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OPPORTUNITIES ARE IN ABUNDANCE in the Creative Industry. Entrepreneurs just have to identify them within the parameters that fit both their strengths as well as market acceptance. That is of course from an absolute perspective. Should one consider relativity, one would need to study the level of competition. Too much competition in a particular sub-market may mean that you do not enter the market at all. For example, if there are hundreds of production houses going after a handful number of television stations only, then why would you want to compete? It will only mean self-inflicted failure. Nevertheless, if there is strong value proposition, competition can be the catalyst for quality.
When a study was made on how the creative industries in other countries flourished, a pleasant surprise was uncovered. It seems that creative industry is the last missing puzzle to the evolution of an economy, at least for South Korea and the United Kingdom (UK). South Korea introduced its KOCCA movement about three decades ago that undertook critical roles covering production support, overseas expansion support, computer and technology convergence content, human resources training and infrastructure establishment management. Today, South Korea has become a World giant for the creative industry particularly in content and entertainment. It is this success that gave birth to the idea of fuelling the creative industry in Malaysia. Numerous efforts have been introduced. The question is, will we have to wait for three decades as well?
Malaysia has what it takes to achieve the intended success much faster than South Korea. This is because our culture is rich with creativity. The UK recorded gross production of GBP76.9 billion from its creative industry in 2013. That accounted for 5% of its economy. In 2008, it was only GBP61.1 billion representing 4.5% of the UK’s economy. This is a staggering 25.8% increase over a period of five years which is more than double the overall UK economic growth of only 11.4% for the same period. The subcomponents of the UK creative industry consist of filming, television, publishing, fashion, design, advertising, music, art, cultural offerings as well as digital gaming. These subcomponents are also the ones that Malaysia is thriving on.
A separate study done by UNESCO revealed that the value of World creative exports from 2002 to 2011 grew from USD198 billion to USD454 billion. That is two and a half times. When broken down into economic groups, the Developing nations showed an increase from USD74 billion in 2002 to USD228 billion in 2011. That represents a threefold in the creative industries’ contribution. Malaysia belongs to the Developing nations group. Interesting enough, Malaysia also recorded a threefold growth over similar duration where it grew its creative exports from RM1.9 billion in 2003 to RM5.8 billion in 2012. All these statistics are on the back of the usual suspects, namely, crafts, audio, design, digital, performances, publishing and visual arts.
Earlier it was mentioned that opportunities are in abundance. Now let us boil it down to the components of the value chain in each of the creative industry subcomponents. Let us start with the Creative Content Industry. For ease of comparison, we shall discuss within four main groupings: Development, Production, Distribution and Enhancer. The Creative Content Industry Development stage has potential businesses to be created which includes but not limited to educational movements, be it vocational or academia, or even training base such as talent agencies, seminars or simply rehearsal studio businesses.
In the Production stage, there are multiple career options ranging from being actors/actresses, casting managers, writers, directors, editor, cinematographers and many more. In fact, pre and post production stages offer many more specialised opportunities such as visual effects, sound effects and computer generated images (CGI). If you expand your mind wide enough, you do not need to be a creative person. An engineer can start an equipment rental business offering their camera and production equipment for rental to the production houses. In this new age of high definition (HD), owning those equipment can be costly to the production houses.
When a creative content is ready, it will need to be distributed. What businesses can you open? A chain of cinemas perhaps? Television broadcasting business is a good one. DVD sales used to be an avenue but nowadays, even the pirates are struggling to push the demand. Instead, a techy approach of downloading and streaming of content via multiple screens will be a better option riding on the technological advancement of content consumption behaviour. There is also the tail end of making money particularly those relating to royalty streams derived from intellectual property (IP) rights, merchandising or even logistics.
A perfect example would be our two most loved sweethearts, Upinand Ipin. The two bald boys not only earned Les Copaque (the owner of the IP) television licensing rights for broadcasting, they had also earned sales of toys and school merchandises that bore the images of Upinand Ipin. Last checked, they also opened a restaurant in Shah Alam.
Let us take the supply of equipment as an example again. The supply of equipment and related engineering services are limited to a few players in the market due to the fast changing technology as mentioned earlier. We have had production houses struggling switching from standard definition (SD) to high definition (HD), and now to 4K, whatever that means. In fact, now we may even be talking about 8K or 16K. The point is, technology does not have a lifespan of five to ten years anymore. Even three years is considered too long nowadays. Therefore, will it not make sense to have a company that solely specialises in supplying such equipment? The economies of scale of such business will allow financial stamina to upgrade the technology as and when warranted commercially.
