Ever since the pandemic broke, the pre-existing industry trends have blown up in a manner which no one had ever imagined they would.
Digital adoption is now more or less a survival strategy for most sectors. e-Commerce has proven to be more conducive for essential purchases. Online transactions have come to our rescue and online content has been providing us with some moments of calm amidst all the negativity that we are surrounded with right now.
With this, the global online content consumption has doubled, from an average of three hours 17 minutes earlier to an average of 6 hours 59 minutes now.
People are now consuming more paid and free video and music streaming services, playing more video games, and are spending more of their time on various social media platforms, which has engendered hardcore competition among an already crowded media and entertainment sector.
Despite the economic slump and production halt in the earlier months of the pandemic, as M&E providers vie for consumers to stay for longer on their platforms—the M&E industry has witnessed a massive disruption within the sector.
The boom of VFX and animation…
Along with the drastically changed consumer trends, the demand for OTT content has spiked, but this has resulted in major losses for cinemas and theatrical releases. Calculated in numbers, that is an overall decline of 24 per cent i.e., a Rs 1.38 trillion loss for the Indian M&E sector, as per EY India. This in effect took the revenues back to 2017 levels.
But if there is one segment that has only grown despite the fallout from the overall economic slump on the M&E sector, it is animation and VFX. The sudden decline in the numbers of studios packed with editors and creators and the shift to remote working has turned the spotlight on VFX and animation-based work.
The rise of VFX and animation
Now movie makers, production houses and content creators are creating stories that depend majorly on special effects and animation. And we love it.
Take the example of films like Inception, Avengers, Baahubali and not to forget Game of thrones. Did you know that Khaleesi’s dragon was made in India by Prana Studios!! Tenet is the latest action techno thrill ride full of confounding visual effects and a winner of the Oscar for VFX. These are just a few popular names in the fray and there are many more such.
These examples prove that animation and special effects, though already an integral part of the content creating process, have reached their apogee now.
As per the analysis of the Boston Consulting Group (BCG) and the Confederation of Indian Industries (CII), the Indian animation and visual effects industry has a potential to capture 20 to 25 per cent of the global AVGC market. It currently has around 10 per cent of the global market share.
“It’s all because of the pandemic,” says Keitan Yadav, COO at Red Chillies VFX in a recent media statement.
He says that the industry is now investing more in virtual production to be able to operate remotely, and efficiently with a lesser number of people, less shooting days, and more effective management of the artists. “Before the pandemic, the animation, VFX, gaming and comics (AVGC) industry never thought of working from home but had to adapt itself to the changed circumstances. With this there will be a lot of flexibility for the studios to minimize their costs and maximize their output,” he avers.
Due to the WFH scenario, Red Chillies has more than 300 artists working remotely and some of their latest projects include movies like Class of ‘83, Gunjan Saxena, Radhe etc.
“The pandemic has had both, a negative and positive effect on our industry,” says another player in the sector and a third-generation entrepreneur, Anant Roongta, MD at Famous Studios, as he talks to us about the current status of the AVGC industry in India.
“However, every challenge has a silver lining,” he adds.
There is an unprecedented demand for animation and VFX
Lately, animation and VFX studios are witnessing a significant surge in content demand for domestic shows. You can just imagine the growth prospects by the fact that the animation segment alone grew by 10 per cent in 2020. It reached Rs 24.5 billion despite the steep losses incurred due to the halt of production in the initial phase of the pandemic.
All this has been keeping Indian AVGC artists busy and the studios have quickly adapted themselves to the changed circumstances.
For instance, Roongta’s firm, Famous Studios, which works on a range of projects—Movies, shows, TV Commercials and long format content, has added OTT to its projects as well. While every month they deliver around 15 to 20 TVC’s to clients, most of these commercials have elements of VFX in them. Last year, Famous Studios delivered a ground-breaking commercial for Panasonic Batteries with the use of motion capture technology. This was the first such instance of the use of motion capture technology for advertising in India.
Roongta tells us how 2020 was surprisingly a good year for them, despite them having to face never before seen challenges in their 75-year-old history. “In addition to the pandemic, we faced an uphill task trying to resurrect our business which included revitalizing our post-production services, real estate offerings and entering high growth businesses such as creating long format content for OTT platforms. But to be honest, the pandemic was a God sent opportunity and we managed to achieve almost all that we set out to achieve in FY 20-21,” he explains.
Inundated with various projects, the studio’s revenue for 2021 FY remained the same as the last FY despite five months of inactivity. In addition to this, Roongta’s firm entered the long format content creation space with a movie titled “Shaadisthan” which is scheduled to go live on India’s leading platforms by June this year. The studio is also working on City of Dreams, an OTT show which will be published on Disney Hotstar later this year.
