entertains big ideas
By Jian Er
is taking centre stage in the world of entertainment.
was the consensus of top executives from the world's largest music
companies, television production houses and Internet content providers
who participated yesterday in the 4th China Daily CEO Roundtable
(CDRT) themed "Entertaining the Nation" in Hong Kong.
they griped about lack of protection for intellectual property
rights and the slow pace of market liberalization, the Roundtable
agreed that the potential of the China market was almost limitless.
And the biggest show of them all is going to be the 2008 Beijing
Olympic, said Stephen Marcopoto, president and managing director
of Turner Broadcasting System Asia Pacific Inc.
his opening remarks, Marcopoto said China's media and entertainment
industry, though it currently accounted for less than 2 per cent
of the country's GDP, is set to grow to a dramatic scale in the
coming years. Marcopoto oversees all programming, network, development,
advertising and distribution sales, marketing and promotion for
Turner Broadcasting and its networks and Internet services, including
the CNN news group, Cartoon Network, TCM and CETV in the Asia
a recent report by PricewaterhouseCoopers, Marcopoto said the
overall size of the global entertainment and media industry will
grow from US$229 billion in 2004 to US$365 billion in 2008. The
average 9.8 per cent annual growth rate is mainly driven by China
and by the country's heavy investment in both communications and
specifically, the entertainment industry will see robust expansion
across-the-board. China's Internet and broadband sector, for instance,
had about 75 million Internet users and it is projected to soar
to 260 million by 2008, which is roughly the size of the entire
US population and among which are 75 million broadband users.
services, buoyed by new technology, are projected to more than
double their current base of 30 million users in the next four
years. Digital TV, booming in major Chinese cities, will have
30 million subscribers by 2008. Theme parks and video gaming,
in vogue for the new generation, are also expected to undergo
similar expansion in the near future.
Chau Suk Poon, managing director of MTV Networks (North Asia),
echoed these sentiments and pointed out that "although the
media sector is still highly regulated in China, there is no signs
of slowdown in our growth."
said the country's media and entertainment market is estimated
at US$18 billion in value in 2004, which represents about 1.5
to 2 per cent of China's more than US$1 trillion GDP. Of that,
US$6 billion is related to media advertising, US$2.5 billion of
which is TV advertising; and the remaining US$12 billion goes
to direct consumer media and entertainment such as CDs and VCDs.
China's overall economic size is still not among the largest in
the world, with that size of market, it's not a small business
for us at all," Chau says, adding the entertainment industry
was actually acting as a creative economy.
the company manages its business in Asia-Pacific area, the highest
growth market is definitely China, Chau says. Using the company's
experience for example, Chau says that MTV Networks, which entered
China's market in 1996, have grown from one representative office
to a 100-staff company with three major offices in Beijing, Shanghai
company now has five TV programmes syndicated throughout China,
including a 24-hour MTV programme in all foreign compounds and
revenue growth has maintained high double-digit annual growth
for the past seven years, and is not showing any signs of growth
slowing. Chau said that the company's revenue would be in the
US$ eight-digit zone in 2005 and will become profitable early
the US entertainment behemoth, is focusing its worldwide expansion
on China as growth in the developed US market is expected to be
limited, said Jun Tang, vice president of China Affairs, The Walt
rapid growth in the last 20 years, we expect the entertainment
industry in the US and Europe will soon reach a developed point
in its growth cycle," says Tang.
believe that future growth in this industry lies in developing
markets, especially China."
China's 1.3 billion population, its entertainment industry could
generate almost US$2 trillion in economic output if China reaches
similar levels of entertainment penetration as seen in the US
today. "So this potential represents enormous growth."
the discussion yesterday, piracy was the most critical issue to
be addressed for the healthy development of the media and entertainment
industry in China, said all representatives.
has developed a satisfactory system of copyright laws and is determined
to protect intellectual property rights. However, more stringent
enforcement of laws and education about intellectual property
rights among Chinese people are needed to protect intellectual
copyright owners and developers, says Walt Disney's Tang.
is not only important for foreign investors but also critical
for the development of local Chinese media industry," Tang
Denekamp, president of Sony Music (Asia) Inc shares similar thoughts.
Just take the Karaoke industry for example, he said. China has
more than 30,000 Karaoke houses and the sector involves about
US$12 to 16 billion of royalty fees, but Sony Music gets few royalties
from the sector.
Leung Chung Chu, chairman and executive director of ERA Information
& Entertainment Ltd, says that piracy has always been a primary
concern as his company suffers from piracy in China.
observation is that we have to be patient as Chinese government
has beefed up efforts to crack down on piracy in recent years,"
Leung said, adding the issue will be addressed though at a very
slow pace as it involves a lot of interests and economic issues
at all government levels.
addition to piracy, MTV Network's Chau says that a lack of talent
in the country is the biggest challenge the company faces at this
five years, we will grow to a 500-strong company. Whether China
is able to sustain high internal growth, it is most important
for us to attract and motivate people," he said.
the country might not have sufficient entertainment professionals,
because most of the people in this industry worked in government
sectors and they have no experience in creating a tailor-made
programme or managing entertainment companies.
Disney's Jun Tang said that the challenge of entertainment talent
might partly be attributed to the fact that the entertainment
industry has rarely been treated as a real business in China.
"How can we find talents in the sector if it is not a real
business in the country?"
said China has made a lot of effort to reform the entertainment
industry in recent years such as liberalizing distribution channels,
allowing Sino-foreign motion picture co-production and setting
up joint ventures in renovating and building theaters.
are very positive steps, but the country has a long way to go
in order to develop the entertainment industry into a vibrant
sector, Tang says.
is crucial that China must realize that entertainment is an industry
and it should be managed a business in order to fully realize
significant economic benefits.
instance, China recently called on provincial TV broadcasters
to set up children TV channels. This is the right move as 300
million children need quality programmes, but setting up 30-plus
children's channels all at once is not market practice, Tang said.
beneficial co-operation should be encouraged and facilitated between
foreign companies, the Chinese Government and entrepreneurial
community, to help China develop a healthy and robust domestic
entertainment industry," he said.
the country has not yet established a national distribution system,
and protectionism within the regions is still very strong.
we believe it is going to break and the above issues will be addressed,
but it will not happen overnight," Tang and many representatives
Sun, acting chief executive officer of Netease.com, pointed out
that a lack of effective online payment was an obstacle for expanding
Internet business such as video gaming and online auction in China.
says that Chinese consumers are still not accustomed to using
credit cards and Netease has to rely on the country's two mobile
phone service providers to run its online business, which also
explains why the company still has a large number of free online
about entertainment business in China, MTV Network's Chau says
that focusing on key cities is vital.
is a significant, huge market with more than 300 million TV households
and 3,000 TV channels countrywide. "If you wish to set a
firm foothold in the country quickly, focus on the tier one cities
like Shanghai, Beijing and Guangzhou," he says.
explains that television media groups in Beijing, Shanghai and
Guangzhou combined snapped up US$1.7 billion, or nearly 70 per
cent of total TV advertising spending last year.
said "creating compelling content for local consumers is
equally crucial in China as localization plays a key role for
doing entertainment business."
Networks now produces and shoots all of its five Chinese programmes
"100 per cent locally in China."
we don't localize the programmes and they are only with Chinese
titles, there is no success here," he said.
said Disney always attached high importance to local flavour and
introduced shows in a way Chinese audience accepts.