Our youth has a myopic view of what Creative Industry can offer them as far as career is concerned. Within the context of Creative Content Industry, the popular aspirations are to be involved in casting, writing, directing, editing and programming. If they had considered a wider spectrum, areas that do not have stiff competition can emerge as fantastic money-making models. Some of it are equipment services, engineering services, logistics, studios and manufacturing of props and merchandises that complement the creative content value chain.
Next, closer to the Creative Content Industry is the Performing Arts Industry. Many artistic endeavoursfor film and television are classically derived from performing arts such as theatre. Similar to Creative Content Industry, the Performing Arts Industry also offers many opportunities during its Development stage, namely, academia, vocational, talent agency, seminars or even studios. The Production stage also offers roles from casting, writing, directing, choreographing and an extension to all this would be the design and production of props as well as relevant technical expertise such as lighting control and stage control.
How do we deliver the performing arts to the public? This question alone uncovers many opportunities. Similar to owning a cinema, we can own a theatre premise that promises share of the ticket sales or strategic packaging with tour agencies for tourists. Along with the sales of tickets, merchandises can earn quite as handsome of a profit like its ticketing counterpart. Again, IP licensing from performing arts can cross over to other platforms for royalty income.
The Malaysian Usman Awangclassic, UdadanDara, moved from theatre to publishing and to filming or television content. PuteriGunungLedangby Enfinitysaw the opportunity to also capitaliseon music sales for its dedicated song writing for the play. In fact, the performing arts show itself can be recorded for subsequent resale via multiple windows of opportunity. This is true for musical concerts as well as fast tempo shows like LawakKeDe by Tall Order Productions. In many cases, ticket sales from the original theatre alone may not be adequate to cover the costs invested in the production. Every penny from complementing windows help tremendously.
A typical theatre and arts student will just limit his or her imagination for choices of career to directing, casting, script writing, choreographing or even music for the theatre. A more robust thinking would suggest out of the box opportunities surrounding theatre maintenance, props manufacturing, merchandising or even IP licensing management. The point here is that the mindset of the students needs to be reactivated to be business minded. This realisationis slowly being addressed in the Malaysian universities. At least University Institute Technology Mara (UiTM) under its Faculty of Film, Theatre and Animation (FiTA) has started to offer Creative Consultancy as a subject to bridge the left brain to the right brain by inviting experts from the industry to share their experience on how to conduct creative activities as businesses.
Let us look at another fairly related industry, the Music Industry. The music fans' growing appetite for subscription and streaming services helped drive trade revenue growth in most major music markets in 2013, with overall digital growing at 4.3% and Europe’s music market expanding for the first time in more than a decade. We are now experiencing a shift of revenue source from physical to digital. Statistics from Global Market Trend 2013 revealed that digital related revenues for music contribution of 33% in 2011 has increased to 39% in 2013. Today, digital is at the top of the list. The Malaysian music landscape saw the same development whereby in 2012, the digitally earned revenues contributed 46% of the overall income with physical sales of CDs at 39%. This is a switch from the position in 2011 when physical sales of 45% was higher than digital sales of 43%. Within less than a decade since digital sales start appearing in 2005, consumer behaviour has changed.
What opportunities are then being presented to our youth? As usual, those who are keen in developing new talent can stick to academia, vocational, talent agency, seminars or even studios. Those who are hard core production technical suckers will master their capabilities on recording, mixing and mastering the music production. Those inclining towards the right brain will explore their artistic talent in writing songs or become musicians. When all these have enough players in the market, to avoid stiff competition, there are alternative areas where money can be made. Distribution stage offers the chance for new comers to explore applications of pushing music online, manage concert tours, manage artists’ endorsements and merchandises and many more.
Touring with concerts alone poses many more opportunities from musical equipment rentals (also known as Back Line in the industry), logistics, engineering as well as exploitation of various angles of IP licensing. A business minded music industry player will realise that creating multiple source of revenues is crucial. A more 360 degrees consideration so to speak. Just a decade ago a unit of sales for the music industry was a CD costing RM40. That soon changed to singles of RM10. Today, it is down to the streaming of songs at 99 Sen each. In fact, it may be cheaper once you start buying subscription packages from the likes of Spotify.
