Day two of CII Summit FX 2021 saw a session on ‘Special Policy Session on AVGC Sector – Focus on Games & Emerging Verticals’ which was moderated CII National Committee on Media & Entertainment VP and Technicolor India country head Biren Ghose and a mix of policy makers from the government and important stakeholders participated; the likes of which included Punnaryug Artvision and Screenyug Creations founder & CEO Ashish Kulkarni, Nazara Technologies Manish Agarwal, Mobile Premier League (MPL) SVP, strategy and business operations Naman Jhawar, CII India@75 Council chairman and JetLine Group of Companies vice chairman & managing director Rajan Navani, and Department of Commerce joint secretary Darpan Jain.
Setting the context of the discussion, Ghose shared, “From the CII’s perspective, policy enables transformation and while we have to do things at the level of academy and industry and multiple areas that enable exports, jobs and revenue generation, the industry has seen a massive pivot. On one hand, we see elements of our business like VFX dependent on live action that might have taken a bit of a stumble when things came to a halt in the middle of last year in 2020 in the pandemic, on the other hand, games went through the roof.”
Ghose shared that online games went up by 10 per cent ‘because of the huge growth in that segment’. Games, streaming channels and related industries like ed-tech have grown in India. He pointed out that the policy initiative is to bring clarity as we have newer sectors which are sometimes not understood by legislators and states or newcomers or start-ups who don’t know how to make a foray into our business.
Echoing the need for clarity and a more robust policy framework, Kulkarni laid out a comprehensive set of recommendations for the ministry representatives in attendance. He has been helping create a national AVGC policy for almost about a year and a half. Elaborating the journey of policy formation, he said, “We started this effort from November 2019 and we had several deliberations with the IMB ministry, commerce ministry and IT ministry and I remember in one of the meetings, we also had a cultural ministry. In some countries, it is also referred to as the heritage ministry.”
He shared that some of the salient issues that they needs to be a bind from state as well as center. Stating the reason, he shares, “Our industry is very deeply affected on both these fronts because there are two sets of governments for any studio. If studios have multiple locations for their establishments, then they have to deal with more than one state.”
Precociously, they had realised this a long time ago, he informs, when they were deliberating in early 2000. He shared, “This is why we started with state policies as well, creating a state-level ecosystem. So that has kind of paid off quite well. While states are doing their job, the industry thinks that there has to be a center-led guideline or policy; an overarching kind of focus like an AVGCXR policy with separate documents on animation, VFX and gaming. Gaming itself will have six or seven sections and then we will have XR and the comics industry. Comic industry is showing a strong sign of improvement especially after the pandemic began and digitisation.”
In terms of animation, there has been substantial deliberation. Kulkarni feels that what is missing from the sector is the effort to do co-productions or enabling co-productions.
He expounded, “Although we have 15 co-production treaties as of today, the major effort was to include animation and other forms of storytelling into the process. In some cases, there was an effort to include comics in the co-production ecosystem.”
Co-productions is integral part of animation production and it affects the kind of value chain if India is not a part of it. He added, “For two decades the industry has been pushing for it and doing co-productions without officially calling it a co-production by participation from the studio’s side which is a good thing that it has happened independently. There is a deep requirement to create a mechanism of co-production and also create a co-production fund in the first place. The way it works is that every time you do a co-production, you need a local broadcaster and a local distributor if you are doing a feature film as a pre-condition by many countries.”
Broadcaster, he shared, contributes with a part of incentive through funding the studios in their country and also passing on tax credits. Being a huge country, it is important for us to have a public broadcaster for any producer, especially for creating original IPs; absence of it is a 50 per cent loss in revenue and reach according to him.
Kids’ population in India is equivalent to a sum total of 40-50 countries put together; a very sizable number of eyeballs and he informed that the loyalty factor of our audience is very strong.
Detailing the importance of empowering the animation sector, he shared, “In the pandemic, animation was the only mode of entertainment and even education for children. We need a public broadcaster very strongly in India and we need to empower broadcaster to do co-productions so we can grow up the value chain and look at creating global properties out of India.”
Laying out more reasons to substantiate his stance, he shared, “With 106 years of cinema, the largest number of films in the country, largest amount of live action content in the country and the largest number of languages that we produce in the country in terms of content, we have achieved several benchmarks. Creating global properties will only come from animation and gaming and that’s the easy low hanging fruit for us to pick. That’s how global brands created out of India will go a long way in creating a soft power and also creating different kinds of revenue streams for the Media & Entertainment sector. And that is the biggest potential that we see right now. We have seen some successes on OTT whereby Indian brands like Mighty Little Bheem have become one of the largest consumed brands in the kids’ segment in more than 190 countries.”
VFX & Gaming industry
Kulkarni shared that incentives are happening for the producer or the brand creator so the services sector only has services promotion counselling and we need to see that VFX touches every production today whether it is films, television, OTT, advertisements and animation.
This sector is bringing a lot more stability and jobs and without a doubt one needs to look at that industry. Stating some recommendations, Kulkarni continued, “Create a IP hub where we encourage creating original content out of these places whereby the foreign producers and creators can also produce content out of these places so they know that India is ready for end-to-end value chain production in terms of skills and delivery so we need to do something which would also be proposed whereby we can actually create IP and give special incentive for IP creation so that monetisation and incentivising globally can happen out of this country in a different way. We are not asking for subsidies but value-based export creation out of the AVGC industry which is a very solid proposition.”
