Mumbai: Animation has come a long, long way since the first public screening of animation with cinematic apparatus that used hand-painted sequences on celluloid strips. Today the global market is worth about $50 billion and is projected to become a $70-billion industry by 2007.

Though global figures looks quite impressive, the share of the Indian animation market is a mere $0.6 billion, with just $20 million in export. It may be growing year on year, but is not going anywhere. The Indian animation sector is, at best, at the crossroads, while its better-off cousins — IT and business-process outsourcing services — are consolidating their scale, reach and focus, and continue to create ripples in the global market.

The industry is beset with problems of size and scale, lack of global presence and marketing muscle, low margins, time and quality issues, low level of supply of quality animators, low entry barriers, and poor domestic demand to give the much-needed boost for such a fledgling market. Several companies of late have shut shop overnight, merged with parent/larger companies or scaled down, and most stuck in the sub-$1-million scale, even after a decade of being around.

So while the world ''outsources'' more or less everything to India, has animation missed the bus? Clearly there are two types of companies today — the first category catering to the typical back-end ''outsourcing'', and the second having core competencies in original storytelling and indigenous character development for local market fare and co-productions.

The former is by and large denominated by low-end or relatively low-value work catering to 2D animation. On an average it costs about $30,000-75,000 for an average episode produced in India as compared to $100,000-150,000 or so in the Philippines, Taiwan or Japan. A standard 22/24-minute episode if made in India costs 70% less compared to the production costs in the US; Disney, Sony, DreamWorks, Warner Bros and Pixar being some international firms that are quietly reaping the benefits of this cost-advantage.

India does remain a preferred destination in spite of very strong competition from Taiwan, the Philippines, Japan, South Korea and Mainland China. This despite the fact that these countries have been servicing the outsourcing needs of the West for over three decades, while Indian companies only entered the fray in the mid-90s.

The Indian animation segment traditionally owes a lot to the advertising and TV fraternity where TV commercials and brands accepted character illustrations like The Amul Girl, Gattoo (the Asian Paints mascot), The Handiplast Boy, The Bata Bubble Gumme, 30-second ''animercials'' for brands like Hutch, Amaron, Orange, All-Out Mosquito Repellent, 7-Up, Kellogg''s, ICICI, Morten, Good-Night and Vicks. This proves that animation is now an acceptable medium to convey brand properties and values.

The various mythological films and serials also spun off cartoon forms to educate the masses and complement efforts of organisations like UNESCO, UNICEF, Doordarshan and the ministry of health and family welfare to address social issues using the more benign cartoon and animation format to deliver a social message.

Unfortunately the same agency fraternity has not been able to grow the market mainly because animation for them is still seen as a distinct post-production and visual effects process rather than as an integral component of the master production process, thereby making it prone to severe budget restrictions and low attention value. Ironically animation companies depend on these ''sponsors'' to give them steady work while at the same time make them prone to being squeezed for margins and back-breaking work in tough times.

The plethora of interest groups like TASI, APAI, ASIFA-India and Nasscom, and concomitant duplication of efforts and a disjointed national image that is conveyed are not helping either. In the 2002 Annecy Festival in France, the Oscar and in Cannes, the South Koreans had organised their animation studios under one umbrella and stall.

The studios were competitors to each other in their home country (like in India) but projected Korea as a major outsourcing hub (unlike in India). This ensured that Korea as a country had a better chance of grabbing business than any other individual entity working in isolation.

The nascent Indian animation market must find ways to move up the value chain and get out of the current mindset by adopting a three-pronged strategy:
1. Original character development and storylines for the significant domestic and cross-cultural audiences
2. Moving on to 3D/digital graphics, flash-and-live action animation and taking on the resultant high-end outsourcing work available from US studios as they themselves quite clearly look to pare costs. This can be made possible by a distributed workflow model, which in turn has been made possible by common hardware, database systems, tools and off-the-shelf software suite, enabling artists scattered across the world to send in scene files and have them rendered into finished frames centrally.
3. International co-production, whilst an emerging option for sharing risks and resources, is not a particularly new idea. It is in an experimental stage even for the mature Indian film industry. What co-production and owning intellectual property rights does to companies is to leverage alternative revenue streams and footprints that come with the turf — terrestrial, video/CD releases, print, merchandising, licensing, first-run cable and theatrical rights. This will provide the necessary commercial environment for development of character, experimentation and even co-production.

It is in these areas that tomorrow''s opportunities lie and where India can become the ''most preferred'' offshore facility for such type of high-end/high value work. These strategies quite clearly will put them on a path of achieving a critical mass that has eluded them so far — something which just 2D outsourcing will never be able to put it in the big league. There are companies in India that can ramp up and manage from 10 to 100 people in a month and to 1,000 in six months for the right kind and size of a project, but, alas, such projects continue to be the exception rather than the rule.

Today, somehow, several TV channels have stepped in and provided the much-needed fillip to the struggling industry by running local animation fare. Even global and domestic brands like Asianet, ESPN-Star, Sony Max, Discovery, Nickelodeon and TNT Cartoon Channel have found ready acceptance of local animation fare among their respective target audiences (Tenali Ram, Hanuman, Pandava).

Turner International''s Cartoon Channel is currently telecasting episodes of Adventures of Chota Birbal while a mainstream entertainment channel has commissioned Bheema Kheema, India''s first 52-episode series for children to be aired from mid-February 2004.

In the US, the biggest market in the world, a recent partnership between IT giant IBM and independent producers for CG feature film production, economics of scale and size and workstation technology will radically alter the dynamics of the animation market yet again. And it is true that mega-size projects ($60 million-plus) and revenues determine who does what work where.

It is no secret that Pixar''s (one of the few independent computer-animation companies) five animated full-length feature films have earned it more than $2 billion from worldwide box office. And sample this. The ''hit'' of tomorrow (Foodfight, produced by Larry Kasanoff, TDRL, involving 138 speaking ''main'' characters, 6,254 ''secondary'' characters, 174 sets that include 5,000 ''buildings'' and 12,000 lights) was ''filmed'' in the garages of Santa Monica and in the by-lanes of Taipei and Mumbai (and not in the backlots of Shanghai and Hollywood) at half the cost of a typical Pixar full-length CG feature film.