Hyderabad based animation studio DQ Entertainment, which raised £26.8 million on London Stock Exchange’s Alternative Investment Market (AIM) late last year, is on a roll.

The company recently announced its intent to foray into Bollywood with the likes of Pritish Nandy Communications and Percept Picture Company. Bollywood animation and live action films are on the cards. DQE also picked up a 20% stake in France’s Method Films.

Spearheading DQ Entertainment is chairman, managing director and CEO Tapaas Chakravarti.

Plans are afoot to set up its Visual Arts School across India, expand its production facilities and strengthen its hold on the film industry.

In a chat with Businessofcinema.com at the company’s expansive premise in Hyderabad, Chakravarti holds forth on the company’s vision and way forward.

Excerpts:

What’s brewing at the company as we speak?
A lot of things are happening and we will be making the necessary announcements in due course of time.

Tell me about the company’s film production plans. You’ve ramped up your operations now by getting into Bollywood live action films and animation films. What’s the game plan?
In the entertainment business, it was very clear that we could not be restricted to just one sphere like animation. Global entertainment companies provide a broad product offering in entertainment, which includes live action, animation, new media etc. And we are no different. Our decision to venture into live action was taken five years back. However, we were waiting for the right opportunity and at the same time, stabilize in what we were doing, scale our operations so as to attract the best of the industry from across the globe.

We are working with the likes of Electronic Arts, Disney, Nickelodeon, the BBC on animation and we also have major co-productions with the US, Europe and now Japan. So the game plan was very clear that sooner or later we would foray into live action. We will be looking at pure Bollywood Hindi movies, which will then be followed with regional films.

Another genre is live-action cum animation like Who Framed Roger Rabbit? or Space Jam. We have been working on two Canadian and one Italian television co-productions, which are of similar nature. Hence long format features are the next logical progression for us. The third is live action for the small screen.

What genre are you looking at in television?
We are looking at family oriented films but of course the central focus will be on kids. However, we are not looking at pre-schoolers. Our target is tweens and above.

On the movies’ front, we have recently announced our partnership with Pritish Nandy Communications wherein Sony Pictures Entertainment will be distributing PNC and our movie – Meerabai Not Out.

We are also working on couple of other live action projects along with Percept Picture Company.

How did DQ Entertainment’s collaboration with PPC and PNC come about?
We were looking for a partnership with organizations with a professional structure in place. Today there are a few companies like that in the film business. PNC and PPC are smart investors and hence we decided to partner with them.

People have to understand that IPR creation doesn’t happen overnight in animation. It is faster in live action films and so is monetization. It gives quick returns and hence we were attracted to it. Live action will also enable us to reflect our returns in the balance sheets in the same year. The cost comes out and one gets ROI, which shareholders are happy with.

Another area where we found synergy with PPC and PNC was the need to take India abroad. We are systematically working on things so as to produce smart budgeted films and take it abroad. That is a very big challenge.

Secondly, their attraction was of course to be with a company like ours, which has not only a humongous capacity but also quality which can be compared with the likes of Disney or Pixar.

PNC and PPC have fantastic networking in India, whereas we have equally good networking worldwide. So that was the synergy we found and decided to work together.

Are you looking at any other such partnerships?
We already have a few offers lined-up, which we may take up in the future but at this point in time we are not considering them as we have our hands full.

We want to consume our relationship where products should come out in the market. Our company’s mandate is to deliver and not just make announcements

DQ is a risk averse company and hence once everything is in place, we will make the relevant announcements and money will be raised. We will close the budgets, create global pools and bring distributors on board. As a company we make sure that the risk is completely mitigated. If we produce something in Rs 25 crores, then we make sure that the amount is guaranteed back to us within a set time-frame.

How do you guarantee that?
When you have co-productions, the risk is shared between the production, distribution and the monetizing companies together. When the whole group is working together, it can’t fail since combined energies, brains and emotions are being pumped into one thing. That’s the guarantee.

But what if the product fails? What’s the guarantee on that?
There is no guarantee on that. However, to ensure that we are on the right track, we have a large team, which does research about what the market needs. We don’t have ego and we don’t feed on ego, we feed on need.

Globally, before a television series goes into production, $1.5 – 2 million is spent on researching whether the content will work in the market.

I’ll give an example of Iron Man, the cast of the movie is in the age group of 35 to 40 years old. But the question was: Could the same be applied to a television series where kids would see Iron Man to be in his late thirties? We carried out a research and found that kids wanted Iron Man to be 17-18 years old. Now if the television series would have been made without undertaking research, it would have failed.

