The ranking of the Chennai-based Pentamedia Graphics as the world's number one animation company ahead of US-based outfits like Lucas Digital and Digital Domain is a sure sign of the potential India has in this field.

With animation becoming an essential component of the increasing number of feature films produced in Hollywood, cost-cutting has become producers' main concern particularly because animation, computer graphics and computer-generated special effects cost a bomb if undertaken in the US studios and labs.

With low wage structures and an abundance of skilled manpower, software companies in India, Korea and Malaysia are proving to be much more economical to undertake these tasks. Decreasing cost of equipment and software is a crucial factor which has helped these countries harness the potential of their skilled and creative manpower, points out Robi Roncarelli, president, editor and publisher of PIXEL, the international magazine devoted to animation industry.

According to Roncarelli, the $25-billion animation industry is growing at the rate of 25 per cent each year. "In 1984, the total industry size was just $8 lakh. By this yearend, it is expected to touch $30 billion and by 2005 up to $70 billion," he predicts.

According to him, as the financial threshold for entry into the computer animation industry becomes lower, animation production will take place more outside North America as has been the pattern in the past three years.

Today, North America's share of the global animation business stands at 46.9 per cent followed by Asia-Pacific countries' share of 28 per cent and Europe's share of 25.1 per cent. "In 1996, North America's share of global computer animation production was 52 per cent and this has gone down gradually," he says. The biggest gainers are Asian countries like the Philippines, Thailand, Korea and Japan.

Though 72 per cent of computer animation is used for entertainment – films, TV, games, advertisements and the Internet – there over a dozen other user groups such as medical, scientific, legal and architecture that account for the balance.

Gaming has immense potential. Already, the global electronic gaming industry has reached the $20-billion mark. With 3-D games gaining popularity, India is in a position to excel over the other Southeast Asian countries, which though good in 2-D animation, lag behind in 3-D animation. At present, India has a mere 0.1-per cent share of the world animation market. But its share is steadily increasing.

"India has the technical pool that is good at operating systems. What is lacking is the experience and creativity," says Roncarelli. He has ranked Pentamedia Graphics as the number one computer animation company in the world based on the facilities, number of animators and system operators, equipment and the software packages the company owns.

"Indian companies in general have to shore up their acts on quality and volume of production. Companies like Pentamedia Graphics are trying to bridge the gap by tying up with overseas companies," he says. But there are very few other companies in India that can match Pentamedia in capabilities. "Size matters a lot in this field, and sticking to delivery dates is very crucial," says UTV Software Communications chairman Ronnie Screwvala.

With pre-production and animation cost per episode of TV serial coming to around $2.5 lakh, producers would not like to take chances with small players, he points out. His company's animation division, UTV Toons, earns around Rs 25 crore revenue a year.
"Our production facility is the single largest in the entire South Asia in terms of executing number of episodes per month," he claims. "Nobody in India does more than 22 minutes of animation per week. Critical mass is four episodes per month and we do eight episodes for Fox and Universal," he says. UTV Toons has recently bagged a $65-million order from a Canadian television channel for production of TV animation serials.

The other crucial issue before the Indian animation companies relates to human resources. Unlike other software companies, animation outfits require people who are creative and can handle computers ably.

Poaching of talented manpower by companies has become the order of the day as happened with Pentamedia Graphics, which lost a good number of skilled hands to another Chennai-based animation company, TIL Studios Ltd, formerly known as Total Infotainment Ltd.
In order to take care of the human resources needs, major players like Pentamedia Graphics, UTV Toons, Color Chips, Toonz Animation and others conduct hands-on training before hiring the skilled staff. Pentamedia Graphics is setting up another training centre in Hyderabad besides the one at Chennai.

Allured by the rosy projections of the animation market, several training institutes like Aptech's Arena Multimedia and MUV Technologies have introduced special courses in computer graphics and animation. Some of these, like the MUV Technologies, have even morphed themselves into an animation company in course of time.

Starting as an animation-training outfit, the company has bagged an order for a four-hour animation movie on Nelson Mandela. The company had earlier executed animation work for a Tamil movie. "Apart from training students in animation, we also place them on jobs," claims Roshini M Tondlikar, manager, training division.

But there is no standardised training programme that is available in the country. MUV Technologies train its students on the Maya software. Toonz Animation is developing a curriculum in collaboration with the National Institute of Fashion Technology, New Delhi.

Like computer training institutes upgrading themselves into animation studios, so have several animation studios turned into production houses. Apart from executing animation projects for others, companies like Pentamedia Graphics, UTV Toons and Crest Communications have started producing movies and TV serials.

Pentamedia Graphics has produced two movies – Sinbad: Beyond The Veil of Mists and Pandavas: The Five Warriors. UTV Toons, according to Screwvala, is producing a serial called Toad Patrols. The Thiruvananthapuram-based Toonz Animation is planning to produce serials on Panchatantra and other Indian folk tales. The company also intends to produce an animation movie based on Taj Mahal. The Hyderabad-based Color Chips will be serialising the Amar Chitra Katha comic strips.

The benefits are manifold. First, producing their own movie enables the Indian companies to showcase their capabilities upfront and at the same time offers the needed experience to their staff. Secondly, digital images thus created could be repurposed or reused later, thereby reducing future production costs. "Merchandising of the images or characters offers another huge potential," says Screwvala and cites Disney's Lion King and Jurassic Park that helped the Disney rake in millions through this route.

Risks associated with production are high. While some movies rake in money in bags others don't do the same. Pentamedia Graphics' Sinbad: Beyond the Veil of Mists is one such example. The movie, which didn't do well in theatres, is now being shown on television channels.

Apart from making movies, some animation companies are also getting into publishing. Toonz Animation set the trend by launching a comic strip and is now being followed by Pentamedia Graphics with its Pandavas: The Five Warriors movie being turned into a comic book.

In order to go up in the value chain at a faster pace as also to improve their own animation skills, domestic companies are on an acquisition spree:

• Pentamedia Graphics acquired Improvision Corporation, USA, and
  Animasia International Pte Ltd, Singapore.
• Crest Communication, Sriven Multitech and Compudyne
  Winfosystems acquired Rich Animation (purchase price $5 million) Station X Studios Entertainment ($1 million) and Vision Art Studio ($4million) respectively.

The notable acquisition failure was Pentamedia Graphics attempt to buy majority stake in the US-based Film Roman. Apart from acquisitions, Pentamedia Graphics has inked joint venture and alliance deals with companies like Digital Domain, 3D Max Media Inc and Creek & River, Japan.

Not only the export markets, even the domestic market is becoming big to beckon new players. India produces around 700 films and there are several television channels offering soaps.
"Even a one-minute animation in each movie is enough to give huge revenues for the local players," says VS Sundararajan, CEO and president, TIL Studios. It is said that Telugu films with special effects earn more money than those without. That apart, commercials also use special effects in a big way.

But what is baffling is why have software majors like TCS, Infosys and Wipro have not yet gone into animation despite having piles of cash. Remember Microsoft has entered the gaming segment in a major way.
"In fact it should happen sooner than later and will be good for the industry," says UTV's Screwvala. These companies have established their names abroad and it will be easier for them to negotiate directly with Hollywood producers instead of going through middlemen and losing part of their revenue, he says.