3dMaxMedia, Pentamedia tie up - Views on News from Equitymaster

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3dMaxMedia, Pentamedia tie up

Mar 9, 2000

3dMaxMedia, a Silicon Valley–based 3D animation start–ups has tied up with Pentamedia Graphics for setting up a production facility catering to the entertainment industry involving an investment of over $ 5 million (Rs 200 million). Pentamedia specialises in 2D/3D animation, special effects for the film and broadcast industry, multimedia based IT solutions and computer business tutorials (CBT). The company has executed various 2D/3D animation projects for large US companies like Funimation Productions (for Cyboar), Improvision Corp (Sinbad) and Rich Animation (King and I).

The logic for the US company to setting up a production facility in India is the vast difference in rates for animation jobs per minute of screen time charged. In the US rates range anywhere between $ 5,000 and $ 7,000 per minute of screen time. Animation studios such as Pentamedia offer services at around $ 2,000 to $ 2,200 per minute.

However, not much is known about the size, operations, or promoters of 3D. The promoters are Indian nationals who have a tie up with Hewlett Packard for 3D animation content creation. Nothing is known about the revenues that would accrue to Pentamedia and whether the deal would envisage a share in the profits or fixed cost plus margin for Pentamedia. Hence, it is difficult to make a call on the impact of the deal on Pentamedia’s numbers.

Market View:
Analysts are bullish on the stock primarily due to a change in the valuation of the media stocks themselves. However, in the past it is the negative perception about the management that has led to a lower discounting of the stock.

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