emerging as niche growth segments

The Indian animation and gaming industry is quietly carving a niche for itself. India is looked at as an attractive outsourcing destination for animation by other countries as the cost of labour and content development is low. For example, 30 minutes animation for a 3D episode on television costs about $220,000-$250,000 abroad, whereas in India the same costs between $100,000-$120,000, that's half the cost. Besides, India has a good talent pool in animation and content creation.
The offshore gaming development market is growing in India. Developing a game entails coming up with concepts, scripting, programming, designing characters, animation and testing. India is becoming a favoured destination for developing games. Benefits such as reduced costs, and improved quality, associated with outsourcing business processes have built confidence among global gaming production houses to outsource their work in India.
The research firm AC Nielsen estimated the Indian gaming market at $50 million in 2005. Game development today is a $10 billion industry in the US. Estimates suggest that by the end of 2006, an estimated 529 million people across the world will play mobile, interactive TV and online games. India is fast emerging as a key one-stop destination for game development.
The lower cost of porting a game onto multiple platforms (making a game compatible with a mobile handset which may have a different screen size, resolution, etc) is also leading to outsourcing of game development to India.
India's advantage
A typical game title today takes around 24 months to make and will have a production budget of $ 4 -10 million. The game industry is under increasing pressure to reduce development time and the cost of production. Reason enough for major publishers and studios to look at outsourcing development.
This is where the Indian game developers with their world-class quality and game development experience step in. India has excellent programmers and the rapid growth of the market is adding to the allure. The Indian market has 4 to 6 large game development companies with 50 seats and more, while there are another 100 odd small game developers with 5 to 10 seats, which are dedicated to developing for the wireless. Leading Indian game companies like Indiagames, Dhruva Interactive, Paradox and Mobile2Win develop for a range of platforms such as PC, console, wireless and online.
Game developers say porting costs are around two to three times the costs of basic mobile game development (graphic designing). This is because porting is a labour-intensive job. The cost involved in making a game compatible with a specific mobile handset costs $1,200 to 1,500 in the US. The same job can be carried out in India at a cost of cost $500-1,200. Further, for a game to succeed it has to be playable on at least 60 or 70 phones and it costs around $100,000 in the US to make a game compatible with that many handsets. If similar work is outsourced to India, the costs can be reduced by as much as 50 percent.
Analysts and game developers feel that there is high growth expected in the coming years. Gaming companies are also these days seen setting up training institutes and providing in-house training to their employees to hone their skills and to help meet the increasing industry demands.
According to the Nasscom report, while in 2005, there were around 600 people employed in this industry, given the present circumstances, demand for gaming professionals can increase to 2,000 professionals by 2007.
Gaming in India is picking up but it isn't a mass phenomenon yet. In fact, taken as a percentage of the global market, it's just a drop in the oceanall of 1/6th of a percent today and it'll be less than 1 percent even as per the 2009 forecast. As the mobile revolution continues and entry-level phones become more sophisticated, the market for mobile gaming will flourish. One can only hope that Indian cellular subscribers will prove the forecasters wrong and get the Indian market to, say, five to 10 percent of the global figures by 2009.
A study made by NASSCOM on the Indian animation and gaming industry revealed that Indian animation and gaming companies are establishing credentials the world over. Availability of right skills and cost competitiveness are factors that will lead Indian industry to potential growth, the study said.
The Study, unveiled at the NASSCOM Animation & Gaming India 2006, report reveals a huge growth potential in both the animation and gaming industry in India. The Indian Animation Industry is expected to reach USD 950 Million by 2009, and the Indian Gaming Industry is expected to reach USD 300 Million by 2009.
According to Kiran Karnik, President, NASSCOM, India's IT expertise and creative skills, combined with the entrepreneurial drive of its companies, make it well positioned to tap the potential of the growing global industry of animation and gaming. The rapid growth of mobile telephony, increase in personal computers and the greater use of animation content will fuel the growth of the domestic market too. If India focuses on developing the talent pool and leveraging our cost competitiveness, animation and gaming look like the next promising fields, Karnik says.
India is fast going up the animation-outsourcing ladder. Though a recent entrant in the global animation scene, demand for India's production services is growing at a fast pace. With global entertainment majors like Walt Disney, Imax, Warner Brothers and Sony signing up huge contracts with Indian animation companies, local animation design studios are gradually establishing their credentials overseas and building their skill sets in this high potential global market.