Today the series is sold in the US to Nick Toons, we have sold it in Europe and we will soon be closing deals for Asia. So a property can fail but at least as a corporate we can say that we did our best. If it fails then nobody is hurt too much because the investment is put in by everyone. We are clear that we want to do co-productions with like-minded people who have the specialization and expertise.

DQ Entertainment has also announced a cricket based live action project. Can you throw some light on it?
At this moment, we cannot talk about it. But you will hear about that very soon.

What kind of investment are you pumping into Bollywood?
We will be investing a huge sum into Bollywood over the next one year. With the animation and live-action projects that are lined up with Pritish Nandy Communications and Percept Picture Company, we will be investing close to $ 75 million into films and television.

Additionally, we have access to many film funds from Europe, Canada and Japan, which will come in with the money. So once the money is raised for a particular property and we’re sure that we will be producing it, we will announce the same and commence production.

Is there a benchmark on what kind of money you are looking for raising?
We are not raising money from the market. The money, which is constantly raised from the stock market, is meant for the company’s growth, infrastructure, technology, manpower training and development and on properties like Casper, Iron Man etc. We have to invest our part of the equity in it.

The money for production is actually raised from various people getting together and pooling in their resources. For instance, if a movie is being made on a budget of Rs 200 million and produced and DQ’s scope of work in it is say 25%, we may invest only 25% the money. Now we may raise the amount from the bank or somewhere else, but we will not go back to the stock market for it. However, if a big opportunity comes our way coming in terms of a major Hollywood or Bollywood deal and we need to raise a very large amount of money for it, we will go back to AIM and raise the necessary amount. The other parties involved will also do the same and hence the risk is share.

How much of the funds that were raised by DQ Entertainment on AIM have been utilized until now?
Approximately 70 per cent of the funds have been utilized till now in infrastructure building, manpower etc. Additionally, we also used the funds to give our five private equity investors an exit.

Majority of the money has gone into infrastructure development. Apart from Hyderabad, we have also opened our offices in Mumbai, Chennai and Kolkatta. Additionally, our School of Visual Arts is also underway in various cities. This will feed our manpower requirement. Our LA office has also expanded. The rest of the money is meant for safety, training, development and our expansion plans. Moreover, we also have a fairly robust order book, for the next two – three years.

Our aim is to grow at a faster pace now than before. So if need be, then we will go back to AIM or even the Bombay Stock Exchange to raise the funds but only if it is absolutely essential for us to do so. At present, we are covered for the next one and a half years for our planned growth.

Can you throw light on the new media division and the plans under it?
Our new media division came up one and a half years back. Its mandate is very clear – the division has three sub-divisions. The first is IPR (intellectual property rights) sales, licensing and distribution, which is looked after by our Paris, Los Angeles, Japanese and Hyderabad office together. The second is PR, which is looked after by Gautam and the third is the creative part that is handled by Rouhini.

The new media division’s core strength lies in the fact that it has partnered with Paris, Los Angeles and Japan for creative inputs. We are creating Indian IPs with a strong focus on mythology with a difference. Broadcasters and distributors have been knocking at our door for the last one year for such content. However, it is too early to divulge more.

What kind of mythological subjects are you looking at?
For animated features we are very clear that our first feature has to be mythology but for contemporary India. The quality will be very high and with lots of fantasy and visual effects. We will be combining our writers from the US and Mumbai to create this.

As far as international co–productions are concerned, what do you think of the interest that Hollywood studios like Walt Disney, Warner and Viacom have been showing in India lately, especially in Bollywood?
According to me, only the strongest will survive at the end of the day. The interest from the West is a great thing for our country because these companies bring in resources and India does not have subsidies and film funds like all European and Canadian companies do. Hence they are bringing in their experience, worldwide distribution and content creation strength. Moreover, they all love Indian stories.

The demand for content is so huge worldwide that for the next 10 years 30,000 animators will be required to fulfill that need gap as the west does not have content creators anymore. They can create the ideas but they can’t create the television series or movies. Today, only three – four big studios in the world are producing animated movies and you can count them on your fingers – Lucas Films, Walt Disney and DreamWorks.

Recently Warner Brothers inked a deal with Soundrya Rajnikanth’s Ocher Films for regional movies, which is fantastic news!

What happened to the software industry in the last 25 years is now happening to the entertainment industry. So it’s just the beginning and a very optimistic one at that.