NASSCOM releases Animation & Gaming Report 2008-09

NASSCOM today released the NASSCOM Animation & Gaming Report 2008 -2009 at a specially organized function at CCI, Mumbai this afternoon. Present at the occasion were NASSCOM President Som Mittal, Vice President Rajiv Vaishnav, Ernst & Young Partner & National Leader, Media & Entertainment Practice Farokh Balsara and industry leaders including Dhruva Interactive’s Rajesh Rao, Indiagames’ Vishal Gondal, Jump Games’ Salil Bharagava and Ninad Chhaya, Autodesk’s Arun D’Souza and Tata Interactive Services’ Manisha Mohan.

Speaking at the report launch, Som Mittal, President, NASSCOM said, “The industry in 2008 was estimated to gross revenues of USD 661 Million in 2008, up from USD 364 Million in 2006. NASSCOM recognizes this industry as one that is a significant user of technology, and can further showcase India’s well established credentials in the IT industry space. However, being in a nascent stage of development, it is critical for all stakeholders to come together and create an environment that nurtures this industry for it to be able to compete at a global scale.”

Farokh Balsara, Partner & National Leader, Media & Entertainment Practice, Ernst & Young says, “India’s pursuit to establish itself in the global animation and gaming arena is facilitated by quality and lower cost advantage, large scale availability of manpower along with cultural and English language synergies. We believe that this combined with growing consumer demand from the domestic market would provide the required boost for the industry in India.”

The Animation & Gaming Report 2008-09 by NASSCOM and Ernst & Young provides a detailed insight on the growth drivers, business models, issues and challenges for the industry in the next few years. The report also provides recommendations to the government, charts the road ahead and suggests targeted actions that key stakeholders need to undertake for the industry to achieve its true potential.

Following are some excerpts from the report:

The animation industry in India can be divided into the following key segments: Animation entertainment, animation education, custom content development and multimedia/web design and VFX. The entire animation industry in India was estimated at USD 314 million in 2006, USD 494 million in 2008 and is expected to grow at CAGR of 22 percent to reach USD 1 billion by 2012. In absolute terms, custom content development and multimedia/web design is the largest segment today, followed by animation entertainment, animation education and VFX, respectively and is expected to remain so in 2012.

The gaming industry can be divided into the following key segments: Online Games (MMORPG and Casual Games), Mobile Games, PC Games and Console Games (Regular and Handheld Devices). The Indian gaming industry was estimated at USD 50 million in 2006, USD 167 million in 2008 and is forecasted to grow at CAGR of 49 percent to reach 830 million by 2012. The overall size of the Indian gaming industry represents revenues from the consumer market, services market and revenues from non development activities such as services rendered as technical support to international gaming companies. The consumer gaming market was estimated at USD 105 million in 2008 and is expected to grow at a CAGR off 55 percent to reach USD 610 million by 2012. The services market for gaming was estimated at USD 61 million in 2008 and is expected to grow at a CAGR of 38 percent to reach USD 220 million by 2012. In 2008, the console gaming segment is estimated to account for the largest share of the Indian gaming market, followed by mobile gaming, online gaming and PC gaming respectively. In 2012, it is expected to remain the same.

Budget

The production budget of an animation movie made in India has increased from USD 1.7 million – USD 2.2 million to USD 4.5 million- USD 6.7 million over the last few years. Moreover, the production budget of international movies outsourced to India has increased from USD 8.8 million to USD 11.1 million. Consequently, realization for domestic work has gone up from USD 1,300 to USD 2,667 per seat per shift per month. The realization for international outsourcing is in the range of USD 2,200 to USD 3,100. This increase in realization is the result of animation companies providing higher-end services such as long form and 3D animation films.

Cost Advantage

Cost Advantage is the most important and attractive value proposition for India as an animation and gaming content development destination. India’s low cost-high quality advantage offers a 60-80 percent cost saving for the international studios outsourcing/off shoring to studios in India. This has become an even more attractive proposition for India due to overall skill enhancement of the companies enabling them to cater to the whole value chain rather than service labor intensive low end jobs.

Indian animation and gaming studios have consistently delivered several projects at significant cost savings for the international clients over the last few years. This has helped to establish India’s credentials as an offshoring destination especially in the animation space. The international companies which came to India for outsourcing work, have expanded their horizons. The relationships with the Indian firms as clients or partners have enabled them to further expand their capabilities and global reach, while achieving cost efficiencies. Many international companies like Walt Disney, Sony and EA have set up captive centers for animation, VFX and mobile gaming related work.

This trend is expected to intensify further in future with most international animation and gaming majors setting up development centers/ production houses in India, either through acquisitions or as Greenfield ventures, to cater to the mature markets internationally. These centers will also meet the emerging demand from the Indian market.

Industry leaders present as a part of a round table conference at the launch shared their views on the report.

Rajesh Rao, CEO, Dhruva Interactive
“In the past few months, all the players of this space have had their fair share of challenges. But what has been really interesting is the multi platform takes off in the gaming space in the domestic market. We have seen the various gaming platforms evolve simultaneously. Also the gaming services industry has benefited from the economic downturn in a way, as the prices of game development have gone high in the west, which has in turn resulted into increased workflows to India.”

“Considering the dynamic nature of the market, this time around the numbers quoted in the report have been revised and we have gone with conservative growth numbers in comparison to the past projections. We are positive of matching them and it would be even better to over achieve them.”

Vishal Gondal, CEO, Indiagames
“The last 12-18 months have been the bringers of change for the entertainment industry in India as we have seen many international studios coming in to India. The corporatization of Bollywood has already happened and now we are in the second stage were Hollywood is betting its money big time here. Talking about gaming, I think its going to exceed the numbers that have been forecasted by the report.”

“In India we currently have installed base of 450 million mobile handsets which is going to grow to 700 million in 2012 and every handset is a gaming device. This goes on to say volumes about the revenue potential of the mobile gaming space. Mobile gaming will be followed by the online gaming business which is growing at a rapid pace with increasing broadband penetration.”

AK Madhavan, CEO, Crest Animation
“The industry in India looks very promising. Its very common sensical, if you look at the kind of economic growth happening in India. What works for India is the impressive deliveries that we have had for the past 5-6 years. The quality of work being done here has improved and we are delivering volumes and at the same time bringing in the awards as well. Its not only about the west outsourcing work to India, today Indian companies are also outsourcing work to the west. We ourselves have involved talents from west for some of our projects. With time India has garnered three key factors that make it a competitive player in the market namely creative bandwidth, delivery pipeline and distribution processes and the growth is taking place in a geometric progression.”

Source: Frameboxx,Ahmedabad

Date:27th Nov.,2009