The development cycle in animation project is basically divided into four parts - conceptualization, pre-production, CG production and post-production. CG production includes assets creation, animation, lighting & VFX, compositing, rendering and editing. Animation has three stages involved in 3D animation: In the first stage of `blocking the blocking', the character is positioned according to the storyboards and the primary poses of the characters are set as per the requirement of each shot. In the primary animation stage, the breakdowns and in-betweens are completed. This defines the movement of the characters. The character's facial expressions are applied in the third-and-last stage of secondary animation. All secondary animations such as ears and tails which complete the animation are also drawn during this stage. Final voices, sound effects and music are added and then final editing is done in the post- production stage. Once the audio synchronization of the shot has been checked and scenes edited together, the animation process is complete.

Emerging production pipelines in animation

It all started with hand drawn 2D animation and reached a stage where we cannot differentiate between CGI and live-shot imagery. There are many new trends coming up every day in CGI. We see motion capture/performance capture taken to a different level in some of the recently released Hollywood blockbusters. We are going to see more 3D stereoscopic content getting developed for TV, already most of the latest animation films are done in 3D stereoscopic. Going forward, we will see many more and new technological advancements which will bring CG content closer to real-life.

Revenue streams in animation

Nasscom's recent study on the animation industry projects the global animation industry to grow at a CAGR of 10 percent and reach over USD 100 billion by 2012, from USD 68 billion estimated in 2008. The animation industry is classified into the following segments - animation entertainment, custom content development & multimedia/web design, special effects (VFX), and animation education. Global animation market for animated content and related services is expected to increase to USD 45 billion (from the developer's perspective) by 2011. In absolute terms, custom content development and multimedia/web design is the largest segment, with an estimated industry size of USD 256 million in 2008, which is expected to reach USD 542 million by 2012, as production budget for animated content is set to increase. The second largest segment is animation entertainment, which was around USD 107 million at 2008 and expected to reach USD 207 million by 2012. Animation entertainment segment is again split into movies, broadcast, advertising and direct to DVD. Currently, the Indian box office accounts for 60 -75 percent of revenues, satellite TV rights 15 percent, merchandising 15 percent and home video accounts for 5 percent. As the Intellectual property (IP) rights will be retained by the developer, instead of the TV channel, the developer will be able to exploit alternate revenue streams such as merchandising, and sale on digital platforms.

Animation & VFX: making waves in India

As Indian production services are growing at a fast pace, India is expected to position itself as number one in the animation market, riding high on its talent and quality of work. However, these days nearly all the global animation giants make use of Indian personnel and facilities through various business entities or have some kind of presence in the Indian subcontinent. Currently pegged at over USD 430 million, the animation and visual FX segments (excluding animation education segment) in India have experienced a huge upturn over the past five years. Taking into consideration the rate at which this industry is growing within the country, it is estimated by Nasscom that India will probably need more than 30,000 professionals in next couple of years. Today, however, the industry has a little over 17,000+ professionals working in the animation space. As the demand for animated content is rising, the infrastructure for training and education in animation is also being augmented as students have started looking at animation as one of the better career-options.

Challenges for Indian animation industry

Capital Index: Animation space is quite capital intensive. This is a scale business and for companies to grow and sustain in this business they need huge initial investment in hardware, software and infrastructure. High cost of hardware and software, lack of sufficient bandwidth and infrastructure costs have been the hurdles in the rapid growth of the animation and gaming industry.

Excessive dependence on outsourcing model and lack of original IP: There is no major intellectual property (IP) development from the Indian sub-continent, since animation IP development has huge cost implications. There is major dependence on external outsourcing work.

Lack of content variety: Domestic demand has suffered from the mythological baggage which has reduced its exportability and appeal beyond India, making it unviable for producers.

Absence of co-production treaties: There is no adequate government support, tax exemptions policies, or entertainment-tax corpus, to support co-production treaties.

The future of Indian animation industry

The Indian animation and gaming industry has matured substantially with a number of new players joining the space. Indian animation studios are making further inroads into the world of movies and TV broadcasts. There are about 125+ animation studios operating in India, employing around 17,000+ people and nearly 3,500 freelancers. There is a huge growth potential for Indian animation industry, as it is expected to grow at a CAGR of nearly 10-15 percent, to reach over USD 1 billion by 2012, with the entertainment segment contributing nearly 68 percent of the total market in India. Demand for India's animation services is growing fast, with global entertainment majors such as Walt Disney, Imax, Mattle, Warner Brothers and Sony signing-up huge contracts with Indian animation companies. Going forward, India is expected to position itself as the number one in the animation market.

India's advantage over other ASEAN and Eastern European countries are qualified professionals, presence of animation studios, growing reputation for quality of output, low cost of animation services, etc.