Software companies get animated

Chennai: Animation companies like Pentamedia Graphics, TIL Studios and Toonz Animation watch out. The recent entry of Tata Elxsi, a systems integrating company, is expected to attract other big names in the domestic software industry towards the $25-billion global animation industry. What's more, the market is rife with rumours that other software biggies are set to follow the Tata Elxsi path.

"It was bound to happen and with the software industry facing a downslide one can see more companies jumping onto the bandwagon," says TIL Studios COO Subash Babu. Reports say Tata Elxsi is aiming to earn $10 million from multimedia activities next year.

Even in Indian films, animation and special effects are finding an increased usage. Unlike the software market, which is largely concentrated in the US, the market for animation is truly global. With Indians' skill in handling various computer-operating systems, domestic software companies can now capitalise on that expertise for doing 3D animation, as is being done by the existing players.

While 2D animation needs artistic skills to draw every movement and running them at a high speed to create a movie scene, in 3D animation special effects are mainly done on the computers using specialised software. Further, software biggies like Infosys, Wipro or TCS need no great introduction abroad — they also have the advantage of being present in multiple markets.

Such well-known companies can directly deal with film production houses abroad, unlike the existing animation companies who source contracts through brokers for a fee. For instance, Tata Elxsi has representative offices in the US and Japan, which are big markets for animation. "That is the advantage they have," agrees Babu.

In the meantime, after a brief lull post-9/11 events, things have started to move ahead in Hollywood. "The computer animation industry had generally slowed down during 2001, but the 9/11 situation put the brakes on to many jobs when they came under review. Business in the US during September-December 2001 was very slow, and this also applied to the computer animation production industry as well as the rest of the industry — software, hardware…. But things have started to bounce back since early January 2002," says Robi Roncarelli, president, editor and publisher of Pixel, an international magazine devoted to the animation industry.

Roncarelli says many film and TV production jobs were put on hold while the scripts were reviewed to make sure they were post-9/11 politically correct. "Also, there were holds on funding due to the slow economy during the period. I know of three at least — two productions that I was a bit involved in — but I cannot give you specific details."

The Bangalore-based listed company Compudyne Winfosystems had earlier announced that its multimedia division based in America got affected because of the WTO twin tower blasting. Babu says the slowdown is only in Hollywood, as the market is good in the Middle East, Singapore and Japan. "Payments for projects from America will slow down due to the 9/11 incidents."

On the prospects for offshore production of animation, Roncarelli says: "In the longer term, the slower economy and tighter budgets auger well for increased offshore production — that bodes well for Indian computer animation companies. I know — and am working with — film EFX producers, who are looking to extend their budgets by getting work done in India."

The industry as a whole, he says, "is becoming increasingly competitive, so margins are being pared to the bone. To succeed in the North American market, an Indian company has to offer rates that are 75 per cent less that of US West Coast rates. Americans can get a 50-per cent increase on their dollar's purchasing power just by getting work done in Canada."