Let us go off tangent away from content, performing arts and music. Let us consider fine arts, or better known as Visual Arts Industry nowadays. What is the financial performance of the visual arts market? Performance analysis of the visual arts markets have been conducted for more than 30 years. A study carried out by Wolfgang Wilke from Dresdner Bank in 2000 explained that the long-term trend in inflation adjusted art prices follows the general economic trend whereby art prices rise above average compared to the prices of other goods. Mei MoesesAnnual Art Index and SGP 500 Total Return Index for the years 2000 to 2010 provides the empirical evidence for such observation.
What does this really mean? On the surface it suggests that there is profit to be made from the appreciation of the value of art as well as from the sale of the initial production of the art. However, art is very unique to the following of a particular nation and it does not necessarily cross the borders as efficiently as music or films. To have a better appreciation of this phenomenon, we shall study the Malaysian visual arts landscape. Previously, Malaysia has never had any form of systematic market measurement for the transactions involving visual arts until 2010 when the first Malaysian arts auction was held on 8 August 2010 by Henry Butcher. That first auction recorded sales worth RM1.7 million.
Soon that number grew to an annualised figure of RM3.1 million recorded for 2011 and RM7.5 million each for 2012 and 2013 on the back of an average of 3 auctions in a year. The yearlycumulative transaction accounts for a compounding annual growth rate (CAGR) of 41.5%.The monopoly advantage Henry Butcher had had come to an end when three more auction houses emerged from 2013 onward. They were Masterpiece, KL Life Style and The Edge. Even without auction houses, since 2006, prices for the better-known Malaysian modern artists have soared hundredfold in extreme cases as reported by John Kirchof The Wall Street Journal on 2 October 2009.
The Malaysian visual arts graduates must now grab the opportunity to ride on this bullish movement for there are plenty of ways to lucrative careers. They can choose to remain in academia and vocational movements such as residencies and apprenticeships. They can embark on the provision of studios, material or even installation services. Some may take a more historian approach by being the custodian of the arts narrative via roles such as curators, writers and the like. Then there are complementary services such as printing, logistics, cataloging, galleries and warehousing. Not all players in the industry wish to be artists. Some may be of value in areas such as conservation, exhibitionists or even as art appraisal experts.
On a more specified cross-professional expertise or faculties manner; accountants, bankers, valuers, auctioneers and insurance brokers may just find an expanded role in their work. In the end, the hard core players who wish to be a true artist may find it challenging to survive compared to their colleagues who had ventured into those complementing industry roles mentioned earlier.Why? Well, to be a professional artist, you will need to be patient and this will consume time. To produce seminal body of work alone may take months or years. One good example would be a famous Malaysian Islamic contemporary artist, Husin Hourmain. Husin spent three years without any income when producing his famous Awal Huruf Asal Huruf series consisting of thirty pieces of the Arabic alphabets Alif to Ya. In 2012, he did his solo show for the series and managed to sell all thirty pieces making it a sold out solo show. This had significant impact to the value of art produced by Husin Hourmain where a typical five feet by five feet work of RM15,000 each in 2012 had immediately gone up to RM20,000 each subsequent to the solo show. Today, a piece like that is worth RM40,000 as benchmarked to the latest sale transactions done at art galleries.
Apart from being able to produce seminal pieces, an artist must also be consistently producing for a great duration of time to establish his or her prominence in the market. This is necessary to mark an artist as being serious in his or her career as an artist. A good collection of art can only have value if there are enough people in the market owning it –not too many nor too little –not too prolific nor too scarce. One must observe how and when art pieces are traded along the value chain and this has critical consequences on how art is being priced. An artist will typically sell via a gallery that he or she is being represented by. The artist makes money and so does the gallerists. The former produces and the latter does the promotion, marketing as well as run the exhibitions. The transfer of art from the artists to the gallerists is referred to as the Primary Market and the subsequent sale to public by the gallerists constitute the Secondary Market. Finally, the Tertiary Market would be the collectors disposal of their collection via the auctions.
