Indian animation industry enters new dimension

Monday March 13 2006 00:00 IST IANS

NEW DELHI: From a low-cost content provider to Hollywood studios and global film producers, the $285 million Indian animation industry has moved up the value chain with an entry into the lucrative business of co-production.

Walt Disney, NBC Universal, Mattel, Lionsgate and Mike Yong Productions are just a handful of big names using the Indian talent pool not just to execute animation software but also to share copyrights and profits.

Little wonder India's main lobby group for software industry - the National buttociation of Software and Service Companies (Nbuttcom) - had projected the Indian animation industry to log $950 million in revenues in four years.

"This trend is particularly heartening as benefits of co-producing are immense," said Nbuttcom president Kiran Karnik.

"Apart from the ownership of intellectual property rights around the world, co-production yields multiple sources of revenue like merchandising and licensing as firms like Disney have shown," Karnik told.

So far the relationship between Indian animation firms and their deep-pocketed but cost-conscious western customers has been that of slave and master, with the master sending the storyline and the slave faithfully fulfilling his brief.

But the scenario is changing. The Hyderabad-based DQ Entertainment, for example, among the largest animation firms in India with clients Universal, Walt Disney and Mattel, executed 27 co-production buttignments since their first one in 2002, out of a total of 60 outsourcing contracts.

The company's order books now show 38 co-production projects out of 52 projects lined up for 2006-07. DQ has even set up a production firm in Mumbai to look after the distribution rights of its breastles in South Asia.

"When we began our operations seven years ago, things were not quite like this. The business model was quite different from the BPO industry that was making good profits," said DQ Entertainment CEO Tapaas Chakravarthi.

"It is a combination of various factors like cost arbitrage, quality for product price point and the number of shows on air that has aided this shift," added Madhavan, CEO of Crest Communications that employs 450 people.

A show called Jakers, produced exclusively at Crest's Mumbai facility has been nominated for the Daytime Emmy awards while the company has signed on a pact with Lionsgate to produce three feature films in India, he said.

But the success has not come easily. Indian firms worked hard to get their orders, ensuring required quality and charging rates that barely allowed costs to be recovered and winning the trust from big studios, industry experts said.

All this has been achieved while staving off compebreastion from other outsourcing destinations like South Korea, China, Taiwan, Philippines and Eastern Europe.

"Production studios are always on the lookout for new destinations from where they can get their work done at fractionally lower costs and this ensures that production costs have been steadily going down," Chakravarthi said.

"The biggest challenge to moving forward is consistent quality. This means an obsession with quality while still meeting delivery schedules and the ability to scale up production and maintain those levels for as long as required."

The Hyderabad-headquartered company has over 3,000 employees on its rolls spread across eight locations in India, two in China and one in the Philippines that cater to some 70 customers in 14 different countries.

There are voices of concern within the industry that say that there still is some distance to cover before the Indian firms mature.

Rhythm and Hues' managing director Prashant Buyyala said: "While the general trend of the Indian industry is headed in the co-production direction, a major bulk of the work is still outsourcing."

"These are early days and once the market reaches a certain level of maturity, many more firms will be signing co-production deals."