Gaming & Entertainment: Animated Entertainment

In our annual survey last year, Dataquest predicted that the gaming and

entertainment (G&E) sector would be the next poster boy of Indian IT.

G&E was residing on the same point of the growth curve where software

services was during the mid-90s. The growing maturity showed by the sector, both

on the offshore outsourcing and domestic front, during FY 2005-06 proved our

foresight was not misplaced.

Any analysis of this sector distinctly demarcates between entertainment and

gaming segments. But they share many common trends. These include positives like

exploring expansion opportunities abroad and moving towards in-house production

model, as well as concerns like shortage of quality manpower, lack of quality

training institutes and appropriate recognition for the sector.

Riding the Crests and Troughs



Like software services, Indian players in this sector too, ventured abroad

through the acquisition of foreign studios. These acquisitions helped Indian

studios add pre- and post-production services to their portfolio and gain

existing clients. Chennai-based Pentamedia Graphics, acquired the US-based

Improvision, which is involved in production and distribution. Mumbai-based

Prime Focus picked up UK's VTR Group, a media service company, while Crest

Animation, Mumbai, acquired Rich Animation in the US to exploit the company's

experience in full-length animation movies. On the gaming front, Dhruva

Interactive, Bangalore, actively scouted for acquisitions in Eastern Europe and

China to expand its production capacity.

Indian companies also moved towards in-house production model from the

earlier scenario when the IP rested with foreign production houses outsourcing

to India. This fundamental shift helped Indian studios move up the value chain

to perform the role of producer and publisher. This shift also generated high

returns as different sources of revenue such as merchandising emerged out of the

IP. Indiagames, Mumbai switched from the earlier outsourcing business model to

acquiring licenses and developing mobile games like Spiderman. Toonz Animation,

Kerala, produced a 26-episode TV series called Tenali Raman.

The scarcity of skilled personnel was a major concern for both entertainment

and gaming sectors and inhibited the growth of the industry. While India needs

at least 10,000 animation professionals-not just technical professionals with

rudimentary graphics knowledge-only 3,000 skilled personnel are available. The

gaming industry employed 600 people when the demand was for 1,200 and is

expected to grow to 2,000 this year.

The major factor leading to this gap in the demand and supply of skilled

manpower was the lack of specialized training institutes. India has had no

government support on animation training except for the National Institute of

Design in Ahmedabad. Barring a handful, like the Maya Academy of Advanced

Cinematics (MAAC) or Zee Institute of Creative Arts (ZICA), no quality private

training is available either.

The government apathy has also ensured public reluctance to consider it as a

career. With hundreds of studios across the country, the industry is highly

fragmented.  Hence unlike IT

services and BPO, it cannot raise its grievances in one voice. FY 2005-06

witnessed activities to redress these concerns. To attract the best talent, the

industry started by building up a brand image, identified key centers as hubs,

and launched forums and associations to give the industry a common voice.

Due to the presence of several studios, Mumbai has become the default hub of

both the entertainment and gaming sectors. Chennai, Hyderabad,

Thiruvananthapuram and Kolkata have emerged as smaller centers. Both NASSCOM and

FICCI tried to woo the stakeholders. Various associations such as iGITA (Indian

Games Industry and Trade Association), and FICCI-Visual Effects Community (VEC)

were formed in 2005-06.

The Animators



India is finally coming of age as an animation outsourcing hub. This can be

seen by global leaders like Dreamworks and Walt Disney planning to set up their

captive centers here or at least enter into JVs with Indian firms. Rhythm &

Hues did so with its captive center for VFX in Mumbai. The quantum of offshore

projects had a disproportionate TV broadcasting bias with broadcasters such as

BBC, Animax, Nickelodeon and Disney, all outsourcing to India. This contributes

to 64% of the overall animation pie.

Production houses too,have forayed into the market. These include the Zoo

Group of UK (with Maya Entertainment), Mike Young Productions (with Crest

Animation) and Decode Entertainment of Canada (with Escotoonz Entertainment),

which outsourced both 2D and 3D animation projects. The domestic TV market is

still in a nascent stage for animation projects, except for isolated instances

like Tenali Raman produced by Toonz Animation, which was broadcast on the

Cartoon Network in India.

In the TV broadcast value chain, most of the outsourcing took place in the

labor-intensive production stage that required less precision and skill.

Services outsourced included creation of animation, lip synchronization,

scanning and compositing. However, in FY 2005-06, even post-production services

like mixing of audio, elimination and editing of scenes, SFX and final

compositing were outsourced.

Another favorite outsourcing area is fully-animated movies. Animation Bridge

did three titles for Kahani of Canada, Paprikaas Animation Studio created a 3D

fully animated feature film 'X and I' while RichCrest, Crest's US

subsidiary, partnered with Mainframe Entertainment and Lions Gate Family

Entertainment to co-produce three animated feature films. However, Disney and

Dreamworks still outsourced only small parts of a movie or teasers to India.

