Global Entertainment Industry Looks Forward to Indian VFX Wizardry

Movies with 3D, VFX and animation happen to be the top most revenue generating source for the Hollywood industry. According to a report, out of the Top 10 box office hit Hollywood movies, three are animation movies while rest have some kind of visual or 3D effects. According to a PricewaterhouseCoopers report titled A Goose that lays a Golden Egg, 3D films generate 2 to 3 times the revenue per theater of 2D, giving theater operators a powerful incentive to convert to the new technology. A big expense for theaters is in converting from traditional prints to digitala transition the film industry regards as essential, as it can then shed the cost of copying and distribution.

Once a theater employs digital technology, the transition to 3D is relatively easy and done inexpensively. Studios have therefore a strong incentive to make 3D movie a success in order to facilitate a particularly interesting and profitable change in movie distribution. The success of 3D has proved critical in the rapid digital roll-out which has been observed this year in the US and throughout the world.

However with a slowdown in 2009 and several layoffs that happened in the 3D and the visual effects industry globally, Hollywood and other global movie industries since then have started focusing on India as the hub for the VFX/SFX and their post-production work. If Slumdog Millionnaire was to be re-made again then one of the dialogs of the movie would have been the followingIndia is at the center and visual effects and animation is at the center of the center. With several developments taking place in Hollywood, the VFX, 3D and special effects industry in India is surging from the East and setting its focus on the West. Not to mention that global studios are now seeing huge potential in the Indian media and entertainment industry. The Indian animation and visual effects industry has moved from a pure offshore model to co-production model in some cases with Indian studios contributing with its manpower and infrastructure while the international producers contributing with marketing and distribution. Cities in India such as Mumbai, Chennai, Bengaluru, Hyderabad and Trivandrum have emerged as the countrys major animation and visual effects hubs.

IndiaThe New Avatar

India continues to remain an important outsourcing destination not only for IT services but also the media and entertainment industry, offering significant cost arbitrage to countries in North America and Europe. Moreover the growing presence of Indian studios in international markets has caused them to capitalize on synergy across their various offices, locations, talents and projects. Reliance MediaWorks, Prime Focus, Tata Elxsi, and Pixion are some of the Indian studios that have established their footprint in the overseas markets. Captive centers in India have moved up the value chain to become Center of Excellence (COE) for specific areas for many animation and visual effects companies. Captive transformation from cost centers to profit centers is a rising phenomenon in the offshoring landscape in India.

According to a Nasscom report, Indias share of the animation outsourcing industry is less that 10% as compared to its share in the IT and BPO industry, which stands at 51%. However, this can grow as more studios worldwide are looking to cut costs and send work to India while also setting up captive centers.

Experts say the Indian studios in the past had a hard time delivering quality and schedules effectively due to lack of artistic talent and effective use of technology. Till the recent past there was a lack of awareness about the industry, and hence, animation and VFX was not a career of choice for many. But over the last few years, global acceptance of Indian talent is encouraging and has steered in a new era where there are a lot of collaborations with international production houses. We would witness an even playing field in times to come. If 3 years ago we witnessed international production houses setting up shop in India, coming in with the natural advantage of a better brand image and deeper pockets, today we are witnessing the Indian studios catching up fast. This process of erosion of differential would continue till a level playing field is established. This would also be a function of the maturity of the new age creative workforce. India is now seen as a leading destination for high-end, skill based activities.

Companies such as DQ Entertainment, Crest Communications, Toonz Animation, Prana, and Anil Ambani-promoted Technicolor India (that acquired Paprikaas) are already engaged in end-to-end outsourcing work. Animation and VFX industry are now seeing larger investments in studios to provide better quality work to the domestic and the outsourcing market. International companies such as Walt Disney, Warner Brothers, Sony, have already made it big in the Indian market by setting up captives centers for animation and VFX. Leading studios also focused on co-productions vis--vis the outsourcing model and as a consequence of IP creation.

Reliance MediaWorks has worked on academy award winning projects from across the globe, and is backed by a robust proprietary pipeline that seamlessly connects (via a global optic fiber network) its state-of-the-art VFX studios in LA, London and Mumbai. Its VFX Solutions including concept design, pre-viz,look development, on-set supervision, 3D animation/CGI, matte painting and compositing/finishing for 2D and stereoscopic feature film and TV projects. The team has worked on projects such as the Harry Potter franchise, Troy, Kingdom of Heaven, Prince of Persia and The Chronicles of Narnia: Prince Caspian. Current projects in production include Shark Night 3D, Conan, and Secret Diary of a Call Girl. The Reliance MediaWorks Imaging Technology Center, the companys R&D hub focuses on image processing technologies. The Imaging Technology Center has developed technology in-house, that has been deployed in the digital restoration of over 400 motion pictures including the Star Wars series, Indiana Jones series, the James Bond library, the Disney Platinum classicswinning several awards in the process. The group technology has also been utilized on Oscar-winning new productions such as The Curious case of Benjamin Button and Avatar. Reliance MediaWorks has established an integrated international presence in the film restoration service space and offers high-end restoration and image enhancement services across USA, UK, Japan (in alliance with Imagica Corp) and India.

