Sunday, January 31, 2010

Industry growing 20% annually ANIMATION’S NEW AVATAR .....

Industry growing 20% annually ANIMATION’S NEW AVATAR

While tracing the animation and 3D industry,
Ashish Agashe & Nikhil Menon chance upon an Indian connection with the blockbuster Avatar

For the generations that grew up reading Phantom and Mandrake comics during lazy afternoons pre-1980, animated shows on television changed entertainment forever. Comics could never match the lure of He-Man, Spiderman and Giant Robot on Doordarshan’s noontime show during summer vacations. Then, cable TV threw open the doors to an ocean of animated shows and films. But one thing remained constant—India consumed what the West produced.

Then the tables turned. Even for the West, animation was expensive to produce in the volumes demanded by viewers. Outsourcing was the obvious answer. The easy availability of technically competent, low-cost talent in India encouraged studios in North America, western Europe and Japan to recognise their Indian counterparts as credible organisations that could deliver the goods. PricewaterhouseCoopers’s leader for media and entertainment, Timmy Kandhari recalls, “Indian companies joined the bandwagon after computer-aided animation came in and made best use of the software available.” In no time at all, the West was starting to consume content developed in India.

AK Madhavan, CEO of Crest Animation, one of the first studios to get into the outsourced business, estimates that the outsourced work done by Indian studios adds up to $200 million a year. Within the media and entertainment space, animation has outperformed its peers in recent history, growing at 20% in 2008 to become a Rs 1,560 crore industry. Mumbai-based Crest Animation started off producing advertising commercials in 1990. It got into CGI animation ten years later and today, has over 200 hours of content to its credit. The DE Shaw-funded company also acquired a firm in the US in 2000, which helped them get a foot in the door in the Americas.

The US has always been Indian animation’s big market. P Jayakumar, CEO of Toonz Animation, says that roughly 40% of the industry’s business comes from the US, and another 35-40% from all over Europe. “Starting 2005, Wall Street firms had pumped $3 billion into Hollywood but funding stopped in 2008. In spite of that, Indian animation grew at a healthy 20% last year and with work coming up, the prospects are good,” he says. Some of the work done by Toonz includes Dragonlance, a movie based on ‘Dungeons and Dragons’ and a 26-episode TV series for BBC, based on X-men.

One of the earliest entrants in the VFX segment, which entails digitally creating scenes like a mass fire, cricket stadium with crowd, was Prime Focus, which is listed on London Stock Exchange and Indian bourses. Their biggest project so far has been James Cameron’s cult hit ‘Avatar’. Namit Malhotra, founder and global CEO of Prime Focus discloses that they have bagged the contract to work on one more big Hollywood project.

VFX is also playing a growing role in mainstream live action movies. Prime Focus has worked on films like 3 Idiots, Blue, Wanted, Paa, etc. “These days, Indian movie makers also want to give songs or background sets special treatment, which is good for our business,” Malhotra avers. However, he adds, India’s supremacy in the outsourced animation/VFX market is increasingly facing competition from Malaysia and Korea.

Almost everybody agrees that the domestic market is the ‘next big opportunity’ both for animation as well as VFX firms. The Indian appetite for animation is increasing very fast but companies haven’t been able to capitalise on it yet. Toonz made ‘Hanuman’ in 2004, which became the first Indian animated feature film, an event which animation guru Ram Mohan describes as watershed. Yashraj Films followed up with Roadside Romeo (RR) which was not so successful at the box office. Coming up ahead are a slew of animation films like UTV’s Arjun, Karan Johar’s Kuchi Kuchi Hota Hai, etc. Apart from the numerous start up ventures, bigger corporates like Tata and Reliance have also seen value in entering this space.

Tata Elxsi’s Visual Computing Labs (VCL), which worked on RR and is in the process of finishing Arjun, spotted the importance of Indian markets early. It continues to get 70% of its revenues from domestic projects. VCL’s creative director Pankaj Khandpur says, “Animation has a higher gestation period but is scaleable while VFX with its quick turnaround time is good for routine business.”

The way ahead for Indian firms, Khandpur says, is creating products of their own for a global audience. “Thanks to the outsourcing work, we have arrived when it comes to the craft of animation, but sadly, we haven’t mastered the art yet. We lack the prowess to write a movie, generate international concepts and have aesthetics which will appeal to a global audience.”



