Facebook Blogging

Edward Hugh has a lively and enjoyable Facebook community where he publishes frequent breaking news economics links and short updates. If you would like to receive these updates on a regular basis and join the debate please invite Edward as a friend by clicking the Facebook link at the top of the right sidebar.

Friday, November 07, 2003

Whose Century is It?

This, I'm afraid, is an enormous post. I think it is justified by the quantity of issues raised in the content. The body of the text consists of a edited extracts (by me) from an interview with Shekar Kapur published by Rediff. (Thanks to Marcelo for the link). What amazes me about this interview is that he sees everything so clearly. I have been trying to argue some of these topics here in Western Europe for the past couple of years. You see I think here - especially in the 'culture industries' - the numbers are everything, and once you pass a critical point, there really is no turning back. Kapur can even see the importance of the age structure of the population, even if he doesn't grasp the full signifiance of this. He even 'gets' the fact that GWB leading the US off on a 'bad for business' war in Iraq may yet have profound implications, well beyond those that were originally envisaged.

So why are virtually none of the conventional economists getting the message? Why do you need a film maker and cultural entrepreneur to explain this to the world? I've thought long and hard about this. The only answer I've come up with (and I think I've said this before on Bonobo) is the existence of a form of soft-racism. A soft-racism which exists in Asian society itself, in the sense that people feel so lacking in their own self confidence and abilities that they think it can never happen. Then there's the soft-racism of the left, who need the poor to be poor. I mean if the poor can get to be rich by themselves, wouldn't that mean that capitalism might work? And then of course there is the soft-racism of the political and economic elites in the US and Europe who just can't even begin to imagine that a bunch of yellow and brown people could finally get their act together. Kapur mentions 09/11 and the analogy is a good one in another sense. No one important in the US saw 09/11 coming, because they just couldn't believe it could happen.

Of course when all is said and done, I'm not saying you're all going to have to watch or like all those endless Bollywood films that which are the implicit consequence of everything said below.

Film-maker Shekhar Kapur says the expanding infotainment market, estimated to grow to more than a trillion dollars in 10 years, has profound implicationsfor India and Asia.

An accountant by training before he turned to films, Kapur says the sheer size of this market will give India a global role in defining lifestyles and driving what he describes as a process of 'reverse colonisation'. In the first part of an exclusive interview with Senior Editor Shyam Bhatia in London, Kapur says the Asian century has already arrived, but needs nurturing, guidance, and structure. Excerpts:

What do you base your projections on?

Business projections are not difficult, but, unfortunately, all business projections are done on an historical model. Let's look at the trends. The world is changing so drastically every day that it is not possible to draw conclusions 10 years from now unless you have looked carefully and wondered what new things are likely to happen.

People are predicting that the global media business will be worth a trillion dollars in 10 years. If this growth is coming, my question is, where is this growth coming from? Where are the markets for this growth?

Media includes entertainment?

Yes, media includes entertainment, films, television, games, DVD and video. Newspapers are not that large a proportion. It is infotainment, yes. Every way we look at it, my guess is that 10 years down the line the absolute revenue in the entertainment business will be more out of Asia than from the West. Let's take a look at the demographics. Entertainment demographics run from 14-15 to just under 30. The stunning population statistics are huge in the particular demographics I'm talking about. In India, we are expecting almost 30 per cent of our population to increase within that demographic. In the US, despite immigration, they are expecting between 5 and 10 per cent. So it's not just population growth. It is population growth within that demographic as a percentage of total population

If you talk about the business of health care, I would say yes, given that people are living longer, the amount of people that are going to get into that demographic will be huge as a percentage of the total. So healthcare business, yes. Even that part of the healthcare business they keep talking about, a large part of the servicing is shifting to India. I guess the big service that will shift to India specially is health care. You'll probably find that old people's homes exist now in India. They [the West] will be offloading their people at a huge cost to themselves, but at half the cost of what they have to do to keep them well here.

Are you saying that it's the 15-35 age range that will be consuming infotainment and that huge potential market is in India? Basically, what we are doing is just touching the tip of the iceberg, whether it's India or China. Anyway, when you take Asia, whether it's India or Japan, China, Indonesia, Bangladesh, Pakistan, Malaysia, Singapore, they are all about 75 per cent of the world's population already. Right? So when that happens, one thing people don't understand and what I'm banking all my predictions on is a philosophical thing. What happens is that when the financial strength of a particular consumer group becomes stronger, that particular consumer group starts to extend its own cultural muscle.

