This blog can be attributed to Jared Dougherty, Assistant Vice President – International External Affairs – Asia, AT&T.
Content protection, facilitating investment inflows and eliminating market access restrictions are common policy ingredients to support the creative economy, whether viewers opt for pay-tv, streaming video, or both!
Recent industry events including AVIA’s Asia Video Summit, the Asia Television Forum and Singapore Media Festival which it is part of, and Media Partners Asia APOS, have celebrated the role of the creative and media community through the COVID-19 pandemic and shared enduring industry trends. Regulators, government related media development agencies and legislators have an important role to play in creating an environment for recovery and sustainable growth.
It is becoming increasingly apparent that there is a global trend of broadcast television shifting towards digital. 138 countries have an Over the Top (OTT) video market. There are billions of people viewing OTT services through apps or internet connections instead of traditional broadcast or cable TV, many viewing services that are free to consumers. The subscription Video on Demand market alone is projected to grow to over 650 million by 2021. Further, global OTT video revenues are expected to reach US$129 billion by 2023. An Asia Pacific OTT TV and Video Forecast study published in March 202, forecasts that the region will have 417 million streaming video on demand (SVOD) subscriptions by 2025, up from 269 million last year. Finally, Media Partners Asia predicts that the Asia-Pacific online video industry will be valued at US$50 billion by 2024.
All this growth is a clear indication that the way we access our media is evolving. New technologies, growing device adoption, and increased data usage worldwide have led consumers to expect more tailored services, including quality, convenience, and mobility when they choose content. Coupled with increased competition in the sector, the industry is being driven to a new level of innovation and there is a changing media landscape. Companies are differentiating themselves by cultivating direct-to-consumer relationships and delivering more personalised content offerings. This is also driving a deep collaboration between sectors and industries, and a sector-wide move towards convergence. Media companies can no longer rely exclusively on wholesale distribution models; neither can communication companies rely exclusively on large bundles of content. Worldwide, consumers have benefited from new dynamics in the form of more content, better experience, lower prices and easier and safer access. There is certainly more content, as well as new formats such as VOD and short-form, and viewers have a greater choice of niche content from countries and producers around the world.
Regardless of this evolution, at the heart of the creative economy is content creation and content ownership. These core attributes mean that there are common policy ingredients which remain crucial to a vibrant creative economy.
Firstly, content protection is critical. Piracy remains at unacceptable levels and is a barrier to the growth of legitimate services. While piracy takes many forms, illegal recording of content whether in theatre or otherwise, and streaming pirated content online or on other platforms, stand out as significant illicit businesses. The piracy ecosystem exposes consumers to malware and privacy threats, deprives governments of tax revenues, and challenges the economics of legitimate investment in content creation and distribution.
National governments and international collaboration have a role to play in combatting piracy and driving consumers to legitimate sources of content. This includes promoting legitimate distribution, improving overall intellectual property protection regimes and encouraging all stakeholders in the internet ecosystem to actively reduce support for illegal and unauthorised distribution of music and video content. An important step is to enforce and improve existing anti-piracy laws, including those that protect digital rights, and encouraging meaningful action by local criminal enforcement authorities. Many of those that distribute video and music illegally do so for a profit, and include significant criminal syndicates.
If successful, this will unlock several benefits across the creative economy: it creates formal employment; new sources of tax revenue; allows companies to invest revenue collected from legitimate royalties and fees into creating new content and jobs; incentivises innovation in other content delivery mediums, including OTT.
Secondly, facilitating investment inflows remains important. An efficient way to do this is to incentivise companies in the media ecosystem to develop, grow and compete with legal content. These may include policies such as tax credits and cash rebates that stimulate production.
Production incentives have become an effective public policy tool in the global screen sector. According to Olsberg SPI, incentive usage has expanded in line with increasing production. By May 2019, 97 automatic production incentives were operating in countries, states and provinces around the world. Globally, the value of incentives varies from around 15% to 45% of qualifying production expenditure – in Asia/Oceania it is already at 30.8%. These incentives reflect the known benefits of producing creative content, on the local and national economy.
The impact in generating production investment is significant. An analysis of the UK market concluded that between 2014 and 2016, 91% of UK film production expenditure would not have occurred without the incentive. In addition, collaboration between international and domestic companies increases the vibrancy and competitiveness of the domestic content industry and has positive ripple effects to related industries, such as tourism. For instance, WarnerMedia has jointly produced 25 HBO Asia Originals and kids programming content for Cartoon Network in the Asia-Pacific region, with more slated to premier in the coming years. These productions were done in collaboration including partners in Malaysia, Singapore, Taiwan, India, Vietnam, Thailand, amongst others.
Finally, continued efforts are needed to eliminate market access restrictions. Increasingly, the market for content is global, and efforts to shut the door on international content encourage similar impositions on each country’s own creators with aspirations of global audiences. Restrictions may take the form of foreign investment restrictions, requiring local presence as a condition to provide content in-country, or licensing requirements. Local content quotas also could result in a reduction in content that contains cultural value, creating a loss of diversity, erosion of quality, an increase in production costs, and even a reduction in the quantity of local productions. Competition for quality local content is already being driven by natural market competition. As more players compete for viewers, imposed quotas can affect quality, diversity and availability of content for consumers.[i]
We encourage policymakers and regulators to embrace policies and practices that support creative economies, and harness the benefits of these trends. We must consider what remains necessary and eliminate unnecessary regulatory burdens imposed on pay-TV providers in the contemporary competitive marketplace and to enable the growth of the OTT market. At the same time the policymakers and regulators should not shackle OTT with pay-TV type regulations as the two platforms are fundamentally different. Our experience has taught us that creators, businesses, consumers and economies thrive when there is openness and robust innovation in the marketplace matched by respect and protection of content and IP. It is therefore necessary for policymakers, industry, and civil society to collaborate to identify solutions to reduce regulatory barriers and promote growth. We could all benefit from a mindful awareness and consistent regional and global approach, which would lift all creators in the Asia-Pacific region and beyond.
[i] Raul Katz, Juan Jung 2020, INFORME CUOTAS KATZ informe version 10 (limpia) (teleadvs.com)