games and enhanced skill sets will result in
a rise in mobile game outsourcing deals.
Higher
revenue shares, third-party contracts and end-to-end development
of mobile games will lead to better revenue realization for
mobile game developers. The release of locally developed games
with international appeal will open up new target markets
for Indian mobile gaming companies.
Development
of domestic localised PC games is expected to pick up. Due
to stringent antipiracy measures and a reduction in the affordability
gap, the sale of legitimate PC games is expected to increase.
Outsourcing deals, especially in the end to end production
domain, is expected to rise significantly.
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