Animation Business Dynamics For An Evolving Global Market

Devdatta Potnis Oct 01, 2021

Animation in India has come a long way from simply being a service provider market for big name international animation studios to becoming a hub for original IP production in south-East Asia. What the global industry took over 7 decades to achieve, the Indian segment achieved in short of 2 decades. Naturally, the segment was primed for major financial interest, especially from a high-roller investment standpoint. But what often leaves heads in a twist, is how production companies in an industry like animation that doesn’t seem as labor or cost intensive as most physical manufacturing concerns invite millions in investment from global venture capital entities no less, and therein lies the magic of animation not just what one witnesses on the screen, but also what goes behind! Maintaining this magic within and around the business is a constant challenge that this industry has been grappling with.

Creativity drawing upon from audience trends could be the nutshell in which we define the core of animation – we keep our fingers on the pulse of what works with the audience of our desired market, conceptualize projects and then partner with broadcasters/distributors/OTT streaming platforms (often this can be the preliminary step too). In a sector such as this, we need to take care to ensure a strong sense of seamless alignment between sales and delivery pipelines. Animation is an extremely timeline oriented business – deliverables for shows and broadcast partners due by, say end-of-year, even if the show release might be scheduled for much later, must be met with ideally 2-3 months in advance to allow for creative back and forth and any re-hauls where required, and accordingly the production schedules and work delegation are set in stone, months or sometimes even a year in advance. Transparency in communication must be maintained delicately to manage customers who are essentially each other’s competition. Only with such processes in place and by allowing space for creative feedback, we can really set our content apart from the rest of the market offerings. So how does implementing all this in the organizational culture divert towards a studio’s viability from an investment-attractiveness standpoint and how do we translate these processes into a financial structure that facilitates these goals?

The studio will learn to adapt their strategies for choosing projects weighing in their strengths and closely evaluate the revenue potential of each project, basis which it will decide whether to even initiate the project or not in the first place. Some IPs are really huge and popular from a brand capacity and need the best mileage while being equally profitable. There have been situations in the past where an IP performed exceedingly well in terms of its audience ratings, but it might not have brought in as much profit as expected. It all comes down to bringing a collectivist mindset into the business unit that understands where that balance lies - keeping costs down, investing in technology to process faster, better and such sort of mundane industry agnostic basis for success blended into the creative business of animation, without the business losing its spontaneity and charm is a challenge and managing that tight rope walk on a daily basis is critical. Focussing on creating a diversified creative portfolio, in order to not get too dependent, the star IP/s is crucial. It may sound utopian, but a concerted effort is indeed needed for this, which is very essential in the long run.

Concurrently, the studio should look into diversifying our service portfolio to its absolute possible extent. With the huge growth seen by the digital streaming space in the last 3-4 years, new avenues have been created across OTT platforms and social media as well for any kind of content creators to develop stuff basis the audience and the platform they’re serving the same at. Kids content producers are no longer limited to linear TV channels for revenue streams. Studios are making use of the dual monetization model – where shows release simultaneously on TV as well as OTT platforms, which is a privilege afforded mostly to kids content unlike most mainstream adult-oriented content nowadays. Indian digital kids channels like WowKidz started their brand journey with AVOD streaming on YouTube and grew to nearly 70 million subscribers, with their content now available on all major streaming platforms in over 100 countries. Having such a digital brand with a strong presence across video monetization-based social media further paves the way for potential brand collaborations in the licensing and merchandising space as well.

Not in the least, the size of the studio and the its business reach – in terms of categories as well as territories – weighs a fair bit into their ‘invest-ability.’ A company like Cosmos-Maya finds itself in the unique position where it has been one of the earliest entities in the animated IP creation space in India, and covers the lion’s share of the same, with over a score of projects domestically and internationally – all factors discussed above get subsequently bundled together to invite consecutive global investors to work with a controlling stake in the company and see over and above their expected returns.

The Author is Devdatta Potnis, SVP Revenue and Corporate Strategy, Cosmos Maya