Concept Arbitrage: Infosys
Check other articles in the series...I wrote an article last Fall called Indian Anime. If you are looking for another multi-billion dollar outsourcing phenomenon, animation could be one.
The global digital animation industry is poised to grow to $70 billion by this year. The Indian animation industry is expected to reach $15 billion by 2008. Big numbers, pointing to India’s next big outsourcing boom. Labor arbitrage numbers are absolutely fantastic: $125/hour in the US versus $25/hour in India for animators. $75 Million to $175 Million for a full-length features film in the US versus $1-$15 Million in India.
From a venture investment point of view, the market opportunity is squarely in the outsourcing space, not in title production.
Down the road, this may change, but in the immediate term, Animation is a straightforward labor arbitrage opportunity.
There is, however, a skill-base developing in India of animators and animation film-makers. The first ever Indian animation film, Hanuman has done okay in the box office. There will be an opportunity to move up the value chain, and create India’s own genre like the Japanese Anime in the future.
This segment is part 9 in a 24 part series Summary Trends →
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Sramana
I am in the trenches of content creation in India from the last three years.
The service sector is finally hitting its stride after years of struggle.
What excites me is that “product” content will happen out of India for the global market quicker than any software product.
Mainly, it’s not a zero sum game. If you have a nice animated film and so does pixar, there is space for both of you on some platform or the other.
Second, “coproductions” exist. You can co-develop IP with a US/Europe frontend and have an even share of the upside. Imagine that in a tech company !
And mobile content increases the labor arbitrage imperative. You cannot make a short animated film for under $10,000 anywhere but in india - and this is what the revenue model will support.
What remains to be seen is when VCs might back content plays (a hit driven business backing another hit driven business) and what skills they would need to select good content. This is where we have got stuck in the past.
But with all the money chasing deals in India, I personally believe some of the biggest plays could be in content if VCs step out of their traditional mindset and adopt a “project finance” mindset on content products. For this they will need content experts to help them select good ideas.
Think Terry Semel+Yahoo. Time for Sand Hill to get in bed with LA !
Completely agreed.
Read The Timer and Disney and Globalization.