MUMBAI, INDIA

India Film Export2002-2003 Feature Film Export

FIJI IS 1%

SOUTH AFRICA 1%

SWITZERLAND 0%

GERMAN F REP 0%

INDONESIA 2%

TANZANIA REP 0%

NORWAY 0%

FRANCE 0%

ISRAEL 0%

JAPAN 0%

NEPAL 0%

THAILAND 0%

PAKISTAN 0%

EGYPT A RP 0%

HONG KONG 0%

MAYANMAR 0%RUSSIA

0%IRAN 0%

KOREA DP RP 0%

DENMARK 0%

GREECE 0%

BELGIUM 0%

GUINEA 2%

CZECH REPUBLIC 0%

HUNGARY 0%

MOROCCO 0%

ITALY 0%

ARGENTINA 0%

FINLAND 0%

KOREA RP 0%

BANGLADESH 0%

BAHARAIN IS 0%

CHINESE TAIPEI 0%

PORTUGAL 0%

YEMEN REPUBLC 0%

BHUTAN 0%

CHINA P RP 0%

COLOMBIA 0%

CONGO P REP 0%

MAURITANIA 0%

NETHERLAND 0%

NIGERIA 0%

YUGOSLAVIA F RP 0%

SWAZILAND 0%

TRINIDAD 0%

TURKEY 0%

UNSPECIFIED 0%

PHILIPPINES 0%

NEW ZEALAND 0% U K

25%

U S A 21%

U ARAB EMTS 12%

MALAYSIA 11%

SINGAPORE 7%

SRI LANKA 4%

MAURITIOUS 3%

CANADA 6%

KENYA 1%

AUSTRALIA 1%

Why is Bollywood globalizing?

1. Technology advances- Digital media has improved prints of Indian movies. They are much more appealing because they lack the grainy scenes of past movies, as well as frequent advertisements that used to crowd the top and bottom of the screen as well as break into flow of the movie.

2. Breakdown of Language Barriers- Subtitles now allow more people to watch Indian movies without knowledge of the language, making Bollywood all the more accessible.

3. Cultural Differences- The main attraction in these countries is the mix of modernity and tradition in Indian movies. People in countries in Africa and surrounding Asian countries do not easily identify with American culture. Topics such as divorce are not as common to their lives as those in America. In addition, people from other countries are sometimes anti-Americanization and as a result choose Bollywood over Hollywood. “The Indian masala film is closer to the emotional grammar of the Asians and Africans than the Hollywood box office bonanzas.”- The Hindu: “Bollywood films make waves around the world”

4. Tailoring of Stories- In addition, producers and directors are tailoring their stories more to the western audience, although it is indicated that the more authentic the movie, the more westerners enjoy it.

5. South Asian diaspora- NRI’s (Non-Resident Indians) previously migrating to countries such as Fiji and Africa, have now increased migration to the western world. They often encounter a nostalgic connection to their homeland and try to connect with Indian through various mediums- food, movies, religion, etc. South Asian diasporas are considered a distribution territory by Bollywood distributors due to the large number of movie they import. With increased population and import of movies, comes greater exposure to Bollywood which generates interest in non-Indian friends or associates. “…this world is getting smaller, and [people] want to see what other cultures are like. I have a sense that world cinema is much more important to people now.” – Tower VP John Thrasher qtd. in “Hearing Bollywood’s calling, Eros finds a U.S. market for Indian films”

Porter’s Prioritized Strategy

• Activate and upgrade clusters

• Continue to enhance education and workforce training

• Invest in research and the University system

• Launch internal and external marketing campaigns

• Create an explicit economic development program for distressed areas

• Increase support for start-ups and local firms

• Create new institutions for economic development

• Measure progress in raising prosperity

Indonesia Movie Industry: A Competitiveness Study

Handry SatriagoWayah S. WirotoFaculty of EconomyUniversity of Indonesia

BackgroundWhy bother?

• Indonesia film industry has been rooted since Dutch colonialism era (1st bioscope in 1900, 1st movie produced in 1926). Why this industry is less competitive than other countries in the region and global?

•Market for Indonesia film industry is huge, >200 Million population. In 1960’s, the film attendance reached 450 Million…nowadays is only about 35 Million..what happened?

