Phantom Digital’s CMD Bejoy Arputharaj discussed the company’s journey from a small studio setup to becoming a global VFX player. He spoke about its expansion through acquisitions, international projects, and plans to strengthen its presence in the global media and entertainment industry.
Mubina Kapasi: Hello everyone and welcome to SmallCap Spotlight. I’m Mubina Kapasi and today we have with us a company that’s responsible for the effects that you see in Marvel movies and even in Pushpa 2 for that matter. I have with me the Chairman and Managing Director of Phantom Digital Effects, Bejoy Arputharaj and he’s here to tell us the story about the company and of course his own career journey as well.
Bejoy, thanks so much for joining us today on Small Cap Spotlight. To begin with Bejoy, let’s understand a bit about the company’s journey. I mean, you started off in a small studio apartment and today you’re a global VFX powerhouse, what with your recent foreign acquisition.
So tell us a bit about the journey.
Bejoy Arputharaj: Yeah, thank you Mubina and SmallCap for this opportunity. Of course, you know, as you introduced, you know, we’ve been in the creative space for many years now, you know, Phantom, as you all know, it’s a 14-year-old company founded in 2011 by me.
Phantom is actually a company which was born out of passion. So I am a person, you know, very fond of visual effects and animation from my childhood onwards, you know, like so I decided that I’m going to be in this field when I was doing my 10th grade. So that’s when everything started.
I was, you know, taken to watch a film from my school, that film is called Jurassic Park. So that’s what inspired me. So my brother, he still used to say that, you know, you told me that day that, you know, when I grow big, I’m going to do this.
So that’s how determined I was when I was a kid that I’m going to do this someday because it felt really surreal, you know, like it felt like a magic, you know, imagine, you know, when you see that film, you can see the dinosaurs come alive and they look so real. And it is really a magic, right? You know, it’s nothing like what you see in the small, you know, illusion tricks, but it is it is pure magic. And it really mesmerized me and, you know, inspired me to do something like that.
And that’s when I decided that I’m going to be doing this when I grow big. So, you know, I started following all the Hollywood films. I was watching, you know, almost all the Spielberg films.
And so that’s when everything started. And after my schooling, I got my own computer. And then that by that time, you know, even having a computer, I come from a very rural background of Tamil Nadu.
Even having a computer is a very, very rare thing. So I, you know, I convinced my parents and I bought a computer. And then I started my own research on how and what kind of software people use to create this kind of, you know, animations and stuff.
So I, you know, even internet is very, very rare. At that time, we call it as a dial-up connection, where we have to pay for each and every second that we use. So, you know, I spent a lot of my parents money and, you know, downloaded all those softwares.
I’m a self-taught person. So I learned all these things through the help documents that comes along with the software. There is no YouTube, there is no video tutorials by then.
So there are very few websites that, you know, that people just have, you know, like the blogs are all not very famous. So there are very few information out there in the internet to learn things from your own. So all I was left with is the help documents that comes along with the softwares.
So that’s how I started. And, you know, my passion grew when I, you know, after I finished the college, then I, you know, started working as a freelancer, doing all these 3D animations for TV channels and commercials. And then I decided that I’m going to, you know, specialize in this.
And then I came to Chennai. I did my post-graduation in visual effects and animation. Back then, even the colleges are not fully equipped to, you know, teach us on the complete knack of this.
So I found my own way to, you know, learn there. And then I joined a small company in Chennai. And from there, you know, I grew.
I worked with a few major companies after that. And then by 2010, I decided that I’m, you know, I wanted to work on films that excites me, like, you know, all these creatures and environments, like what you see in, you know, the Van Helsing and films like that, you know. So that’s all inspired me, actually.
Creating that magic in big screen is what inspired me. But unfortunately, I never got an opportunity to work on such films when I used to work with Indian films. Because, you know, we were operating back then, you know, it was very small budget and very rarely big films come in.
And even those films will come with very short timelines and not every studio will get an opportunity to work on that. So there were like so much of restrictions. So I decided to move out and work for Hollywood itself.
