Shakaib Feroz, M.

Saad Afridi, Syed Qamar

2011
and Maha Jawed IBA 6/8/2011

Animation Industry of Pakistan

Contents
Overview of Animation Industry.................................................................................4 Research Methodology:.................................................................6 Scope of Research.............................7 Production Process:............................8 Factor Conditions:............................12 Human Resource..............................12 Technology.......................................................................................................14 Software Applications:............................................................17 DEMAND CONDITONS......................19 Featured Film Industry....................19 Trend of Globalization and outsourcing.....................................20 Scope of Pakistani Animation..........20 Potential of GAME Pakistani Animation.........................21 DEVELOPMENT..................................22 Advertising/Commercials...................23 Market Trends of animation...............24 Local Animation Masterpieces...........24 Firm strategy, structure and rivalry...........26 Culture and environment...................26 Barriers to entry....................................................................................................26 Hiring and training................................................................................................27 Rivalry...................................................................................................................27 Animation Companies in crisis..............................................................................29 Indian animation industry - an overview...............................................................32 Competitive advantages of the Indian Animation Sector......................................32 Related and supporting industries............................................................................35 Computer hardware industry................................................................................35 Software Industry..................................................................................................35 Page | 2

Film industry/ Cinema industry..............................................................................36 Ad Agencies...........................................................................................................41 Gaming Industry....................................................................................................42 Media Channels.....................................................................................................42 Recommendations....................................................................................................43 Recommendations

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Overview of Animation Industry

Animation industry is going through a spectacular growth all over the world. The worldwide media industry, growing at an average of 6.6% p.a., is expected to reach $2.2 trillion by 2012 (Hollywood Reporter, June 2008). A growth is media industry automatically signals a growth in animation industry, as demand for animation, especially in the entertainment sector, seems to be steadily growing every year. While more than half of the top 20 grossing films of 2007 were wholly or partially animated, this ratio grew to 7 out of top 10 grossing movies in 2011 (as of 31 May, 2011). With the demand rapidly increasing, and with excess supply and increasing costs in the developed markets, many animation producers have started to outsource a significant amount of production to the third world. This has led to the growth of animation industries of a number of developing countries such as India, China, Malaysia, etc. In 2007, Indias animation and gaming industry grew by almost 27% to $325 million and is expected to reach $1 billion 2012. (The Hollywood Reporter, May 2008) Looking at these figures, business students in Pakistan should naturally be inclined to ask, Where does Pakistan stand in animation, if it does at all? With these figures in front of us, and indications of some serious animation studios working in Pakistan, we set out to look at this small sector more closely and see how it could be taken further. Animation is relatively young in Pakistan, and can be classified as an informal sector. There are currently three studios that are comparatively more prominent, and there are a number of smaller studios operating across the country. The currently important players in the Pakistani market are ICE Animations (operating under the banner of Lakson Group), Sharp Image Animations, and Cult Productions. The other two important players of the past have been Post Amazers (operating under the banner of AKD Group) and H2O Animations. Post Amazers closed down a couple of years ago, while H2O is currently going through some very serious financial troubles and is not likely to make a recovery.
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Animation is produced by creating a sequence of images (called frames) showing incremental motion and then playing back those images at a certain speed to create an illusion of motion. Animation is traditionally categorized in the following two types: character animation and effects animation, the terms that have morphed with time into animation and visual effects. The global convention is to refer to character animation as animation, but these conventions do not hold true in Pakistan due to a fundamental lack of awareness. With time, other types of animation have been defined based on the production technique used, but for the purpose of simplicity, we will refer to them as techniques rather than types. These techniques are as follows: Classical / traditional animation This was the technique most commonly used before the advent of computers, and is still in popular use because of its inherent artistic appeal. It involves handdrawing drawing every frame of animation on a paper or a sheet of celluloid acetate. It is also known as cel animation or hand-drawn animation Cut-out animation This technique uses flat characters and environments cut out from paper or cardboard. Stop-motion animation Stop-motion involves incremental photographing miniature models of characters and environments in motion and then playing them back at the required framerate. 2D digital animation This simply employs the use of digital tools to create the equivalents of handdrawn or cut-out animation. 3D animation

3D animation can be described as the high-quality, digital counterpart of stopmotion. Since its inception in the 1980s and 1990s, it has grown to become the most popular technique of animation, mainly due to the added capabilities offered by the precision of rapidly advancing computer hardware and software. This is enabled animation producers to achieve exponentially increasing levels of subtle

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acting and photorealistic rendering than was possible with any of the traditional techniques.

Research Methodology:
Our research was conducted in four major steps: 1. Secondary research (Layer-1) 2. Primary research 3. Secondary research (Layer-2) 4. Consolidation and analysis In the first step, i.e. preliminary study of secondary data, one of the major issues of this sector quickly became evident. There was a very serious lack of information available about this sector. No formal research had been done about this sector in the past, or at least was not available to the public. The very few blogs and articles that did cover this area did so very fleetingly, and that information was also quite obsolete. We found a list of 47 Pakistani animation studios listed on Animation World Networks database 1but that list was outdated as well, and most of the studios listed did not exist anymore. Most of the information was acquired in the second phase, i.e. primary research. Guided by a carefully prepared questionnaire, we conducted in-depth interviews of some veterans of Pakistans animation scene. They included the following people: Durriya Kazi (Head of Department, Department of Visual Studies, Karachi University) Arif Kamal Zaidi (Creative Head, Game Ventures) Saqlain Zaidi (Faculty Member, Department of Visual Studies, Karachi University) Asif Iqbal (CEO, ICE Animations; ex-CEO, Post Amazers) Amyn Farooqui (Co-Founder / Co-CEO, Sharp Image Animations)

There were some other individuals who were not formally interviewed for this research, but their insights and perspectives helped us further shape this research. They include the following people:
1

(www.awn.com),

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S. Ali Ahsan (Producer / Executive Advisor, Sharp Image Animations) Mir Z. Ali (Technical Director, Rhythm & Hues, USA) Rehan Zia (Lecturer, Bournemouth University, UK) Shahan Zaidi (ex-Art Director, H2O Animations; Visiting Faculty Member, Iqra University)

The second layer of secondary data was appended after interviewing the aforementioned individuals and getting pointers about some more areas where some information pertaining to Pakistans animation industry could be found.

