BOLLYWOOD

1. BOLLYWOOD MUMBAI, INDIA

7. India Film Export

8. Why is Bollywood globalizing? 1. Technology advances- Digital media has improved prints of Indian movies. They are much more appealing because they lack the grainy scenes of past movies, as well as frequent advertisements that used to crowd the top and bottom of the screen as well as break into flow of the movie. 2. Breakdown of Language Barriers- Subtitles now allow more people to watch Indian movies without knowledge of the language, making Bollywood all the more accessible. 3. Cultural Differences- The main attraction in these countries is the mix of modernity and tradition in Indian movies. People in countries in Africa and surrounding Asian countries do not easily identify with American culture. Topics such as divorce are not as common to their lives as those in America. In addition, people from other countries are sometimes anti-Americanization and as a result choose Bollywood over Hollywood. “The Indian masala film is closer to the emotional grammar of the Asians and Africans than the Hollywood box office bonanzas.”- The Hindu: “Bollywood films make waves around the world” 4. Tailoring of Stories- In addition, producers and directors are tailoring their stories more to the western audience, although it is indicated that the more authentic the movie, the more westerners enjoy it. 5. South Asian diaspora- NRI’s (Non-Resident Indians) previously migrating to countries such as Fiji and Africa, have now increased migration to the western world. They often encounter a nostalgic connection to their homeland and try to connect with Indian through various mediums- food, movies, religion, etc. South Asian diasporas are considered a distribution territory by Bollywood distributors due to the large number of movie they import. With increased population and import of movies, comes greater exposure to Bollywood which generates interest in non-Indian friends or associates. “…this world is getting smaller, and [people] want to see what other cultures are like. I have a sense that world cinema is much more important to people now.” – Tower VP John Thrasher qtd. in “Hearing Bollywood’s calling, Eros finds a U.S. market for Indian films”

10. Porter’s Prioritized Strategy • Activate and upgrade clusters • Continue to enhance education and workforce training • Invest in research and the University system • Launch internal and external marketing campaigns • Create an explicit economic development program for distressed areas • Increase support for start-ups and local firms • Create new institutions for economic development • Measure progress in raising prosperity

11. Indonesia Movie Industry: A Competitiveness Study Handry Satriago Wayah S. Wiroto Faculty of Economy University of Indonesia

12. Background Why bother? • Indonesia film industry has been rooted since Dutch colonialism era (1st bioscope in 1900, 1st movie produced in 1926). Why this industry is less competitive than other countries in the region and global? • Market for Indonesia film industry is huge, >200 Million population. In 1960’s, the film attendance reached 450 Million…nowadays is only about 35 Million..what happened? • Is there any film cluster industry in Indonesia? How large and how it has changed? What are their impact to the economy? • What are the initiatives that can be done to improve this industry competitiveness?

13. The History A Good Start… 1931: First Indonesia sound movie (Boenga Roos) 1936 : First Indonesian language movie (Terang Boelan) 1953: Indonesia rank 15th from 35 countries in term of number of Theatre (outside US) 1953: First Indonesia Film Festival Sep 1905 First documenter movie in Indonesia (US producer) and exported to Netherland 1926 1st Indonesia Movie produced “Loetoeng Kasaroeng” 1960 Highest record for movie audience : 450 Million Dec 1900 First movie screened in Batavia 1943 : 1st National Film Company Established Kino Drama Atelier (1948). 1st film education institution 1928 Doenia Film Magazine (Film Critics) 1930 The First IFC Importer and Theatre owner association 1903 : The Life of American Fireman and The Great Train Robbery (ES Porter_ 1st huge success of American cinema 1895 1st Movie launched in Paris (Lumiere) 1913: Hollywood become American Movie Capital 1927 : Fist Talkie Film 1927 : Fist Academy Award 1905: Italia 1st movie (La Presa di Roma) 1919 : Korea 1st movie (Righteous Revenge) 1908 : Russia 1st movie (Stenka Razin) 1913: India 1st movie (RajahHarischandra) 1927: Thailand 1st private sector movie (Chok Song Chun) 1896 – London 1896 - Russia 1896 – India 1897 – Japan 1903 – Korea 1905 - Italy 1897 – First Shot of Rama V of Thai Dec 87 – Premiere in Thai

