The Impact of Local Content Investment on Global Media Industries

Rather imminent towards the pandemic, major entertainment companies that are mostly based in the United States have launched their own video-on-demand (VoD) services in the hope to get a share of the large video streaming market (Berman, 2019). The pandemic further accelerates the VoD market across the world due to the high demand for home entertainment. In 2021, the global video streaming market size was estimated to reach USD 419.03 billion and projected to grow to USD 932.29 billion in 2028 at a 12.1% annual growth rate (Fortune Business Insights, 2021). With an increasingly lucrative outlook, major VoD providers invest heavily in content to support their services globally. As the VoD market in the Western regions saturates, these providers have invested in local content in several fast-growing markets in the Asia Pacific region to meet the local consumer demand (Choudhury, 2020).

Local content investment spent by VoD providers, taking forms of production and distribution investment, is a significant engine of growth within the wider economy of the invested countries. Through production investment, direct expenditure on core operations (e.g. equipment, transport, marketing, hospitality, etc.) in turn drives indirect spending by suppliers (e.g. camera lenses, catering, transport fuel, etc.), and induce employed labour to spend their wages in the economy. AlphaBeta (2018) estimated the spending in the economy that could be supported by VoD providers’ content investment in Asia could be worth up to US$30.4 billion in 2022, three-fold the investment amount, with a further impact of 736,000 jobs directly linked to the investment. These huge numbers will be amplified even further if the spillover benefits to other industries are to be included, given that through VoD platforms’ distribution investment, Asian content is disseminated to wider audiences abroad and drive cultural influence as well as demand for Asian exports and tourism. Deloitte (2021) further investigate the findings on a national level by conducting a case study of Netflix’s investment in South Korea. It is estimated that from 2016 to 2020, an investment of USD 648 million on local content has contributed to 51% annual growth of inbound tourism and 150-221% annual growth of foods, beauty, and fashion exports, extending the global spread of Korean culture. As VoD platforms provide a powerful channel to share cultural relevance across borders and educate audiences in Asian culture, such international exposure generates cultural appeal and increase global demand for Asian content on top of the demand for tourism and exports from domestic industries (AlphaBeta, 2018).

In addition to generating economic and cultural impact, the latter of which specifically increase global demand for local content, investment in local content also supports the supply side by improving the production environment and diversity of works in invested countries. Researches by Kenny (2021a; 2021b; 2021c; 2021d) suggested that investment in training and skills during content production, which has been widely done by major VoD providers across Asian countries, ripples through the industry as highly skilled workers shift jobs and collaborate with others. Innovations introduced along with the investment will also diffuse around the industry and be taken up by other domestic productions, enabling knowledge transfer between entertainment industries around the world. Several examples of production improvement driven by VoD providers’ investment include the start of script-pitching practice across Southeast Asia, Taiwan, and South Korea (Kenny, 2021a; 2021b; 2021c), the use of new and globally-competitive VFX technologies and systematic production schedule in South Korea (Deloitte, 2021), and the commencement of showrunner concept in India (Jha, 2019). Investments in infrastructure, such as studio space or post-production facilities, also increase the capacity and capabilities of the industry as a whole. VoD investment within the country has contributed to growing the number and size of VFX studios, and translations and dubbing services in South Korea (Deloitte, 2021). VoD providers also offer creative freedom for local content creators, unlike traditional media that has several broadcasting limitations. Consequently, entry-level screenwriters are able to showcase their works, the production team can experience a variety of genres, and a lot more diverse and riskier content flourishes (Ward, 2021).

The economic and cultural impact and the production improvement happening in each potential country have started to diversify the global content market. In the last few years, the internationalisation of the world’s top content has accelerated as 27% of 2021's most popular titles are produced outside the United States, up from 17% in 2019. This trend can be attributed primarily to the global VoD platforms where local titles are made easily available internationally, hence allowing more non-U.S. originated content to become worldwide hits (Patel, 2021). The global content market will continue to be more diversified as the cultural impact increase global demand for local content, the economic impact will act as an incentive for the local governments to ease related regulations and develop the industry further to attract more content investment, and the production improvement will increase the quality and quantity of local content production. The ability of VoD providers to mediate partnerships between local and international players is also crucial in increasing the international appeal of local content (AlphaBeta, 2018).