VIEWING is all set to get a new 3D avatar, with every electronic and technology manufacturer gearing up to enhance experiences and entice buyers. If those sprinting ahead in the race to deliver this in-depth content to the maximum Indian consumers seem to be sporting bodies, they are being ably backed up in their endeavour by hardware. Not that it’s surprising, as the 1984 Asian Games in Delhi not only revolutionised India’s media and entertainment space by bringing colour to break the black & white monotony of the lone broadcaster and then its monopoly.

Now, the promise of 3D has the Indian Premier League pipping the Commonwealth Games to the viewing post by announcing that it will become the first sporting body in the world to telecast a cricket match in 3D this year to deliver “a significantly superior fan experience”, as their spokesperson put it. If there is a chance of making cricket a 3D experience for Indians, electronic companies will not lag behind on delivering hardware. Samsung is coming out with its 3D TV in the second quarter of 2010 while rival Sony has also declared its intention of hitting the market this year. Cinema exhibitors are ramping up their 3D capacities as well.

The gamechanger for this “immersive viewing experience” via 3D stereoscopic content is, of course, James Cameron's ‘Avatar’, that raked in over $1.8 billion in two months from besotted audiences and prompted all stakeholders in the 3D technology to rejig their plans. The result is visible: at least two computer majors have already launched 3D notebooks, Discovery has announced a 24-hr 3D channel in the US while the TVmakers have drawn the 3D finishing line at Q2 of 2010.

Broadly, the technology, which is not new, involves tweaking with the screen, the projector and wearing a pair of glasses to watch the images. The polarised screen allows two layers of images, one each for the left and the right eye due to which the depth perception increases. A 3D TV is expected to cost upwards of Rs 1 lakh while the laptop manufacturers are pegging an incremental pricing of around Rs 4,000 and it takes around Rs 40 lakh to make a regular movie hall screen compatible for 3D.

So, what does this hold for India, both at the end of consumers as well as for our companies who stand to benefit directly or indirectly? The Indian Premier League is set to become the first sporting body in the world to telecast a cricket match live in 3D this year, even as TV manufacturers gear up to hit the market with their new sets in the second quarter of 2010. Theatres, too, are stepping up their 3D capacities.

As a natural fallout of the surge in hardware offerings and increasing appetite, we will see an upsurge in content. The Mumbai-based Crest Animation, which is set to release its first 3D stereo film ‘Alpha and Omega’ globally in October, is set to announce its plans for a 3D film exclusively aimed at Indian audiences. “We see a geometric progression in the 3D market and hence, are getting into an end-to-end production in India by ourselves. I can only say that our Indian film will be beyond mythology and animals,” says Crest’s CEO AK Madhavan.

“Avatar has changed a lot of perceptions. Sometimes, you need a movie like that to change the sensibilities. It is certainly a technology for the future and considering that, I am sure now everybody will start studying the market for 3D,” says Timmy Kandhari, PricewaterhouseCoopers’ leader for the media and entertainment practice.

VN Dhoot, chairman of Videocon, claims that his company has already developed 3D televisions at its R&D centre in Rome.

Avatar changed the game

THEacquisition of the R&D facility of Thomson some years ago gave access to new technologies that the company was already was developing and we further worked on it. We will launch our TVs across the globe as soon as competitors decide to do so. I expect that to happen in the middle of 2011,” says Dhoot.

HK Seo , vice president, sales and marketing, Samsung India says globally his firm is looking at selling two million 3D TV units this year while in India, their efforts will be concentrated on creating the market for this premium category. Realising the constraints posed by the lack of content, Samsung will come out with a technology that renders 2D images into 3D at the push of a button. Beyond this, the South Korean company has also gone into an “exclusive global partnership with DreamWorks Animation and Technicolor to create a comprehensive eco system to make 3D entertainment a reality in consumers’ homes,” Seo says.

Sony India’s general manager, marketing Takakiyo Fujita also claimed that 2D content can be viewed on a 3D TV but refrained from commenting on the Indian market, saying it is still in its nascency.

On the personal gadgetry front, Acer has already taken the lead by launching India’s first 3D-enabled notebook. “Consumers want to feel reality, get as close to it,” says Acer’s CMO for India S Rajendran. Post-Avatar, the most exciting area for 3D, for obvious reasons, is movies. At least ten global releases, including Crest’s A&O, are lined up for release this year and the last three months have already witnessed a 100% jump in the number of 3D compatible screens in the country to 50.

