Market Research Report
Asian Animation Industry: Strategies, Trends and Opportunities
|Published by||Digital Vector, Inc.||Product code||135490|
|Published||Content info||562 Pages, 38 TABLES, 215 Figures
Delivery time: 1-2 business days
|Asian Animation Industry: Strategies, Trends and Opportunities|
|Published: January 9, 2017||Content info: 562 Pages, 38 TABLES, 215 Figures||
Much of Asia's animation production since the 1960s has been tied to foreign interests attracted by stable and inexpensive labour supplies. For nearly forty years, western studios have established and maintained production facilities, first in Japan, then in South Korea and Taiwan, and now also in the Philippines, Malaysia, Singapore, Vietnam, Thailand, India, Indonesia, and China. The economics of the industry made it feasible for Asia to feed the cartoon world, to the extent that today, about 90% of all American television animation is produced in Asia. The usual procedure is for pre-production (preparing the script, storyboard, and exposure sheets) to be done in the United States or other headquarter countries, after which, the package is sent to Asia for production (drawing cels, colouring by hand, inking, painting, and camera work). The work is sent back to the U.S. or other headquarter country for post-production (film editing, colour timing, and sound). Asian animation companies bid fiercely for part of the global business, insisting that it provides employment and skills for young people, brings in needed foreign capital, and adds to the creation or enhancement of domestic animation. Offshore animation has led to the creating and nurturing of a local industry, as an infrastructure is built up, equipment is put into place, and skills are transferred.
There is a considerable increase in the 2D and 3D animation outsourcing to India. Due to the extremely competitive climate as well as the global slow-down, some of the large studios in the US have implemented large amounts of layoffs of animators and artists. India is slowly emerging as an alternative to Korea, Philippine and Taipei for animation outsourcing. India is also emerging as a post-production hub for animation. Post production involves a lot of ink, paint and compositing and scanning work, which is the labor intensive part of the entire process of animation and requires less skill. Thus we can see that the animation industry in India is following a similar evolutionary part as the software industry. In the early part of the evolution of the India software industry, it was the low value jobs which were shifted to India. Over time it is projected that more and more high value jobs would be outsourced to India. For low value post-production works, it is easier for a studio in the US to outsource its post production work as probably nothing is going to go wrong. India has one of the lowest labor rates, which makes it an attractive destination for animation outsourcing.
Indian animation companies are moving up the value chain to own and co-produce intellectual property rights. This is a shift from the model of outsourcing animation production from international studios. The Indian animation companies are also focusing on strategic alliances with overseas studios with the eye to establish a presence in the global animation market. Content creation in the country has peaked and big Indian studios are increasingly making their presence felt in foreign markets. Indian studios are developing rapidly and a trend being witnessed is one of modularization of animation wherein expert from multiple animation companies, come together to execute specific functions in the production value chain. Some work on the design, storyboarding, layouts etc while others focus more on other elements of the process i.e. animation, texturing, lighting etc. These were models which had been perfected previously in mature animation countries such as Korea. This model is being increasingly adopted by Indian animation studios based on the ability of the studios to be process driven enough to distribute the work in modular units without loss of time or quality.
Indian animation companies are garnering larger chunks of the animation outsourcing pie and are also moving up the value chain by co-owning IPR, co-producing animation products for television or home videos or theatrical releases. Given the large domestic demand, India is also likely to evolve into a significant animation consumption country and the demand for local animation content is rising which is exemplified by the tremendous success of the first fully locally produced movies such as Hanuman, and TV shows such as Chhota Bheem etc. Plus there is the tremendous untapped market for merchandising. Popularity of channels such as Cartoon Network, Pogo, Nick etc. has resulted in more opportunities for studios in India. Indian cities such as Mumbai, Hyderabad and Bangalore are offering a state-of-the-art mix of software skills, production and animation expertise and studio infrastructure.
The demand for Indian animation production for export comes mainly from feature film producers and distributors, broadcasting channels, game software producers and advertisement film producers. As of now, Indian animation companies are working with a number of leading foreign studios.
Indian Animation studios typically have four prominent business models. They are:
Most of the Indian animation studios have adopted this business model. This is a low risk low return business model, with the studios doing low value added services such as post production services. In this business model, animation studios work on a time and material basis (payment based on actual expenses) or on a fixed payment basis (fixed fee for the project). Most of the outsourced animation jobs come from studios in the US, Canada and Europe. In this business model, the outsourcing firm has control over the quality of the output and they execute the pre-production and post production part of projects. Thus the labor intensive production works are outsourced. The partnership could be between animation studios in India and abroad, Indian animation studios and foreign TV channels/film producers, Indian animation studios and advertising firms etc. We are also seeing bigger studios in India winning large scale projects and in turn outsourcing some parts of the work to the smaller studios in India to specialist animation studios. Moreover in outsourced animation services, the Intellectual property of the job rests with the outsourcing firm.
In this business model, there is a collaborative effort involving multiple animation studios based in India and abroad. The Intellectual property rights are shared by the firms and so are the revenues arising out of the content. Here firms with different core competencies come together to leverage each other's expertise. The partnership could be between animation studios in India and abroad or between Indian animation studios and foreign TV channels/film producers etc. These revenues could be from selling the content to channels and from royalty from the sale of animation character related products. Firms following this business model are building their capabilities towards producing in-house content.
In this business model, Indian animation studios create their own content in-house thereby owning the complete intellectual property rights to the content. This is a high risk-high return business model with the animation studio bearing the risk of the entire project. This is evident from the scale of investments required for a full length film (US $ 50-100 million). Most of the Indian players are not in a position to make such large scale investments. In India, more number of large animation studios shifting towards this business model. However no Indian studio has adopted this business model completely. This business model exists along with the previously mentioned models. More and more studios are attaching greater importance to the ownership of intellectual property rights to the content as they can not only generate revenues from content, but they can generate revenues from royalty payments from merchandising. This business model has high barriers to entry and is not easy for the small animation studios to adopt this business model. A number of Indian animation studios have adopted this business model.