• Is there any film cluster industry in Indonesia? How large and how it has changed? What are their impact to the economy?

•What are the initiatives that can be done to improve this industry competitiveness?

The History A Good Start…

18951st Movie launched in Paris(Lumiere)

1896 – London1896 - Russia1896 – India1897 – Japan1903 – Korea1905 - Italy

1897 – First Shot of Rama V of ThaiDec 87 – Premiere in Thai

Dec 1900 First movie screened in Batavia

Sep 1905First documenter movie in Indonesia (US producer) and exported to Netherland

19261st Indonesia Movie produced “Loetoeng Kasaroeng”

1903 : The Life of American Fireman and The Great Train Robbery (ES Porter_1st huge success of American cinema

1905: Italia 1st movie (La Presa di Roma)1919 : Korea 1st movie(Righteous Revenge)1908 : Russia 1st movie (Stenka Razin)1913: India 1st movie (RajahHarischandra)1927: Thailand 1st private sector movie (Chok Song Chun)

1913: Hollywood become American Movie Capital

1931: First Indonesia sound movie (Boenga Roos)1936 : First Indonesian language movie (Terang Boelan)

1927 : Fist Talkie Film

1953: Indonesia rank 15th from 35 countries in term of number of Theatre (outside US)1953: First Indonesia Film Festival1943 : 1st National Film

Company EstablishedKino Drama Atelier (1948). 1st film education institution

1927 : Fist Academy Award

1960Highest record for movie audience : 450 Million

1930 The First IFCImporter and Theatre owner association

1928Doenia Film Magazine (Film Critics)

The HistoryThe Influence of Who’s in The Power

Major Business Players

Government Actions

Local Movie Major Theme

ImpactsProducers Distribut

orsExhibitors

The Dutch Colonialism Era

DutchEuropean + USChinese-Indonesian

DutchChina Overseas

DutchChina OverseasLocals

Endorsed movie and theatre business development

Local Exoticisms

Local Drama

Folklore

Growth of number of theatres

Emerged of local talents

The Japan Colonialism Era

Japanese Government + Indonesian Controlled Companies

Japanese Government

Japanese controlled

Banned of non-Japan allied movies

Endorsed local movies for Japan propaganda

Japanese Propaganda

Nationalism

Closing of Chinese-owned Companies;

Growth of Stage Performances

Growth of nationalism spirit

Old Order LocalsChinese-Indonesian

LocalsChinese-Indonesian Group

LocalsChinese-Indonesian Group

Banned of American movies

Nationalism

Drama

Film as political tools for communism

Import movies from India and Mandarin flooded

New Order LocalsChinese-Indonesian India-Indonesian

PERFIN GPBSI Import film quota

Treat Film as information tools (potential threat)

War – Propaganda of New Order,

Sex, Violence, Comedy and Action

Film is controlled (commercial but not critical to Government)

Mushrooming of rural theatre

Reform Young Cinemas

The Big 5 (strong relation to TV Sinetron)

Independent Filmmaker

Producers distribute directly

Group 21 Treat film as cultural assets

Teenage drama

Social/Cultural Behavior phenomena

Political content

Growing of local production and new young talents

Indonesian movies accepted in International Festivals

The HistoryNumbers Talk..

0

200

400

600

800

1,000

1,200

1936 1949 1952 1960 1967 1971 1977 1980 1986 1990 1996 2000 2006

0

500

1,000

1,500

2,000

2,500

Film Production Film Import Number of Theater Number of Audience (Million people)

• Start of Private TV• VCD/Laser/DVD• Cineplex (21 Group)

start to “monopolize”

Local Film: Comedy, Sex, Violence

themeImport Film Quota

•Reform of Indonesia

•Deppen diminished

•Kuldesak (1998) breakthrough

•Import quota released

Good business for theatre

(Support by Govt preferred IFC – GPBSI,

PARFI, PERFIN)

The golden era of imported film (US, Europe, India, Malaysia,Phil)

Nationalism Spirit

Old Order

New Order (Govt

Control)