Scope of Research:
In Pakistan, animation sector is not defined as such. In order to conduct our research effectively, we defined our scope of research as follows: The companies that have a prominent presence in the market; are involved in production of 3D animated content from concept to completion; and we took a tangential look at the game development sector as well. The reason for focusing on prominent companies was the fact that this sector is very informal and there is a complete lack of documentation. A large number of small studios and freelancers are operating throughout the country and we did not have the resources to even estimate the number and locations of smaller studios. But we did find out that smaller animation studios do not have any considerable contribution to the sector, but independent game developers are still doing some contributions. But the numbers are still elusive. We focused almost exclusively on 3D animation because this is the predominant animation technique used in Pakistan. The other techniques have a negligible presence, if any.

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Production Process:
The production process of an animated show is derived from the traditional, shoot-based production pipeline, and is divided in three broad areas: Pre-production Production Post-production

PreProduction Production
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PostProduction

Pre-production Scriptwriting On the basis of the project brief, scriptwriting process crystallizes the story. The entire story is written down along with narration, dialogues and the visual flow of the story. Storyboard The script is converted to visual form by drawing every camera angle of every scene. Concept Art

Everything that would be seen on the screen (called assets) must be designed in this step. Assets are generally divided in three areas: characters, props and environment. Once the designs are finalized, they are drawn from multiple angles to assist creation in 3D workspace. These drawings are called model sheets.

Production Asset development Modeling Based on the model sheets, all the assets are created in the 3D space of specialized computer software. This process can be seen as the digital equivalent of sculpting. Rigging The 3D models created in the last step are static. Rigging prepares them to be moved and deformed for the purpose of animation. This is achieved by adding specific controls to the models that define the range and nature of movements the model would be able to make. Texturing This involved adding details, surface texture and colors to the assets.

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 Layout Assets and cameras are placed in the computer softwares 3D space according to the guidelines provided by the storyboard Animation Animation is usually thought of as the process of adding movement to something. But it is not as simple. Animators define this process as creating the Illusion of Life, and it is considered the digital equivalent of acting. Lighting & Shading Scenes of the project are lit according to the aesthetics defined in concept art and storyboard. Moreover, materials and shaders and assigned to the assets, which determine the interaction of light with their surfaces. Rendering

All the data that is stored in the computer in the form of advanced level mathematics, calculus and logic must be converted to the images that can be viewed on the audiences intended medium. This process is called rendering. To ensure maximum control over the final look of the project, rendering is carried out in a number of passes or layers.

Post-production Compositing All the render passes are combined or composited together to create the final look of the show. Passes enable the team to tweak and touch-up any specific area of the frame as required at the minimum cost. Last minute touch-ups are done and visual effects are added at this stage too. Editing All the camera angles, shots and scene are combined in the final narrative of the show along with voice-overs, sound effects and music tracks. It must be noted that this is not the only time when editing comes into play, but it stays active from the storyboarding stage and helps the directors and supervisors monitor the progress of the show as a whole.

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 Conversion

Once the editing is completed, the show is converted to the appropriate format for release. The commonly used formats include DVD, Beta Cam tape and Digital Beta Cam tape (aka DigiBeta).

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Factor Conditions:
Human capital is of paramount importance in the animation sector. Although technology plays a very important role, most of the people in the industry classified this sector as being highly labor-intensive, while some argued that the balance between labor and capital is more or less equal.

Human Resource:
While the total employment in the animation sector is estimated to be around 500-600 employees with the potential to exceed 2500 in near future, the total employment of three major studios is 220; Sharp Image Animations: 100; ICE Animations: 100; Cult Productions: 20. Another company in game development sector with a significant employment is Game Ventures with 42 employees. This shows that these four companies have generated about 54% of the employment in the sector, while the other 46% are employed by a large number of smaller studios and freelance setups throughout the country. Due to the lack of awareness about animation in our society, the long and demanding work hours, the animation sector is very highly male-dominated. Average education of the workforce is intermediate. Technical personnel, who are relatively few in the market, generally have a Bachelors degree in computer science or a related field. Vocational skills and competence are quite robust for the local and regional markets. Most of the workers are either self-taught or have received in-house training at one of the bigger studios in the market. This is reflected in the studios budgets as well, which show a significant portion being spent on training the fresh recruits. Keeping in view the exorbitant costs of training new recruits, coupled with the failure of academia to produce work-ready graduates in this field,

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Sharp Image Animations has set up a purpose-built, in-house animation school2 that is open to the public for a competitive fee. ICE Animations is also working on a similar plan. Pay scales range from very low to very high (in the context of related industries, of course). Since formal education plays a very little part, pay scales are generally determined on the basis of the individuals skill level and experience. In absolute terms, however, the industry is widely seen as offering very low salaries. Some people have described the animation workforce as being overworked and underpaid. This is one of the reasons for brain drain, which is a major concern of Pakistans animation sector. It becomes even more important because of the small size and the current infancy stage of the industry. Workers have a tendency to move abroad after reaching a certain level of proficiency in their work. This threshold appears to be immediately following a workers capability to compete in the international job market. The most common reasons cited for emigration include the following:

Low pay scales in Pakistan Personal and financial growth plateaus Lack of infrastructure Political and economic instability

The most popular destinations amongst Pakistans CG (computer graphics) artists are UK, USA, Singapore and Middle East.

2 Sharp Image Academy (http://www.sharpimageonline.com/sia)

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Technology
Most of the functions and jobs in animation dont require very specialized pieces of hardware, and can be completed using a sufficiently power desktop computer. However, there are some parts of pre-production and post-production that do require specialized hardware to an extent or another.

Graphics Tablets: Most of the drawing and painting work in preproduction requires the use of digitizing graphics tablets. The most popular manufacturer of graphics around the world and in Pakistan is the Japan-based Wacom Co., Ltd. In Pakistan, the most commonly used tablet is Wacoms mid-range product, Intuos. However, Wacom Bamboo also has a significant penetration in the market due to its lower cost.

