Getting on top of the next big wave of the entertainment industry, even during a pandemic

Global entertainment is a well-structured trillion-dollar industry that contributes to economic growth in an era when technology is narrowing the gap between audience and stage. What do we have to learn about how we can structure our entertainment industry as an economically more impactful industry? Pictured is Universal Studio, Hollywood – Pic by Charith Gamage 

The labour-leisure choice is a paramount important consideration in Economics. Developed economies sustain advanced Media and Entertainment (M&E) industries as a means of refreshing and motivating their workforces. This labour-leisure balance and attachment to aesthetic pleasure have always been essential for workers. 

A good example of this is a genre of Sri Lankan folk poetry (Pathal Kavi) that was created historically by labourers who worked in graphite mines as a method of expression, dispelling boredom, and entertainment. Today, this is a giant and diverse global industry where it is a commonplace to see engineers, educators, lawyers and economists working in these fields alongside the actors and singers catering this need. 

In addition to this, with the ongoing 5G and digital takeover, the world is expecting a dramatic shift in this sector. This article discusses the technological and economic perspectives of the M&E industry, outlining the challenges and policy considerations required for Sri Lanka to adapt to these changes. 

Entertainment industry: Global and Asian markets 

M&E constituents from cinema, television, music, publishing, radio, internet, advertising and animation and gaming are now experiencing an unprecedented digital takeover and technological advancement towards online digital space. This has created a vast industry where diverse employment opportunities are available, from Hollywood actors to engineers at Walt Disney Animation Studios. Today this is becoming one of the most diverse, knowledge-intensive and profitable global industries.

The USA, which has an entertainment industry worth more than $700 billion, one-third of the worldwide share, is currently the global industry leader. The fact that the country’s TV and home video revenue alone (~$96 billion) surpasses the GDP of Sri Lanka is an indication of its magnitude[1]. 

When it comes to Asia, China, India, Japan, and South Korea are the leaders in this industry. It is not a coincidence that the worlds and Asia’s major economies simultaneously structured their entertainment industries alongside their economic development. As mentioned above, this is just another variable of the economic growth equation to promote a good labour-leisure balance. 

India’s Bollywood and audiovisual sector, Japan’s gaming, anime and pop music (J-POP), China’s drama and TV shows, South Korea’s pop music (K-POP) & Dramas are now notable exports supporting their economies. In addition to this, these industries achieve global recognition. South Korea’s K-pop boy band BTS’ recent nomination for the US Grammy Awards is an excellent example of this[2].  

It is worth noting some of the critical features of these global (Asian) markets. India, apart from its bedrock contributor film industry, is rapidly expanding into video games, e-sports, music, and podcasts to reach $55 billion by 2024 with a robust 10% annual growth[3]. 

Japan has succeeded in conquering the battle for modernisation with its traditional entertainment industry and has remoulded its M&E sector, which now acts as a shield against foreign influxes. For example, the only major market the globally successful Microsoft Xbox gaming consoles were not able to penetrate enough was the Japanese market, this is due to the unique tastes of that market and echoes the dominance of country’s domestic M&E sector[4]. 

Finally, Hong Kong is a small country but has always benefited from the mainland Chinese M&E sector. In addition to this, Hong Kong-American megastars like Bruce Lee paved the way for successful American and Hong Kong co-productions, a breakthrough to the industry.

Why it is essential, and what needs to be done in the context of Sri Lanka?

Sri Lanka’s struggle to make its M&E sector a well-structured professional industry that contributes to economic growth is a prolonged battle. However, the country still has the opportunity to reposition itself with this new digital wave. Implementing a robust framework will allow the industry to reach new heights of export and domestic contributions. 

There are vital ingredients to this recipe. First, it is essential to recognise the nature of this industry formally. Perhaps national accounts might not be the best place to get an idea of M&E sector impact on the economy. In the national accounts this sector contribution is often recorded as a subcategory under ‘other personal service’, but in the modern-day, it is easy to gloss over this with other categories. 

