24 April 2015
Asia's Changing Digital Landscape Set to Boost Region's TV Sector
Changes in viewer behaviour as well as prescriptive legislation on the broadcast of overseas material in China have combined to drive TV and film production in Southeast Asia, according to attendees at the Asian Television Forum.
Speaking at the opening of the Asian Television Forum and Market (ATF), Robert Gilby, Managing Director of The Walt Disney Company for Southeast Asia, was upbeat about market conditions for the TV industry in the region. Addressing the delegates gathered in Singapore, he said: "Growth is right here in Asia. The rapid transformation in the digital landscape and the emergence of new business models are changing the way we look at the industry. This is a good time to come together and learn from each other."
In a similar vein, Virat Patel, Managing Director Asia for Venture Consulting, drew a comparison between what TV is starting to undergo and what has already befallen the telecoms industry, with technology and consumer demand driving rapid change. He said: "The cash cows for telecoms have gone or are going. In their place are new services. Prices have plummeted, business models have radically changed, new players have emerged. Incumbents have struggled and some have prospered by embracing change. This is what is now happening in TV.
"Today, TV viewing hours are dropping, but more than 75% of Asian internet users consume online videos, leading to an actual overall increase. Social media is also a driving force, with 42% of respondents aged 15-17 using social media to engage with their TV shows. The forecast for Asia's online TV revenue is also set to increase, rising from US$2.68 billion at present to US$10.19 billion by 2020."
Given the significance of the China market, it was wholly appropriate that the opening keynote speech at ATF 2014 was delivered by James Zhonglei Wang, President of Beijing's Huayi Brothers Media Corporation. Addressing the changes sweeping the mainland, he said: "Growth in China continues to be rapid, with 15% of the world's movie screens now in China. Overall, the country is set to overtake the US and become the world's largest market by 2017. Quality content, however, remains key."
Some 25%-30% of the films made in China are produced by Huayi, which is now working with an increasing variety of directors in order to deliver fresh content. In November, Huayi welcomed US$590 million in investment from a number of new strategic shareholders, including Alibaba, Tencent and Ping An Insurance, the first two of whom, in particular, will act to boost its online presence.
Wang sees the company's focus as now on developing its intellectual property operations. Over the last 20 years, Huayi has generated a lot of content that it is now developing under licence, in terms of merchandising, games and even theme parks. Huayi claims to be in a unique position in the industry in this regard, with Wang saying: "China's domestic tourism is set to reach 3.2 billion visitors by 2017 and we are well positioned to benefit from this."
The strong Chinese presence at the show also included iQIYI, the video subsidiary of Baidu, the web services company. Ma Dong, iQIYI's Chief Content Officer, said: "In China, there has been considerable consolidation among internet content providers in recent years. It's like poker – you need luck and skill. iQIYI now has 100 million daily unique visitors. For us, whether the content is original or not is not as important as having the right mix of content that viewers want.
"Nonetheless, in 2014, we produced 15 programmes in-house, comprising 302 episodes, and in 2015 we intend to produce 30, representing a total of 500 episodes. We are spending some US$50 million to achieve this. We see that, in the future, demand will be for local and localised content, rather than foreign remakes. We also plan to purchase more than 1,000 movies from the US next year."
Another speaker to address the changing nature of the Chinese market was Wang Yi, Head of International Business at Sohu. He said: "Five years ago, there were zero US shows legally online in China. Now there are more than 70, with 20 exclusive to Sohu. This gives us an audience of 200 million – about one-third of the Chinese internet population. The content we are looking for, I tend to divide into three categories: advertisers' eye candy such as the big US dramas; traffic generators, notably Japanese anime, and art-house gems; and shows that neither attract advertisers nor audiences but should be made available due to their sheer quality."
The aggressive buying strategy of companies such as iQIYI and Sohu may, however, run into a roadblock in the form of the Chinese media regulatory body, SARFT, which is increasingly cracking down on what it sees as unwholesome online content. This has seen a number of US shows, including The Big Bang Theory, The Practice and NCIS, being banned since April of last year. This perhaps explains the push by players such as iQIYI for local content, as well as increased efforts to localise content from overseas.
One example of the drive for local content came with the launch of a US$100 million media development fund, established by China's Bona Film Group Ltd, the Singaporean private equity firm Tembusu Partners, and Singaporean entrepreneur Calvin Cheng. Another investor into the fund is likely to be Thailand's Chia Tai Group. The avowed purpose of the fund is to seek to foster co-productions with Chinese companies.
Liu Xichen, President and CEO of 3C Media, sees the SARFT regulations as a driver for the development of original Chinese content, either made entirely in China or in terms of co-productions. He advised those looking to co-produce to "find a good alliance partner," adding, "those that really understand China are few." He also warned: "Do not contradict traditional Chinese values or you risk not getting into the Chinese market."
One company at ATF 2014 that was making clear inroads in the global market was Israel's Keshet International. Its Prisoners of War TV drama was redeveloped as Homeland in the US, and its MICE was the first Korean adaptation of an Israeli drama, with Korea's version of Prisoners following shortly after. Its talent show, Rising Star, is doing well in China, one of 25 countries where it has been sold to date.
Outlining its future plans, Alon Shtruzman, Chief Executive of Keshet, said: "Asia is the next big play. We are now engaged with China, Korea, Japan, and also Singapore, as a springboard to Southeast Asia. To us, being from a small country, we see every market as completely different, so the key, especially in Asia, is to adjust, to localise, and to be flexible."
Overall, Shtruzman sees the new trend for broadcasters being scripted programmes rather than reality shows. He also believes there will be more Asian formats heading out to the US and Europe.
Taking a clear lead on this front is Korea. Among its shows that are making waves in the US and across the world are My Love from the Stars, Good Doctor, Grandpas Over Flowers, Running Man (Run, Brother! in China – a massive hit with more than 500 million online views), Yellow Boots and Super Diva.
Acknowledging Korea's growing significance, Lee Deok-Jae, Executive Director of tvN, part of the entertainment conglomerate CJ E&M, said: "Korean TV formats are now growing to be the new brand of the Korean Wave."
Part of this "Korean Wave" is DramaFever, an online video provider that is starting to make a name for itself. Hyun Park, DramaFever's Vice President for Licensing & Business Development, explained how the service had grown from 1,000 hours of Korean content targetted at the American market in 2009, to 15,000 hours provided from 12 countries, with 22 million unique visitors a month. Its focus, however, is still mainly on Korean shows.
He said: "The US still has some of the best primetime content in the world, while Korean shows tend to be less violent and sexual, more emotional and family-orientated. This, though, has resonated increasingly well with our widening audience – 40% of our viewers are now non-Korean."
Held over four days at the Marina Bay Sands Exhibition Centre in Singapore, the Asian Television Forum & Market was attended by an impressive 5,000 delegates from 60 countries. There was a particularly strong showing from South Korea, which had three national pavilions, while China, Japan and Taiwan were all close behind with two pavilions each. The convention had a total of 13 national pavilions.
Ronald Hee, Special Correspondent, Singapore