White Paper Soft Culture Hard Economy Part I

PART ONE Global Creative Industry Trends & Implications for China “China's creative history goes back centuries. Dance in China entered into a period of unprecedented brilliance during the Tang dynasty (618-907 A.D.) as culture flourished. The imperial court founded the Pear Garden Academy, the Imperial Academy, and the T'ai-ch'ang Temple and gathered the top dancing talent of the country to perform the magnificent incomparably lavish "Ten Movement Music" dance. Version 2.5 August 09 by China Creative Capital 1

Version 2.0 22 Jul09 by KCYoon 2

WHO IS DRIVING THE CREATIVE INDUSTRY? WHAT ARE CHANGES HAPPENING? HOW DOES TREND IMPACT GLOBALLY? WHY DOES IT AFFECT CHINA ? WHEN WILL CHINA RESPOND? 3

“Future of Media” Gerd Loenhard ..DIGITAL CONVERGENCE + RISE of INFORMATION ECONOMY is DRIVING GROWTH OF THE CREATIVE INDUSTRY ..where Intellectual Property and Ideas have highest economic value-add …DATA IS THE NEW OIL 4

Globalization and Proliferation of Digital Media Devices Media Channels of Tomorrow Text Links Micro-sites Video Broadcast and Digital Radio Advertising Rich Media In-Game Ads IPTV Print and Reusable Paper Mobile Ads Social Networking Ad-funded apps User Generated Pre-Roll Micro-sites Video Rich Media Advertising Broadcast Interactive Video and IPTV 5 second spot Mobile Video Ads Portable Media Ads Ad-funded OS “Future of Media” Gerd Loenhard 5

“Global Consumer Spending in Media & Entertainment in “Global digital and mobile will grow at 22% CAGR from 2012 will reach USD1.2 trillion..with highest growth USD87bn in 2007 to USD234bn by 2012” PWC 2008 coming from TV, sports and games” PWC 2008 PWC Report 2008 PWC Report 2008 Global Media & Entertainment spending will reach USD 2.2 trillion by 2012 growing at CAGR 6.6% from 2007..faster than rate of global GDP growth.. With consumers driving the majority spend at USD1.2 trillion, especially through mobile and digital media 7

World trade in Creative Goods grew at annual rate of 8.7% be twe en 2000-2005, reaching USD 335bn in 2005..China is already the largest exporting nation 1950’s Year 2000s- emergence Emergence of Oil & of Global Corporations in Auto Global software , Media Corporations UNCTAD Creative Industry Report 2008 Emergence of the Creative & Cultural Industry globally will shift economic opportunities and significantly change the value of economic output , creating a new global class of DATA CORPORATIONS 8

 Fastest growing sector (@ 5%) outperforming traditional sectors with a size UK: comparable to the financial services sector Largest & fastest  Contributes close to 10% of UK’s GDP (2009) growing economic  Employs 1.8 million people sector  Contributes 6% of economy US:  Hollywood+ Top 3 Broadcaster (NBC, ABC,FOX) + Times Warner Music dominates Second largest the industry economic sector after  Employs close to 17million people Wall Street  Exports over USD 90 billion with a global influence only matched by the US Military  Hollywood movies dominates 70% of EU’s cinema revenues Case Studies of Creative product Impact on the Industry  Originally published as a Children book  Originally conceived as a comedy series-  Sold 300 books in 63 languages unique due to the “no-speaking” mode  Generating over USD 10bn in films and  Widely popular and distributed in over DVD licenses 200 countries worldwide  Helped drive revenues for entire industry  Inspired 2 feature films and an animated in the US – Warner movies, online games cartoon series EA and Amazon.com 9

IT’S AN “EVOLUTION ‘” TO A CREATIVE DIGITAL AGE Emergence of the Creative & Cultural Industry globally is part of the industrial evolution as economies migrate from manufacturing-based to knowledge-based “plus “digital-content” based in the 21st Century.. 10

