The Future of Animation, VFX and the Gaming Industry

With the unprecedented growth in the animation industry over the decade, it is important that we shall spare some time to reflect on the exponential growth of the animation, visual effects (VFX), and gaming industry globally with special emphasis on the Indian Animation Industry.

The global animation, VFX and gaming industry is on the rise due to the increasing demand for animation and multiplication in the targeted broadcasting hours by cable & satellite TV. Some other factors driving the surge in demand could be the availability of low-cost internet followed by the penetration of mobile devices in the market and the rising popularity of streaming video. Additionally, the demand for Animation and VFX content to power immersive experiences such as Augmented Reality (AR) and Virtual Reality (VR) has also witnessed an escalation. Through this blog, I would like to share some facts and figures on the Global Animation Industry.

According to a survey report, the global animation industry is estimated to have reached US$ 259 billion in 2018 and is expected to reach US$ 270 billion by 2020. Research studies in the animation sector suggest that, globally, most of the segments in the animation industry are growing at a year-on-year (Y-O-Y) growth rate of 2%. The traditional form of content viewership could be one of the major drivers for this sharp increase in streaming video consumption. The size of the global streaming market for animation content is estimated to be US$ 2.9 Billion in 2018 growing at an annual rate of 8%.

One of the fastest growing segments of the global media and entertainment market, the Animation, VFX & Gaming industry, is experiencing a rapid advancement of technology. The production of animation, VFX and gaming is taking place in a distributed-mode globally with U.S.A & Canada leading the global markets, respectively. Production work is globalizing with tax incentives, regional low labour costs and less computing costs. Consequently, companies have been forced to reduce costs and set-up facilities in low-cost regions, a model which is increasingly being tapped by content producers.

Research reports also point out that amongst Asia-Pacific (APAC) region, Japanese animation market is estimated to have reached US$ 1,842.91 Cr. in 2017, consequential to the foreign animation boom and business diversification policy followed by most of the players. After Japan, South Korea could be the next animation hub of APAC region where the industry is estimated to be valued at US$ 853.38 million in 2017 out of which US$ 617.85 million is attributed to the online animation market. The size of the online animation market in South Korea is expected to reach US$ 853.38 million by 2020.

To be more precise, the Indian Animation and VFX industry is estimated to have reached US$ 1.15 billion in 2018 from an estimated US$ 928.60 million in 2017, growing at a CAGR (Compound Annual Growth Rate) of 18.60%. During the time-period 2017-2021, it is expected that the segment could grow at a higher CAGR of 17.40%. I believe, that the various factors which lead to such a growth rate could also result in the continued growth in outsourced services and large scale use of animation and VFX services in the domestic television and film industry.

With the growth focus on the ‘kids' genre’ and the rise in dedicated T.V channels for them, the Indian animation market could be expected to rise. With growth in the advertising industry, the share of animation driven advertisements could also be expected to grow. The gaming industry in the country is estimated to have reached US$ 679.60 million in FY18 from an estimated US$ 482.93 million in FY17, at a CAGR of 35.10%. Most importantly,gaming companies have also shifted to Augmented Reality (AR) and Virtual Reality (VR)-enabled games.

The Indian Animation, VFX and Gaming Industry is on an impressive growth path. In the future, it is expected that these industries will grow at a rate faster than the global average rate. Growth is expected in almost all the segments due to several factors such as several players entering the segment and domestic companies testing out the waters. The rural region is also seen to be a highly profitable target in terms of the demand for animation. The government is also taking several state-level initiatives to encourage animation industry. Considering all the above factors, we can say that the animation, VFX, and the gaming industry is on its boom within India and outside.