India’s animation, VFX segments set to touch $2.2 billion by 2026, online gaming to reach $4.6 billion: Report

India’s media and entertainment industry is likely to spur a more than two-fold growth in the market size of the animation, visual effects and gaming sector in the next four years, a report said.

The AVGC-XR sector (animation, visual effects, gaming, comics, and extended reality) currently accounts for about 20% of India’s media and entertainment (M&E) industry, according to the CII-Grant Thornton knowledge report titled ‘FX & Beyond: Shaping India’s AVGC Landscape,’ launched at the CII Summit FX 2024 on Wednesday.

The animation and VFX segment alone is expected to surge to $2.2 billion by 2026 from $1.3 billion in 2023, increasing its share of the M&E industry from 5% to 6% during this period. Online gaming, valued at $2.62 billion, is expected to reach $4.6 billion by 2026, with its contribution to the M&E sector rising from 10% to 13%, according to the report.

Also Read: Top 3 VFX stocks to add to your watchlist

India’s AVGC sector had an overall market size of $2.3 billion in 2019, which was about 0.7% of the global market. The sector is expected to grow 2.2 times over the next four years, driven by market forces, and constitute about 1.5% of the global AVGC market.

According to the report, the AVGC sector in the country is flowing with opportunities. Rising demand for high-quality content in entertainment and gaming is driving growth, and India is positioned to revolutionise content creation and gain global acceptance.

Boosting growth

Technological advancements, including AI (artificial intelligence), ML (machine learning) and 5G are enhancing efficiency and unlocking new creative possibilities. Government support through strategic investments in talent development and infrastructure is encouraging growth.

The sector is expected to create over 160,000 jobs annually, with 2 million new jobs anticipated by 2030.

To harness the sector’s potential, the report calls for swift implementation of the National Draft Policy Framework for AVGC-XR. Key recommendations include establishing a self-sustainable fund to support small and medium-scale content developers, with clear budget allocations and an inclusive scope that extends to training institutes, technology providers, and marketing efforts.

Also Read: India to be big stage for VFX co ILM that powered Star Wars

The report recommends establishment of a National AVGC-XR Mission to provide a roadmap for the sector, leveraging India’s cultural heritage to appeal globally and reducing import duties on essential equipment.

“India needs to embrace the more virtualised world and provide access to a greater degree of multilocation high-end hubs for large-scale high-tech production. The AVGC policy and the National and State centres of excellence should be a network of pathways that will see greater digital transformation,” Biren Ghose, chairman CII AVGC-XR and managing director - Technicolor Asia Pacific, said in the report.