Covid 19 lockdown impact on the entertainment business

Interview

Covid 19 lockdown impact on the entertainment business

The corona virus lockdown crisis is causing major disruptions across the entertainment business. Companies are redrawing their business strategies and looking at ways to overcome the challenges during this period and adapt to the changing global scenario. Broadcast & Film had an opportunity to assess the ground reality through an exclusive chat with P Jayakumar, CEO of Toonz Media Group & Kireet Khurana, a leading Animator & Filmmaker.
 
 

P Jayakumar – CEO of Toonz Media Group

Q 1. The impact of the Corona Virus lockdown has been severe across the board. More so when we look at the implications on the animation and the entertainment business. How do you look at this whole scenario?

Response: The Coronavirus pandemic has been the most unprecedented humanitarian situation that the world has ever witnessed. The lockdowns across the world, albeit a completely essential measure, has definitely impacted all industries, including the animation and entertainment business. Within the entertainment sector, the live-action film and TV industry has taken the hardest hit but its ripple effects can be tangibly felt in the animation industry. Movies and TV series filming has come to an absolute halt across the world and nearly all producers have stalled their releases. The pandemic and lockdowns have created a strange Catch 22 situation for the entertainment industry in general. As people are confined to their homes, the demand for content has nearly doubled but our industry is not entirely equipped to meet this demand as the personnel involved in the industry are also confined and working out of their homes. For animation, we require complex systems, data rooms and software, all of which is available in physical studios but it is very challenging to replicate the same model at homes on a large scale. On the good side of things, we’ve seen a trend wherein platforms are approaching content owners to license more of the content already produced. This will definitely see some increase in sales.

The financial impact has also been immense as advertising and merchandising revenues, which often finance the creation of content, have slumped in the past weeks. This is due to the fact that the product industry is not investing in advertisements as before because the manufacturing units are closed and they are unable to meet the supply-chain requirements of products.

The whole scenario seems worrisome, but it is essential that we remain optimistic about what the future holds.

Q 2. How soon do you think the business can bounce back from this impact and attempt to make a recovery?

Response: As the pandemic situation seems to be evolving every single day, it is quite difficult to predict when the business can bounce back. In fact, even governments and medical professionals are finding it tough to give us definitive timelines on the return of normalcy. However, realistically, it seems that by the second half of the year and particularly by the last quarter, there will be some respite and all businesses can attempt to make a recovery. Having said that, it is essential that all businesses have their business continuity plans in place with reasonable foresight. While is it necessary that we remain hopeful, we must also be prepared for any contingency at any time. At our company, we’ve ensured that our business operates as normally as possible and our sales as well as content deliveries continue to happen without much hassle. We’ve been able to achieve this through a sound business continuity plan which was implemented across the board so that all our employees can operate out of the safety of their homes.

Q 3.What is the other bottlenecks which hinder the growth in the entertainment and animation industry?

Response: There are of course other bottlenecks which hinder growth in the animation industry, regardless of the pandemic. The imbalance of demand for highly skilled creative personnel when compared to its availability is always a concern. This industry is constantly in need of highly skilled and talented professionals but as animation continues to be a niche field unlike many other fields, it is not easy to meet the number of such professionals required. One of the other key bottlenecks is the lack of tax credits, subsidies and incentives for this industry in territories like India. Animation costs are generally very high and securing financing from private investors and banks is a long-drawn process. Government aids such as tax credits and subsidies would greatly help in closing the funding requirements of projects.

 

Kireet Khurana, Animator & Filmmaker

Q 1. The impact of the Corona Virus lockdown has been severe across the board. More so when we look at the implications on the animation and the entertainment business. How do you look at this whole scenario?

Response - As we know India has been experiencing an economic slump in 2019-20 with growth rates plummeting to sub 5%. To add to the country’s woes, Covid19 has come as a big blow to not just our country, but to the entire world. When business goes down, the first casualty is usually advertising and marketing spends as the disposable income threshold is reduced significantly among consumers. This depletion has a cascading effect on the entertainment Industry of which the animation industry is a sub-set.

For the animation industry specifically there is a silver lining though. Most live-action productions cannot shoot, hence are virtually shut. Some live-action productions which are in scripting/development and pre and post production phase are still going on remotely. In the case of animation, many studios have moved proactively and moved their entire operations online through remote desktop. Artists sitting in their homes can manage and control their machines and still produce animation and graphics. Hence whatever little bit of advertising that is happening is being executed in animation, which is a blessing in disguise.

Q 2. How soon do you think the business can bounce back from this impact and attempt to make a recovery?

Response - There are many scenarios that are emerging and everyone is dealing with it differently. I’ve seen some organisations have culled people the day the lockdown happened. This was primarily because they weren’t doing well due to the unfavourable conditions before the virus struck. Covid19 was a huge blow which many companies clearly cannot wait out; hence they laid off people at the onset, which is tragic. Many Producers have backed out of contracts invoking the ‘force majeure’ (act of God) clause embedded in all contracts. Many organisations have given pay cuts to their employees and it’s difficult to guess when their pay packets will be back to their original amount. This purely depends on the overall economic recovery of India, which is interlinked with the world’s economic recovery. The third set of companies is willing to stick their neck out and stand by their employees, neither retrenching them, nor cutting their pay. They are perhaps more confident of their future and resilient in their financial outlook. There is still a great deal of uncertainty over how long Covid19 will be around for, but it seems it will be here for a few months at the least. Hence it’s very difficult to predict the implications over the long period. My guess is that this pandemic has set us back by at least a year. Economically, we have regressed maybe by a few years.

Q 3.What is the other bottlenecks which hinder the growth in the entertainment and animation industry?

Response - Pre-Covid19, many of the larger animation studios which were catering to TV channels and OTT platforms were anyway struggling. Some had multiple shows on various channels and platforms, yet were unable to break even because margins are thin and there isn’t enough to sustain downtimes for a large team. Many others have shut down. Channels and OTT platforms aren’t willing to look at developing an eco-system with win-win relationships. Eventually all stakeholders suffer. The same for the VFX industry, where margins are under pressure and studios do well only over a period of time. Till the country isn’t able to evolve a mature, IP driven model and a distribution / marketing ecosystem, animation will always remain a commodity where bottom lines will always be under pressure. This doesn’t however negate the fact that the Indian animation has grown by leaps and bounds in the past 2 decades and is among the leading animation service providers for the world and our local film and TV industry.



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