The latest FICCI-EY report titled, “Shape the future: Indian media and entertainment is scripting a new story” has revealed that digital media in India has overtaken television to become the largest segment within the M&E (media & entertainment) sector, contributing 32 per cent to the overall revenues.
While the Indian M&E sector is expected to grow by 7.2 per cent in 2025, reaching Rs 2.7 trillion (US$31.6 billion), the growth trajectory for the animation sector within M&E is not the same.
The animation and VFX segment saw the highest decline within the M&E segments that include digital media, live events, OOh (out of home) media, radio, music, TV, films and online gaming. Animation and VFX fell 9.4 per cent due to global supply chain issues, struggling international studios and the Hollywood writers’ strike. Reduced broadcast ad revenues also impacted the production of animated content in India.
Below were the key trends observed in the animation industry in 2024:
The segment witnessed a 19 per cent decline in 2024
The global decline in commissioning TV and OTT animation shows, coupled with cost-cutting measures and shifting priorities, disrupted the animation outsourcing pipeline to India in 2024. The industry is undergoing a reset, re-evaluating its strategies and adjusting to the changing demand. Contributing factors include:
- Over the past decade, linear ratings for kids’ television declined sharply, with Nickelodeon’s ratings falling 86 per cent and Disney Channel’s dropping 90 per cent by 2023.
- TV commissioning volumes in the US plummeted, with a 20 per cent decrease in new releases during 2024.
- Networks such as TBS, FX, Own, Freeform, Nickelodeon, Comedy Central, BET and AMC cut scripted commissions by over 50 per cent compared to the same period in the previous year.
- OTT platforms reduced commissioning animated shows due to cost pressures and strategic realignments.
- In May 2024, Pixar laid off 175 employees (14 per cent of its workforce) to refocus on feature films.
- Netflix canceled Dogs in Space, Army of the Dead: Lost Vegas and Scott Pilgrim Takes Off, citing production challenges and budget cuts.
Declining linear ad revenues and a reset in the domestic TV market further reduced animation commissions
- Declining Pay TV ad revenues, mergers between large buyers, and restructuring of operations led to delays in new show commissioning, adversely affecting domestic animation production.
- The restructuring at Discovery-Warner (due to their merger) and Sony prolonged the slowdown in new show production, which started in 2023 and continued into 2024.
- The Disney-Reliance merger exemplified this trend, delaying new approvals as the merged entity worked towards streamlining operations, repurposing existing content, and prioritising RoI due to the high costs and lengthy timelines associated with animation production.
- Broadcasters like Disney Star and Sony prioritised financial prudence, limiting investments in new animation projects.
- Amid this reset, broadcasters leaned on syndicated foreign content, moving away from investments in original Indian programming.
Indian studios’ participation in global events rose, but project financing remained limited
- In 2024, as the global animation industry recalibrated, Indian studios bolstered their presence at key events like Mipcom and Annecy International Animation Film Festival to reposition themselves for future opportunities.
- The Indian pavilion at Mipcom, organised by SEPC, the Ministry of Information & Broadcasting and the Ministry of Commerce, hosted over 235 delegates from over 70 companies and independent professionals.
- Despite this increased visibility, participants raised concerns about declining global investments in kids’ content, highlighting a challenging environment for project financing.
India’s adult animation saw growth
Indian animation moved beyond products created for children:
- Prasar Bharati launched Season 2 of KTB Bharat Hain Hum, building on the success of its first season.
- Disney+ Hotstar (now JioHotstar) released seasons 3 to 5 of The Legend of Hanuman, with the fifth season amassing 9.4 million viewers.
- SS Rajamouli expanded the Baahubali franchise with Baahubali: Crown of Blood on Disney+ Hotstar.
- Amazon Prime introduced B&B: Bujji and Bhairava, an animated prologue to Kalki 2898 AD, which garnered 4.9 million views.
Animation studios explored alternate monetisation models
Here’s how animated studios responded to the industry reset:
- Studios diversified revenue streams through Fast channels, short-form animations and audio platforms.
- Smaller studios turned to AI-driven short-form animations for platforms like YouTube, targeting younger audiences while optimising production.
- Graphiti Multimedia extended its reach by streaming Bharat Hain Hum on Spotify in 10 regional languages, signaling a shift to audio-first strategies.
AI adoption increased efficiencies
- AI is still in its early phases of integration into the animation pipeline, especially for theatrical and long-form content.
- AI tools accelerated pre-production processes like storyboarding and animatics by 30 per cent to 60 per cent, while enabling rapid asset creation for short-form projects in one-tenth the time.
- Larger studios invested in proprietary AI solutions to streamline asset creation and crowd simulations, positioning themselves for scalability and efficiency in a changing market landscape.