When American culture and therefore entertainment started dominating the world after the Second World War (they did it in many ways by giving free entertainment also), essentially they could do what they did because at home they were financially strongest anywhere in the world. So they called the shots and they had the financial muscle to go out and conquer the rest of the world, which was coming out of the wars and was underdeveloped. That's what McDonald's did. Before McDonald's went out and conquered the world in a full franchise system, they were hugely strong in their own home market.

Are you saying that the billion-strong Indians in 10 years time will be calling the shots as far as the entertainment industry worldwide is concerned?

Yes, they will ask for their own culture. And the shape it will take is that it will go mythic. In Asia we like more mythic stories. That's the kind of change we'll have. Over the years the 70 per cent majority will gradually marginalise the Western market. So what happens is that just as we now love Tom Cruise, the West will learn to love our actors and they will get used to those faces. So in 20 years time you could have a Shah Rukh Khan who would earn US $40
million because by that time his market has extended.

What about issues like colour and language?

These are tastes. Language is important. In 20 years time I believe the Chinese will start making English-language films. Just remember all entertainment,80 per cent of the viewership of all entertainment, is dubbed into the local language. So that's never a problem, and it's very sophisticated. Even today a Hollywood film you see in Italy is dubbed into Italian. In Germany it's dubbed into German, in France into French. It's not just Arabic and Hindi that they do, in all of Europe it's dubbed.

This shift in culture and the aggressiveness of the Asian consumer is going to be supported by a large number of that culture who actually live in that lifestyle. Currently there are 27 million Indians approximately who live outside India and their combined GDP is 75 per cent of the total Indian GDP. Add to that Bangladeshis, Pakistanis and Chinese. So there's probably a hundred million Asian diaspora dotted around that will support any such reverse cultural colonisation. They will also have the purchasing power. And the purchasing power at home is growing.

Shall I give you an example of this? Everybody told me Bombay Dreams won't work, including Andrew Lloyd Webber. It became the most successful show in town. Who supported it in the first month? The diaspora. Apollo is the largest theatre in town [London]. It's now going up 80 per cent and 90 percent every day and 100 per cent at the weekends. Still, it's one year down the line. It was for the Really Useful Group -- Andrew Lloyd Webber's company -- the fastest payback for investors ever. Not even Phantom of the Opera returned it that fast. All investments were recovered within a year, in fact within eight or nine months it went into profit. So I have tested my theory here. The idea came to me here in London, but I have been in that mode if you like, that Asian culture is going to be the culture of the future. That's why I go to the World Economic Forum every year, I talk about it. People understand it, but they don't know what todo about it. We'll come to that later.

Let's talk more about Bombay Dreams and about growth. If you talk about ticket price growth, in the US it has gone up from about US $5 to $7.

In the UK or Europe it has gone from $6 to $7. It has not been that amount of growth. But take India. It has gone up from Rs 40 in the balconies to Rs 250 in the inner cities. We have more multiplexes being built in India and China than anywhere else in the world.

Is cinema the only avenue you are looking at?

No, let's take television. Twelve years ago India had two state channels and now we have 24 channels. The number of consumers is there. Let's go further. The figure of US $1.3 trillion is never going to be achieved unless there is some kind of merger between various industries, what they call convergence. A convergence between digital and entertainment. Ultimately, what is convergence? People keep talking about it. The end use is always towards the consumer. That's what you are aiming at. The biggest thing convergence will do is change delivery systems. This morning I justset up my broadband and I found a thousand radio stations to choose from.So I'm picking up radio stations from all over the world and it's incredible.Broadband video screening is giving me convergence, so I don't even need to switch on the radio anymore. I have 1,000 radio stations and I can just turn them on.I'll give you an example. Steven Spielberg today decides to release Jurassic Park, let's say. Because it is an event -- like the Harry Potter book or the new Microsoft operating system -- there are queues of people waiting to see it. Why? They could wait for a few days or a week. But human beings in this attention-grabbing world can be provoked into doing this kind of thing. I've seen it in India: first day, first show, everybody wanted to see the show in the first week, on the first day, just to be able to say they had seen it. And they were willing to pay. At a time when the pricewas Rs 10, they would pay Rs 300 to get into the first week, first day show.

