Indian Animation Industry: Moving Up the Value Chain?

Abstract:
In the last decade, the Indian animation industry witnessed high growth rates largely due to some inherent strengths and the cost advantage that it offered. The companies were adopting different business models, and experts believed that many of these companies were moving up the value chain.

However, they felt that the Indian animation industry had a lot of bottlenecks and that Indian animation companies had some weaknesses as well. In such a scenario, the Indian animation companies had to make the right strategic moves in order to tap thefull potential of the market.

Issues:
» Analyze the Indian animation industry at the backdrop of the global animation industry.

» Explore concepts related to value chains and discuss whether the players in the Indian animation industry were moving up the value chain.

» Analyze the various types of business models adopted by the Indian animation companies.
Contents:

Page No.
Introduction
1
Early Years
2
A Turning Point
3
Indian Animation Gains Momentum
3
Coming of Age?
5
Challenges
5
The Way Forward
6
Exhibits
8

Introduction
In November 2008, NASSCOM3announced that the Indian animation industry was poised for significant growth in the coming years. The industry was expected to record US$1163 million by 2012, as against the projected US$460 million by the end of 2008, reporting a CAGR of 27 percent, according to a report jointly prepared by NASSCOM and Ernst & Young4.5 (Refer to Figure I for a break-up of the animation market in India). There were several movies slated for release in 2009 including big budget movies like "Sultan-The Warrior", "Coochie Coochie Hota Hai"and a few more.
The entry of big players into the animation industry served to encourage the animation studios in India, which were hoping to get both investment and more and more original and varied content that would suit the global audience.

Experts felt that the Indian animation industry had gained significant momentum in the 1990s and the 2000s.

It had witnessed the entry of many new players and many of the companies were moving up the value chain (Refer to Exhibit I for the value chain of the Animation industry, and to Exhibit II for a list of key players in the Industry).
These companies were adopting different business models in their bid to take advantage of the huge scope for growth in the industry (Refer to Exhibit III for the business models adopted by the Indian players). While the projections for growth were good and some experts felt that the Indian animation companies had some strengths, others pointed out to weaknesses which could prevent the companies from tapping the full potential of the global animation industry.
Industry experts pointed out that Indian players still accounted for only a minuscule share of the global animation industry (Refer to Exhibit VI for a note on the global animation industry).
Early Years
The history of the Indian animation industry dates way back to 1914 when Dadasaheb Phalke, considered the father of Indian cinema, made an animation film using the stop-motion camera technique and simple things like matchsticks and coins. He also used animation to create special effects for films like Raja Harischandra and the other mythologicals films that he produced
A Turning Point
It was in the 1990s that the Indian animation industry witnessed a boom. Ram Mohan and Sako were determined to make the animated series based on the Ramayana and so Ram Mohan traveled to Japan to make it happen...
Indian Animation Gains Momentum
The low entry barrier and the lure of easy dollars that could be earned by providing cut-price work for the animation studios from the West resulted in several small companies crowding the Indian animation industry...
Coming of Age?
The Indian film industry, which is the second largest in the world, was not involved in animation in a big way. It had been using animation to a limited extent in live