Business Description :

Using animation technology to meet client requirements for designing, modeling and other allied animation services in the areas of movies, serials, corporate advertisements, architecture, medicine, sports, gaming, etc.


Business Overview :

Providing designing and modeling services to various companies ranging from movies to medicine to sports. Animation technology is being widely used in any business where visual imagination and depiction is important. Advertisement, architecture, medicine, education and sports have a huge potential to leverage on the benefits of animation, apart from the conventional areas like movie, cartoons, games, TV serials etc. Such companies frequently require a cost effective source to model their designs, products and demos.

One can also target businesses that may not require hard-core animation services, but need animated models for internal business purposes.

Product Service Description :

Creating character designs, visual effects, motion graphics, customized models and movies etc. to meet the business requirements, of both conventional industries like movie and gaming and other industries that may require animation models and movies for internal business purposes.

All the products would be based on 2D and 3D animation technology

Market Opportunity

The global animation industry offers a tremendous growth opportunity. The industry size was $55 billion in 2005 and is expected to touch $75 billion by 2009.

The gaming industry, which heavily uses animation technology, was worth $19 billion in 2005 and is expected to touch around $36 billion by 2009. Thus gaming has the potential to provide great business opportunity.

The growing need for visual depiction of concepts has resulted in increasing demand for animation services. Newer technologies have only made such services more affordable.

While a chunk of animation projects do get outsourced to places like India, small and custom projects, turn out better when handled in close proximity with the client. This area is a potentially good market.

Competitive Analysis

Animation is a growing field and has significant competition. Some potential competitors are:

http://www.hybridmedicalanimation.com/
http://www.medicalanimatics.com/flash-site/
http://www.suite42.com/who.htm
http://www.moving-picture.com/
http://www.martestudio.com/

Marketing Strategy

>>Creating a website for promoting the business.
>>Apart from providing other information, the website would host a few animation videos that would serve as examples of the quality of work.
>>Sending emails to potential clients.
>>Affiliate programs could turn out to be an effective mode of advertisement.
>>Placing advertisements in magazines related to the targeted industries.

Sales and Distribution Strategy

Sales would be based on projects and contracts that the business generates from clients. Thus the key to growth in sales would be networking with potential clients like local filmmakers, game developers, medical schools and companies, big sports clubs and top educational institutes.

Key strategies should include focusing on small organization that cannot afford big animation companies.

One could also provide ancillary animation services, to expedite the completion of full-fledged animation projects undertaken by bigger companies.

Your USP would be your ability to deliver high quality customized animation products, at costs that are lower compared to other animators.

Operations Strategy

Quality would drive sales. In order to ensure quality and handle demand, one would require three or four skilled animators in the beginning.

Financial projections

Pricing: The average price of 3D animations ranges between $90 and $350 dollars for every finished second. Whereas the production price of 2D animation would range between $50 to $250 dollars for every finished second.

Price calculated on the basis of a day’s work may vary between $1,200 and $3,000 per day.

The cost of a scene in 3D animation may average around $1000.

The cost of an average 40-second animation may vary from $4000 to $5000.

Pricing differences are based on the complexity of design, modeling, animation, rendering etc.

If one can bag 30 projects having an average of 4 – 5 scenes each, and if each scene is priced around $1000, then for the initial year, the expected annual revenue would be around $150,000. By giving discounts to maintain price competitiveness, annual revenue of $125,000 would make for an attainable target.

Category	Year 1	Year 2	Year 3	Comments
Revenue	$ 125,000	$187,500	$234,375
Cost of Goods sold	-	-	-
Gross profit	$125,000	$187,500	$234,375
Expenses : -
Payroll	$75,000	$100,000	$125,000	For 2 highly skilled salary would be around $35000 per annum and other staffs $15000 is reasonable
Rent	$10,000	$10,000	$10,000	Rent for 800 square foot place.
Advertising	$5,000	$4,000	$3,000
Telephone	$1,000	$1,200	$1,400
Miscellaneous	$10,000	$12,000	$15,000	This includes depreciation for equipments, maintenance of equipment etc
Total Expenses	$101,000	$127,200	$154,400
Net operating Income
Other Income
Net Income / (loss)	$24,000	$60,300	$79,975

 

Capital Needs Analysis

Asset	Year 1	Year 2	Year 3	Total
Equipment	$ 15,000	$ 1,000	$ 2,000
Staff	$ 25,000	$ 20,000	$ 25,000
Cash	$ 2,000	$ 3,000	$ 3,000
Maintenance	$ 2,000	$ 2,500	$ 2,000
Totals	$ 44,000	$ 26,500	$ 32,000	$ 1,02,500

Risks and Challenges

• The primary challenge is to live up to the quality standards of the client. Since the work would involve building customized models, any quality breach would mean a lost client.
• As a start-up, maintaining cost-effectiveness would be another crucial challenge.
• Emergence of improved technologies would mean regular investment into the new technologies and that would result in a higher investment cost.
• Since animation is a growing business, competition from established companies, as well as new entrants, could mean squeezed profit margins.
  

Exit Strategy

Since the business would be focusing on meeting customized needs and catering to an ever-increasing business demand, one should wait atleast for the next 10-15 years before exiting.

Tips for Success

• Networking with clients
• High quality of service
• Focus
  on markets that are not catered by bigger animation companies

Books

ISBN NO	Book Title	Author
978-0306809187	Serious Business: The Art And Commerce Of Animation In America From Betty Boop To Toy Story	Stefan Kanfer
978-1589650077	Creating 2D Animation in a Small Studio (Gardner's Guide series)	Bill Davis
978-0312284282	The Animation Business Handbook	Karen Raugust
978-1401848187	Exploring 3D Animation with Maya 6 (Design Exploration)	Patricia Beckmann
978-0446696180	Running a 21st-Century Small Business: The Owner's Guide to Starting and Growing Your Company	Randy W. Kirk

Web Resources

Resource URL

http://www.animationmagazine.net/

http://usa.autodesk.com/adsk/servlet/index?id=7635018

http://www.adobe.com/products/aftereffects/gallery/

http://www.sba.gov/

http://www.geocities.com/danny_su/dec8art.htm

http://www.marketresearch.com/product/display.asp?productid=1659893