Everybody now recognises Asia. The first attempt will be Western corporations to try and treat this as an extension of their product, a market that will extend their product and, yes, MTV will say yes, that's okay because we can do local programming. It doesn't work like that because the intention is not the same. The intention is to increase your shareholders' value and the shareholders' value is held mostly outside. That's where you go wrong. The Asianisation of these businesses will probably come from people who are Asian and who are happy to earn in rupees or earn in the progress and become part of the progress and the expansion of Asia. The only Asian corporation today that is very extensive in infotainment is Sony.

At the last FICCI [Federation of Indian Chambers of Commerce and Industry] meeting I spoke about these figures and I talked to people about the possibilities. I even went into the detail of creating for them a plan, a ten-year plan. Mike Grindon is the head of international television at Sony. He was also speaking at the same thing and wrote me a note, saying every statistic, everything that you've talked about, is exactly the view of the chairman of Sony. This is exactly what he is saying and he is so frustrated with his team in LA who actually control the software of Sony that they don't get the future importance of Asia. That's the problem.

It's an Asian corporation that understands Asia, is Asian, and is being run by Americans who have their own world view. The next thing is that investment in India, in China, in Asia is going to increase dramatically. Where will all the Arab money go now? They don't want to invest in the US. Europe is not offering great investment opportunities. Where is the investment opportunity? Asia! One of the things Mr Bush has done is accelerate this process. Through the Iraq war he has created a divide and that divide will only help Asia. That's what we saw in Cancun when all the Asian economies got together and Brazil joined in. I don't think it would have been possible if Iraq hadn't happened. That's my guess.

The big business opportunity now is for this big Asian corporation, or corporations, to come in and take a long-term view and see that if 70 per cent of the growth in revenues from the entertainment, infotainment, media business is coming from Asia, are we looking at out of US$1.3 trillion, at least $700 billion coming from Asia? If there is a $700 billion future market, how much of that comes from India? Can India take 30 per cent of that? Are we then talking about a $200 billion business that can come out of India?.................................

As a government, as a society back in India, what can we do about this impending change?

We need strategies to take advantage of this. We have to decide which city will become the centre of media in the next 10 years. Because if you are not careful it will be Shanghai. Could it be Mumbai or another Indian city? I think the corporations must start investing.

What we don't have now is structure. The growth is happening in unstructured movement. It's boiling consumer demand and attitude that's pushing it without anyone at the top understanding what's happening. Nobody is pulling it. There's a push factor happening on its own, there's no pull factor. A pull factor that can happen with a large strategy and a corporation saying, 'If we set this, this, this up, and then open the floodgates, we are ready for a catchment area, we are ready to direct this place.' So basically what it needs is large investment, strategy, co-ordination. I have talked about this at the World Economic Forum, Indian film forums and I've talked to the Indian government, which totally agrees with me.

This is superpower stuff?

Yes. Look, when you sell American culture, what follows? McDonald's.We don't buy McDonald's because we love McDonald's. It's because we aspire to a lifestyle. We buy Levi's because it's American culture. You buy McDonald's because it's American culture. Tourism follows.

The Lord of the Rings increased New Zealand tourism by 30 per cent. Go ahead 10 years and see how everything Asian and Indian could become popular.Indian lifestyles, Asian lifestyles, could become popular because this is where everything will be marketed. It will be Indian glamour programmes like The Bold and The Beautiful with Indian models and the Indian scene. Sex and the City will be Indian. It will be watched in New York, that's what will happen.

The Amitabh Bachchan 20 years from now will be a major megastar worldwide, possibly the world's biggest star. That's what's going to happen. Gucci and all these others won't be the big brands, the big brands will be Asian.You'll have an Indian brand that sells all over the world, Indian designers, Indian models, everything Indian or Asian. But you need structure for all that. Because if you don't, Western corporations will try and profit. Trust me, they know about this, they understand it, but they don't know what to do about it. Their attitude is, it's a market for them. I'm saying, 'No, they are a market for us.' There is the big difference and if you can do it in the entertainment business, all businesses follow, attitudes change.

In summary, are you saying the Asia century is upon us and the defining issues of fashion, lifestyle, entertainment will all follow ?

Yes, because attitudes change.
Source: Rediff.com

No comments: