State of the Global Animation Industry and the Opportunities for Outsourcing Content Creation:
The rapid advancement of technology has made computer animation available to the masses and the animation industry is one of the fastest growing industries. Owing to the increase in computing power and the reduction in computing costs, we are seeing more and more of the global computer animation production output taking place outside of North America. This is a pattern we have seen for the past three years, with the resultant growing importance of the outsourced computer animation production market. This market is increasingly being tapped by North American film and television program producers. The major factor behind this shift of computer animation production to the Asia/Pacific region continues to be the availability of low cost, powerful computer animation platforms and much lower labor rates in the Asian and Pacific Rim countries compared to North America and Europe. The bulk of the outsourcing happens for 2D animation content with some amount of 3D content.
The global computer animation production industry is very fragmented and the total number of players in this industry runs in excess of 4000. Most of the small and medium players are located outside of North America and execute outsourced animation projects. The costs of getting work done in countries such as Korea is said to be roughly half that incurred in production houses in developed countries. In countries such as the Philippines and India, the costs are even lower (25 - 30 % of the cost of production in developed countries). The low labor costs in these countries means that they can offer computer animation production services to American and European producers at very attractive rates. The cost competitive advantage along with the delivery of good international standards of animation by studios in India has encouraged these production houses to look towards India as the future destination to outsource their assignments.
There is a considerable increase in the 2D and 3D animation outsourcing to India. Due to the extremely competitive climate as well as the global slow-down, some of the large studios in the US have implemented large amounts of layoffs of animators and artists. India is slowly emerging as an alternative to Korea, Philippine and Taipei for animation outsourcing. India is also emerging as a post-production hub for animation.
Asian Animation Industry: Strategies, Trends and Opportunities
Much of Asia's animation production since the 1960s has been tied to foreign interests attracted by stable and inexpensive labor supplies. For nearly forty years, western studios have established and maintained production facilities, first in Japan, then in South Korea and Taiwan, and now also in the Philippines, Malaysia, Singapore, Vietnam, Thailand, India, Indonesia, and China. The economics of the industry made it feasible for Asia to feed the cartoon world, to the extent that today about 90% of all "American" television animation is produced in Asia.
The usual procedure for preproduction (preparing the script, storyboard, and exposure sheets) is done in the United States or other headquarter countries, after which, the package is sent to Asia for production (drawing clays, coloring by hand, inking, painting, and camera work). The work is sent back to the U.S. or other headquarters country for post-production (film editing, color, timing, and sound). Asian animation companies bid fiercely for part of the global business, insisting that it provides employment and skills for young people, brings in needed foreign capital, and adds to the creation or enhancement of domestic animation. Offshore animation has led to the creating and nurturing of a local industry as an infrastructure is built up and equipment is put into place and skills are transferred.
With the current size of the entertainment industry alone being Rs.18, 600 crores and projected to grow to Rs 52,600 crores. By 2008, the industry will be among the biggest employers. India has already become a favored market for outsourcing work for the multimedia industry. In 2001, major Hollywood and European studios outsourced services worth $300 million to India. With the added advantages of an English speaking population, cost effective production, and trained manpower, India is the new potential Mecca for the worldwide $30 billion multimedia industry. Television and cinema which have been linear, passive forms of entertainment in the past are no longer the only entertainment media. Computers, video games and the Internet are fast becoming equally important and popular forms of entertainment worldwide.