Also, part of the industry overlaps with the informal economy; hence there is also no way to capture the total impact. In addition to this, there are notable indirect contributions from this industry; for example, the national identity and social cohesion induced by this sector can not be easily articulated or quantified. Thus, from a policy perspective, detailed surveys and analysis covering direct, indirect and informal sectors are a  necessary endeavour, as they provide proper foresight on the future of this sector. 

The Sri Lankan entertainment industry suffers from a lack of financing solutions. Prospective entertainment producers face difficulty in finding investors. This is not an uncommon situation worldwide, products of the entertainment industry are usually “experience goods”, as neither producers nor consumers can predict the demand and quality of the work in advance. New digital age creators are the most affected by this industry trait, and information asymmetry causes financers to see them as risky investments.  

Therefore, streamlining the financing mechanisms is of paramount importance to boost this industry. For example, either through business process outsourcing (BPO), sub-contracting or through other methods, Sri Lankans now have the opportunity to be a part of large international M&E productions. This in itself, creates more employment opportunities and the potential for future business ventures (e.g. digital game developers). 

Unfortunately, however, most banks and conventional lenders are unable to accurately assess the risks associated with lending to the M&E industry. This is due to the difficulty in predicting the success of M&E content. This means that employees can find it difficult to get funding to purchase the software and tools that they require to do the work. This uncertainty, unfortunately, masks the growth opportunities and economic potential of this industry. These products are mostly targeted at the international markets, therefore identifying the risks and rewards of both sides of the equation is essential. 

Inevitably, the future M&E industry will depend heavilty on data and the internet in the coming years. According to PwC, by 2025, 45% of the world will be covered by 5G, with 1.7 billion devices active[5]. This is the future of media experiences. Hence, policies on affordable data and internet are also key ingredients to this sector. The internet-based M&E culture automatically creates more connections globally, so it will equally bring competition as well as the opportunity to market the Sri Lankan products to the world. 

Finally, providing more opportunities, in particular, foreign education in this sector is the backbone that supports the future of this industry. Moreover, it should not be limited to artistic space, but there should be a mechanism to link these exposures with the mainstream M&E sector. Nowadays, this is generally becoming the norm in advanced economies and happening at all levels of M&E. From the back-end production level, media engineering and other media-related technical courses have now entered the curriculums of universities. 

Meanwhile, the front-end or the practitioners have also become fervent knowledge seekers; the British actress from ‘Harry Potter,’ Emma Watson and background violinist Ann Marie Calhoun from the Batman movie, ‘The Dark Knight Rises’ are good examples[6][7][8][9]. Both work in commercial M&E, are well educated and continuously develop and support their fields with their knowledge. In Emma’s words, she is not going to university just for academia – she wanted to share ideas and to be around people who are passionate about learning[10]. 

This culture is nothing new to Sri Lanka. When thinking about the early era of Sri Lankan stage and cinema, for example, this interaction between university and mainstream entertainment has always been there, but now it must be revamped and remoulded for the digital age. 

Rising talent in Sri Lanka

This writer also had an opportunity to discuss briefly with young and rising Sri Lankan talent in this sector, positioning well towards the next wave of the M&E industry. 

Randy Chriz and his production house Meraki United are involved in the production of animated videos and comic art, catering to the entertainment industry both globally and locally. With the quality of content produced by Randy Chriz and his team, Meraki United has been able to breakthrough to the worldwide entertainment sector, even being recognised and hired directly by well known international entertainment labels. 

The team believes that Sri Lanka’s artists, animators and video producers have a great potential in capitalising on our creative talent to bring about an impactful contribution to the country’s economy via foreign exchange while catering to the domestic demand. Randy Chriz Perera, together with his founding partner, Portia Ratnayake, believe that with a little support from the country’s administrative and financial facilities, Sri Lanka can reposition its export portfolio more towards skilled services and products in the M&E sector. 

