Indian animation industry moving up the value chain

Abstract

Animation is a $70B global industry and growing. India, with approximately 150 animation studios offering relatively cheap production costs, is poised to become a player in this trade. The animation industry in India is worth $285 million and is expected to grow 35% every year to reach $960million by 2009, according to NASSCOM. However, this industry currently accounts for only a little over 0.01% of global animation industry. Primarily, Indian animation studios have engaged themselves in outsourcing works arising from the global majors like Disney and Pixar. This work proposes to answer the following questions: Will Indian studios move up the industry value chain to take on more creative pre-production work, rather than just labor- intensive post-production order filling? And, most importantly, will they manage to create original content, by producing or co-producing lucrative movies and television shows, and capture the residual benefits from licensing and merchandising that the world s largest studios enjoy? If so, how? And which companies will succeed? As a frame of reference, Mrs. Anita McGahan s How industries evolve and Porter s model of Competitive advantage of nations framework have been used to analyze the Indian Animation industry. The industry is identified to follow the pattern of creative change. Currently the industry life cycle is in the end stages of fragmentation and is moving towards a dominant model. We have attempted to predict the dominant model that will be followed by successful firms in the shakeout stage. Also to understand the benefits of the eco system on industry evolution the case of Japanese animation industry has been analyzed. Final recommendations are given for the company to succeed in the shakeout and also for the industry associations to make policy level changes.