“Avatar has really been the game changer here. We are witnessing a lot of appetite for 3D and I see the number of screens going up to 100 by this September,” says an extremely bullish CEO of Reliance Media-Works, Anil Arjun. Looking at the market, the company has already tied-up with a LA-based company to convert already existing 2D properties into 3D. “To start with, our producers can start looking at parallel releases on both 2D and 3D formats,” he says about the Indian market. Dhilin Mehta, managing director of Shree Ashtavinayak Cine Vision, which made the successful ‘Jab We Met’, amongst other movies, says, “We are currently working with a few leading companies and consultancies to develop a cost efficient solution to capitalise on this growing trend.”

Director Rajkumar Hirani, who is flying high on the success of ‘3 Idiots’, says to start with 3D films will attract people due to the format but after a while success will depend only on content. “Such films need gags that are 3D driven and hence, I think it is a totally different ball game,” he adds.

Hirani had a word of advice for aspiring Indian animation movie directors : create something original. “I do not get driven by mythological characters, it’s a very boring thought. One needs to create something original...(like) Finding Nemo or Toy Story.” In an e-mail reply on the prospect it sees for 3D globally and in India, a spokesperson for Warner Brothers, USA says, “We are not ready yet to speak about our future plans for 3D at this time. We most likely will be in the very near future.”

IPL’s plunge into 3D has surprised many but the management has taken this “rather audacious” decision to “build its brand” and “enhance the viewing features for fans at home and in the stadium,” says an IPL spokesperson.

Apart from the backend opportunity which Reliance MediaWorks is eyeing, there are many Indian Visual Effects (VFX) firms like Tata Elxsi and Prime Focus who are all set to benefit as the appetite of global audiences increases for a superior visual experience offered by 3D. “In India, it is still the beginning for 3D. But worldover, producers have realised that they can achieve the critical mass due to the presence of theatres. So, the real guys benefitting for now will be our VFX studios who will be in demand,” says Kandhari.

Prime Focus, which had worked on Avatar, is already working on one more Hollywood project, though its founder and global CEO Namit Malhotra did not disclose who he is working with.

Technology players too are gearing up. Nvidia, which has a centre in Pune and has worked on Avatar as well, controls over 91% of the 3D applications market. “Our ultimate aim is solve the most complex of the visual computing problems and 3D is just a part of it,” says Prasad Phadke, who heads the professional solutions business at Nvidia.


Breathing life into drawings
ANOTHER two Avatars and we’ll have truly arrived,” says an optimistic Kuldeep Pareek. Pareek is VP sales of Maya Academy of Advanced Cinematics (MAAC). His jubilance can be attributed to the rising numbers of students flocking to learn animation after the success of Avatar. And Pareek is not the only one celebrating.

Arena, a division of Aptech Computer Education was called Arena Multimedia till some years ago with a focus on vocational design courses. When everybody discovered animation and VFX, it quickly rebranded itself as Arena Animation.

The growth of Indian animation has given an impetus to VFX and animation courses in the country. Pareek estimates that educating animators is currently a Rs 500-crore market.

“Animation grew at over 20% even during the recession and hence, our courses continue to attract students,” says Pareek of MAAC, which started seven years back and has 70 centres.

Arena, which has been around for 15 years and operates 175 centres in India and 15 abroad serves 2.5 lakh students and registered a turnover of Rs 250 crore last year. This year is expected to be even better. “There is need for trained manpower which is crucial for the performance of the industry and it works to our advantage,” says Anuj Kacker, Arena’s chief operating officer.

Many local institutes like Pixel Perfect and ICAT of Chennai are also jostling to grab a pie of the market. Both Arena and MAAC have tied up with universities to offer industry-oriented degrees in animation. MAAC has a tie-up with the Indira Gandhi National Open University while Arena has tied up with a university in Tamil Nadu to offer BA (Animation) degrees.

Nearly all the major institutes have a presence in tier-II cities while Arena has gone a step ahead, opening Arena Points in tier-III cities. “Arena Points teach elementary web design and multimedia skills and act as ‘feeders’ to our main institutes,” Kacker says.

The year 2009 had its share of jitters for animation and VFX education sector. Enquiries and business generation was low in the months of March-May 2009 owing to fears about a global slowdown. However, interest increased as signs of normalcy returned. It reached a high towards year-end as James Cameron’s Avatar released in India. Now these educators, who teach young students to breathe life into drawings, are hoping for more good luck.

My Comments:
There are dark horses in this space which I will write othertime.But readers can give me names if they found any......Ofcourse in this post itself there are 3-4 stocks discussed...
And BTW, I have read this in todays ET......


  1. the only name which comes in my mind is CREST Animation. It looks fantastic.

  2. Rajeev ji,
    i see lot of buzz in Reliance media word , continuous UC..
    sir your views on this ?