VFX and Economics

With the industry booming after the Covid-19 pandemic, it is essential that we take a deep look into one of aspects which goes into making a movie, the VFX, from an economical perspective.

VFX and Economics
image source: www.actionvfx.com/

The film industry is present world-wide, from Russia to North Korea. Whether good or bad, it continues to be one of the largest sources of entertainment and information throughout the world. With the industry booming after the Covid-19 pandemic, it is essential that we take a deep look into one of aspects which goes into making a movie, the VFX, from an economical perspective.

VFX, or visual effects contains any imagery which has been created or manipulated using computer software. From blowing up the White house to making Shah Rukh Khan into a 3 foot tall dwarf, all this comes under the domain of VFX. If done right, it can bring a movie to life but on the flip side, if done wrong, it can be the downfall of a particular film. Being responsible for films like Bahubali and even developing Khaleesi’s dragon in Game of Thrones, the Indian VFX industry is one of the major players in the game.

The film industry is one of the few which managed to survive through the pandemic. Netflix and Amazon Prime video were the main source of entertainment during Covid-19. About 48% of the US public had subscribed to at least one streaming service. The advent of the pandemic resulted in one of the lowest points in the Indian cinema industry, with Tollywood losing as much as 9 billion rupees (102.5 million euros) and cinemas and theatres suffering as the government completely shut them off. However, the industry was able to bounce back quickly, with an increase in 78% in the revenue earned and in specific, the VFX sector growing by 20% after the initial shock.

Although, the film industry is not the only beneficiary of the pandemic. Covid-19 proved to be a paradise in a dream come true for the gaming industry as well. Spending on video games in the US jumped by 35% in 2020 and the console sector itself has made over $45 billion. The Indian gaming industry also showed an unprecedented rise of 38% catapulting it to the top 5 mobile gaming markets in the world. Unlike the film industry, the gaming industry didn’t face any severe setbacks during the initial hit of the pandemic. In fact, in-game spending in video games increased significantly because it was one of the few outlets of money. From skins in Fortnite to players in FIFA, since there wasn’t much spending on other things, it was easy for people to justify spending on such things which they were earlier hesitant about.

These two industries thrived where all else failed simply because the main attraction of these industries is entertainment without going outside your home. Hence, people found it easy to fall back on these activities when they were in lockdown, explaining their growth. The Indian film industry contributed around 200 billion rupees to India’s GDP in 2020 whereas for the gaming industry, it was about a 100 billion rupees. Both of them were estimated to show extreme growth by the year 2024, with the film industry growing of 194% and the gaming industry of 150%! Along with that, both these industries are responsible for massive employment in the post Covid-19 era. The film industry employs about 2 million employees whereas the employment rate in gaming industry increased by approximately 100%.  VFX is an essential part of both these industries. It accounts for an average of 20% of the total post-production cost of a movie and almost all of the gaming industry is based on VFX.  Thus, it is clear that VFX, through these industries, which were in a sense, seen as uncultured (specifically the gaming industry, which did not have much scope in India before the pandemic) acted as an essential support system to India’s economy during the trying times of the Covid-19 pandemic.