So that’s when I got an opportunity from one of the, you know, world’s number one company. And unfortunately, they gave me an offer, but they were not able to give me a visa. So I left my current job since I got this offer.
But then now I didn’t get my visa also. So I had a small gap between, you know, getting the visa and the current job. So I thought I will do consulting, you know, till then.
And that’s when the idea of, you know, forming a company, you know, came true because I was I was consulting the company in Delhi. And one day I was just sitting alone in my stay place. And all of a sudden, in the middle of the night, I got a call from a US filmmaker asking me, you know, they just went through my website where I had my personal portfolio uploaded, my works and showreel and everything.
So they just asked me that, you know, will I be interested to work on their film for visual effects? So that’s the starting point of everything. So I just felt that I can definitely do it. It’s a complete film, but I was just a single person.
And then they asked me that, will your company be interested to, you know, work on this film? So my website name back then was Phantom Effects. So that’s how the name Phantom Effects also born. Phantom is my childhood hero.
So Phantom Effects website was created, like way back in 2007, actually. So that was created for my personal portfolio. And that particular person who spoke to me, he thought that it is a company name.
And he asked me whether my company will be interested to do it. So that’s how I got inspired. And, you know, everything started from there.
So I worked on that film. I successfully delivered that film. I took, you know, many of my friends as freelancers.
I just played the work. And, you know, naturally, I’m a good leader. And I’m a very good problem solver also.
So I was able to figure out all the, you know, issues and problems. And I delivered the project in a very good success rate. And then I started approaching, you know, similar filmmakers.
So then I thought, okay, this is a good way of, you know, keeping me inspired. And that allowed me that creative freedom. So I thought, let me do it till I get my visa.
So that’s how everything started. And then I came back to Chennai, since I had a lot of, you know, all these contacts and a few projects are with me. So I thought, let me do it from Chennai itself.
And then I came to Chennai. And then I got one very interesting project from Canada, a complete film, a horror feature, which actually demanded more people to work on that. So I cannot single-handedly, you know, deliver that film.
So I thought, I will hire a few freshers and then, you know, deliver this project. And then after it is finished, let me go back to this abroad, you know, let me continue with my abroad plan is what the idea was. But fortunately, that project went very well.
We rented out in a small apartment and I rented out all the furnitures. I bought a few computers and then I successfully delivered that project. But even before completion of the project, I started getting more projects.
So that’s when the idea of continuing that, because I felt that I had a lot of creative freedom and I do something on my own. So then I dropped my plan to move abroad. And then I continued it.
That’s how, you know, what started as a dream with just three, four people in a small rented apartment has now grown up to, you know, 650 plus artists spread across the globe with four operational studios in India, Chennai, Hyderabad, Mumbai, and Bangalore. And after becoming public, you know, we, last year we acquired a company called Tipper Studio. That’s a 40 year old legacy company, as you know, you know, and Mr. Phil Tippett, founder of this company, he’s the one, he’s the animation director for the film, Jurassic Park.
So that’s, that’s his company, Phil Tippett’s company is what we bought. So, you know, it’s, it’s a full round circle, I would say, you know, I, what started as a dream is now becoming a reality. So I’m, I’m still chasing my dreams.
There are so many things, you know, it’s, it’s not, it’s a very small baby step that we have taken. So, you know, the vision for the company and myself is to, you know, position ourselves as a global company in the media and entertainment sector. So that’s what we are focusing right now.
And we are moving forward.
Mubina Kapasi: Well, yeah, I mean, that was going to be my comment as well, like life’s taken a round circle, right from being inspired by Jurassic Park to actually acquiring the studio that’s responsible behind the genius of Jurassic Park and from being, you know, from having a visa that’s, you know, tentative to actually acquiring a US studio. It’s truly marvellous and self-made journey as well at that.
So tell us a bit about this acquisition. I mean, Phil Tippett is a big name in the industry. How do you plan to leverage that, that name and expand your relationships to acquiring more Hollywood projects?