According to industry estimates, by 2030, AVGC would form more than 50 per cent of the media and entertainment industry. Gaming will take a lion’s share of all this which would be upwards of 30 – 35 per cent of the media and entertainment business. Kulkarni shared that we would be having more than 20 lakh jobs by then.
The initiatives that had been germinated decades ago are now seeming to take flight. Rajan Navani informed that the pandemic accelerated many of the areas that have benefited from the digital proliferation, particularly in the past 18 months and gaming is no different.
According to him this is an opportune time for us to look at how we can get an integrated policy where we can bring together all the stakeholders, align the interest of the government and the industry so we can meaningfully discuss growth around these areas. He shared, “From the value creation and the economy angle, if we are able to create a policy that encourages incentives for IP creation and the product-led economy from India, it will drive investments significantly into this sector, both internationally as well as domestic capital.”
Efforts from the Ministry
Domestically and globally, there is a significant potential for India to increase the share of the sector. AVGC at present hangs at only one per cent. Darpan Jain shared that there is a forecast that we can grow 20 times in the next 10 years and similarly on the employment side.
Sounding bullish about the sector, he asserted, “I don’t think I have found anyone who says that this sector won’t grow or it will stay stagnant or it will see a fall in coming years. The reason for that is that there are very clear growth drivers which are there in front of us.”
Jain feels that there are various drivers of growth which will chart the sector’s future. Elaborating his point, he continued, “They are in the form of expansion of smartphones which is happening at a pace no one could imagine. Alternative platforms are growing. We have seen people moving over to OTT platforms and the kind of content which is getting consumed. During the pandemic, data flow saw multifold increase. This sector needs a lot of support for which we are on the same page with the industry. India would be seeing a lot of potential and we have a large creative and skilled talent pool.”
According to Jain, this sector is not very infrastructure-intensive like the brick and mortar companies which need land and sheds and heavy capital expenditure for machinery.
Comparing the success of the IT industry to the sector, he shared, “It is not capital intensive and it doesn’t have many regulatory problems in terms of the way the business is conducted on the ground so in many ways it is similar to IT-enabled services sector and because of that this sector has a lot of potential in our country. The way IT services sector grew, now we are exporting 150 billion dollar worth of IT-enabled services and we are among the leaders in the share in software services so I would say that sky is the limit for us.”
How we can reach that potential?
While this sector has enormous potential, Jain feels we need to focus on how to build this sector in the country or improve its competitiveness and identify the requirements or the important interventions. He enlists six elements that can bring about an orderly growth to push the sector.
Six elements to push growth
He shared, “Skilling and education is important as to how we integrate the requirements of the sector in the new education policy and take it forward. R&D and innovation is where we need a lot of work. Start-ups are important as we have seen how unicorns have emerged in this sector. Strong focus on intellectual property needs to be put by department industry and internal trade and ministry of IB and they need to work together so we can have an ecosystem where we can promote the development of Indian IP and supportive regulation need to evolve, taking into account the futuristic needs of the society.”
He feels that those regulations should be based not on the current requirements but the futuristic needs of the industry, whether it is the regulation on the digital content or the regulation in the way the IP is used and enforced. According to him, there should be strong convergence between state and center’s initiatives to promote competitiveness.
The Role Of Department Of Commerce
He informed that their focus is on how we can promote exports. So first and the foremost, they are trying to get market access for the AVGC sector. Globally the sector is valued at 300 billion dollars and India stands at one percent of the share.
Jain shared, “And there is a strong room for increasing that share so how we can get more market access. There are 10 countries with which we are focusing on in getting better market access. UK, EU, Canada, Australia, South Africa, UAE, Israel and Bangladesh. We are targeting our free trade agreements with these countries in the next one and a half years. Audio visual sector and AVGC is our main ask from these countries. In the trade agreements, most countries are reluctant to commit in these sectors so we really have to negotiate hard to get market access.
Jain implored the industry stakeholders to inform them how they can propel the sector further. He asked, “From the industry side, tell us as to what we want from these countries, how we can prioritise our asks, and what can be there in the trade agreement. There are many platforms where we interact with these countries in the form of joint working groups or engagement at senior official levels and we have 160 missions across the globe.”
Speaking about the instruments at their disposal, he continued, “We have commercial reps on a hundred missions abroad who are there to pursue the interest of the Indian industry. How we can promote our AVGC sector and reach out to the global value chain? How can we integrate ourselves in the global value chain? Do our ambassadors need to meet with them on global meets? Focused promotional strategy is required to reach out to the markets abroad.”
On the export infrastructure, in other streams, testing and certification requirements are required to comply with the requirements of the businesses outside. Jain asked if they need the development of export infrastructure.
Under the audio visual sector, Jain informed co-production is their champion. He shared, “Incentivising co-productions is a subscheme. Ministry of broadcasting has a plan to incentivise coprod films which are shot in the country.” He shared that they would like to know of the regulatory impediments that are causing bottlenecks and assured that ‘ease of doing business’ is their mantra.
Naman Jhawar threw light on what can be done to form favorable policies. Speaking about the fledgling yet promising esports segment, he shared, “Esports is a culmination of a lot of AVGC sectors. It has elements of strong graphics, games, broadcasting viewership and path of skill for our youth. Youth is picking up esports in a big way as a professional career. ASEAN games have committed to launch esports in 2022 and we are also reasonably certain that Olympics will follow suit as well. It is one of the industries which is globally being through and members from the government are also looking at it in a deep way to promote it.”
We are hopeful that discussions like these will eventually lead to policies that put the wind in the sails of the AVGCXR ecosystem.