Motion Capture: Animation is sometimes created using motioncapture (aka mocap). This is a technique where markers are strategically placed on a human actors body and as the actor gives out his performance, the locations of these markers are monitored by special-purpose cameras and then transmitted to the motion-capture software running
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on a connected computer. This motion data is then transferred to a 3D character. Motion-capture is used very sparingly in Pakistan. ICE Animations and Sharp Image Animations have their own in-house motion capture facilities, but are used primarily in situations where a lot of animation needs to be created in a very short period of time. ICE Animations is using its mocap system almost exclusively for the production of Express News Bankay Mian. Moreover, Lahorebased MindStorm Studios is known to have rented a mocap system for its Cricket Revolution game because of the exorbitant costs of owning and running a mocap system. Render Farm: Rendering is a very processor-intensive task, and cannot usually be handled by a single desktop computer. For this purpose, studios with enough resources need to utilize Render Farms, which are groups of a large number of interlinked computers (nodes) dedicated to the process of rendering. Render farms are very expensive to set up and maintain. In the developed markets, there are businesses that specialize in the provision of render farm services to the producers who cannot afford to own a render farm themselves. However, no such service providers exist in Pakistan because of the size of animation industry. Some of the smaller studios are known to make use of conventional computer networking to provide the needed processor-power for rendering, which is not as reliable as the use of a dedicated, purpose-built render farm. Editing Suite: Editing Suite is a complete setup for editing and includes dedicated screens, sound system and mixers for the precise handling of audio-visual data. This system is not exclusive to animation production, but is identically used in shoot-based productions too.

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Digital Intermediate (DI): Digital Intermediate, or DI as it is commonly referred to, is a real-time colorgrading system. Software-based colorgrading is a time-consuming and processorintensive job, which becomes a bit more difficult because of the time-lag occurring between a color-graders treatment and the output he receives from the computer after the long and complex calculations performed but the system. With DI, the color-grader can see the results of his treatment in real-time, improving productivity and performance. However, the real importance of DI lies in the fact that it is used in shoot-based projects to convert the data shot on film to the digital format. This process is extremely important because of the premium picture quality offered by shooting on film, and the endless possibilities offered by digital post-production techniques.

The most interesting fact is that there is only one DI facility in Pakistan, which is owned and operated by Sharp Image Animations. This facility has also been acquired very recently. Up till now, films needed to be sent abroad for the DI process, and this increased the costs of DI services manifold.

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Software Applications:
A wide range of software applications is used to different areas of the pipeline. Following is the list of most commonly used software programs. AREA Preproduction (all areas) VENDOR Adobe Autodesk Modeling Pixologic E-on Software Autodesk Rigging and Animation Autodesk Next Limit Lighting & Shading Autodesk Autodesk Rendering Mental Images Pixar Adobe Compositing Autodesk The Foundry Editing Adobe Apple SOFTWARE Photoshop Maya Z-Brush Vue Maya Motion Builder Real Flow Maya Maya Mental Ray Renderman After Effects Combustion Nuke Premiere Final Cut Pro For motion capture Simulation and animation of fluids For detailed sculpting For environment modeling COMMENTS

Piracy: Software piracy is rampant in animation industry, just like in any other IT or ITeS sector of Pakistan. Licensed software packages are extremely expensive can be difficult to obtain for even
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the more resourceful studios. Maya, for example, the most important and commonly used software, costs around $ 7000 apiece; the bigger studios of Pakistan need at least 40 copies each! This would amount to about Rs. 24 million at the current exchange rate. This kind of costs would collapse the entire sector in no time. Moreover, piracy plays a very important role in human capital development as well. Most of the learning material used by the artists is obtained through downloads from various unauthorized sources.

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DEMAND CONDITONS
The demand for animation in Pakistan has increased with the current rapid growth of media channels and with the globalization all over the market demand of our animation has increased in the global market as well, giving our local animators a chance to showcase their animation work in competition with the rest and get contacts for even bigger and quality future animation ventures. Currently the animation is demanded by these sectors:

Featured Film Industry Cartoons Advertising/Commercials Games Architecture Medicine (Scientific Visualization)

Apart from the above mentioned sectors there are a number of other applications of animation as well. For example special effects etc.

Featured Film Industry

At present of film industry of Pakistan is in a very poor condition mainly due to lack of attention and investment in this sector. Another main reason for this fiasco is a very insignificant number of cinemas in Pakistan, which are mainly screening Indian and other international movies and never gave enough room to our local film industry to prosper. This phenomenon never

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let our local demand of movies to increase as a cheap substitute for entertainment is always available in form of English and Indian movies. On the contrary, our neighboring country India substantially funded and marketed their local Bollywood movies. And their stringent local demand pushed their industry to new heights just in last couple of decades. They started off with live character movies and with the growth in the industry they are now at a level where they are focusing on making high budget animated feature films like Kouchi kouchi hota hai and Road side Romeo just to name a few. Our Pakistan govt. should have introduced such policies in which our local movies should be promoted and the screening of international movies should be limited. This measure would automatically give a rise in demand of local movies and hence leads to the growth of Lollywood. Apart from that a significant number of cinema houses should be made in order to have a lucrative market for the films being produced. As the TV and DVDs are not the right profitable markets for the film industry.

Trend of Globalization and outsourcing

Now globalization and outsourcing are the two key trends that are shaping up the careers of animators. Top-notch studios are expanding into locations where they can do more for less. This means studios operating state-of-theart facilities in cities such as London, Sydney and wellington, as well as outsourcing piece of animation projects to low cost vendors in India, Indonesia, Malaysia, China, Pakistan and Singapore. While many animators see a bright future for the industry with the growing need of more animators, some worry that the growth will go to low-cost labor in developing countries. They are concerned with falling pay rates, increased completion, and a possibility of leading a nomadic lifestyle pursuing project based productions around the globe.