Bejoy Arputharaj: So Tippett Studios, you know, Tippett Studio is a 40 year old, you know, legacy studio, as I said, Mr. Phil Tippett, he comes from a stop motion animation background.
So he, you know, even before computer graphics was founded, you would have seen all this puppetry, animated, you know, movies, probably. I’m not sure if you’re from this younger generation, you know, you might not have seen it, but there was, there was a technique called, you know, puppet animation. So, you know, stop motion animation.
So he, he comes from that era actually. So he has contributed, you know, in major films like Velo and also many, many films, Star Wars. So he, he used to do all this stop motion animations before.
And then after computer graphics took over after Jurassic Park, you know, he, you know, he was just transforming his, you know, stop motion animation technology into the computer generated imagery technology. So that’s how he, you know, transformed himself. And he then founded Phil Tippett, founded Tippett Studio.
And, you know, over the years, they have contributed to all the major, you know, films, you know, and they are very closely working with all the Disney shows and Marvel shows. And the brand itself has a very, very good name among the top production houses. So the very reason for buying Tippett Studio is, you know, we thought that, you know, like to grow there, to start something there and grow from there and get established is going to take us time.
So the decision is to, you know, acquire a company which is existing and has the brand value already and grow from there. And Tippett Studio, you know, due to the market, you know, downfall in the last three, four years, and, you know, they were going through some tough times as well. And Phil is, you know, pretty old actually, like, you know, he wanted to, he wanted an exit, you know, not, not an exit immediately, but he wanted to, you know, lessen his burden, you know, so he thought, you know, helping shoulders are, you know, very much appreciated at that time.
So we stepped in and he took over the company. And now, you know, we are building Tippett’s brand and we are building Tippett’s business team as well. You know, through that we were able to, you know, pitch in for more projects because, you know, before that, before our acquisition, they were just looking out for Tippett’s workforce, you know, so it is it’s a boutique studio and they were just picking up work that is capable within their abilities.
Now, you know, with Phantom’s huge manpower, execution power backing them, they are able to, you know, pick up more work. So, you know, we are building the business team there and, you know, picking up more work. With Tippett’s branding, we were easily able to knock all the major production houses doors and, you know, open up opportunities for us.
So that is a very, very strategic move that we thought will work out and it has definitely, you know, yielded great result through Tippett’s brand name. We were able to, you know, pitch on high-end projects. And also, we were able to establish new clientele with such a big brand name.
And about Milk and Lola, this happened a couple of months back. You know, we were in a principal agreement to acquire them and almost the DD and everything is done and we are in the process of drafting a SPA right now. So, with Tippett and Lola, it is, you know, again, they are also an Oscar winning company.
Tippett has two Oscars and multiple Emmy awards and, you know, many awards. And Milk also has two Oscars with them. Milk and Lola.
Milk has one Oscar and Lola has one Oscar. So, the creative supervision team is very strong there, you know, they are very well known for their high quality work among the industry. And most of the Hollywood studios are nowadays looking for studios in London and Europe to get their work outsourced, you know, because of the tax incentives.
So, we thought, you know, having a studio there is going to help us out. And that is when, you know, Milk and Lola post showed up in our radar and we thought of picking them up, you know. So, talks are going on.
Hopefully, everything should be, you know, going positive and closed by this month or maximum by next month is what we are expecting. I am very interested in your Chinese expansion because, you know, that is a market that is a bit different. We are separated by the entire language barrier, etc.
And then there are some, you know, regulatory complexities as well that get thrown in.
Mubina Kapasi: So, I want to understand a little bit about your plan for the Chinese market.
Bejoy Arputharaj: China is actually a challenging market, you know, for especially for visual effects, you know, we have been trying to penetrate Chinese market for many years now.
But China has a very good potential as well. At the same time, you know, they are producing content equally with great budget, like equally to Hollywood, maybe not equally to Hollywood, but at least, you know, slightly lesser than that. They have produced so many big contents and, you know, there are a couple of recent shows which we worked on had millions of dollars as their VFX budget alone.
