Animation industry registers 25% year-on-year growth

The Philippine animation industry posted a 25 percent increase in revenues for 2005, according to data provided by the National Statistics Office. Revenue increased to $52 million from $40 million in 2004.

The results were culled from revenues generated by registered members of ACPI. ACPI membership has also increased in recent years with 35 organizations, up from approximately 20 production houses when the association was established in 2000. According to Grace Dimaranan, CEO of Top Peg Animation and Creative Studio, Inc., and president of the Animation Council of the Philippines, Inc. (ACPI), a national association of animation industry players and stakeholders, the 25 percent annual growth is a conservative estimate in her view, given the recent boom in different animation verticals such as game development, flash animation, computer animation and mobile content.

Although the industry is growing, Dimaranan said a number of competitive threats could trim growth. She said that India and China are the industry’s most important competitors in the global market for outsourced animation work, which was estimated to be worth $72 billion in 2005. The Philippines trails India and China in terms of revenue. According to India’s National Association of Software and Service Companies (NASSCOM), India’s animation industry generated $285 million in revenues in 2005, while China captured $604 million.

One of the principal factors accounting for the India and China lead is the low cost of animation services in those countries compared to that in the Philippines. Clients who value low cost over creativity send work to India and China, rather than the Philippines. While cost is important to all clients, it is not the first consideration when outsourcing work, fortunately for the Philippines.

“In terms of creativity, there is no doubt that Filipino animators are highly preferred by clients to their Indian and Chinese counterparts. The earliest animation studios here have been outsourcing work to foreign clients since 1980s — and this experience is something that India or China cannot duplicate,” Dimaranan said. Because Filipino animators cannot compete on price, they leverage their track record for creativity to sell services at a premium, and to win contracts involving higher-value and knowledge-based animation processes.

Aside from the cost differential, Dimaranan said that growth of the local animation industry’ is also constrained by the thin talent pool.

“There are a lot of global opportunities. Unfortunately, the bigger the market, the more we have to prepare a sufficient skilled workforce to meet demand,” Dimaranan said. To beef up the talent pool, ACPI has partnered with the Technical Education and Skills Development Authority (TESDA) to institutionalize animation training beginning with the development of a modern curriculum, training regulations and assessment standards that are aligned with industry requirements. That work has been completed, and is available for assessment and incorporation into course offerings by academic and training institutions.

The ACPI also conducts road shows throughout the Philippines to promote animation as a serious career to incoming college students and parents, and to offer help in the form of trainers and assistance in developing an industry-focused but customized curriculum for academic institutions. ACPI is hopeful that their efforts will translate into an increase in the number of animators from the approximately 6,500 at present to 25,000 by 2010. The need for a deeper pool of qualified creative talent is becoming increasingly urgent due to an increase in global demand for newer animation verticals, including game development.

Despite serious obstacles to growth, some ACPI members are moving beyond contract outsourcing to produce original content. The risks are substantial. “Producing a 22- to 30-minute show could can cost anywhere from P2 to P3 million. To sell your work to a network, you need to make at least one series, which is 13 shows. So you can just imagine the risks and resources involved,” said Dimaranan.

The industry produced the TV series Panday and Captain Barbell in the 1980s, both of which were made manually. These were followed by Kwentong Kayumanggi, Ibong Adarna, Isko sa Animasia, and a few more animated shows. Top Peg’s Tutubi Patrol, an animated adaptation of the value-oriented book series for children, was the first full series created using computer-assisted animation processes. Since its release in 2004 to 2005, it has been shown locally and exported to Indonesia, Hong Kong and Germany, with subtitles. Following up on that initial success, Top Peg is now working on its second original series, “Jobert,” which is being fully funded by an investor.

As part of its promotional and capability-building efforts, ACPI has also partnered with the Center for International Trade Expositions and Missions (CITEM) in presenting a conference track on Digital Animation at the e-Services Philippines 2007 global sourcing conference and exhibition.

“We have been a staunch supporter of e-Services Philippines since its inception. This year, we are focusing on digital animation in response to the many inquiries that we’ve been getting on the newer forms of computer-assisted animation.” Topics to be covered during the track include: film animation and CGI, mobile animation and game development, and voice acting.

e-Services Philippines takes place from February 15 to 16, 2007, at the Edsa Shangri-La Hotel, Mandaluyong City. The Digital Animation track will be held on the second day, at the Batanes Rooms 1 and 2.

For more information on ESP 2007, please visit www.e-servicesphils.com or call CITEM’s IT Services Division at 831-2201 loc 301, 251, and 212.