Académique Documents
Professionnel Documents
Culture Documents
Prepared By
Sumit D. Kumtha
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1. SITUATION ANALYSIS:
1.1. Industry Analysis
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Competition has been especially fierce since many countries around the world offer attractive tax incentives and studios have demonstrated a willingness to outsource in response to these tax credits. The main reason why foreign entertainment firms are flocking to India is the cost advantage the country offers. For instance, in the US, animators can cost about $125 an hour; in India, they cost $25 an hour. Animation Studios in India offer animation service at 25 per cent to 40 per cent lower rates than other Asian studios and much lower than those of American studios. For many years, Indian VFX units catered mainly to Hollywood and ad film makers in India, with feature film directors - barring a few exceptions - keeping their distance. Suddenly, attitudes have changed. The market for VFX in India stood at approximately Rs 450 crore in 2010 against Rs 320 crore in the previous year, an increase of 41 per cent. The overall industry comprising animation, VFX and post production grew by 17.5 per cent over 2009 to reach Rs 2,360 crore, according to a FICCI-KPMG Media and Entertainment report. The overall growth was largely led by VFX and post-production, the latter rising by 17 per cent. The report says that animation and VFX together are expected to grow at a compounded annual growth rate of 18.5 per cent to reach Rs 5,590 crore by 2015.
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Unlike films and TV, Indian advertising cottoned on to the benefits of VFX very early. In advertising, VFX has already come of age with almost 80 per cent of commercials today using VFX in varying degrees, according to those in the industry. They estimate that a 40-second commercial, which would typically cost Rs 40 lakh to shoot, can be made for Rs 30 lakh if VFX is used instead. Conversion from 2D to 3D is a growing trend in the film industry. Currently in India, 2D to 3D conversion for a full-length feature film may take 4-6 months and cost over Rs20-30 crores, depending on the complexity of the execution.
1.1.3. Technology Factors In the last few years hardware prices have fallen dramatically along with easy availability of pirated software copies leading to low entry barriers and exponential growth in number of VFX studios.
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Applying Michael Porters 5-forces Model to the VFX services Markets in India, we can analyse the following points; SUPPLIER BARGAINING POWER a) Supplier concentration: Low b) Importance of volume to supplier: High c) Differentiation of inputs: Low d) Impact of inputs on cost or differentiation: Low
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e) Switching costs of firms in the industry: Low f) Presence of substitute inputs: High
g) Threat of forward integration: Low BUYER BARGAINING POWER a) Bargaining leverage: High b) Buyer volume: Low c) Buyer information: High d) Brand identity: Low e) Price sensitivity: High f) Threat of backward integration: Low
g) Product differentiation: Low h) Buyer concentration vs. Industry: Low i) Substitutes available: High
THREAT OF NEW ENTRANTS a) Proprietary learning curve: Low b) Access to inputs: Low c) Economies of scale: Low d) Capital requirements: Medium-High e) Brand identity: Low f) Switching costs: Low
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THREAT OF PRODUCT SUBSTITUTES a) Switching costs: Low b) Buyer inclination to substitute: High
Summarizing Michael Porters 5-Forces model of pure competition in seeking to develop an edge over rival firms by understanding the industry context in which the firm operates we observe that:
a. Supplier Bargaining power is low on account of low concentration ratio of suppliers due to overcapacity in this segment. b. Buyer Bargaining power is high. c. Threat of New Entrant is high as setting up an animation and VFX studio involves moderate fixed investments. d. Threat of Product Substitutes is high as VFX shots can be sometimes substitutable with conventional live action footage which is a low cost affair. Also there is low service differentiation within VFX service category. e. The Degree of Rivalry in the VFX service Market is high as the market concentration is low owing to large number of players in the market. Low entry barriers, low technological complexity and high bargaining power of the buyer have contributed to the high market dynamics.