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Scope of Pakistani Animation

As the scope of animation in Pakistan is very limited, so the professional animators found their way out and started catering to across the border demand for animation. Post production work of some Hollywood movies outsourced to Pakistan mainly because of the acceptable quality of animation and relatively lower price in the region. We the current advancement in technology in Pakistan the concept of telecommuting and free lancing of animation work is also becoming quite popular trend in the industry. Another competitive edge to Pakistani animation is its low cost of production in the region. This is so because of two major reasons:
1. Software Piracy: Due to the piracy of software to an enormous

extent, we are saving our primary cost on purchase of animation software. Thus the loose legal obligations in Pakistan is aiding animation industry by drastically cutting our cost of production.
2. Cheap labor: Pakistan is among one of those countries where man

power is comparatively quite cheaper than the rest of the world. We have a large untapped labor pool of English proficient graduates willing to work at 60% below their US counter parts. Furthermore, consolidated operating costs are estimated roughly 30% lower in Pakistan as compared to India or Philippines, two of Asia major Business Process Outsourcing contender.
3. In comparison with India, who has almost the same cost of production

as ours, we are still in a better position. The cost in Pakistan are as much as 30% lower than India, while the infrastructure advantage of high speed connectivity in all major cities are available at competitive

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rates. This aspect also give us a competitive advantage over our rivals in the region

Potential of Pakistani Animation

Many local individuals as well as studios are now playing a significant role in bridging the supply and demand gap in the international market. Many professional studios are able to find international clients by passing the standard test and by producing standard quality animation prototypes. There are various worth mentioning Hollywood movies post productions which has been done in Pakistan namely The Son of MASK, Underworld III, The Exorcist etc. Beside these our animation studio like Post Amazers has also done a number of animation projects from Dubai, France, Germany, Saudi Arabia etc. Pakistani studios are self established, they are helping themselves in fostering talent by developing and training their own human resource with respect to international standards. Online coaching and in-house training sessions are being conducted to further hone the skill set of our animators and making them competent in their field. This is the main reason why Pakistan is able to make its way to London International Documentary Festival (LIDF), Cannes Film Festival (France), Glasgow Film Festival, Kara Film Festival and the list goes on and on. It all just happened within the last few years. Pakistani animation has a lot of potential for growth in the upcoming years, with the increased market trend of using animation. Out of the top10 block buster movies of 2011 so far, 7 out 10 has used animation up to a great extent. Pakistan has a lot of potential and just need to provide a supportive environment to cultivate it. The only reason we have lacked behind in animation is the lack of investment funds.

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GAME DEVELOPMENT
Game development has been one of the highest growth sectors in the developed world with its revenues outpacing other sectors of the entertainment industry. Games continue to be on the cutting edge of emerging social and mobile platforms and are incorporating increasingly sophisticated art, design and monetization methods. The world market for gamming software is expected to be worth of approximately $91.96 billion by 2015, as per various credible estimates. The video game industry in the US and Canada alone will reach $21.6 billion in sales by 2013. US gaming industry is expected to be over three times the size of recorded music industry. In the gaming market, mobile and on line gamming segments are expected to grow significantly beside console gaming. In view of the stellar growth statistics of the gaming industry, it is pertinent to take steps to bolster the local gaming industry. By 2011, the worldwide gaming market will be worth $48.9 billion at a compound annual growth rate of 9.1%. Gaming Space in Pakistan Pakistan has full potential of fetching precious forex of $1 billion every year through promotion of Video Games Industry that is full-fledge entertainment industry world over having export potential of $70 billion. Gaming is a sub industry of animation industry and according to all related professionals, it has a strong potential for growth in Pakistan in the upcoming years, due to the rising trend of gaming locally and worldwide. So far Pakistan gaming studios are focusing on producing mobile and online social network games, also developing number of applications for iPhones and Androids. Many of them has been on top rated downloads and some popular ones has more than 2 million downloads. Apart from that Game Ventures, an online sport gaming studio in Karachi has developed Facebook games like Pokerama, Howzat and many others. Howzat is a big success and has over a million users on Facebook and other online gaming platforms like
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ibebo.com. Currently Game ventures is mainly earning by charging the end user of the game and now a days it is working on even bigger ventures in collaboration with big companies like EA, Sixwaves and UbiSoft. The biggest accomplishment of Pakistani gaming industry is the

development of "Official Game" of the ICC World Cup 2011 by a Lahore based company known as MindStorm Studios. The company has managed to indigenously design, develop and deliver an officially licensed title over all leading global game development games. The selection of a Pakistani IT firm for designing the official game of the World Cup is an honor for the country besides being a pointer towards the strength of the IT industry in Pakistan. ICC World Cup was a reflection on the immense talent and potential for innovation possessed by our IT professionals. Tintash and GenITeam have produced strings of games in the top 10. Whacksy Taxi, Doodle Toss, and Fishing Frenzy Deluxe have been on top ranked games. In addition to this 12 Pakistani companies are participating in premier gaming conference Gamers Developers Conference (GDC) this year for the very first time. The animation gaming industry of Pakistan is characterized by young, energetic entrepreneurial individuals and continues to win laurels abroad due to their high quality and high impact work. Applications developed by Pakistani gaming industry are consistently ranked among the top ten applications on Apple Apps Store. These home grown achievements are laudable in view of the challenges faced by the IT companies, while operating in difficult local environment.

Advertising/Commercials
There is a very significant role of animation with the advertisement and commercials; most of them use a substantial amount of character animation and special visual effects in it. So the main demand of animation is by advertisement agencies and media buying houses, whose main purpose is to prepare visual advertisements mainly meant for TV on behalf of their clients,
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who are mostly MNCs and FMCGs. These big corporations have actually a lot of budget meant for the promotion and advertisement, which is the main reason why there is a greater profit margin for ad agencies and animators in making an advertisement. For instance, a typical budget of an average commercial exceeds the budget of a low quality short film. According to the statistics of a renowned Pakistani marketing agency, namely Synergy Advertisement stated that less than 1% of the advertisement content on Pakistan TVCs is animated, while the leading animators of the industry tends to disagree with these figures as there might be some discrepancy in what does animation actually means? Whether it is just character animation or it encompasses motion graphics and visual effects as well in its domain. So far the current and correct statistics regarding animated content on TV cant still be stated with precision.