The domestic market showed promise in animated feature films. These include

the highly successful, Hanuman, produced by Sahara Percept and created by

Silvertoons, and the critically acclaimed ZEE Telefilms' Bhaggmati-the Queen

of Fortunes-animation done by ZICA. However, the direct-to-DVD segment

completely depended on offshore outsourcing: Animation Bridge collaborated with

PVP Productions and Viskatoons of Canada, Crest Animation with Care Bears for

Nelvana and DQ Entertainment with projects like Skyland, Donkey Ollie and Delta

State.

The visual effects (VFX) segment bucked the offshore trend and was largely

fuelled by domestic demand primarily from Bollywood and South Indian movies. The

Aamir Khan-starrer, Mangal Pandey, might have flopped at the box-office but

earned rave reviews for both Maya Entertainment and Prime Focus for its VFX

work. These two studios led in VFX services as films like Dhoom, Rang De Basanti,

Black, Bluff Master, Bunty Aur Babli, Veer Zara, Salaam Namaste and Gangster

used substantial effects to make their packages more attractive.

Rang De had a good half-hour of VFX, most notably the runway and the MiG

scene. In Bunty Aur Babli, the Big B was nowhere near the train when he caught

up with Abhishek and Rani. Instead, he shot at the studio and the train was

added in lab. Veer Zara, Salaam Namaste, Sarkaar, and Khamoshi-all opted for

visual enhancement, and not the cleaning up variety done earlier during

post-production. In Shyam Benegal's Netaji, the U-180 submarine that carries

Bose from Germany to Japan was also lab-created, as was the East India Company

ship that comes to quell the Mutiny in Mangal Pandey.

 There were instances of reverse

outsourcing too when Rakesh Roshan got most of the VFX work for Krrish done from

Australia. However, offshore outsourcing on VFX is still minimal-it is

primarily the BG Prep work, involving removal of objects that come in the frame

during shooting, that are getting outsourced. Prime Focus was working on two

film projects with UK-based SFX specialist, Cinesite, while Paprikaas worked on

projects for Les Films D'ici, Paris.

Is India Game for It?



The Indian game development industry is characterized by the presence of

players such as Dhruva Interactive, Paradox Studios and Indiagames. These

provide development service in all four segments of mobile, PC, console and

online. Other game developers have positioned themselves as niche players, like

Small Device Technology which provides mobile porting service.

Several animation players have set up game development centers. Paprikaas has

a separate division, Paprikaas Entertainment Labs, for gaming development while

Crest also provides animated content for games. However, other than mobile

gaming, the market is primarily catering to offshore outsourcing clients. Global

gaming giants like Gameloft and Jamdat have set up offshore centers in India for

game development, while Electronic Arts is scouting around for a JV.

The mobile gaming market has generated some domestic demand, primarily from

Indian telecom service providers who have been selling games to end consumers.

Reliance Infocomm, Tata Indicom and Bharti have developed a pool of more than

100 games as part of their VAS bouquet. Indian gaming companies are increasingly

moved towards a co-production model with Indian telecom service providers.

Globally, the telecom operators have generated a large amount of revenue through

mobile gaming. Subsequently, companies like Dhruva Interactive, Indiagames and

Paradox Studios moved up the value chain and started performing the role of

publishers by developing their own games. Still, India accounts for only 2% of

the worldwide mobile gaming development market in FY 2005-06.

Porting accounted for a significant portion of this outsourcing chunk with

companies like Small Device Technologies with internal library of around 200

phones to provide porting services to its clients. Graphics designing is

becoming popular as an outsourcing option as mobile and wireless games have

started using more animation. Mobile games like Maria Sharapova Tennis by Dhruva

Interactive have received rave reviews.

PC and console gaming are other popular offshore outsourcing items. So far,

however, mainly the audio, character building, texturing and animation have been

outsourced. There is an increasing trend to develop different versions of the

same game for different devices. This is increasingly being outsourced. For

example, Dhruva Interactive developed the PC version of Mission: Impossible for

Infogrames Entertainment and mobile phone version of the popular PC game Slyder.

On the flip side, the game engine has restricted the growth of PC gaming

development outsourcing to India. This is because a company that has invested

three to five years in developing a game engine, is reluctant to provide it to

the outsourced service provider. No wonder, then that in FY 2005-06, around 60%

of the mobile games played in India were from abroad and only 40% of the games

were developed indigenously.

Companies have now started outsourcing the testing stage of PC and console

games to India. On the online gaming front, only the 3D asset creation work was

outsourced, but with India posing no significant cost advantage, this sector

remains largely untapped.

Rajneesh De



rajneeshd@cybermedia.co.in