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Competitive rivalry among various companies large and small operating in this space is very intense, most of the times the competition is in the form of price. VFX and Animation services sector is a highly unorganized sector the majority of VFX companies are not efficiently run. For the most part, the people running these companies don't have business backgrounds. Smaller companies are almost always artist-driven (meaning a talented artist or group of artists driven get together and start their own business). These companies are notorious for being mismanaged and the result is that they end up underbidding competitors to generate cash flow. This puts downward pressure on the industry puts pricing in general. Price cuts by one competitor are quickly and easily matched by rivals and once matched they lower revenues for all firms. Most domestic and international clients view animation& VFX service as a commodity and choice by the buyer is largely based on price and credit periods.
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Apart from these there are numerous other small and medium sized companies operating out of various cities and towns across India. Cities like Mumbai, Hyderabad and Chennai have pockets within these cities which house large clusters of companies offering various postproduction services mainly to television channels, smaller advertising agencies, regional films etc. Out of the key players based on current strategy,capabilities,competitors response profile and there known future goals we can conclude Prime focus,Pixion,Reliance MediaWorks , Tata Elxsi and FutreWorks are the companies which are the most aggressive to grab a larger market share.
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SERVICES
MOTION PICTURE PROCESSING,EQUIPMENTRENTAL,SOUNDSTAGE,SET DESGIN,ANIMATION,VFX,TVC,SOLUTION,STEROSCOPIC 3D CONVERSION,FILM RESTORATION,CONTENT PROCESSING.
SERVICES
ON SET SUPERVISION,PRODUCTION ASSITANCE, ANIMATION,MOTIONGRAPHICS,ANIMATICS,PREVISULISATION,DI,TELICINE,EDITING, RESTORATION,DIGITAL ARCHIVING,FILM VFX,TVC VFX,BROADCASTVFX
SERVICES
FILM VFX,TVC VFX,BROADCASTVFX,ANIMATION,VFX,TVC,SOLUTION,STEROSCOPIC 3D CONVERSION
SERVICES
DI,TELECINE,SCANNING,FILMRECORDING,SUBTITILING,RESTORATION,ROTOSCOP Y,COMPOSITING,MATCHMOVING,VFX,BROADCASTVFX,ANIMATION,VFX,TVC,SO LUTION
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SERVICES
ANIMATION, DI,TELICINE,EDITING ,RESTORATION,DIGITAL ARCHIVING,FILM VFX,TVC VFX,BROADCASTVFX.
SERVICES
ANIMATION, DI,TELICINE,EDITING ,DIGITAL ARCHIVING,FILM VFX,TVC VFX,BROADCASTVFX.
SERVICES
FILM VFX,TVC VFX,BROADCASTVFX.
SERVICES
DI,TELECINE,SCANNING,FILMRECORDING,SUBTITILING,RESTORATION,ROTOSCOPY,CO MPOSITING,MATCHMOVING,VFX,BROADCASTVFX,ANIMATION,VFX,TVC,SOLUTION,E DITING,SOUND ETC
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Direct Competitors
Service Description
Service Features
Strengths
Weakness
Marketing Strategy
Unorganized sector
Customized service
Low Overheads
Lack of QC
Aggressive Pricing
High
High
Small Companies
Customized service
Low Overheads
Lack of QC
Aggressive Pricing
High
High
Indirect Competitors
Aggressive Pricing, All major POST PRODUCTION SERVICES end-to-end Post Production solutions Effective Branding, Better customer reach
Large Companies
Economics of Scale
High Overheads
Medium
Low
Aggressive Pricing, All major POST PRODUCTION SERVICES end-to-end Post Production solutions Effective Branding, Better customer reach
Mid-Size Companies
Economics of Scale
High Overheads
Medium
Low
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Geographic Regions: Apart from India which is growing media market, globally there are
other regions which are lucrative from services view point these can be classified as primary markets like USA, Canada, UK and Certain Western European countries and secondary markets like certain South American countries and Middle East. S.E.Asian Market is difficult to access and owing to its cultural proximity to these countries is largely dominated by China. The domestic market is again broadly classified into two regional and mainstream. Overseas clients have a work flow which is more streamlined. Purchase Habits: The Buying Cycle for feature films and Corporate AV, TVC is different, Vendor selection for Corporate AV and TVC is shorter as the projects involve quicker turnaround time and net worth is less than a feature film project. Resistance to Change: Resistance to change is very high in the A+ segment as compared to other segments in both tvc and feature films where the client has very strong relationships with the vendor.