“We are currently very busy. We have successfully set up new departments to enter the OTT and localization services space and have aggressively hired both creative and management talent in 2020,” says Roongta.
Shreedhar BS, filmmaker and Director of Shred Creative Lab, comments, “At first, business slowed down for us, as most of our clients were not sure about the effects that this would have on their business. None of us expected a pandemic or a lockdown. Thankfully, we had a few ongoing projects and a group of passionate and motivated artists who could perform remotely and yet deliver a world-class product.”
Shreedhar, who is also known as Shred in his field, has been experiencing first-hand the changes in the field. “Mostly positive,” he says. “We see big films debuting on OTTs. The consumption patterns are changing, and OTTs had the most significant surge in subscriptions. More and more platforms are being launched, creating opportunities for new filmmakers and content creators. Apart from that, we are becoming more responsible and sensitive, “he concludes.
Collectively speaking, albeit experiencing losses in productivity, the VFX and animation segment proved to be resilient in the wake of the pandemic. The EY India’s analysis predicts that with the abundance of available work, the growing demand for content and the adoption of cutting-edge technology, the segment can grow at a CAGR of 34. 6 per cent over the next three years, reaching Rs 129 billion by 2023. While VFX and post-production are set to recover to 2019 level revenues by 2022.
Meanwhile, there are a few reasons for why VFX and animation work never stopped
Just because we are in the middle of a pandemic, creative studios are not getting a pass. It also means that the kind of work that they were doing earlier has been transformed dramatically.
First, the outbreak of the corona virus infection pushed them to rethink their business models. With the rise in demand for content, such as commercials, web series and feature films, most studios are taking up less live action projects, instead completing them with more cinematic effects and animation.
Also, the current scenario is proving to be a good opportunity for artists who are willing to explore their capabilities. Shreedhar comments, “Creators are no longer limiting their imaginations due to lack of technology. VFX and animation effects work as enablers to make the illusion real and infuse fantasy in reality.”
According to Roongta, “Indian VFX studios are slowly achieving Hollywood levels of quality with the availability of world class talent.”
Another disruptive transformation that the industry has witnessed is adapting themselves to home offices, which has kept their businesses going.
We all know how hard it is to implement change. And traditionally this industry was never equipped to work from home. Before 2020, globally, 46 per cent of the VFX sector did not promote a work from home policy or have the technology set-up to support remote workflows. But essential social distancing norms compelled studios to adopt the WFH mode.
For instance, the VFX for Avatar 2 were mostly created in WFH mode from New Zealand, and it will be released this year. Not going far from home, Nube Studio—a post-production studio, worked successfully on web series like Raktanchal, Aarya, and the movie Mumbai Saga during the pandemic. Regardless of their work being affected, artists worked remotely on Mumbai Saga’s 750+ shots which included VFX work like crowd multiplication, CGI animals, colour composition and much more.
Talking about this shift, Famous Studios MD, Roongta informs us, “Post- production, VFX and production studios like ours have successfully moved to remote working. Unfortunately, because of expensive technology and machinery, WFH is not applicable to the entire post- production process. However, with the help of our stakeholders, we have managed to move 80 per cent of our technology to WFH.”
Shreedhar of Shred also weighs in with his comments on the WFH scenario, saying, “Considering the safety and health of our team and their families, we are devising suitable workflows that allow better efficiency while working within the safe confines of our homes. We ensure that stringent health protocols are given priority and implemented fully on shoot sites.”
The pandemic restrictions have sped up the adoption of new tech systems.
Today, experts are sure that the sector’s future lies in the virtual production set-up. Stuck in their projects, filmmakers and creative directors were rescued by advanced technologies that enabled them to set up their home offices. In fact, these technologies are capable of converting any room into a studio ready environment.
Just to give you an overview of the kind of tech we are talking about, take the example of Shahrukh Khan’s movie Zero.
In this movie, the entire chimpanzee scene was actually shot in Mumbai. But it was shown as if they were in the US. It was all done by employing a virtual production and motion control technology called ‘Techno Dolly.’
Game development companies such as Unreal Engine and Unity Technologies are the two main players that are aiding filmmakers in their projects lately. In a media statement, commenting on the tech evolution in the sector, Red Chillies COO, Yadav, says that the technologies of gaming engines like Unreal or Unity Engines are going to play a significant role in this industry. They will be replacing the traditional software that has been used in the industry till now.
“Introduction of new technologies such as virtual production, real time compositing and the new entrants in the software space such as Unreal Engine are the potential disruptors and game changers for the VFX and animation industry,” also adds Roongta.
Indeed, this is what is happening now.
This advanced technology ensures that there is no green screen required for movie production instead, readymade environments or backgrounds are used. Now, the team has to simply use these backgrounds and work on other parts such as manipulating the lights and colours. Which is definitely cheaper than the traditional work style. You can experience such backgrounds in movies such as the Lion King and Black Panther.
