FICCI-KPMG-Report-13-FRAMES

The power of a billion: Realizing the Indian dream 153
VFX in India
The VFX industry, a rapidly evolving segment in India, is
estimated at approximately INR 7.7 7 billion and can be
broadly classified into the following verticals — movies,
TV shows and advertisements. As the segment is still at a
nascent stage and domestic consumption remains limited,
with mainly low-end work being carried out in India, there
is considerable dependence on outsourced projects from
the US and the UK. However, the domestic market is now
witnessing bigger budget film releases and ad campaigns,
for which players have increased spending on VFX so as
to provide an enhanced visual experience for viewers. The
segment registered 35 percent 7 growth over 2008-2012
and is expected to grow approx 20 percent 7 CAGR to reach
INR 19 billion in 2017.
VFX Domestic / Outsourcing Revenue Split
Source: KPMG in India analysis and industry interviews conducted by KPMG in India
“
As the team leader @ Technicolor India,
2012 leaves no room for doubt that India
has ascended to the top of the pyramid
when it comes to CG Animation/VFX
productions. MPC’s Life of Pi, Prometheus
and Skyfall; DreamWorks Dedicated Unit’s
-Madagascar 3 and Rise of the Guardians;
Technicolor Animation’s services in Mattel’s
Barbie& the Pink Shoes, and award winning
episodic work for Nick on Kung Fu Panda
and Teenage Mutant Ninja Turtles – is proof
enough!
“
Scan the QR code to hear more from Biren
- Biren Ghose
Country Head,
Technicolor India
Key trends
VFX budgets
On average, Indian movies have limited budgets for visual
/ special effects. In India VFX budgets are considerably
below international benchmarks, even as a percentage of
production costs. The VFX budgets for Hollywood movies
range from USD 3 million to USD 9 million 8 , which could
07. KPMG in India analysis
08. Anand Rathi research report - India Media and Entertainment, August 2012
cover the cost of an average Indian movie. However, VFX
budgets for Indian movies, including regional cinema, are
showing an increasing trend and are expected to boost the
segment. Also, spends by the advertising industry on VFX
have been increasing.
Outsourcing of VFX work to Indian
studios
While outsourcing of animation to Indian studios has a
relatively longer history, outsourcing to Indian companies
of visual effects/post-production/3D conversion work of
Hollywood films has gained ground in recent years. The
movie ‘Life of Pi’ changed the way VFX is employed in
films, it has not only consolidated the belief that VFX can
be used as more than just a gimmick, it has also managed
to captivate audiences worldwide with imagery of oceans,
realistic animals, etc. Almost 40 percent of the visual
effects work was done out of Asia, primarily India and
Malaysia. This was a landmark film for the industry and the
region in many ways which hopes that the quality of work
will be a catalyst for the growth of the industry in India.
To do work for Hollywood productions, however, requires
constant investment in people and technology and the
larger studios would need to ensure sustained investment
over the short term in order to reap benefits over the long
term. Also, there is a dearth of artists with advanced VFX
skills, reflecting in high recruitment and training costs.
Testing overseas shores
To overcome the challenges of limited domestic demand
and residual skepticism of production studios in the US
or the UK in outsourcing work, many dominant players
in the VFX space (Tata Elxsi, Prime Focus, Reliance etc)
have established overseas offices in order showcase their
capabilities and service clients better.
3D conversion market
Hollywood is witnessing a surge in the production and
popularity of 3D films. Over the past three years, half of the
top 20 grossing films in the U.S. were released in 3D. 8
Number of Hollywood 3D films released
Source: Anand Rathi research report - India Media and Entertainment, August 2012
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