Animation India 2006 reiterated the fact that India ranked high on its skill pool and familiarity with English language made it a perfect animation outsourcing destination.
The boom is not only seen in the animation industry. The growth of the mobile industry has lead to a rise in demand in the gaming industry as well. India being a very competent nation with technology has an edge over others in terms of the time involved in game development. Games developed in India have been successful internationally and therefore, are enhancing India's image as a country with the technical and infrastructure capabilities to provide gaming-related services that meet international standards.
With the growing business in animation and gaming an emerging trend that can be seen in the market currently is that a number of Indian companies adopting a co-production business model from an outsourcing model. Shift to the new business model would prove fruitful for the industry as co-production model would drive motivation of industry players and compel them to perform bigger and better business. Going forward, India is expected to position itself as number one in the animation market riding high on its talent potential and quality work it offers the global market.
NASSCOM's annual animation event has over the years constantly evolved in format to offer an ideal platform for attendees to get 'real world' information on the animation and gaming industry. The event ensures that topics are concurrent with the present day needs of the industry.
The latest NASSCOM report on Animation and Gaming industry in India - estimates the global market size (demand perspective) of industry will witness a CAGR of eight percent and is expected to reach USD 75 billion by 2009. Based on this, the global animation market (from the developers' perspective) is expected to increase to $35 billion by 2009 from $25 billion in 2005.
The size of the Indian animation market (from the developers' perspective) was estimated at $285 million in 2005. It is expected to witness a CAGR of 35 percent from 2005-2009 and increase to $950 million by 2009. According to the report, the market for gaming is expected to witness a CAGR of 78 percent and reach $300 million by 2009 from $30 million in 2005.
The market size of the global animation industry (from the demand perspective) was estimated at USD 55 billion in 2005. The industry is expected to witness a CAGR of eight percent and is estimated to be USD 75 billion by 2009. Of the total animation market, approximately 40- 45 percent goes towards the cost of development. Based on this, the global animation market (from the developers' perspective) was estimated at USD 25 billion in 2005, and is expected to increase to USD 35 billion by 2009.
The size of the Indian animation market (from the developers' perspective) was estimated at USD 285 million in 2005. It is expected to witness a CAGR of 35 percent from 2005-2009 and increase to USD 950 million by 2009. Currently, activities at the production stage form a major portion of outsourcing, with postproduction accounting for a small share. The share of post-production activities is expected to increase in future. The entertainment sector contributes as much as 68 percent of the total Indian animation market (from the developers' perspective). In entertainment, the share of fully animated movies is expected to increase significantly, from 15 percent in 2005 to 28 percent by 2009.
Introduction of newer technologies and platforms has facilitated the growth of the worldwide gaming industry. The global gaming market (from the demand perspective) was estimated at USD 19 billion in 2005, and is expected to increase to USD 36 billion by 2009, representing a CAGR of 17 percent for the period 2005-2009. Developers cost account for around 25-30 percent of revenues. Therefore, the worldwide gaming market (from the developers' perspective) was estimated at USD 5.8 billion in 2005 and is expected to increase to USD 11 billion by 2009.
The market for gaming development in India was estimated at USD 30 million in 2005. It is expected to witness a CAGR of 78 percent and reach USD 300 million by 2009. Mobile gaming will dominate the market with its share in the total Indian gaming market (from the developers' perspective) expected to increase from 53 percent in 2005 to 68 percent by 2009. Key services currently outsourced in gaming include production and testing activities.
In animation and as well as in gaming, a number of Indian companies are changing their business model and are moving from an outsourcing to a co-production model.
India already offers a significant cost advantage in animation and game development, as compared to other outsourcing destinations such as Taiwan and South Korea. A key factor restricting the growth of animation and gaming in India is the scarcity of skilled professionals. Increased focus on the needs of the segment by key stakeholders can help address these areas and lead to significant growth.
Suggested initiatives include increasing the level of interaction between the industry and existing institutes to develop a comprehensive training module can result in bridging the demand-supply gap of skilled professionals. Industry support in the form of funding, and enabling environment for domestic market development can further grow the opportunity.