Moving forward, the adoption of virtual technologies is going to escalate even more. Market studies state that even when restrictions are eased, some of these virtual technologies are here to stay. It is expected that over the next five years, 20 to 25 per cent of Indian studios would have adopted such technologies.
There is immense potential to scale up their operations in India
Here is a fun fact.
In 2020, the Indian animation sector alone, clocked 70 to 75 per cent of revenues from its international clients.
The EY analysis says, “As OTTs increasingly commission domestic projects (original digital programming was around 1,200 hours in 2020 and is expected to approximate 2,500 hours in 2021), domestic contribution to revenue is likely to increase to 40 per cent with international works contributing around 60 per cent in 2021.”
One of the major reasons for this is that the prices of Indian VFX or animation artists are reasonable—around 1/5th of their western counterparts.
The latest trend is the rise of the captive centres of international studios in India. Foreign studios are more interested in either opening their own studios in India or investing in existing Indian companies. This is not only bringing in investments, but also adding to the creative and technological talent pool in India.
On this Roongta says, “India has been a crucial outsourcing partner for large Hollywood studios in the past. However, the trend has changed. Most well recognized global studios such as Technicolor and Double Negative have large offices in different parts of the country. Outsourcing was possible in India because of the availability of cheap talent. This is not the case anymore. For VFX studios and content creators, the larger opportunity lies in the volume of content that is being produced in India.”
According to him, India is already a hub for visual effects with most big-ticket Hollywood films’ VFX being delivered by studios operating in India. “According to me, India has the possibility of becoming a hub not only for VFX but also for novel technologies such as Virtual Production, “he further adds.
Shreedhar has similar thoughts, he points out, “The biases are changing,” he says, “India was seen as a cheap alternative to outsource hygiene or less creative work like thread removal, rotoscopy or keying but not anymore,” he continues, “There is a growing audience for fantasy, and India should encourage free-thinkers, dreamers and writers of fantasy to come up with more original content. The more thinkers we have, the more creative work will come to India.”
Also, homegrown stories, characters and domestic content are also providing a much-needed boost to the sector. That means that the studios are transitioning from service mode to IP ownerships of original content. For instance, Green Gold has partnered with Voot Kids for 21 exclusive Bheem movies. Cosmos-Maya announced their IPs for Dr. Tenali Rama, Captain Bharat etc.
This is what makes this industry stand out more than the other sectors, opines Roongta.
“There is no scarcity of inspiring stories from every corner of our country. To add to this, we have the ability to create and showcase these stories through the audio-visual medium. Regional content growth has been phenomenal in the past few years, “he avers.
Shreedhar says that the industry should focus on local productions with a global appeal as this will rewrite the way that we are perceived internationally. “It’s essential to encourage a new breed of creative writers and thinkers to develop content that is heavy on VFX,” he says.
If it keeps up the momentum, this sector can play a larger role in India’s US$5 trillion economy ambition. Also, this sector can create 75,000 to 125,000 direct and indirect jobs by 2025.
But this bright future comes with its own set of challenges
It is a no brainer that with increased online content consumption, there are a myriad of opportunities to make India the hub for visual effects, film production and animation.
But this growth and demand come with their own unique set of challenges.
The biggest challenge is the availability of talent in terms of volume. For example, the process to complete and deliver VFX sequences for films requires a team of a minimum of 150-200 artists working round the clock.
Roongta also points out, “Talent is currently spread across various parts of the country and because of content security issues, it is not possible to always work remotely as it poses certain risks such as piracy.”
Adding to this, Shreedhar says, “The key challenge is to change the opinion that we are only good to handle low-cost hygiene projects.” He believes that with the advent of international OTTs, we have more opportunities and exposure. There should be encouragement from the government and financial support from investors to recreate and visualise contemporary versions of stories from our endless wellspring of mythological sagas.
The other challenge to deal with is on the tech front. As technology is changing at a rapid pace, driven by changing consumer patterns and the availability of unique tech for production. The need of the hour is to educate stakeholders and clients on how to best use this technology to elevate the quality of and speed up the delivery of their productions.
For the biggies in the industry, this change is easily achievable. But for small businesses and production houses, it can be daunting.
Roongta reflects, “Unfortunately, content creators in India aren’t early adopters of technology. It takes time but we strongly believe the industry will learn to adapt to changes faster in the future. It is the responsibility of studios and tech evangelists to educate our clients about the benefits of such technologies.”
Also, major upgrades are needed on the education front to nurture new talent in the form of state-of-the-art media institutes. “Besides that, industry players can get benefits from more tax breaks, Special Economic Zones (SEZ) should be created by the government to boost the industry, construction of cinema halls across the country should be ramped up and India should be highlighted and promoted as the preferred global destination for production and post- production services,” says Roongta.