14. The History The Influence of Who’s in The Power

15. The History Numbers Talk.. The golden era of imported film (US, Europe, India, Malaysia,Phil) • Start of Private TV • VCD/Laser/DVD • Cineplex (21 Group) start to “monopolize” Good business for theatre (Support by Govt preferred IFC – GPBSI, PARFI, PERFIN) New Order (Govt Control) Nationalism Spirit Local Film: Comedy, Sex, Violence theme Import Film Quota Local production declining • Reform of Indonesia • Deppen diminished • Kuldesak (1998) breakthrough • Import quota released Old Order

16. Processes Typical Budget Distribution (Vary depend on type of Movie 10% 60% 30% Exhibition Distribution Post Production Production Development & Pre Production Distribution Sponsorship Promotion Shooting Editing Mixing Sound Matching Print One Print Produced Find Investors Merchandise Scenario Budget Location Casting Schedule (Day/Night) Equipment

17. Industry Structure Local Production..>1M audience is now achievable Exhibitors West Java Representative Exhibitors Exhibitors • Top Box Office • Akibat Pergaulan Bebas (1977): 311,,286 audience • Maju Kena Mundur Kena (1983): 658, 896 audience • Saur Sepuh 1 (1988): 575,480 audience • Lupa Aturan Main (1991): 477,102 audience Exhibitors Sumatra Representative Exhibitors Producers PERFIN (Government Company) Exhibitors Exhibitors East Java Representative Exhibitors Exhibitors Exhibitors Exhibitors Bali Representative Exhibitors Before 1998 After 1998 Studio 21 Senayan • Top Box Office • Pocong 2 (2006) 2,000,000 audience • Eiffel In Love (2005) 3,000,000 audience • Ada Apa Dengan Cinta (2002) 2,400,000 audience • Petualangan Sherina (2000) 1,000,000 audience Producers Studio 21 Jogjakarta Exhibitor (Group 21) Studio 21 Surabaya Exhibitor (Blitz) Studio 21 Bali

18. Industry Structure Import Movies…Buying power is there, but demand is limited by facilities Exhibitors Exhibitors IMPORTERS (Focus : Hollywood Movies India Movies Mandarin Movies Others Major Studios & Producers Exhibitors Exhibitors Control: Badan Film Indonesia Before 90’s After 90’s US$ Million • Top Box Office • Spider Man 3 (2007) US$3,552,693 • Superman Returns (2006) US$2,680,000 • X-Men The Last Stand (2006) US$ 1,386,208 • Lord Of The Ring: Return of The King (2003) US$ 1,323,244 Singapore 4.1 2.4 3.0 3.1 India 9.9 3.2 0.9 0.9 China 13.4 8.0 2.6 10.4 S. Korea 26.4 11.8 12.4 28.4 Major Studios (MGM, Fox, Universal, etc) IMPORTERS (Camilla, Internusa Nusantara) Mostly Group 21 Exhibitors (Group 21) Overseas Producers (India, HK, etc) Exhibitor (Blitz)

19. Industry Structure Comparison with Japan Source : Yano Research Institute from Industrial Reports of JETRO Japan Economic Report, October-November 2006