So, it is a really very, you know, very fresh market and it is growing as well. But unfortunately, they do not have the kind of, you know, quality visual effects companies there. So, they are always on the lookout for a Western company to support them for their visual effects needs.
And that is when we thought we will take this opportunity and, you know, leverage it. And we, through our, you know, overall this many years, you know, we established our own connections and we partnered up with the local post house there. I mean, production house there.
And the government there was very welcoming. So, you know, they offered us free office space, free accommodation, you know, to set up things and move forward from there. So, it has been a year and we have worked on a couple of major Chinese production as of now.
Through Tippett, we were able to pitch and, you know, grabbing work. And so, it is proving to be very, very effective. And to give you a comparison, China has more than 60,000, you know, theaters, where India has only 10,000.
So, China has a great market. And recently, one show from, one animation film from China has collected more than 16,000 crores. So, that is the scope of China’s market, actually.
So, you know, China is a very big market. And, you know, because we wanted to diversify our, you know, business activities, not just relying on the US or the Europe, but we wanted to be spread across the globe and pick up work from across the globe. And so, that is what we are doing right now.
You know, we have diversified our business approach and, you know, mitigate the risks. So, that is yielding very good results as well.
Mubina Kapasi: Since you are across, spread across all of these different geographies, you have certain revenue targets as well for Tippett, which we will speak about.
Do you have any mix, any geographical mix that you would be looking at?
Bejoy Arputharaj: Yeah, of course, you know, like we are expecting China to contribute, you know, a lot this year. So, I do not have the numbers exactly right now with me, but, you know, we are, as I said, you know, China, though it has been a one-year company, but we have been able to, you know, the last year, Tippett was able to pick up more than 6 million worth of work from China alone. So, it is a very good, you know, market.
So, we are looking at a major contribution this year from China.
Mubina Kapasi: Understood. Okay.
All right. You know, I was just looking at some numbers. Last fiscal year, you grew a good 14-odd percent despite industry challenges, you know, with the Hollywood strikes, etc.
You are projecting around 160 to 180 crores this year with the Tippett consolidation. So, could you tell us a bit that once the industry normalizes completely, any medium-term revenue targets and also how you see the margin profile evolving, if possible?
Bejoy Arputharaj: Yeah, you know, the margins we are expecting are somewhere around 29 percentage part, part, you know, is what we are expecting this 25-26. And Tippett probably will be, you know, covering 30 percentage of profit because, you know, we will be executing from here, we will be using Indian workforce majorly.
So, that is what, you know, we are looking at. So, on an average, we are looking at 29 percentage part this coming year.
Mubina Kapasi: Okay, super.
That sounds great. Let us talk a bit about how you would differentiate Fantom, you know, from other global VFX players because there are, of course, quite a few players. Any unique value proposition that you would like to share that you offer to your clients?
Bejoy Arputharaj: Yeah, you know, Fantom is, you know, very well known for its quality and also very affordable costing, right from the very beginning.
We have even contributed to all the major Hollywood films, you know, in a creative way, not just a non-creative work, but, you know, very creative works, you know, we have delivered and, you know, in a very affordable rates as well. So, that itself is a very unique proposal, you know, we have a proportion we have from Phantom because Phantom, you know, unlike others, there are many VFX houses in India who claim to be a VFX studio, you know, they are mostly into the non-creative side of things. Phantom, right from the very beginning for 14 years, you know, we are in the creative side of things and we have a very good track record of delivering, you know, hundreds and thousands of shots on each and every movie.
