June 2007

An article in contentSutra states while Indian animation is attracting investment with tie-ups with US content firms (Turner [see MSNBC article] and Disney [see Variety article]) and Japanese animators, there are not enough animators to compete with competitive animation production centres such as the Philippines, Korea and Taiwan.

The article reiterates a claim in the Economic Times that India needs 10,000 professional animators of international standards.

But India faces a problem with quality, according to director Samanth.

“Barring one or two films, I am not happy with the quality of animated movies being made in the country,” Samanth said. “People are entering into the business just to make quick money. They produce low cost, low quality animation movies.”

The comments remind me of what some would argue to be the case even in Japan, which is often extolled as the world leader of animation, given that some figures put total animation broadcasts around the world as being 60 percent Japanese origin.

The article continues:

Without adequately trained animators, India could end up losing the race to this lucrative business. The Indian production houses inking deals with international companies need to take the initiative to train and retain employees. While it is true that animation houses find India attractive because of the lower labor cost, their Indian partners will have to remember that if they pay peanuts they are only going to get monkeys.

Lucrative business and paying peanuts. Again, there is substantial evidence to suggest that animation subcontracting is not the most lucrative business to be in, precisely because of what it pays: peanuts. This comes despite it being generally perceived as a high-growth high-value sector that policymakers are looking to bolster.

Original research sourced by DISCONTENTS on the animation industry in Tokyo suggests that the industry faces a cost/quality dilemma not too dissimilar (on some levels) to what these news articles depict in India.

Subcontractors face being squeezed by broadcasters and production houses for deadlines, which place emphasis on completion rather than quality. Given this low-cost environment, they can’t afford to train new animators, who are likely to leave if they are offered better (albeit still meagre) compensation. Despite industry reports such as those from JETRO stating that there are shortages of animators, there appears to be a fairly hefty supply of aspiring animators, with many willing to sacrifice higher wages in order to work in the animation industry. What there is a demand for is expert animators, which are in short supply. Given that most animation is for terrestrial broadcast, the vast bulk is based on existing manga characters and stories, meaning production companies get little share of the copyrights, and have little capacity to risk investing in the development of their own intellectual property. Broadcasters are more interested in their core business of satisfying domestic markets and earning advertising revenue so have little incentive to explore international markets with any degree of fervency. Finally, ‘OVA’ (original video animation) has managed to tap a profitable niche market that caters to otaku, which with its proclivity for disturbed and graphic sex and violence, has little hope of rising to mainstream popularity overseas, and is more likely to continue reinforcing stereotypes of Japanese animation as…weird.

This leaves feature-length anime as the most ‘promising’ market. Miyazaki’s Howl’s Moving Castle broke Japanese box-office records grossing 19.6 billion yen. Yet with its high upfront costs, long development timelines, and uncertain returns on investment, and a market dominated by Studio Ghibli, it is a market that is often too risky for investors and too small to house the bulk of those currently employed in the industry.


Indian Animation Industry stats:

  • Predicted to reach $869 million by 2010, (compounded annual growth rate of 25 percent over 2006-2010).
  • Current industry has 300 small, medium and big animation companies employ approximately 12,000 people in India.
  • “Could use 3,00,000 professionals in content development and animation by 2008, up from 27,000 in 2001”
    [NB these figures are from the Economic Times article but I can’t vouch for their accuracy]

It is a little hard to take the Mediacorp news stories ‘Surprise Singapore’ (in ChannelNewsAsia and TODAYonline) without the proverbial grain of salt.

The article reports the findings of a Media Development Authority (MDA)-commissioned international panel, which suggests that creativity in Singapore is alive and well.

Yet does its statement that creativity will ‘continue to flourish in spite of the political climate’ come from the panel being asked directly whether ‘restrictions on political expression would impede the development of a creative culture and Singapore’s aspirations to become a global media hub’?

The answer given skilfully yet obviously avoids answering that sensitive question: “Singapore will continue to be hard on itself and keep asking searching questions like: ‘Are we creative?’ Of course, you are.”

The answer, given by Stanford University professor Paul Saffo is right. Naturally there is significant evidence of creativity in Singapore, and a growing entrepreneurial innovativeness that is relying less on tried and tested business models, and less on would-be entrepreneurs wanting to ‘bring in’ or sell under license a product in Singapore they have seen overseas.

