Indian animation industry banks on US downturn

MUMBAI, INDIA: Will the “so-called runaway film production” survive in the gloomy US economy hovering over its film and entertainment industry? Certainly it will survive and have more growth opportunities voices the Indian animation industry (IAI).

IAI is dear and near to movie companies and production houses back in States, mainly for its quality work and low cost outsourcing services. But at present the multi-billion entertainment sector is facing heat of the meltdown, resulting in project delays, lack of funds with high production costs.

Recently, Sparx, a toon company closed its Paris studio and moved to Vietnam's Ho Chi Minh city, while NBC/ Universal studios announced cut in production budget for 2009 due to recession.

Shift, merger and acquisition

Aptech Limited's executive vice president R Krishnan reckons that for Indian animation studios and companies looking for acquisitions and collaborations it’s a good time.

“Reports say that Pixion is acquiring two UK based studios following in the lines of Prime Focus. DQ Entertainment (DQE) and Turner Entertainment Network (TEN) Asia have tied up for two animated features- Balkand and Ravan, which will be exclusively premiered on TEN in 2009. So India still remains the most sought-after destination for producing quality animation content,” says Krishnan.

“Normally, an animated feature film costs around US$300-500 million and it's hard to fund in the present scenario. So the US industry is looking to find creative opportunities and ways to cut costs so they still are looking to outsource work from India,” he added.

While, Anibrain Digital Technologies' founder, Jesh Krishna Murthy considers shifting studios to be more complex due to investments risks, new setup costs, staffs and the culture.

“But, shifting can happen in India and other nations, via partnerships or collaborations with local studios means more business ahead,” Murthy observes.

“Like other sectors, animation was also over hyped, so the slowdown is good to bring in correction in the industry. For serious players it's a good time, but for new startups and companies planning to enter the business, its bad,” he said.

Similarly, Maya Academy of Advanced Cinematics (MAAC) executive vice president, Jai Natrajan sees growth and no slowdown. “We have clients world over and so we have quite a few projects in the pipeline and movie projects are going forward as per plans, maybe with slight lesser budgets,” said Natrajan.

More fun, more business

IAI banks on this old mantra and cites growth. “Generally, it's a known fact, during depression people tends to go for more entertainment. So, it's actually a good time for our business,” Murthy points.

Also Krishnan too suggests the same, “During recession, it's proven that people still want to watch movies and get entertained. So the crisis would not affect our industry,” but urges that during such phase the domestic market and local content needs to be focused more.

Global Vs local content demand

Though, IAI has high content demand in global market, the domestic demand hasn't grown yet. Among other reasons, the foreign TV channels have less preference for local content. “In a year there's a demand for 4-5 good regional features due to our demography and cultures. But there's not much support from TV channels because of the economics of cost and content,” Natrajan opines.

In Krishnan's view, the present time is the best for local market to get established and in next 4-5 years it will shape up well. And feels that the local players should work together for long-term opportunities.

While Natrajan is optimistic on domestic market growth he blames the non-existing regulatory system, compared to other nations that follows the quota systems - making it mandatory for channels to show certain percentage of domestic content.

“Quota systems, actually ensures domestic market growth and NASSCOM should come up with such system,” he concludes.

So is there any impact here?

According to Kirshnan, the US crisis has only impacted companies or studios that work on animation outsourcing from the west, mainly due to low budgets.

Murthy says there's no slowdown here and their clientele or projects haven't dropped.

“We have clients world over and so we have quite a few projects in the pipeline and movie projects are going forward as per plans, maybe with slight lesser budgets,” adds Even, Natrajan.

Overall, the Indian animation fraternity is highly growth optimistic and firmly believes in more business ahead with expansion of domestic market.