Market Trends of animation

The current market situation for demand of animation in ads is not satisfactory mainly because of lack of marketing funds corporations. Recently, in the aftermath of the current recession many of the leading firms have slashed down their marketing budgets mainly due to the lack of funds. This phenomenon has a trickledown effect on the animation industry altogether, which earn a major chunk of their income by the production of TVCs. Pakistani animation industry is more than sufficient to meet its local demand of advertisement at the moment as compared to previous state in which commercials like that of DING DONG has to be made outside Pakistan. But now the situation is completely reversed, Animators are willing to do animations but due to the lack of marketing funds, Brand managers are more inclined towards playing an international commercial with slight changes in voice over or endorsement graphics, in order to reduce the cost

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of making that commercial all over again, with respect to regional constraints.

Local Animation Masterpieces

Moreover there is a very loose connection between the recent growth in terms of number of TV cable channels. The increasing number of channels is not resulting in increasing amount of animation content in advertisements and commercials, so the size of pie is increasing but not the share in the pie. Some famous example of usage of animation in local advertisements can be easy paisa for its visual effects, Electrolux for character animation and Omore for motion graphics. Above all our local animation industry has done a great job and has produced some remarkable pieces of animation which is even being praised at international level. Some noteworthy example of animation is P&G Commander Safeguard, Tetra Pak Milkateer & Unilever Germ Busters just to name a few. Our biggest achieving so far is undoubtedly the Milkateer campaign, which has won several awards including TASI Anifest in India and Phoenix Film Awards in Singapore.

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Firm strategy, structure and rivalry

Culture and environment
Culture and environment are basic components of any industry that make up its structure. They are said to be unique for every organization and cannot just be taken away. In smaller productions, it is easier for employees to adapt to their new environment, the case being opposite in bigger organizations. In Pakistan, most industries face the problem of power remaining in hands of a family through transfer of authority to the heir, such as industries that usually belong to agricultural sector. This may include poultry sector, dairy sector etc.

This however, is not the case with structure of the animation industry. It does not limit new ideas from entering through new people. People who have any sort of interest in arts and animation, along with people with marketing, financing and Human Resourcing skills make up the structure of the animation sector of Pakistan. Analyzing the environment of animation companies, we observed that all of these organizations have a very informal culture. As we observed in our meeting with the CEO of sharp image at the Sharp Image studio, from CEO to lower level employees, everyone is usually casually dressed. There is a lot of task delegation in these companies as it is believed that work should be assigned to he who is considered better to be able to fulfill the task. This also leads to free flow of idea, restricting none.

Barriers to entry
From what we learnt from interviews with various people who belong to the Animation Industry of Pakistan, we learnt that this Animation Industry, being
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a small growing sector in Pakistan is not yet in a position to have any heavy barriers related to it. While it can be said that this industry does not have any barriers related to it, it is also true that like any other sector, a new firm would still take time to make its place in the industry. This is because despite a very few firms existing in the industry, there are a few firms that are relatively much larger and well known then any animation firm could be initially. Sharp Images, Ice Animations type of firms have been in operations since long now and hence have been able to get renowned across Pakistan, while other firms are yet to gain this kind of popularity with low interest of consumers in this field. Lack of awareness could also be said to be one of the barriers to entry. This in fact is a barrier faced not by the prospect employees but by the industry itself. like mentioned earlier, a very few people in Pakistan have an awareness about what animation is, very few people who graduate from even art schools consider being an animator as an occupation. Because of this, very few people pay attention to entering the animation industry in the first place.

Hiring and training

An intermediate degree is minimum requirement for an employee to enter the animation sector of Pakistan. Considering this, a lot of Pakistanis could be employed in this sector but the dilemma being that a very few have the interest and knowledge of arts and animation that is actually needed by the sector. Neither have been there any workshops conducted in universities and colleges of Pakistan to make the students be aware of the animation sector, nor does the animation sector have any resources or experts to train those who wish to join the animation sector. Like mentioned earlier in the report, a very few institutes in Pakistan actually teach animation as a course and hardly any of them offers an animation degree.
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also international animation industries'

trends

show

that conducting

workshops and training sessions with animation firms has led to their existing employees gain competitive edge over other firms' employees. This could be considered a recommendation for the animation industry of Pakistan, as for now no such practices have been observed here.

Rivalry
Rivalry, in any sector of any country, is generally greater at the domestic level. This is because locally all the firms within a sector have almost the same structure and environment, thus leading to greater competition and thus rivalry. Rivalry, which seems like a negative word, has in fact generated positive results for various firms in the animation sector alone, but not for the animation sector as whole. This is because we already have a limited number of human resources available to serve the animation industry at the moment, and one firm stealing employee from another firm had lead to the slow growth of the industry itself, there being no collaborating effort by the firms. At the domestic level, firms claim that they do work with collaboration. However, our observations and past incidents otherwise. in past, there has been a verbal agreement between 3 leading animation companies in Pakistan, namely Sharp Image, Ice Animations and h2o which dictated that if any employee belonging to any of these 3 companies leaves the company, he cannot be directly hired by the other two companies until unless he has received his letter of Termination along with a Character Certificate when he leaves the company. However, the agreement was not followed and many of their employees shuffled from one organization to another. While Post Amazers, an animation Studio that no more exists, was still in operations, many of its employees had left the organization to join the newly
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founded ICE Animations for various reasons. There being various reasons for it. Our animations companies not being huge enough at the moment do not export much of their products. However, from those who do, Sharp Image and Ice Animations take the lead. 90% of Ice Animations' projects are sold in the international market, Bankay Mian being their only local project at the moment. In comparison to that, only 10-15% of the total projects of Sharp Image comprise of international projects. There being a huge different in percentages of exports of these two leading exporters of animation, there lies a lower level of competition in this regard.

