India's animation industry bandwagon rolled on nonchalantly during the better part of its pink health. There was an air of excitement everywhere, and animation became the buzzword in many tongue tips and stole the limelight outpacing the growth rates of its counterparts, evolving and maturing into a highly rewarding industry. There were entrants of various sizes and shapes, animation training institutes mushroomed everywhere churning out the required manpower to meet this robust growth projections. India was well placed to leverage this opportunity due to its cost effective yet quality-driven production, emerging domestic animation market, and changing business models in financing animation production.

At an estimated size of Rs. 17.4 billion in 2008, the Indian animation industry grew at a CAGR of 20.1 percent in 2006-2008. It is estimated to reach a size of Rs. 39 billion by 2013. Among the different segments of the animation industry, the animation production services segment is estimated to grow the fastest with a CAGR of 17.8 percent in 2009-13. Again India's share in the Rs. 1530 billion global animation and gaming industry is skimpy, showcasing the immense scope to garner a better and bigger pie.

Now, what ails the sector? The industry is in a tizzy. There are no prizes for guessing what is in demand - "money". Surely so, for the studios (sweat shops) who banked wholly on contract productions the recession knocked the bottom out of their profits. For the industry big-wigs who ventured in to co-productions or even own productions, it is a Catch-22 situation, not knowing whether to finance from their own pockets or where to get the finance from. The budgets have become tighter and deals leaner and there would be lesser volume of content in the entertainment space compared to the previous years. Even then, optimists vouch that the entertainment industry and consequently animation is recession proof as more and more masses would turn to the medium of entertainment to keep themselves relaxed during tough times. Primarily, business models need to be examined. We need to have a right blend of outsourcing works and original content creation. This would ensure that there is a constant inflow of revenue to invest in original contents. The market for your production needs to be better defined. There is no point in coming out with contents, trying to satisfy different palates. The golden act of balancing your budget, quality, and content needs to be achieved. The production pipeline would need to be adjusted to ensure that the cost can be minimized. Creative ways and means to integrate innovative production technologies (such as limited animation and blending 2D-3D animation) have to be adopted. Also critical would be implementation of technologies (Renderman, Cintiq) that would drastically speed up the animation process. Over 70 percent of the cost of production in animation is the overheads incurred to pay the fat-pursed salaries. The industry is witnessing a massive salary correction now, which is a blessing in the current scenario. While cutting salaries, we need to keep an eye on the future and retain talents who could make a difference.The vibrancy in the job market needs to be retained as we are still short of the requisite talent both in numbers and quality to meet the projected demand.

While the recession is expected to stay for a year or two, the onus is on the Indian studios to equip themselves to meet challenges and do the right rope walking act. The landscape has changed and only the ones who can adapt would be among the last ones standing.