Local production declining

Processes

Find Investors

Development &Pre Production

Production Post Production Distribution Exhibition

ScenarioBudgetLocationCastingSchedule (Day/Night)Equipment

Shooting EditingMixing Sound

Matching Print

One Print Produced

Distribution SponsorshipPromotion

Merchandise

10% 60% 30%

Typical Budget Distribution (Vary depend on type of Movie

Industry StructureLocal Production..>1M audience is now achievable

Before 1998

After 1998

Producers

Producers

PERFIN(Government

Company)

West Java Representative

SumatraRepresentative

East JavaRepresentative

BaliRepresentative

Exhibitors

Exhibitors

Exhibitors

Exhibitors

Exhibitors

Exhibitors

Exhibitors

Exhibitors

Exhibitors

Exhibitors

Exhibitors

Exhibitors

Exhibitor(Group 21)

Studio 21 Senayan

Studio 21Jogjakarta

Studio 21Surabaya

Studio 21Bali

Exhibitor(Blitz)

Top Box Office

• Akibat Pergaulan Bebas (1977): 311,,286 audience

• Maju Kena Mundur Kena (1983): 658, 896 audience

• Saur Sepuh 1 (1988): 575,480 audience

• Lupa Aturan Main (1991): 477,102 audience

Top Box Office

• Pocong 2 (2006) 2,000,000 audience

• Eiffel In Love (2005) 3,000,000 audience

• Ada Apa Dengan Cinta (2002) 2,400,000 audience

• Petualangan Sherina (2000) 1,000,000 audience

Industry StructureImport Movies…Buying power is there, but demand is limited by facilities

Before 90’s

After 90’s

Major Studios&

Producers

Major Studios(MGM, Fox,

Universal, etc)

IMPORTERS(Focus :

Hollywood MoviesIndia Movies

Mandarin MoviesOthers

Exhibitors

Exhibitors

Exhibitors

Exhibitors

Exhibitors(Group 21)

Exhibitor(Blitz)

Top Box Office

• Spider Man 3 (2007) US$3,552,693

• Superman Returns (2006) US$2,680,000

• X-Men The Last Stand (2006) US$ 1,386,208

• Lord Of The Ring: Return of The King (2003) US$ 1,323,244

OverseasProducers

(India, HK, etc)

IMPORTERS(Camilla, Internusa

Nusantara)Mostly Group 21

Control:Badan Film Indonesia

Singapore

4.1

2.4

3.0

3.1

India

9.9

3.2

0.9

0.9

China

13.4

8.0

2.6

10.4

US$ Million

S. Korea

26.4

11.8

12.4

28.4

Industry Structure Comparison with Japan

Source : Yano Research Institute from Industrial Reports of JETRO Japan Economic Report, October-November 2006

Industry CompetitivenessCurrently Low Potential

Potential Entrants

Buyers

Substitutes

Suppliers

Entry Barriers1. Growing market attractiveness 2. High Capital Requirements (for

exhibitors)3. High Economic of Scale (>200K

audience for new movies to get profit)

4. Access to Exhibitors to distribute products (for producers)

5. High dominance of current exhibitors

6. Government policy (regulation required the new producers to be listed…however, the regulation is lack of enforcement)

7. Learning curve and relationship matters

Determinants of Supplier Power

1. Low to medium switching cost2. Concentrated Professionals

(Directors, Scriptwriters, Actors etc)

3. Scarcity of some local post production facilities

4. Supplier products differentiated

Determinants of Substitution Threat1. Very low price of pirated VCD and DVD2. Increasing number of Private TV Channels

and wider coverage of TV Cables3. Higher attractiveness in producing TV

Materials (dramas, comedy, etc)

Determinants of Buyer Power

1. High determination and control from Exhibitors

2. High buyer (audience) concentrated (mid class and urban only)

3. High determination from audience demand (type of movies)

Rivalry Determinants1.Low competition in Exhibitors

(tend to be monopolized)2.High competition in

Producers3.Limited access to demand

(300 screen – only for big cities) but growing

4.High gap in profit margin between producers and distributors

Intensity of Rivalry

Industry Competitors

(Producers and Exhibitors) High Bargaining Power

Of BuyersLow Bargaining PowerOf Suppliers

High Entry BarriersLow threat of New Entrants

High Threat from Substitutions

Factor Condition

Demand Condition

Related and Supporting Industries

Context for Firm Strategy

and Rivalry

Demand Condition1. Decreasing total demand due to

limited access of screen, substitute products, and high cost

2. However, there is increasing demand in for local movies

3. Mushrooming commercial type of movies, but not generate the spirit for new talent development

4. Higher appreciation for high quality movies (festival quality movies)

5. Increase of demand sophistication (projection and sound quality, Theatre quality)

6. Lack of drive from Government to increase demand (compare with South Korea, Thailand, China)

7. Film Festival. FFI – Government support but not internationally recognized. Independent festival, such as JIFFEST, Festival Film Bandung, generate sophistication of demand

