Asian Domination of Entertainment

October 27, 2005 | 02:37 PM
Asian Domination of Entertainment

In future sequels to Spider Man, Sony will have to ensure that when Spiderman takes his mask off, he is either Indian or Chinese. Or they will loose out on 75% of their market.

This article appeared in Bussiness India last year.

The film, Spider Man grossed US $ 150 million in its FIRST week in the US. It went on to gross over $ 600 million world wide, not counting ancillary sales such as Video, DVD, TV, Cable and retail franchises. That would bring the figure close to US$1 billion.

In 10 years, expect Spider Man, sequel no.5 to gross US$ 1 billion in its first week. Expect total grosses including ancillaries to be 7 times that, or US$ 7 billion.

Also expect 70% of those revenues, or US$ 4 billion to come from Asia.

Expect also, that when Spider Man takes off his mask in Asia, he will probably be either Chinese, or Indian. And he will no longer swing from the high-rise buildings in New York, but from Shanghai or Mumbai.

Revenues from the Entertainment business are expected to touch around US$ 1 trillion in 10 years. This includes Film, Radio, TV, Music, DVD, Video Games and new technologies on the anvil, mostly to do with Mobile Entertainment. Like through your Cell Phones. Or Dual Mode satellite linked Sun Glasses.

A full 70% of these revenues, or almost US$ 700 billion will come from Asia. Other than sheer population, consider the following:

Entertainment demographics (population in age groups that are the highest consumers of entertainment) are more acute indicators of the future of the Entertainment business: Currently North America has 65 million in that demographic, while just China and India alone have almost 700 million. Just in India alone, over the next ten years, another 40 % of our existing population will join this demographic. The corresponding figure for the US is just 15 %.

As Asian economies grow, the %age growth in disposable income levels of the entertainment demographic will be far higher than in the West.
This will lead to a far far greater growth in demand for entertainment than in the West.

Here lies the biggest business opportunity of the next 10 years. In Asia. In India.

As the Asian consumers flex their financial muscle, they will demand product that is more in line with their own cultural identities.

While the Western Media companies will continue to take advantage through aggressive marketing in these rising economies, they will essentially remain Western in the their culture. They will experience a pull between the cultural requirements of their own markets and those of Asia.

The ones that will succeed most are the ones that create spin-offs that are centralized in Asia, catering specifically to the needs of the Asian markets. The most interesting example of this being MTV. Even which, interestingly, cannot stand against a Bollywood musical channel in India unless it incorporates that music within it’s own channel.

However, the theory is that while McDonalds could adapt by offering variations on it’s hamburgers in Asia, it is never going to make Chop Suey. An American Company will find it difficult to don an Asian identity in an Industry that is so driven by cultural tastes. And essentially even MTV will never become an essentially Asian company. It’s commitment and management is Western. The theory that Sony are essentially Asian is not true, because all their entertainment software divisions are essentially driven from the West and caters to the West.

The business opportunity therefore lies in an essentially Asian Media Company that encompasses the cultural needs of the Asian people, driven by Asian people that understand that market place and are committed to it.

There is an assumption in this argument that there is a common Asian identity, as against (say) a Western identity. While it is true that there are cultural differences between (say) India and China, it is safe to say that there is a commonality between an Asian identity as against a Western identity. Just as there are significant differences between German and French identities, yet they have much more in common with themselves than with Asian cultures.

This is seen very easily in the similarities in themes that traditional Chinese, Indian and Japanese films use. From the use of Melodrama in story telling. The use of faith, superstition and Myth.

Predominantly this arises from a philosophy of the East, where man is considered more powerful in encompassing his/her fate and Destiny. While in the West, Will is considered more powerful than Destiny. In fact Will creates Destiny.

Does this rise in the cultural power of the common Asian market then indicate the decline of the domination of the large Western (mostly US) Media companies? Certainly these companies continue to depend on growth of their revenues from the international market place. While at one time Hollywood films use to get 80% of the Box Office from North America, now it is not unusual for the reverse to be true. Certainly 60% from non – American markets now seems to be the norm.

As the Asian the markets become the greatest source of revenue from the entertainment business, the US Media companies will naturally look for growth in those countries. Certainly the success of Harry Potter in China, and of Spider Man in India points that there continues to be growth potential for Western product in Asia.

However, a strong home market has traditionally formed the base for international domination of the market place. US has traditionally had the strongest home market for the entertainment industry. This has provided the base for the domination of the international market place. And therefore American culture has been the dominant culture in terms of international entertainment.

But what happens when the strongest home market becomes Asia? Surely by the same token, Asian culture should gradually take over and become the dominant culture of the world.

Aided by no small means by the large number of Asians that now have made the West their home, Asian culture will find it easier to make inroads into the West. Proven not only by my personal experience with the West End smash hit musical – ‘BOMBAY DREAMS’. There are 30 million people of Indian descent that live outside the India. Most of them still identify with their home culture. Their combined is probably quite close to the current GDP of India.

Add to this the Bangladeshi’s, Pakistani’s and Srilankan’s, and you have a nation of almost the population of the UK.

I have used the word “opportunity”. How much of the US$ 700 billion will accrue to corporations in India? We should be able to have at least a third of that pie, or approx $ 300 billion. But we need to get away from the mindset of a Cottage Industry and think like Global players. We need to do all that NOW.

We need to understand that convergence will change the way people consume culture and entertainment, and therefore look towards technological leaps. There is a market for at least another 15,000 theatres in India. It is feasible at this moment to create low cost Digital theatres all over India and Digitally feed film and other entertainment through fiber optic cable, cutting out piracy, cost of prints etc. Our film business will increase 10 fold.

India has the highest number of trained IT technologists in the world. It also has the highest trained Entertainment technologist and crew in the world. I am surprised moves have not been made to marry the two. India could be at the forefront of technological development.

We need to stop thinking of ourselves as country of back office support economy. We need to think of ourselves as cutting edge.

The Government needs to recognize that when you sell culture, you sell life styles. The American’s sold MacDonald’s, Jeans, Tourism and a whole host of other businesses through the export of Entertainment. The Government needs to look upon Entertainment in the same way that it looked at the IT business.

The old guard has to let go. Historical data projections need to be discarded. Fresh creative, managerial and financial talent needs to be inducted. As does massive financial investment.

Or the greatest business opportunity of the next 10 years will be lost.