A factor making India an outsourcing destination for animation films is its vast base of English speaking workforce. Animation, which requires understanding of the English language in order to lip-sync the animated media to the audio dialog, benefits from this particular skill of the Indian workforce. A number of animation companies in the country are also creating skilled manpower for the animation market through various training programs.

However the main reason why foreign media and entertainment firms are flocking to India is the cost advantage the country offers. For example, US animators can charge about $125 an hour; in India, the charge for that is $25. The total cost for making a full-length animated film in America is estimated to be $100-175 mn. In India, the same could be done for $15-25 mn. Studios in India are also able to provide a large supply of low-cost, high-quality software engineers, even going so far as to establish studios outfitted with state-of-the-art hardware and software to carry out production overseas

Prime Focus is one such company that has established its base in Mumbai and does work for overseas film and animation using visual and special effects. The company follows a WorldSourcingTM business model that enables clients to get resources across geographies, hence saving their time and costs for a project. Within this business model the company has come up with a unique global network of integrated studios called the Global Digital PipelineTM that is spread across 3 continents, 5 time zones, 18 facilities, 3,000 plus professionals, providing 24/7/365 days service. With the WorldSourcingTM model clients can bundle services with Prime Focus, doing away with the need for multiple vendors.

Pixion has already acquired 2 London based studios, Men-From-Mars and Molinare, to promote Indian content and generate revenue from global deals. Tata Elxsi has launched a new facility of Visual Computing Labs (VCL) in Los Angeles. Similarly, Tata Group-promoted Visual Computing Labs (VCLs) new studio located in Santa Monica, LA is designed for US based film and television production companies, specifically shaping its services to suit client needs through all stages of production. Significant economies for clients will be achieved via sharing of work between VCLs Mumbai and US facilities.

Last year DQ Entertainment announced the signing of a new co-production agreement with Method Animation (France) and has also concluded a deal with ZDF Group (Germany) to co-produce the series of The New Adventures of Peter Pan. The aim of the company is to produce high quality branded IP to attract audiences and generate multiple revenue streams for licensing, publishing and merchandising. However DQ Entertainment soon announced the signing of a broadcast deal with an Israel based company Noga Communications for the stereoscopic animated TV series, The New Adventures of Peter Pan.

Technicolor India also has an experienced front-end team in Burbank, California and a state-of-the-art production studio in Bengaluru. The Moving Picture Company (MPC) which is a Technicolor company, had a lot of work on last year providing VFX shots for The Chronicles of Narnia and The Voyage of the Dawn Treader. MPC completed over 700 VFX shots for the film, creating Reepicheep, Eustace the Dragon, a deadly Sea Serpent, extensive digital environments, and the ocean going ship of the films title. MPC also delivered 40 of the shots in full 3D stereo. Rhythm & Hues has an active outreach program comprising facility tours and speaking engagements. It already has facilities in Mumbai and Hyderabad.

Challenges

India today is facing increasing competition from markets such as Singapore and Malaysia as these countries are now offering funds and various other subsidies to animation companies. In India, the industry has collaborated and approached the government to provide incentives through similar grants, but a comprehensive industry incentive structure or policy is yet to be announced. In the absence of such government incentives, Indian players are contemplating setting up of operations in Singapore and other Asian markets. In the next few years, while India will continue to have a lead in CGI animation compared to other Asian markets, these countries are scaling up operations and investing in training talent that could emerge as a threat to Indian players.

Conclusion

India is fast becoming a preferred destination for animation and VFX outsourcing and is steadily overtaking the traditional players such as the Philippines, Korea and Taipei. Similar to the IT-BPO sector, the Indian animation and VFX sector has the potential in export of services on Intellectual Property (IP). As the offshore delivery model matures the cumulative effect of improved skill sets, quality of development, on time delivery combined with cost advantage and scale can lead to expansive growth. With technology consolidation happening, more IT offshore companies are likely to enter this market (animation, VFX, and gaming) in the coming years. As the economy moves out of tough times, animation/VFX houses in India would take the initiative to develop the in-pipeline high budget, high quality movies, and animation content.

PC Suraj
surajp@cybermedia.co.in