Overall, there is much need to focus on developing infrastructure, creating a lucrative incentive structure, and building intellectual capital to boost our VFX and animation industry.
There are many untapped possibilities in segments other than entertainment
These unprecedented times have put every trend on the fast track.
Today, due to stringent social distancing norms, all kinds of sectors such as retail, events, automotive, education, sales and all online solutions are converting themselves into hi-tech businesses.
And animation, VFX and gamification are making them safe and lucrative for their consumers as well.
“The virtual experience spectrum has become a super large space today with multiple innovative companies working towards creating bespoke, Cx technologies to provide the end user or customer with a larger than life and detailed experience,” they add.
So, there is no going back, and businesses are forging ahead on their virtual journeys.
“Virtual experiential technology is certainly the aspect which most organisations across the country are betting on to showcase their offerings, given the state of the pandemic in the country today,” says Jain. “Multiple VR/AR and AI tech solutions start-ups are cropping up in most hotspots and are being acquired by the large industry players to provide a cutting-edge extension to the already adopted tech by these organisations, “he further adds.
The adoption of digital technology and the shift to the virtual arena are a necessary corollary of these unpredictable times and Pragya Jain, an artist, has done just that by using virtual technology to display and retail her art through the virtual gallery format. “Going virtual was necessary,” she says, sharing her experience of the major disruption in her workspace which compelled her to adopt Terapact’s virtual gallery solution.
“By leveraging Terapact’s Virtual Gallery platform, I’ve now been able to allow customers from around the world to experience my brand and my art from anywhere and purchase it, in an immersive experience that replicates the journey they would have had if they had actually visited a physical gallery, “she adds.
In terms of ROI, these solutions provide abundant returns.
Pragya is also expecting the same. Enumerating the advantages of this, she says, “ROI from visibility of my artworks via a virtual art gallery is limitless. In terms of finance, this platform helps me break even with 1 to 2 transactions and that too without paying any rent. It is a simple, fast and easy model to subscribe to or even purchase an outright license for. Since the launch, which was on April 10, 2021, I am seeing an average of 10-15 visitors daily, who of course come due to the digital and social media campaigns directing them to the virtual galleria.”
Excited with the response, Jain is in the process of developing immersive 3D models of her products which are inspired directly from her work and is gearing up to launch a virtual store of her brand ARTychoke, this quarter.
As per the prevailing trends, in today’s scenario, when consumers consider purchasing something online, they expect social or visual proof of it and that is why VFX, and animation are needed—to inspire and tempt consumers to buy these products.
Jain of Terapact adds, “VFX is a component of Virtual Reality (VR) and with VR, whether its online gaming, virtual walk throughs, the e-commerce 3D products experience and even education, every type of business is adopting some form of VR tech to enhance their online presence which in turn will result in a transaction, hence impacting a very large percentage of profitability for any business or enterprise.”
Can VFX and animated effects take over the offline experience as well?
Currently, virtual production is mitigating certain challenges that have cropped up due to the outbreak of the corona virus. It is enhancing production planning, increasing shooting efficiency, narrowing the number of expensive reshoots and providing a big boost to the Indian VFX and animation sector.
And while virtual production is not brand new, a combination of industry, tech, and macroscopic developments is accelerating the abundance and growth of opportunities.
“It’s a golden period for content and animation and will continue to over index!” states Max Madhavan, Founder and CEO at Assemblage Entertainment. “The past fiscal year has been favourable for animation, in spite of and even somewhat due to the pandemic. The number of independent OTTs in the world and in India have increased dramatically, and the pandemic has led to a surge in demand and consumption of more content, “he adds.
The players in the field are replete with and at the same time excited about this growth. This has led to the growing popularity of VFX and the animation genre. It has also engendered the setting up of advanced WFH formats, increased accessibility, led to the jockeying between game engines and studios, increased competition between streaming platforms and film studios and last but not least, despite the halt of physical production, there has been no limit to content production due to this growth spurt.
Creative leaders have shown that virtual production can yield incredible outputs—some of the major blockbusters in this genre are Avatar, Baahubali, Avengers Endgame and so on.
These were all created with the use of the modern virtual tool sets of visualization, motion capture, hybrid camera, and LED live action, which many are yet to adopt.
Also, going beyond the entertainment industry, these techniques are now also penetrating various other sectors to support and upgrade them and create a unique sales experience.
“More brands will rely on telling a better story online and go beyond just the web pages that every brand has used in the last decade. Some industries will see a more prominent shift towards virtualization of their shopper experience, while others will use it as a powerful new way to improve the in-store customer experience. We’ve built a robust suite of products to enable brands to do this,” says Jain of Terapact.
Like every new technology, there will be an initial learning curve, but the costs of execution will ultimately come down over time. SME Futures