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Animation Companies in crisis

There are many companies in the animation sector who have already ended its operations for various reasons, and many who probably will, according the industry experts. Amongst these are names of: 1. Post Amazers 2 AniVista 3. Carrot productions 4. H2O About Post Amazers Post Amazers had a modest start with an objective to reach international standards. With only 4years+ in operation, it has ranked as one of the top 200 technologies and Media Company in Asia by Red Herring in 2005. Its local production consists of working for Procter & Gamble, Unilever, Reckitt Benckiser, Coca Cola, Pepsi, Lakson Tobacco, Colgate Palmolive, Standard Chartered Bank etc. On an international level, it is currently working in collaboration with Hollywoods top animation studio, it has also produced work for movies such as Exorcist: The Beginning and Son of the Mask, designed character and animations for a US based game release Also produced number of animated television commercials & short films for local & international including Commander Safeguard (P&G), Adventures of Zak & Sylvia 6 minutes animated serial pilot for Black Cherry Multimedia (Canada) and Quartics (USA).
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The reason of demise of Post Amazers is said to be 'mismanagement' within the organization in terms of how it used is human and other resources. Heads were rather laid off and so were the employees after they realized that they have become fairly profitable. However this pride led to the end of Post Amazers. About h20: H20 is an animation company that is actually still in operations to date. However, industry experts expect it to end its operations real soon due to incurring losses in a few consecutive years. Lack of business is what seems like the reason of its demise apparently. Mr. Saqlain Zaidi (faculty member at Karachi University's Visual Arts Department; former animator at Post Amazers) explained to us during our interview with him that H2o treated its slave worse than Egyptians treated their slaves. Competitions Pakistans animation industry being at its growing stage does not have any international rivals as such, but in our report we chose to compare it with the animation industry of India in terms of competition. To give a summary, it could be said that Indias animation industrys competitive edge is in the size of the industry while Pakistan claims its Animation Industry to have found its competitive edge in its quality of animations. The quality of animation is better in Pakistan. That is, if we do not include in this those animators who have come from US to India. Also, Unlike Pakistan, India has a better movie culture and a flourishing film industry. This provides animators in India with a bigger market within their own country. Among top animated
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movies of India are:

Toonpur Ka Superhero Jumbo Roadside Romeo Koochie Koochie Hota Hai Aladdin Krishh Koi Mil Gaya

Also, India has used animation

to

promote

their

religious values through their animated film Hanuman. This film is aired every morning on their channel called pogo, therefore infusing animation also on the television media.

However, the truth remains that almost none of the entirely animated Indian movies have been successful so far. Movies like Krishh, Koi Mil Gaya did attain some success, but not outside India. Their animation stunts not being admired to a very high level.

Next section of the report will give a relatively detailed overview of the
animation industry of India.

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Indian animation industry - an overview

Currently there are many global motion companies that outsource their work to the Indian Animation Industry. The use of special effects through animations by the firm production firms has also increased a lot in the past few years. Also, animation sector serves as a revenue spinner for Indian IT sector and generates job for thousands of Indians. Indian software organizations are creating gaming solutions for phones that are not only sold locally but also internationally.

Competitive advantages of the Indian Animation Sector

From what we have learnt from our secondary research, Indian Animation Industry claims to possess the following factors as a list of its reasons of being competitive: cost advantage large skilled force English speaking man power growing maturity domestic market opportunities

The Indian animation market, fairly static until a few years ago and activity on this front only began in earnest in the latter half of the 90s when animation studios made an appearance in the country and the industry developed a more serious, export oriented outlook. India is now waking up to a host of global opportunities that promise a lot of action for the countrys leading design specialists. The forces that are shaping the development of the animation industry in India include technical manpower to meet the 2-D and 3-D animation

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requirements, lower costs of animation production, the expected demand from domestic Indian television channels and the formation of domestic animation studios and training centers A snapshot of the Indian animation market scenario in the 90s: The animation market in India today is characterized by the presence of multiple players including Crest Communications, Films Division Maya Entertainment, Silvertoon Studio, 2NZ Studio, Cine Magin, Climb Films, UTV Toons, Zee Institute of Creative Arts (ZICA), Digital Studio, Pentamedia Graphics, Prasad Studios, Acropetal, jadoo Works, Color Chips, Heart Animation, Ocean Park, Padmalaya Telefilms, and Toonz Animation, Magic Shop, Moving Pictures, among others. These companies are spread across cities such as Mumbai, Chennai, Bangalore, Hyderabad and Thiruvananthapuram. Indias animation studios are catering to the requirements of various end users segments such as feature films, TV programs, advertisements/commercials and computer games. Animation solutions are also finding a place in niches such as film titling, special effects, Web entertainment programs, TV broadcast graphics, 3D modeling and background development. In each of these areas the extent or scopes of services for an animation production company include offering services in Animation production services, co-production and content creation. Segments such as online education, CAD/CAE, and industry specific applications such as architecture, medical, legal/insurance, etc. are also potential platforms for

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Animation, though Indian studios are not focused on these markets. Skill sets in 2D and 3D animation are leading to opportunities in segments such as TV programs and feature films.

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India: The Animation Hub? A recent study on the animation industry by NASSCOM3 shows that the global Animation production market is set for major growth. The study, which is based on multiple statistical projections on the market, from segments such as industry Sources, Pixel Inc. and Arthur Andersen (Study on the Entertainment and Media Sector) forecasts that the global animation market will generate revenues worth US $ 50-70 billion by 2005. Total animation production by Indian producers meanwhile is expected to touch US$1.5 billion by 2005 (Arthur Andersens study on the Entertainment and Media sector).

Performance of the Indian animation sector Currently an approximate total of 300 animation companies operate in India. It employs 12000 people and 3000 people are associated to it as freelancers. In 2010, 70% of the total exports revenue comprised of products by the animation sector; of which, 68% belonged to the entertainment sector of the country.

Mobile gaming contributes 77% of total revenue of the country for the year 2010 and the gaming segment touched US $ 422 million for the same year. The growth rate of Indian mobile market is 72%, giving animators a great opportunity to sell mobile games in the international and local market, both of which are forecasted to be profitable for India. However, the worldwide share of India in the global Animation sector still remains 2% only. It was not able to reach its potential due to demand supply gap in Human Resource, say the industry experts. The expected revenue out of animation sector was US $ 1 Billion
3 Nasscom is the premier organization that represents and sets the tone for public policy for the Indian software industry.

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while the actual revenue was US $ 869 million.

