27 Key Assertions At CII SummitFX 2021

• The Covid-19 pandemic affected the media and entertainment sector adversely. But unlike most other sectors, some of the sub segments actually saw strong demand and managed to grow in this period. And this was largely on the back of digital and digital driven businesses.
• Segments like animation and VFX had a positive impact, keeping the supply chain disruptions aside, on the demand side, there was a positive impact, because of the increasing demand from digital and OTT players for animation content. As India progressed through the pandemic, people figured out a way of operating in the new normal and demand started picking up again. By 2021, the estimation was that the M&E sector growth is coming back to the pre-pandemic levels of demand. And that actually augurs well for the sector as a whole.
• The second wave created significant uncertainties, but what was different this time was that most organizations have realized that this is something that is here to stay and are now figuring out ways to operate both on the supply side and the demand side.
• Then you look at the animation and VFX sector, the second quarter of FY 2021 saw some significant operational disruptions as organizations figured out how to transition from a work from home model, and also more importantly, how to deliver the kind of quality work that was needed from a work from home model. This obviously took some time and some learning and some trial and error, but organizations figured that out over time.
• In the third phase of pandemic while supply chain disruptions on the delivery side got sorted, a lot of demand that was coming in from global markets slowed down significantly, either because of projects getting delayed, or getting either stalled or cancelled. This also meant that even for the existing deliveries, there were situations where contracts and commercials were getting renegotiated all of which has placed pressure both on the top line as well as the bottom line for a lot of organizations.
• The Covid-19 pandemic affected the media and entertainment sector adversely. But unlike most other sectors, some of the sub segments actually saw strong demand and managed to grow in this period. And this was largely on the back of digital and digital driven businesses.
• Segments like animation and VFX had a positive impact, keeping the supply chain disruptions aside, on the demand side, there was a positive impact, because of the increasing demand from digital and OTT players for animation content. As India progressed through the pandemic, people figured out a way of operating in the new normal and demand started picking up again. By 2021, the estimation was that the M&E sector growth is coming back to the pre-pandemic levels of demand. And that actually augurs well for the sector as a whole.
• The second wave created significant uncertainties, but what was different this time was that most organizations have realized that this is something that is here to stay and are now figuring out ways to operate both on the supply side and the demand side.
• When you look at the animation and VFX sector, the second quarter of FY 2021 saw some significant operational disruptions as organizations figured out how to transition from a work from home model, and also more importantly, how to deliver the kind of quality work that was needed from a work from home model. This obviously took some time and some learning and some trial and error, but organizations figured that out over time.
• In the third phase of pandemic while supply chain disruptions on the delivery side got sorted, a lot of demand that was coming in from global markets slowed down significantly, either because of projects getting delayed, or getting either stalled or cancelled. This also meant that even for the existing deliveries, there were situations where contracts and commercials were getting renegotiated all of which has placed pressure both on the top line as well as the bottom line for a lot of organizations.
• The COVID-19 situation has triggered even faster growth of the gaming segment in India. While there was a significant growth during the lockdown periods, post lockdown when the user behaviour normalized, the user engagement levels were 15 or 20% higher than what they were in the pre-pandemic period.
• There’s a perception change that is starting to happen in terms of online gaming. The user base on the digital side has been growing significantly. And there’s a significant awareness growth that has happened among consumers on online payments and Ott platforms and social media. With greater time spent on mobile, particularly for entertainment, this has really helped drive demand.
• On the supply side, there are three or four elements in terms of kind of product changes and innovations that are being made by the studios. These include enabling greater user engagement, multiplayer gaming, localized content, localized language, and social elements around gaming. So, the supply side
• factors are equally contributing to the growth of gaming as a segment.
• There is a need to be a little bit more circumspect about gaming comparisons with more developed markets because all those markets are far more digitally mature, as also have a strong gaming culture through a history of PC and console gaming, both of which are fairly embedded. Particularly the digital maturity in India is at a very nascent stage.
• As Indian users grow up, go up the maturity curve, there will definitely be a significant growth in monetization potential, particularly on iTunes. But as of now, advertising is expected to continue to be a significant source of revenue generation in India, as against most other markets. There exists a lot of potential for ad growth in India, particularly around reward ads, which effectively offer the consumers the same value but without having to pay for it.
• Gaming is also being used to drive consumption across other digital platforms by telcos, ecommerce companies, tech, and food tech companies. A lot of these players are now looking at gamification and also gaming as an integral use case to drive user engagement.
• Greater content supply at scale and quality from India is expected in the gaming domain. Multi-gaming platforms are expected to be a key play going forward. The multi-gaming platforms are uniquely suited to provide multiple offerings in one place to users, particularly casual and hyper casual users. From platform
• perspective, it makes the user acquisition and retention far more efficient. So this is something expected to grow as we move forward.
• Some of the challenges that online gaming is facing in India include lack of digital maturity and console culture. Given that India is largely a mobile driven market, almost all the distribution of gaming in India happens through Google and Apple Play Store. And what that has meant is that there is no real publisher at size that is available to build scale, which effectively means that a lot of the studios have not been able to grow and scale up to compete with global studios.
• Another challenge for gaming industry is that purchase price priorities are not consistently applied and government support is something that is absent from at least an overt support perspective. And when it comes to real money games that challenge becomes a little bit more starker as there are regulatory uncertainties that exist today around definitions of money game, game of scale versus game of chance, and which models are acceptable and which are not, as also which states accept real money games and which don’t.
• There are some three or four key elements that are going to make a fundamental difference as we go forward. One of the key elements is the rise of eSports as an underlying enabler for growth of the gaming sector. And while eSports has already been starting to see a lot of growth, it is still limited in terms of the number of titles that are made available, and therefore, limited by the demographics of users who are currently competing in these forums. As the market matures, it is expected that there will be a greater number of titles.
• The other key element that is expected to see growth which will make a fundamental shift going forward is cloud gaming. As we go forward, it is expected that when cloud 5g in particular becomes available at scale, cloud gaming should actually be able to replace at scale mid core and hard-core games, and provide opportunities for wider and larger demographics of the Indian gaming universe to actually engage in some of these more complex and higher end games.
• Leveraging artificial intelligence is going to be extremely critical and core to studios that have been looking to build their games and looking to engage with users as they go forward. The ability to understand individual users’ gameplay and tailor products to their needs will make a fundamental difference in user acquisition.
• When it comes to gamification of content itself, particularly around kids content, the whole convergence between animation VFX and gaming is something that we can expect to see more and more. And as games, particularly indie games, start becoming more and more complex, the requirement for animations and VFX skills are also likely to increase.
• Another area is augmented and virtual reality adoption, which will drive the growth for animation and VFX. But more importantly, not just in the media and entertainment sector, but also wider sectors, such as healthcare and defence.