But to the answer of will restrictions on political expression impede the development of a creative culture, the answer may well equally be ‘of course it will.’

This is not to say it will stop creative or cultural development, but it will certainly impede it.

One key question is how much of the “renaissance” that has been taking place in the arts scene over the last five years according to MDA chairman Dr Tan, has been driven by government direction and public funds? Many nations around the world have (heavily?) subsidised arts sectors, but the combination of significant public funding and restrictions on political expression do not bode well for creative development. Perhaps if there was more private sector investment (or even philanthropy) then any lack of political freedom may not be such an issue?

Some of the insightful findings reported include:

Among the recommendations yesterday of the 10-member Media Development Authority (MDA) International Advisory Panel, was one which called for Singapore to “foster an ecosystem that breeds talent for the media industry”.

The panel suggested that Singapore leverage on its strength in education, medicine and technology by developing media content in these sectors. These products could tap on interactive digital media technologies, tools and applications to produce materials such as professional publications or training materials.

“Creative Industry Showcase in Kansai”, a content industry trade show introducing Kansai-based films and animation will be held Sept. 29-Oct. reports a Yomiuri Shimbun article on June 21. Dubbed as a Kansai-version of the Japan International Content Festival in Tokyo, the Kansai event, which will include producers from China, South Korea and other countries, will focus on cultural exchanges.

Organized by the Kansai Bureau of Economy, Trade and Industry, the Kansai Economic Federation and other groups, the event also aims to establish a business network of content industry companies in Asian countries, the article states.

Currently scheduled events include:

  • an international film conference (Sept. 29-30)
  • and a symposium on comics (Sept. 30) in Kyoto
  • an animation workshop in Kobe, featuring voice-dubbing artists (Sept. 29-30)
  •  an Asian contents market in Osaka, focusing on negotiating and featuring a business plan competition (Oct. 1-2)
  • a screening of Asian films (Sept. 29-Oct. 2) in Osaka
  • a cinema competition, featuring never-before-seen movies (Oct. 4-6) in Tanabe.

Queensland Business Review article announces the launch of Queensland Government Creative Industries 2007-2008 Program.

Minister for State Development John Mickel says Queensland has the fastest growing creative sector in Australia.

Since 2004, employment in our creative industries sector has grown from 28,000 to 67,000, significantly surpassing the national growth rate.

“Today Queensland’s creative industries are worth $3.4 billion annually and generate $1.1 billion in annual exports.”

“We’ll continue with our highly successful export initiatives, that have resulted in more than $2 million in commercial deals in the USA for Queensland writers and musicians, and continue to develop the business skills of the sector,” he says.

Mickel says that the initiative will also result in a database that will contain information on businesses including employment growth, profits, turnover, supply chains, and export sales.

In this article in The Age, ‘Less Kulcha More Creativity’, Steve Dow raises the issue of what image the Australian government is willing to promote overseas, how much funding they are giving to (or cutting from) arts and cultural industries in their diplomatic representations overseas.

The article criticises the Australian Government for being too interested in economic relations and cutting the funding for cultural counsellors in diplomatic posts around the world that can guide interested parties to Australian culture and creatives, as well as promote the image of Australia as a sophisticated and cultured on the international stage.

Could the creation of an Australian arts advocacy body for the dissemination of Australian culture internationally give our image and culture a broader, more sophisticated focus? Models being considered include France’s Alliance Francaise, Germany’s Goethe-Institut, China’s Confucious Council and the British Council.

While the mix of sources combined in the article does not quite attain what one would called balanced, what the article does raise is to what extent a government should or even can control the image that content and other creative products create of a nation. The article cites an incident where the Department of Foreign Affairs pulled funding from the Jakarta International Film Festival because the ‘Australian films selected for screening would not promote “greater mutual understanding between the people of Australia and Indonesia” ‘.

On the ‘can’ side of the coin, consider the Japanese Government (particularly the Ministry for Foreign Affairs and its minister Aso) hopes for Japanese content to be a(n) (in)tangible but cogent source of soft power, allowing neighbouring nations to see Japan in a positive light. As mentioned in previous posts (and in a forthcoming book chapter), there is nothing to say that private companies will produce works that the government will be proud to peddle overseas or hold up as examples of national pride. If the ‘textbook issue’ (issued by a private publisher) in recent years is not example enough, a certain amount of animation that is produced in Japan services a ‘specific market’ that the Government of Japan might not be happy to announce that exists let alone be excited about using these products as representative works of Japan’s national image.