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STRENGTHS
Low Cost Business Model. R&D Capabilities. Training Division. Financial Strength of the Group.
WEAKNESS
Poor Sales Management Poor Brand Awareness Lack of Global Presence Ambiguity in Positioning
OPPORTUNITES
Growing media services outsourcing market. Emerging markets like game art, architectural walkthroughs, medical animation, product animation, animation for television and films. Regional films market and TVC market.
THREATS
Over dependence on TVC segment. Potential loss of financial backing from parent company. Price war from small and unorganized sector.
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2. Objectives:
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3. Marketing Strategy:
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1. Cost leadership Strategy-(Global Markets): Considering the global economic situation which has made it mandatory for various global studios to cut cost thereby making India a suitable destination for outsourcing on account of wage-arbitrage I purpose we develop a strategy based on the principle of cost leadership.The core principles of our strategy would be to build efficient-scale facilities through tie ups with other studios, tight cost and over head control followed by aggressive marketing and sales activities. This would enable us to capture a larger market share across various services globally.
2. Cost Focus Strategy(Domestic Markets): Extending the strategic outlook of global markets to
domestic markets we would like to focus on a strategy whose central theme would be low cost relative to leading market competitors but we would seek a lower-cost advantage by primarly focusing on TVC,Regoinal Films and c and d grade Hindi films.
3.2.2. Positioning Strategy Keeping in mind the global aspirations of the company we would have to device a positioning strategy that would reposition toolbox from being merely a vfx studio to complete media Solution Company. This positioning philosophy would remain constant irrespective of the market and would serve as a differentiating factor for the company.
3.2.3. Branding In tune with the positioning philosophy the company would have develop all marketing collateral that would address the issue of positioning toolbox as a media Solution Company. Web site needs to be gradually changed to incorporate more services and highlight our strengths like our financial capabilities, in context to our relation with the parent company, our IT strength etc. The website also needs to shed some light on our training capabilities and our technology pipeline. If possible we should also design a brand mascot for better brand recall. Inclusion of sections like downloads on the website where potential prospects can download e-brochures of the company services, can read about client testimonies etc.
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4. Marketing Programs
4.1.2. Pricing:
In order to achieve a larger market share and to develop a substantial body of work the company would need to resort to aggressive pricing. Most VFX and Animation companies operate under a fixed bid business model. In order to maintain a healthy cash flow we need to follow the principle of 50% advance and 50% on delivery.
4.1.3. Place:
Focus should be to keep pipelines busy at both locations Mumbai and Pune and whenever possible try arrange for a client visit to the Pune facility.
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5. Sales Program
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5.4. Scheduling:
Activity
Start Date
Assigned To
Building an extensive database of prospects both domestic and global for all services. Defining and mapping the sales process, for better sales management. Extensive telephone cold call campaigns. Extensive cold call campaigns through personal visits.
Sales team
Bulk mailing campaigns and monthly newsletters to reach out to other geographies and other segments Extensive cold call campaigns and follow up through personal visits for domestic clients
Sales team
Extensive telephone cold call campaigns for 2D&3D Animation and VFX FOR USA ,Canada and western Europe
Telecaller
Extensive telephone cold call campaigns for 2D&3D Animation and VFX for South America and Dubai along with other geographies for other services.
Telecaller
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5.5. Sales Analysis: 5.5.1. Reporting Schedule: Reporting would be weekly, with a review meeting scheduled on every Monday to review the sales performance of the past week and to brainstorm and carry out any measures that would help accelerate the sales process. Along with weekly reviews there would also be quarterly reviews.
Note: Kindly find attached with this mail a copy of daily sales report.
5.5.2. Benchmarking:
Sales goals and past year sales figures would be used as a benchmark for performance evaluation.
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5.6. Resource Requirment: 5.6.1. Marketing Collateral: Brochures E- Brochures Client Testimonials Case Studies Show reel
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