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Related and supporting industries

Computer hardware industry
Pakistan is currently not manufacturing any sort of computer hardware used in animation. Most of the equipment is purchased from China, where as hightech equipment is imported from European countries. The computer hardware industry is one of the fast paced flourishing markets in the world. As per surveys, global computer hardware market grew by 5.6% in 2007 to reach a value of $399.8 billion. A major reason for this overall lucrative growth is the sales of computer hardware apart from the PCs that has alone yielded total revenues of $208.2 billion, which is equivalent to 56.7% of the overall market value. It is also being estimated that by 2012, the global computer hardware market is forecast to have a value of $537.3 billion, an increase of 34.4% since 2007
4

Software Industry
From its nascent beginnings in the late 1980s, the industry has successfully arrived to a point where its value proposition has been validated over and over again. The largest members are grossing 15-25 million dollars in revenues, and receiving 100 million dollar valuations. Most tech companies are growing in excess of 30% a year annually. The industry as a whole is doing over 2 billion dollars a year in revenue, up from less than a billion dollars a few years ago. About half of this growth is coming from foreign, software and high end services projects. IBM, Cisco and Microsoft are expanding Pakistan operations aggressively while several startups are now backed by VCs such as ePlanet Ventures, Motorola, Adobe and Innovacom1.

Ref http://www.hardwaremarketplace.com/computer-hardware/

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Current growth rates indicate that the industry will exceed the 11 Billion USD mark within the next 5 years. What other sectors and countries have achieved in 15-20 years, Pakistans technology scene is poised to achieve in less than a decade. Putting it all together, the Pakistani Technology industry is very different from what it was in the early 1990s. From 4 founding companies in 1994, PASHAs current membership exceeds 370. From 4,200 employees in 2004, current employment is at 12,000 and rising.

According to market researcher DataMonitor, the size of the worldwide software industry in 2008 was US$ 303.8 billion, an increase of 6.5% compared to 2007. Americas account for 42.6% of the global software market's value. DataMonitor forecasts that in 2013, the global software market will have a value of US$ 457 billion, an increase of 50.5% since 2008.5

Film industry/ Cinema industry

Animated content is used in film industry to create effects which are either not possible or very expensive to shoot through a camera. Pakistani Film Industry also known as Lollywood has not matured enough to use significant amount of animated content up till now. Before the separation of Bangladesh, Pakistan had three main film production centers: Lahore, Karachi and Dhaka. Dhaka was lost after 1971. Zia-ul-Haq, film piracy, entertainment taxes, and Islamization have been some of the many obstacles to the industry's growth. Once thriving, the cinema in Pakistan now barely exists.[1]

5 http://en.wikipedia.org/wiki/Software_industry#cite_note-3

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The Pakistani film industry is credited with having produced some of the most notable and recognized filmmakers, actors, writers and directors, and for introducing music to South Asia and beyond, Competition from Bollywood and piracy, however, has led to the industry's decline. Since 1995, the government of Pakistan has kept a close eye on the decrease of cinema halls and theatres in the country. Below is a chronological index of cinemas in Pakistan from 1995 to 2002. The country boasted 750 cinema theatres in 1990 (even more before then), but that number had declined to 175 by 2002. The remaining cinemas are reported to be in very poor condition, and in desperate need of attention.

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Number of Cinemas in Pakistan according to geographical location:

Province/Division/ District

19 95

19 96

19 97

19 98

19 99

20 00

20 01

20 02

Khyber-Pakhtunkhwa Peshawar District Mardan District Kohat District Dera District Bannu District Hazara District Mansehra District Malakand District Baluchistan Quetta District 7 7 7 7 8 8 8 8 Ismail Khan 17 4 1 17 4 1 17 4 1 17 4 1 17 4 1 15 4 1 16 4 1 15 4 2

1 6 2 2

1 6 2 2

1 5 1 2

1 5 1 2

1 5 1 3

2 7 1 2

2 6 1 2

3 6 1 2

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Zhob District Sibi District Kalat District Makran District Nasirabad District Punjab Lahore District Sialkot District Faisalabad District Rawalpindi District Multan District Gujranwala District Sargodha District Bahawalpur District

1 2 1 4 1

1 2 1 4 1

1 2 1 4 1

1 2 1 4 1

1 1 2 2 1

1 1 2 3 1

1 1 2 3 0

1 2 1 3 0

67 25 42 25 56 61 17 30

65 22 42 25 56 61 17 30

65 16 38 26 53 60 16 31

65 13 38 26 50 59 15 30

62 10 37 23 50 58 15 29

62 10 38 21 47 64 15 29

56 10 38 20 46 66 14 27

56 09 34 18 39 69 12 27

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Dera District Sindh

Ghazi

Khan

18

18

19

19

19

12

10

11

Karachi District Hyderabad District Sukkur District Larkana District Mirpur Khas District

57 35 27 21 25

57 35 27 21 25

57 27 24 11 22

57 27 20 11 22

53 23 17 9 22

46 22 18 6 22

45 19 10 6 22

43 13 9 5 19

Islamabad Capital Territory Islamabad District 4 4 4 4 4 4 4 2

There are very few movies released especially after the Islamization in Ziaul-Haqs era in 1977-1988. Recently produced films had traces of animation work which was done by the in-house animation artists. Despite some optimism of a solid revival at the turn of the millennium, progress continues to be slow. Alongside Geo Films continued efforts with their 'Revival of cinema', the Pakistan New Cinema Movement was launched in 2009. With around 1400 members PNCM is a grass roots organization that

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facilitates networking and publishes articles in an effort to stimulate production.

6

However world over, animation content is increasingly being viewed and 3 of the top 10 movies of 2010 were animated. This ratio has now increased to 7 out of 10 in 2011 (Wholly or partially). It is now a growing industry in Pakistan now. Quite a few films are in pipeline in 2010 which is a good omen for the local animation industry.

Ad Agencies
Today, almost all advertisements have some sort of animated content in the form of special effects, character animation and object animation. Marketing Industry has grown phenomenally in the recent decade and many new local entrants have made a good name for themselves such as Synergy, Red Communication and Bullz Eye 360. JWT, Mindshare and Ogilvy are the largest of the many multinational marketing agencies present in Pakistan. Integrated marketing communication (IMC) is the new buzzword in the marketing scene which means companies use a consistent message on all fronts of media. So not just TV commercials but print advertisements also take help from the animators and artists to develop their trademark characters, for e.g. Cocomo. However due to globalization, Multinational Companies are seen using foreign made ads in local markets which saves them cost. Due to these recent phenomena, our marketing agencies are losing on important clients and revenues. Foreign celebrities are a common sight on the billboards in Karachi. The growth and strength of marketing agencies are also very much dependent upon the national growth of industries in Pakistan. Local

6 En.wikipedia.org/cinema_in_pakistan

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companies are more likely to spend upon marketing if they make good profits and have a bright prospect to grow.