For example, we have contributed ourselves in this Pushpa, we have contributed in recent, you know, show called Saare Jahan Se Acha from Netflix, you know, all shots, you know, all films had like hundreds of visual effects shots. To deliver hundreds of visual effects shots with high creative work, you know, like this, all these Netflix shows, recent shows had multiple number of aircrafts and effects, crafts, you know, I mean crashes, blasts and, you know, all those things, you know, it’s all very high-end, highly creative work that we have contributed ourselves to and last year we worked on a project called Island which had more than 4500 shots, which had a lot of creature work and we have contributed ourselves into almost all the major films like from Triple R to Bahubali, you know, name it and we are there and we are also committed to India’s most anticipated next major film as well right now. So, Phantom has such a track record and it is, that itself is a very unique, you know, proposal for any of the production house to come to us because they were hesitant to come to an Indian studio because they thought that the quality is not to that bar, you know, but Phantom has raised that, you know, the quality expectations that what they had towards an Indian studio.
We have, you know, delivered a lot of high-end visual effects shots for a lot of Hollywood films, it can be Chinese films and European films, we have done high-end, you know, visual effects contribution to all the major films. So, that itself is a very unique position for Phantom because of course when you compare to major film, you know, visual effects houses like ILM or Vita, they are top, you know, entire visual effects houses and they are there in industry for many years and their turnovers are in billions. So, that is, you know, we cannot compare ourselves to them immediately now but the vision is to reach such a point that, you know, we are rated one among the top, you know, five players in the global market.
Mubina Kapasi: Well, never say never, you are watching Jurassic Park, one day next you acquire the studio so why not, you know. I would like to know a little bit about the day-to-day challenges you may be facing while running the business and also perhaps more fiscal challenges because as we understand it’s a capital intensive business plus there are project delays etc which may not be in your hands. Could you share some of the challenges you face?
Bejoy Arputharaj: You know, there was challenges last two years, you know, because of the, you know, the writer’s strike and, you know, the economy is not that great and, you know, the habit of movie watching, you know, that has come down and so there was a crunch the last one and a half, two years but now things are coming back, you know, gradually.
Maybe it might not be the same like what kind of boom we saw in 2021 but it is coming back and, you know, OTTs are, you know, gearing up for many of their new productions and almost all the production houses are, you know, gearing up and a lot of productions are all in shoot and we have, you know, a lot of works showing up, a lot of bidding inquiries coming up so the industry is really picking up and this year is, you know, we will be like witnessing that, you know, surge in the demand as well. So other than that, you know, challenges when you say challenges, you know, of course there are challenges when it comes to this kind of unforeseen circumstances like, you know, people just, you know, walk in and, you know, into a strike and everything gets halted and so I think that is all done for good now and, you know, for another 10-15 years, you know, it is not going to happen and people often talk about AI. So, of course, AI is, you know, generating a lot of stuff but that is not going to be a replacement for visual effects because it is not, you know, anywhere closer to what a filmmaker would want.
So it is creating random, you know, images and random videos but it is not equipped enough to replace any visual effects company. So that is a slight challenge that we are looking at but what, how we are trying to adapt and evolve is we are, we have set up a small research team in AI for the past one and a half, two years. We have created our own AI tool sets.
We have implemented a lot of AI tool sets into the pipeline. Instead of generating images like how, you know, the online platforms offer, we are, you know, implementing AI tool sets to improve productivity. So that way we were able to, you know, stand on top of the other competitors and we are giving an edge, we are having an edge and we are giving that advantage to our clients as well.
And we have also established our own offline platform for creating, you know, generating images because almost all the major production houses do not want us to use any AI tool sets, online tool sets. So we are, you know, we have our own offline models and offline setup for AI tool sets. So, you know, we are gearing up in the AI competition as well and of course we are staying ahead of a lot of others, you know, because recently I had a meeting with one of the major platform and they were so surprised to see what we have done because they haven’t seen something else like that even with, you know, any foreign studios.
So I can very well say that we are staying ahead on our AI research and implementing our tools. So that’s how we are, you know, we are just traveling with the technology and evolving with it. So the challenges can be overcome.
The globe are left with no options but to come down to Asian countries, looking out for resources or hiring people from here, you know. So that is one thing and even the production houses are, you know, now aware that India can produce very good quality content. So, you know, a lot of creative works are being diverted now, but it’s, of course, it is not very easy to win their trust and pick up projects that easy.