Related & Supporting Industries1. Increasing number of supporting industry but highly

scattered2. Geographically concentrated only in big cities and

supporting industry not inter-connected3. Improvement in terms of technology and quality but

not as advanced as in the region4. Quality of human resources are rare in the top of the

pyramid

Factor Condition1.Low physical infrastructure of

adequate movie industry standard (studios, post-production facilities etc)

2.Lack of Government support to develop competitive industry (financing, promoting)

3.Low legal enforcement in terms of pirated product substitution (DVD/VCD)

4.Collaboration industry-players only on mutual business (lack of supporting ‘idealistic high quality movie”)

5.Scarcity of Education Facilities of Arts and Movies, as well as research activities

6. Increasing availability of new technology and creativity in movie production

Context for Firm Strategy and Rivalry

1. Current regulation does not support competitiveness

2. Monopolized distribution channels3. Highly concentrated Producers and

Exhibitors4. Lack of government support for

healthy competition and promoting local movies to international market

5. Movie industry is one of the highest taxed industry

6. High risk business for movie producers (<100 audience will be totally lost)

7. Scarcity of incentives from Government or IFC

Diamond ModelCurrently Not Support the Competitiveness

• Limited to 370 Screens (95 Theatre)

• Concentrated 78% in Java Island

• Generated 35 Million audience (34% Local movies audience)

• Urban areas and accessible for medium-high level income population only

• High gap on income distribution of the industry players

ExhibitionHighly Concentrated

Number of Screens 2006 Data

J akarta and Surroundings

51%

Papua0%

Maluku0%

North Sulawesi1%West Kalimantan

1%

South Sumatra5%

South Sulawesi3%

Central Sumatra1% South Kalimantan

1%

East Kalimantan1%

Batam1%

Bali2%

North Sumatra6%

East Java11%

West Java12%

Central J ava4%

Total Audience in 2006 35,000,000

Total Audience Indonesia Movies 12,000,000 34%

Total Audience Foreign Movies 23,000,000 66%

Average admission 15,000

Gross income 525,000,000,000

Pajak Tontonan 15% 78,750,000,000

Net Income 446,250,000,000

Income for Group 21 (Exhibitor) 223,125,000,000Income Distributor non Film Ind 146,625,000,000Income Produser Film Indonesia 76,500,000,000

Average Income prod film Ind 2006 1,912,500,000

• Not Geographically Linked• Support industry is not inter-connected• Lack of education and research institution

development• Lack of government support in fostering

competitiveness environment and spirit• Current major Institution for Collaboration (IFC) is

intervened by Government and lack of support to competitiveness

• Independent IFC perceived as “rebellious” and not supported by Government

• Distributor companies is not exist due to not enough demand

• Exhibitors “monopolized” by major players• Absence of links to other clusters such as Tourism

(such as New Zealand), Education, Finance

The Indonesia Movie “Cluster”The cluster is not yet developed

Indonesia Movie “Cluster”

Pre Production

ProductionThe Big Five (about 5 – 7 film/year, commercial focus, active in TV/ Sinetron industry)

“Serious” Movie Producers (about 1 – 2 film/year, “quality” approach, influencers/role model)Independent Film Producers

Capital/FinancialProviders

Post Production

DistributionProducers distribute

By themselves

Exhibition21 Group (99.9%)

Blitz (New Comer)

TalentAgency

ModelingStudio

Theater“industry” Transportation Lighting

EquipmentRentals

SupportProduction

Services/Location(Bali Film Center)

Catering

Processing Lab

Post Prod House(Editing machine,

Digital effect,Sound facility)

Optical soundfacility

Sound MixingTheater

Not Available In Indonesia

Food SupplyAnd Restaurant

• LSF (censor body)• BP2N (policy advisor to Government)• PPFN (Govt Film Co – non active)