Gaming Industry
Gaming Industry and animation industry are very closely related as the resources and methods used in both animation and gaming are very much the same, though gaming requires more of programming. Both of them require programmers, animators, coders, concept artists, lighting artists etc. We also noticed that many key people in the gaming industry had previously worked in the animation industry, so this industry acts a support industry to animation.

Media Channels
Media has seen a phenomenal growth in the era of Pervez Musharraf 20012007. There are more than 30 Pakistani TV channels now, majority of which are news channels. The bigger television channels have started airing animated content, mostly for their entertainment segments for e.g. Geo Cartoon, Bankay Mian of Express TV. The smaller TV channels are expected to catch up and therefore we can expect an increasing demand for animated content in the future. Media channels can become the major source of revenues for animation studios in Pakistan

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Recommendations Education
According to Saqlain Zaidi, a senior director for the Dept for Visual Studies, KU, Funding of state universities is very critical for the animation industry so that the talent from the lower and middle classes is given an opportunity to emerge and polish their skills, which otherwise cannot afford studying at private institutions. Karachi University's Department for Visual Studies is the only government institution which offers courses in animation and it is in a severe form of distress. The infrastructure is lacking at the level that they are short of chairs for students. It is a common practice for students to pool up money to arrange for tools as simple as a multimedia projector. Animation studios have not put up much effort to collaborate and support with the educational institutions in Pakistan mainly because of the following reasons: 1) They are pre-occupied with their own work so much that they dont have time and resources to be in contact with the institutions. 2) Big animation studios like Sharp Image and Ice animations have their in-house training centers as they say institutes cannot teach them at the standard which they require in practical field.
Platform for the animation industry

A platform for all the people in animation to discuss, support and collaborate with each other has been on cards, for a long time. All the people we interviewed including the CEOs of Sharp Image and Ice Animation agreed that this platform is critical for the industrys success, but due to an oligopolistic firm structure, shortage of human resource, severe competition

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and negative mindsets, this couldnt be achieved. However, through government intervention, this is not a difficult task to do. An independent body should be setup which would act as an umbrella to all the happenings in the industry. Individual and team efforts should be rewarded. Local cultural content to be promoted in animation According to Ms. Durriya Kazi, the head of department for Visual studies, KU, we need to create content which is close to our culture and lifestyle to make it grow. If the content is close to our culture and of good quality, it will manufacture its own demand thus making the whole industry grow. Relying only on media and Ad agencies for the growth of this industry will force it to remain an infant industry. Taking example from the animation industry of Iran, they have developed their own cultural content in films and animation so well that it is now at a level to compete with other film and animation content around the globe. Tax exemptions for hardware import Animation sometime requires high-tech computer hardware and software. Equipment such as Motion Capture, render farms, digital intermediate, higher-end graphic tablets and other technologies are very expensive. Fortunately, there is no import tariff on simple computer peripherals but when it comes to high-tech machinery, 15% custom duty is imposed which scales up the cost. Tax exemptions for such equipment are needed. In software, FBR imposes a 6% advance income tax (a withholding tax) on software imports. Software is exempt from all other duties and taxes, including Pakistan's General Sales Tax (a value-added tax). needs to be revisited. Treaties
7

This policy also

7 http://www.fbr.gov.pk/newcu/TARIFF/Tarrif20102011.asp

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Treaties with the developed countries, for e.g. Germany, should be brought to table, asking them to outsource to Pakistan a specific worth of animation work every year. It is not necessary that the whole animation is done here, which is very difficult to do owing to cultural differences, but we can assist them in specific processes, like rendering, lighting, character animation etc. This recommendation was put forward by CEO Ice Animation Asif Iqbal who added that it is not a very difficult thing to do. Developed countries will be more likely to assist us in this way rather than giving us easy money in aid which is more likely to be misappropriated. Soft loans to produce films The government should propose and sign pacts with the developed countries to aid us in the form of giving soft loans to finance the making of animated films. It takes approximately Rs.3 million/minute of animated content. No studio can alone finance the making of a whole film. Compulsory airtime to animated content To take the animation industry out of its infancy, the government can oblige the Media channels to give a specific amount of air-time to animated content for e.g. starting with 5 minutes per month. This will help in focusing some of the resources of media channels towards the development of animation in Pakistan. Encouraging cinema-houses: There is a dearth of cinema houses in Pakistan. Around the world, films actually earn from cinemas rather than DVDs. And where there is rampant piracy, cinemas are the only place for producers to earn money. A growing film industry will automatically result in growth of our animation industry. Exposure & Placement in festivals Representation of Pakistani animation industry in the film festivals around the globe is an essential element for the industry to grow. However, there is
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huge investment required in booking up the place and space to present the work. Therefore, it is important for the Government sponsorship for participation in international festivals for film and animation, of which most famous of them are Cannes film festival, Annecy International Animated Film
Festival,

New England

Animation

Film

Festival,

Hiroshima

International

Animation Festival and Red Stick International Animation Festival.

Awareness Most people simply do not pay much attention or do not have the knowledge to differentiate between animation and film shooting. General awareness is an essential ingredient for the growth of animation industry as it attracts talent. People do not take it as a serious job which requires great intelligence, time and investment. Especially people interested in arts and programming should be aware of the scope and prospects of animation. Valuable human resource can be diverted towards animation in this way. Attracting local investments and FDI In the long-run, we need to attract big animation studios like Disney, DreamWorks, Rhythm & Hues, Sony Image works to set up businesses here in Pakistan will help the local industry takeoff like India has done. Liaison should be done at the government level to attract them. Also, big business groups of Pakistan should be encouraged to setup their animation studios following the footprints of AKD and Lakson group.

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