Growth of User-Generated Content New Media channels capturing & Reach of online social network consumers + ad spend brings power to consumers Zenith Optimedia Jul2009 Business Models change to collaborate consumers, cross-media, etc eMarketer 2008 Fundamental Changes in Media “Future of Media” Gerd Loenhard Business Models “Future of Media” Gerd Loenhard 12

Proliferation of Digital Devices – Digitization of Traditional Content Computer and Mobile Phones Increases Availability Increases Accessibility • In 2009, over 7000 digital screens, with over 11,000 predicted in US alone by 2011 • Global internet users breached 1 billion in Dec 2008 • Close to 30 billion online videos watched globally • 3.3 billion mobile phone subscribers globally with 600 million in China alone. Mobile TV viewers expected to reach 500 million by 2013 New Media Players Gaining Market share! “Future of Media” Gerd Loenhard “Future of Media” Gerd Loenhard “ Virtually every segment of the entertainment and media industry is shifting from physical distribution to digital distribution of content," said Wayne Jackson, global leader of PWC .. "As this shift continues, we see more revenue opportunities for entertainment and media companies.” Version 2.0 22 Jul09 by KCYoon 13

OLD - Production of content , Power to Few ! distribution, accessibility Limited Content dominated by Limited Channels few Technology Content Creates New Choice NEW Channels - Content has Technology Power to the power but also Proliferates faces Content Creation People!” competition; Consumers Channel Access consumers Choice “Dictate make content UK Creative Industry Report 2008 Consumers Create Content 14

Services to enhance analysis, Survey of growth of various media sectors in the targeting & capturing of online US from 2001-2007 + forecast of future growth consumer traffic of increasing value JEIG Capital Report 2009 Consumer online media- Interactive marketing services- Transactions Transactions Version 2.0 22 Jul09 by KCYoon 15

Birth of MP3 Devices BUT Music Industry seek CONTROL OF DOWNLOAD, SHARING with DRM and coding of content 16

Traditional Global Media Focus on 4 core Company - Ownership of multiple channel strategy to adapt Creation of hulu.com as brands, strong content aggregator site for NBC content Continue to create good content Compete against distributors- control user experience Build value in online sites Launched 10 local city sites as content aggregator with NBC branding M ake strategic Selected M&A of targeted investments in networks like Oxygen media digital media targeting women & iVillage website “How do we make the transition from our businesses of today to the future businesses of tomorrow, without destroying the businesses of today?” NBC Senior Executive 17

Online represents 23% of all time spent Shift of Ad Spend is evident with new on major ad-supported media, but only media channels gaining rapidly at 8% of total ad spend expense of traditional media Share of Total Media Time Magazin es Newspapers 8% 11% In ternet 23% TV 31% Radio 28% Share of Total Ad Spending Inter net Magazi n es 8.0% 18.0% TV 33.0% Rad io 6% PWC Report 2008 Newsp apers 34% While new media channels represent potential for fast growth, the number of emerging channels means the spend quantum remains small – hence an integrated media strategy could offer a good approach 18

Aligned with Growth of Creative Industry as a key economic sector essential to the Economic Chinese Government’s strategy to shift from export-driven to domestic Strategy consumption-based economy.. Large Large potential market - Chinese consumer’s consumption of media Domestic /entertainment increasing as spending power increases plus ability to access Market content (largest internet population 330m; mobile users 550m) Foundation Rich Chinese history/culture provides strong foundation for creative industry for Job and growth of SMEs – generating jobs to fill-gap for loss in export industry Creation Counter Despite censorship implementation, globalization and ability to access foreign Globalization media content through online/digital channels cannot be avoided... Need to with Domestic counter with availability of domestic content Content “Softpower” Leverage on current global interest in China to spread Chinese history/culture to Create as a “softpower” foreign –policy tool to create goodwill internationally for the Goodwill Chinese nation Globally China already a leader in “’new media’’; but need to “privatize” and expose to Competitive “market competitive forces ” SOE-dominated traditional media to ensure that Domestic Chinese media groups can become a globally competitive force Media 20

White Paper Soft Culture Hard Economy Part I

0 comments

Notes on slide 1

Favorites, Groups & Events