• PPFI (producer film association – member only the big five• GPBSI (exhibitor association – member only 21 Group• PARFI (artist association – activities on event• KTV (film employee association)• GPJTI (association of technical services company – film lab (only 2)• Sinematek Indonesia (Archive Film)

Education Institution (only IKJ – Formal) + Practical educations

Government Body

IFC FacilitateOr supportedBy Government

• APFI (commercial film employee association)• MFI (new – Indonesia film society )• KISI (promoting Indonesia film to overseas)

IFC Independent

Related Industry• Television• Print Media• DVD/VCD • Music • Internet• Advertising• Tourism

MerchandizeIndustry

Sponsor

Thailand• More than 500 Screen• Location utilization: >450 foreign filming in Thailand (The Deer Hunter, 1978,

The Killing Fields, 1982, Star Wars Episode III, 2005). Generate 1.9 Billion Bath in 2006

• Department of Export Promotion to support Thai Film• Co-Production with Hong Kong and US

Singapore• 171 Screen, 40,000 seating capacity with 16 Million audience in 2005 (for 4.5

Million population)• Singapore Film Commission – Support local film funding and promotion

South Korea• 1648 Screen with 145 Million audience in 2006• Export local production movies – US$76M value in 2006• Local production 61% domestic market share in 2006. 106 local production

and 227 foreign film• KOFIC (Korean Film Council). Full support of Korean Movies from funding,

infrastructure development, production, marketing, distribution, and international promotion

New Zealand• Internationalization of talent and products (Jane Campion’s The Piano, 1993

won Four Oscars, Lee Tamahori’s Once Were Warriors, Peter Jackson’s Lord of The Ring Trilogy)

• Integrated offering for filming in NZ. Location, post production, special effects. Resulted of The Last Samurai, King Kong and The Chronicles of Narnia: The Lion, the Witch and the Wardrobe. Give enhanced skill to local talents

• Integrated with Tourism Industry. The impact of Lord of The Ring Trilogy movies

• Filming in NZ. Gov’t grant. Large budget film and television productions receive a 12.5% production expenditure grant if production costs exceed $NZ50 million, or if at least 70% of the production's budget (between $NZ15 - 50 million) is spent in New Zealand

• The New Zealand Government already provides about $100 million a year to the New Zealand film and television industries

What About Other Countries?

• Lack of Government support

• Limited and concentrated demand

• Not competitive in region and global market

• Not attractive for new players

• Low economic value for the country

• Inter-connectedness of supporting industry and other cluster industries are low

Current Indonesia Movie Industry Situation is…

• Strong growth for Indonesia movie audience. Average 300 audience per movies (122 only for foreign movies)

• Indonesia movies can reach 3 million audiences

• Buying power of the limited demand still high, Box Office foreign movie still can generate >US$ 1 – 3 Million

• Higher awareness of having better Indonesia movie industry

• More and more appreciation of Indonesia movies in International festivals

• Still, we have 200 million population

• Young talents emerge with strong idealistic for making good quality movies

• Independent IFC keep making positive moves to develop competitiveness

However, The Opportunities is there…

0

0

1

10

100

1,000

2000 2001 2002 2003 2004 2005 2006 2007 Est

Film Production Film Import Total Movies % Audience for Indonesia Movie

Now…What To DoGovernment

• Get the competitiveness mindset, act as the facilitators• Foster regulation that support the industry and healthy

competition• Facilitate the development of cluster industry that has the

interconnection with supporting industry and the related industry

• Realize the high potential of this industry can bring, with the current momentum of change

• Actively promoting local movie productions to international market

• Facilitate the IFC for competitiveness not controlling it or intervene

• Develop the education and research institution that support the development of competitiveness of human resource

• Policy support, Grant support, and facilities support to local movie producers

Private Sectors• Continue to build competency of competitiveness in the global

market, get more acclaimed from international community• Open for healthy competition• Start the move of “Competitiveness Movie Industry”,

continuously educate the market and government

IFC• More and more independent IFC• Develop Indonesia Movie Commissions (integrated of

Government-private sector-and IFC• Competitive mindset of IFC to promote Indonesia products

internationally• IFC foster the development of education institutions