20. Industry Competitiveness Currently Low Potential • Entry Barriers • Growing market attractiveness • High Capital Requirements (for exhibitors) • High Economic of Scale (>200K audience for new movies to get profit) • Access to Exhibitors to distribute products (for producers) • High dominance of current exhibitors • Government policy (regulation required the new producers to be listed…however, the regulation is lack of enforcement) • Learning curve and relationship matters Potential Entrants High Entry Barriers Low threat of New Entrants • Rivalry Determinants • Low competition in Exhibitors (tend to be monopolized) • High competition in Producers • Limited access to demand (300 screen – only for big cities) but growing • High gap in profit margin between producers and distributors Industry Competitors Suppliers Buyers (Producers and Exhibitors) Low Bargaining Power Of Suppliers High Bargaining Power Of Buyers • Determinants of Supplier Power • Low to medium switching cost • Concentrated Professionals (Directors, Scriptwriters, Actors etc) • Scarcity of some local post production facilities • Supplier products differentiated • Determinants of Buyer Power • High determination and control from Exhibitors • High buyer (audience) concentrated (mid class and urban only) • High determination from audience demand (type of movies) Intensity of Rivalry High Threat from Substitutions Substitutes • Determinants of Substitution Threat • Very low price of pirated VCD and DVD • Increasing number of Private TV Channels and wider coverage of TV Cables • Higher attractiveness in producing TV Materials (dramas, comedy, etc)

21. Diamond Model Currently Not Support the Competitiveness Context for Firm Strategy and Rivalry • Context for Firm Strategy and Rivalry • Current regulation does not support competitiveness • Monopolized distribution channels • Highly concentrated Producers and Exhibitors • Lack of government support for healthy competition and promoting local movies to international market • Movie industry is one of the highest taxed industry • High risk business for movie producers (<100 audience will be totally lost) • Scarcity of incentives from Government or IFC Demand Condition Factor Condition • Factor Condition • Low physical infrastructure of adequate movie industry standard (studios, post-production facilities etc) • Lack of Government support to develop competitive industry (financing, promoting) • Low legal enforcement in terms of pirated product substitution (DVD/VCD) • Collaboration industry-players only on mutual business (lack of supporting ‘idealistic high quality movie”) • Scarcity of Education Facilities of Arts and Movies, as well as research activities • Increasing availability of new technology and creativity in movie production • Demand Condition • Decreasing total demand due to limited access of screen, substitute products, and high cost • However, there is increasing demand in for local movies • Mushrooming commercial type of movies, but not generate the spirit for new talent development • Higher appreciation for high quality movies (festival quality movies) • Increase of demand sophistication (projection and sound quality, Theatre quality) • Lack of drive from Government to increase demand (compare with South Korea, Thailand, China) • Film Festival. FFI – Government support but not internationally recognized. Independent festival, such as JIFFEST, Festival Film Bandung, generate sophistication of demand Related and Supporting Industries • Related & Supporting Industries • Increasing number of supporting industry but highly scattered • Geographically concentrated only in big cities and supporting industry not inter-connected • Improvement in terms of technology and quality but not as advanced as in the region • Quality of human resources are rare in the top of the pyramid

22. Exhibition Highly Concentrated • Limited to 370 Screens (95 Theatre) • Concentrated 78% in Java Island • Generated 35 Million audience (34% Local movies audience) • Urban areas and accessible for medium-high level income population only • High gap on income distribution of the industry players

23. The Indonesia Movie “Cluster” The cluster is not yet developed • Not Geographically Linked • Support industry is not inter-connected • Lack of education and research institution development • Lack of government support in fostering competitiveness environment and spirit • Current major Institution for Collaboration (IFC) is intervened by Government and lack of support to competitiveness • Independent IFC perceived as “rebellious” and not supported by Government • Distributor companies is not exist due to not enough demand • Exhibitors “monopolized” by major players • Absence of links to other clusters such as Tourism (such as New Zealand), Education, Finance