To conclude, the virtuous cycle where local content investment enhances the industry’s capacity and capabilities, which in turn results in further investment and growth in the sector, are happening across the world, with growth coming specifically from the Asian region. As more countries get more developed in content production and the demand for local content rises internationally, the global entertainment and media industry will be far more diversified than ever.

References

AlphaBeta, 2018. Asia-on-Demand: The Growth of VOD Investment in Local Entertainment Industries. [pdf] AlphaBeta. Available at: <https://alphabeta.com/wp-content/uploads/2018/10/asia-on-demand_fa_spread_interactive.pdf> [Accessed 10 January 2022].

Berman, J., 2019. The streaming wars are finally in full swing—and the first casualties are coming into view. Time, [online] 25 November. Available at: <https://time.com/5736490/streaming-wars-disney-plus-apple-tv/> [Accessed 03 January 2022].

Choudhury, S.R., 2020. Netflix bets big on Asia as it sees ‘significant potential’ in these markets. CNBC, [online] 8 November. Available at: <https://www.cnbc.com/2020/11/09/netflix-nflx-its-strategy-in-asian-markets-like-india-indonesia.html> [Accessed 08 January 2022].

Deloitte, 2021. Socio-economic Impact of Netflix Korea. [pdf] South Korea: Deloitte. Available at: https://drive.google.com/file/d/1CsnPesZ6dzrE7lDHVxqdceHF554Vo2_o/view> [Accessed 03 January 2022].

Fortune Business Insights, 2021. Video streaming market report. [online] Available at <https://www.fortunebusinessinsights.com/video-streaming-market-103057> [Accessed 02 January 2022].

Jha, L., 2019. Netflix Makes Biggest India Investment Yet with ‘Sacred Games 2’. Mint, [online] 13 August. Available at: <https://www.livemint.com/industry/media/netflix-makes-biggest-india-investment-yet-with-sacred-games-2-1565673333129.html> [Accessed 12 January 2022].

Kenny, C., 2021a. The Economic Impact of Online Curated Content Services in Indonesia 2021. [pdf] Frontier Economics. Available at: <https://www.mpa-apac.org/wp-content/uploads/2021/09/Indonesia-Frontier-The-Economic-Impact-of-OCC-in-Indonesia.pdf> [Accessed 03 January 2022].

Kenny, C., 2021b. The Economic Impact of Video-on-Demand Services in Taiwan 2021. [pdf] Frontier Economics. Available at: <https://www.mpa-apac.org/wp-content/uploads/2021/11/TW-Frontier-The-Economic-Impact-of-VOD-in-Taiwan.pdf> [Accessed 03 January 2022].

Kenny, C., 2021c. The Economic Impact of Video-on-Demand Services in Korea 2021. [pdf] Frontier Economics. Available at: <https://www.mpa-apac.org/wp-content/uploads/2021/05/KR-Frontier-The-Economic-Impact-of-VOD-in-Korea-30.04.pdf> [Accessed 03 January 2022].

Kenny, C., 2021d. The Economic Impact of Online Curated Content Services in India 2021. [pdf] Frontier Economics. Available at: <https://www.mpa-apac.org/wp-content/uploads/2021/12/logos_India-Frontier-The-Economic-Impact-of-OCC-in-India.pdf> [Accessed 03 January 2022].

Patel, R., 2021. How SVoD platforms lead the internationalisation of popular content. [online] Ampere Analysis. Available at: <https://www.ampereanalysis.com/insight/how-svod-platforms-lead-the-internationalisation-of-popular-content> [Accessed 8 January 2021].

Ward, T., 2021. How Has the Unstoppable Rise of Streaming Platforms Impacted Film? We Asked the Experts. Esquire, [online] 6 September. Available at:<https://www.esquire.com/uk/culture/tv/a36842312/streaming-platforms/> [Accessed 03 January 2022].