As anecdotal as these might be, they provide an interesting contrast of a government trying to alter the representation of the nation, and a government being unable (?) to control the image that private citizens and industry may be carving on their own.

An article today Other states embarrass NSW funding (Brisbane Times online Fairfax publication) suggests that funding for the arts and creative sectors in Australia’s most populous State has plateaued or even declined whereas states to the north (Queensland), South (Victoria), and west (South Australia) have boosted funding efforts.Quoting drama producer Brett Poppplewell:

“Over the last five or six years,” he says, “I’ve probably done over $US200 million [$238 million] of production and not one of them has been in NSW.”

Speak to people in certain sectors of the creative or content industries sectors such as games and animation and they will almost invariably tell you the same: Melbourne and Brisbane are the places to be – specifically due to favourable regulatory environments and specific industry policy support from the Victorian and Queensland Governments respectively.

A quick question (or five) to ponder for now:

  1. To what extent do subsidies, tax concessions, and grants from state governments lead to location tournaments between states where investors can ‘pick and choose’?
  2. How much do Queensland and Victoria feel the need (and New South Wales does not) to actively attract investment away from NSW given that Sydney is the biggest city and will tend to attract the most domestic and inward foreign direct investment? Similarly, on the arts front for example, does the NSW art scene benefit from larger donations from private sector patrons and sponsors?
  3. How much does production location actually matter in the creative industries? Of course, theatrical performances, ballet, and other live productions need to be performed locally, but does producing a movie in one location necessarily mean that the most valuable rents accrue to that region? Are we not in an age where post-production for example, can be done anywhere?
  4. How much emphasis is placed on the trickier and far more ‘slippery’ notion of attracting the activities that mean the IP and rights reside locally rather than just the jurisdiction being used for location shooting and supplying lower-end services?

Certainly, much contemporary thinking recognises the vital role played by the cultural industries in contributing to a thriving creative sector; a sector that the influential economist Richard Florida has argued is essential to a thriving economy.

Which brings me to a 5th and final question (for now): Isn’t one of the key takeaways from Florida’s work that a region’s lifestyle and importantly openness to new ideas is key to it attracting creatives (rather than giving tax concessions to investors and propping up local creative industries)?

The UK Government is often held up by creative industries proponents around the world as one of leaders in creative industries policy, having been the first to assemble a Creative Industries Taskforce, and now has a Minister of Creative Industries.

Yet in a report by independent think-tank Demos, the government has been labeled as “confused” for not understanding how the creative industries work, which has created “confusion, indifference, and irritation”.

An article in mad.co.uk by Branwell Johnson reports on Demos’ report:

Demos argues that the standard approaches designed for traditional industries will not work with the creative sector. It points out that firms in this sector typically have less than 10 workers and rely on freelance activity.

…success in these companies is based on quality rather than volume and that they produce “highly specialised products and services.”

Quality is of course a relative term. And quite possibly misunderstood and paid too much lipservice.

What strikes me about many sectors of creative industries, particularly those that face strict deadlines imposed by broadcasters or other large ‘gate-keepers’ that distribute audiovisual content in particular, is that quality often takes a backseat to completion.

I have been quite surprised to find this even in the animation sector in Japan, which is often looked on by outsiders as the world leader on animated entertainment. It would appear that there is a vast amount of fairly low quality content that exists due to demands from broadcasters and publishers. A large number of these animators themselves, having ‘sacrificed’ a better paying job (or a job at McDonalds) for something that they ‘love’, no doubt feel frustrated that their efforts become more about deadlines than about a ‘work of art’ they can take pride in.

Demos would like to see support for the creative sector devolved from government and related agencies to where these industries work; access to potential employees, collaborators, mentors, knowledge and finance through online resources and networks and industry brokers and agencies that provide local knowledge and sector-specific expertise and places to share ideas.

In essence, is the report simply asking government to leave business get to the business of business? Or is it suggesting the government should front up with funds and pass it to the industry who ‘know what to do with it’?

Regardless, it raises the key question regarding the limits of government policy in directing and supporting industry in general, and the creative industry in particular. Should governments be doing anymore than providing access to education, robust institutional (including legal) frameworks, and maximising economic and political freedom?

The Demos report entitled So what do you know? is due to be launched on 19 June 2007.