24. Exhibition 21 Group (99.9%) Blitz (New Comer) Indonesia Movie “Cluster” • LSF (censor body) • BP2N (policy advisor to Government) • PPFN (Govt Film Co – non active) Government Body • PPFI (producer film association – member only the big five • GPBSI (exhibitor association – member only 21 Group • PARFI (artist association – activities on event • KTV (film employee association) • GPJTI (association of technical services company – film lab (only 2) • Sinematek Indonesia (Archive Film) IFC Facilitate Or supported By Government Equipment Rentals Support Production Services/Location (Bali Film Center) • APFI (commercial film employee association) • MFI (new – Indonesia film society ) • KISI (promoting Indonesia film to overseas) Capital/ Financial Providers IFC Independent Production The Big Five (about 5 – 7 film/year, commercial focus, active in TV/ Sinetron industry) Pre Production Distribution Producers distribute By themselves Post Production “Serious” Movie Producers (about 1 – 2 film/year, “quality” approach, influencers/role model) Sponsor Talent Agency Processing Lab Merchandize Industry Food Supply And Restaurant Independent Film Producers Post Prod House (Editing machine, Digital effect, Sound facility) Modeling Studio Theater “industry” Lighting Transportation • Related Industry • Television • Print Media • DVD/VCD • Music • Internet • Advertising • Tourism Optical sound facility Catering Not Available In Indonesia Sound Mixing Theater Education Institution (only IKJ – Formal) + Practical educations

25. What About Other Countries? • Thailand • More than 500 Screen • Location utilization: >450 foreign filming in Thailand (The Deer Hunter, 1978, The Killing Fields, 1982, Star Wars Episode III, 2005). Generate 1.9 Billion Bath in 2006 • Department of Export Promotion to support Thai Film • Co-Production with Hong Kong and US • Singapore • 171 Screen, 40,000 seating capacity with 16 Million audience in 2005 (for 4.5 Million population) • Singapore Film Commission – Support local film funding and promotion • South Korea • 1648 Screen with 145 Million audience in 2006 • Export local production movies – US$76M value in 2006 • Local production 61% domestic market share in 2006. 106 local production and 227 foreign film • KOFIC (Korean Film Council). Full support of Korean Movies from funding, infrastructure development, production, marketing, distribution, and international promotion • New Zealand • Internationalization of talent and products (Jane Campion’s The Piano, 1993 won Four Oscars, Lee Tamahori’s Once Were Warriors, Peter Jackson’s Lord of The Ring Trilogy) • Integrated offering for filming in NZ. Location, post production, special effects. Resulted of The Last Samurai, King Kong and The Chronicles of Narnia: The Lion, the Witch and the Wardrobe. Give enhanced skill to local talents • Integrated with Tourism Industry. The impact of Lord of The Ring Trilogy movies • Filming in NZ. Gov’t grant. Large budget film and television productions receive a 12.5% production expenditure grant if production costs exceed $NZ50 million, or if at least 70% of the production's budget (between $NZ15 - 50 million) is spent in New Zealand • The New Zealand Government already provides about $100 million a year to the New Zealand film and television industries

26. Current Indonesia Movie Industry Situation is… • Lack of Government support • Limited and concentrated demand • Not competitive in region and global market • Not attractive for new players • Low economic value for the country • Inter-connectedness of supporting industry and other cluster industries are low

27. However, The Opportunities is there… • Strong growth for Indonesia movie audience. Average 300 audience per movies (122 only for foreign movies) • Indonesia movies can reach 3 million audiences • Buying power of the limited demand still high, Box Office foreign movie still can generate >US$ 1 – 3 Million • Higher awareness of having better Indonesia movie industry • More and more appreciation of Indonesia movies in International festivals • Still, we have 200 million population • Young talents emerge with strong idealistic for making good quality movies • Independent IFC keep making positive moves to develop competitiveness

28. Now…What To Do • Government • Get the competitiveness mindset, act as the facilitators • Foster regulation that support the industry and healthy competition • Facilitate the development of cluster industry that has the interconnection with supporting industry and the related industry • Realize the high potential of this industry can bring, with the current momentum of change • Actively promoting local movie productions to international market • Facilitate the IFC for competitiveness not controlling it or intervene • Develop the education and research institution that support the development of competitiveness of human resource • Policy support, Grant support, and facilities support to local movie producers • Private Sectors • Continue to build competency of competitiveness in the global market, get more acclaimed from international community • Open for healthy competition • Start the move of “Competitiveness Movie Industry”, continuously educate the market and government • IFC • More and more independent IFC • Develop Indonesia Movie Commissions (integrated of Government-private sector-and IFC • Competitive mindset of IFC to promote Indonesia products internationally • IFC foster the development of education institutions