But, you know, with companies like Tippett and Milk with us, you know, we were able to break through all the major, you know, production houses and win their trust and pick up work. So that’s really helping us out actually.
Mubina Kapasi: Okay, how do you see the company evolve over the next couple of years in terms of the services you offer? You mentioned becoming, you know, maybe a comprehensive media group.
What does that look like? Not just in terms of, you know, market positioning, but also maybe geographical footprint?
Bejoy Arputharaj: As I said, you know, we are spreading across the globe and we are, you know, our clientele is not restricted just to America, but, you know, across the globe. The reason is we don’t want to get stuck with another writer strike or anything else. You know, what is happening out there now, you know, people just wake up and put new rules on in their country.
And so we don’t want to get stuck with, you know, any new, anything, any new risk. So, you know, we are just mitigating our risk. We are spread across the world, picking up projects from across the world, focusing more on the APAC region and also, you know, the Middle East and European region as well.
We are not completely dependent on North America or just the Indian market. And we have a very strong foothold on the Indian market. We are the only partner who has signed an RPA with Netflix.
And we are working with almost all the major OTT platforms, major production houses. And we are also a primary vendor for the most anticipated film from India now. So we are mitigating risks.
And that is the reason we are trying to spread across the world. It is just for picking up business. Of course, if there is a need, we will be starting up a small studio setup and hiring people in the local other regions as well.
But it depends on the projects and its need. So right now, we are in a very good strategic way that we have placed ourselves. We were able to pick up projects, high-end creative projects from the very big productions as well.
We recently worked on Marvel shows, Disney shows. So it’s going very good as per plan.
Mubina Kapasi: All right.
Finally, I’d like to hear a little bit about your team, because you’re spanning across different countries. You’ve hired a couple of leaders from the United States, et cetera, as well. And you have a big team.
So I’d like to hear a little bit about your team, who’s helping you achieve that vision as well that you have for yourself and for the company.
Bejoy Arputharaj: Yeah. So we recently, not just recently, we have people already working for us from across the globe.
But we recently strengthened our leadership team by hiring an executive VP from the US, Mr. Ian Terrain. He has worked with a lot of major visual effects houses. And he’s heading our North American operations right now.
And under his leadership, we have our business team functioning. And Tippett is being taken care of him. And we have multiple executive producers hired who have very good knowledge and contacts in the industry.
They have worked with a lot of major visual effects houses and production houses before. So through them, we were able to pick up a lot of new projects. And in Europe, right now, through Milk, we were able to establish a lot of new connections.
And Milk has a very good business team as well. We recruited more people as well. And the creative supervisors across Tippett and Milk are very well-recognized and renowned people in the industry.
They themselves have established their names in the industry. And many of them are award winners. So it’s a very productive and creative team right now we have.
The leadership team is very good. We have people placed strategically well across all the regions, Middle East, APAC. We have senior most people placed across our business networks as well.
So through them, we are able to pick new business and also manage our local offices as well.
Mubina Kapasi: Bejoy, an absolute pleasure having you with us. Thank you so much once again for sharing your story.
A very interesting and exciting one indeed. And all the very best. By the way, before I let you go, one last question.
Considering that you’ve been such a fan of fantasy and creature movies, what’s your favorite one that stands out, especially from an after-effects perspective?
Bejoy Arputharaj: I am a very big fan of Lord of the Rings. So that’s one movie that keeps on inspiring me. Even now, I don’t know how many times I’ve watched that trilogy and The Hobbit and everything.
But it still inspires me to dream big. And nothing is big when you are so determined to make it happen. So that one film is a very big example of what can be achieved.
So I’m still a very big fan of that film.
Mubina Kapasi: All right. Well, once again, Bejoy, thank you so much for joining us.
Well, that was, of course, Phantom Digital Effects. What an interesting company. Do remember that this platform merely serves to give you information and story of a company and does not in any way constitute investment advice.
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