RP animation firms bank on quality vs China, India

By Lawrence Casiraya
INQUIRER.net
First Posted 09:34:00 05/22/2008

Filed Under: Technology (general), Cinema, Animation, business process outsourcing (BPO)

MANILA, Philippines -- The Philippines faces mounting cost pressure from China and India but the local animation industry is making up for it with quality and wealth of experience.

A Tholons report mentioned that the Philippines faces a serious threat from other key players like China, India and Singapore. The report cited growing demand for outsourced animation services, reaching $80 billion.

Although the country was cited as a strong player, the report said local animation firms are missing out on large-ticket contracts due to lack of capacity and resources, especially in 3D animation.

While estimated 2007 revenues reached $105 million, the report noted that it is considerably less than $185 million projected by industry group Business Process Association of the Philippines (BPA/P) in 2004. Tholons also estimates 7,000 employees as of last year, compared to 10,000 projected by BPA/P four years ago.

"The disparity in figure may be attributed to the lower number of large-sized (and more lucrative) projects being accepted by local players and particularly in 3D animation," the report said.

On the other hand, Tholons estimates $1.4 billion in revenues and 10,000 workers for China. India, meanwhile, is estimated to have more than 12,000 workers -- one-fourth of whom are freelance animators -- and industry revenues reaching $354 million last year.

Grace Dimaranan, Animation Council of the Philippines (ACPI) president, acknowledged that local animation cannot compare with those from China and India in terms of size.

However, she argued that this does not mean that the local industry is lacking in terms of capacity.

"Large contracts are usually coursed through the council (ACPI) and work is divided among studios based on capability," Dimaranan told INQUIRER.net via phone, noting that a number of studios are well-equipped in terms of 3D animation.

On the contrary, she also noted growth in the amount of work subcontracted to local studios, most of which, she added, are busy producing their own original projects.

"Unlike China and India, our battle cry as an industry is that we may not be as a big but we put in better quality and we have more than 25 years of experience as an industry already," she stressed.

She cited a recent project for her company Top Peg Animation, which involved a client from Italy.

"We were beaten by a Chinese studio because of costing,” she said. “After a month, the client called us saying they are pulling out pre-production work from China and getting us instead."

"The client is now gradually pulling out all its requirements in China and migrating it here," added Dimaranan, who is CEO of Top Peg.

The local animation industry traces its roots in the 1980s when internationally recognized companies such as Walt Disney and Hanna-Barbera began subcontracting work to the Philippines.

Based on Tholons' estimates, there are around 50 companies comprising the industry. Dimaranan, on the other hand, mentioned more than 80 companies, about half of which are ACPI members.

At present, she cited very good demand from European markets like Italy, France, Germany and the UK. The animation industry also benefits from gradual exposure the Philippines is getting in the region as an offshore destination for outsourcing in general.

"Every time we invite a client from abroad here, they are surprised to see that we have good infrastructure and good artists. Almost 80 percent of them end up investing in the Philippines," Dimaranan said.