Let us now move on to the Literature Industry. Apart from the Development stage that consists of academia, linguistic services, research and seminars, this industry offers a range of fairly remunerated career covering roles such as writers, editorial services, visual imaging, printing, translation and copyrighting. On the Distribution stage side, running physical or on-line stores is the main channel but alternatives may include e-book services, cataloging, e-publishing and again, IP rights and licensing. As mentioned earlier, literature can also have cross-platform opportunities such as adaptation into theatre plays, films or even television content.
The Fashion and Design Industry is probably the largest component of the building block of the Creative Industry simply because of its close relation to general consumerism and retail industry particularly the apparel and garment industry. The Global Powers of Retailing analysis done by Deloitte in 2014 revealed that out of all sub-groups of retail economic performance in 2012, the Fashion and Design Industry scored the highest for Return on Assets as well as Net Profit Margin. This is quite an achievement as its contenders also include Fast Moving Consumer Goods.
Another measurement worth mentioning from the same study is the level of globalisation of the Fashion and Design Industry where fashion goods retailers continue to adapt a more international profile. On average, their operations spanned 22.2 countries in 2012, which is more than twice the average for Top 250 retail products as a whole. Foreign markets accounted for nearly 30% of the sector’s total retail revenue. This certainly opens the eyes of fashion practitioners. We must not limit our creativity within the national boundaries. We ought to go beyond. A good example worth following would be Fashion Valet that has marked its presence in Singapore and Indonesia.
Business Monitor International (BMI) in Malaysia Retail Report 2014 forecasts that household expenditure on clothing will grow strongly towards the close of the decade in 2020 particularly in the 20 to 39 years age bracket. The sustainable Malaysian Clothing and Footwear Spending averaged at RM15 billion a year for the years 2001 to 2014. This is as huge as the Malaysian rubber product exports. Business models must be appropriate in maximising returns. Some may say that the conventional brick and mortar way is more convincing to customers. Some may also say that the millennial audience does not mind on-line purchases that warrants extensive on-line retail setup. A survey done across a portfolio of fashion designers under the debt financing scheme by MyCreativeVentures revealed that both physical stores as well as on-line stores need to be synergised. This is because the depreciation expense of a physical store is less costly than on-line sales commissions and the widespread of an on-line distribution channel captures untapped markets.
The Malaysian designers rely heavily on cheap quality production in countries such as China, Indonesia, Vietnam and Thailand. Similar low cost high quality production services are lacking in Malaysia. This inadequacy itself must be taken as an opportunity to make business. What if Malaysians can offer services of such quality and costs? Like many other industries, cheap labour can be imported and transportation costs can certainly be much cheaper than having to transport from foreign countries. Such services include designers, illustrators, cutters, material procurement, tailoring and many more.
Other complementary businesses to the industry may include but not limited to fashion shows, trade shows, sales agencies, modelling, photography, curatorial, cosmetics as well as related equipment supply for tailoring work. Of course, there will always be opening for careers in academia, vocational and apprenticeship. Unlike the European continent where fashion retail movements are in accordance with the Autumn-Winter and Spring-Summer seasons, Malaysia presents a fairly unique opportunity of the Hari Raya peak as well as the ridiculous all year round “sale” that seems to attract shoppers since decades ago during the “Globe Silk Store” days until today under the “Jakel” spell or even the on-line craze of Zaloraor Fashion Valet.
The final industry is the Traditional and Cultural Arts Industry. This industry is often referred to as the crafts industry but by right, it should be viewed as more than that. The fact that it carries with it the cultural values and the historical richness, this industry should be closely synergised with the tourism industry. We are talking about items such as wood carvings, batiks, songkets, handy crafts, metal works, silverware, jewellery, traditional costumes, cuisines and many more. Again, apart from academia, vocational and apprenticeship, this industry can offer unique business opportunities simply because of its close relations with the tourism side.
Traditional and Cultural Arts Industry requires designers, material handlers, manufacturing capability, workshops, equipment supply, physical and on-line stores, trade shows, cultural shows, sales agencies, tourism packages, wholesale distributors, exporters, logistics, warehousing, catalogingand many more. The products in this industry are often priced low for local market. Pushing it for international market can provide means of higher pricing. There are many sporadic cottage industry type movements that are not consolidated into a solid and focused trading establishment. The point is, again, we must not forget that its ability to ride on the tourism movement of the nation presents limitless opportunities, if only we are open to explore.
* kopihangtuah
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