Also, since Sri Lanka still does not have a significant global footprint in this industry, most financial and administrative bodies internationally do not recognise Sri Lanka’s need for their services.  This lack of recognition acts as a significant obstacle for Sri Lankan creators to market and sell their services globally. Therefore, they believe long term productive policy actions such as enabling global financial services and actively engaging in opportunities to pitch Sri Lankan talent to the global arena would help Sri Lanka to overcome this fundamental disadvantage.

Pandemic and beyond

Even though the COVID-19 pandemic affected the traditional entertainment industry such as the performing arts, theatres, museums, heritage centres, and galleries, the impact on the digital takeover of the M&E industry was minimal. Whilst the pandemic disrupted traditional audience and stage productions, the situation itself forced companies to adopt new technology, as a result, innovations in this sector accelerated. Today, with the restrictions, both consumers and producers of this industry are seeking online solutions. BBC lockdown comedy ‘Staged’, filmed using video-conferencing technology, is a perfect indication of how the dynamics have changed and will be changing in the future. So, the future of the M&E industry is expected to be vastly different to its historical counterpart. 

Over the years, the industry has become more and more personalised and open to everyone to participate, with platforms being upgraded rapidly to facilitate this interaction (e.g. Youtube). Even traditional media outlets now actively use social media to deliver their entertainment content to consumers and instantaneously receive individual feedback. In addition to this, individuals can seek-out tailor-made entertainment solutions. Today online platforms use Artificial Intelligence (AI) to match performers with relevant audiences. This advancement has not long existed, and therefore, the gap between stage and audience is rapidly shrinking. 

With reference back to the economic equation, entertainment is an essential part of balancing the labour-leisure equilibrium. As the rest of the economy grows up, the demand for M&E automatically grows as well, and its required form alters continuously. Whether this gap is filled by the local or international M&E industry will become less of a concern in the future, as the industry is becoming more and more global and commercialised than ever before. 

Furthermore, it is becoming more personalised and fragmented; with limited time, a person’s choice would matter more in the future in deciding what to consume in this industry. Therefore, the demand factor is becoming more decisive than ever before in determining the ideal form of M&E. With this shift in focus, protecting the vulnerable and high-quality sectors of this industry is important. 

On the other hand, such protection should not underestimate the dynamic and global nature of this industry with its commercial value. Given its undeniable economic potential, Sri Lanka has more incentives to insist on equipping itself with the necessary tools and getting on top of the digital wave in the same way as Japan did for example. This will ensure that M&E is a well-structured, economically contributing industry. 

References

1 https://www.selectusa.gov/media-entertainment-industry-united-states

2 https://www.bbc.com/news/world-asia-55068627 

3 https://www.bloombergquint.com/business/media-entertainment-sector-to-grow-over-10-pc-till-2024-report

4 https://www.forbes.com/sites/olliebarder/2020/12/30/the-real-reasons-why-the-xbox-continues-to-fail-in-japan/?sh=1a8ffe164efa

5 https://www.pwc.com/gx/en/entertainment-media/outlook-2020/perspectives.pdf

6 http://www.annmariecalhoun.com 

7 https://www.telegraph.co.uk/culture/10855882/Emma-Watson-graduates-from-Brown-University.html 

8 https://www.imdb.com/name/nm2922790/

9 https://www.imdb.com/name/nm0914612/ 

10 https://www.brainyquote.com/quotes/emma_watson_574407

(The writer is a PhD candidate attached to the Monash University Australia. He an Engineering graduate from the University of Moratuwa and pursued his graduate studies related to Marketing Management, Economics, and Finance from the University of Sri J’Pura, University of New Mexico, USA and University of California Berkeley, USA. Also, he previously worked at institutions such as IronOne Technologies, LTL Projects, Central Bank of Sri Lanka and BNP Paribas New York. The views and opinions expressed in this article are those of the writer. Also, the article was written solely for educational purposes, and the author has  NO  affiliations with or involvement in any organisation or person mentioned in the article with any financial or non-financial interest in the subject matter discussed in this article. The writer could be reached via [email protected])