Production funding is a complicated biz no less disrupted than any other media sector. Here’s where we think new sources of money in/for premium production in Asia are...

Levy contributions from global online/streaming platforms

Korean officials have started talking about following France and Germany into forcing Netflix, YouTube and other streaming media services (whether or not they have a formal financial presence in the country) to contribute to domestic content/media development funds. In France, foreign streaming/video-sharing platforms pay a 2% levy/tax on subscriptions to the country’s National Film Board; YouTube’s contribution is based on ad revenue. In Germany, streaming companies contribute 2.5% of their revenue to the German Federal Film Board, which subsidises local film/TV production; Netflix, which fought the move for a while, starts contributing from September this year. Most countries in Asia are starting to impose taxes (if they haven’t already) on digital services in the form of VAT or GST; but it’s not clear if any of it is specifically headed for content development funds. In Korea, traditional free-TV/cable channels contribute a percentage of their ad revenue to promote industry development. So, the current thinking is, why not the streamers, given their impact on local media consumption?

Government production grants, subsidies & film incentives

This one’s hit and miss although we’re giving Malaysia’s latest film incentive – dubbed FIMI 2 – a chance. Among other changes, the new incentive lowers minimum local spend for foreign companies by about 40% to RM5 million/US$1,200 (including post production), and the rebate process/refund has been squeezed into six months max. Overall, though (and not just in Malaysia), there’s the usual debate on whether grants work in the long term and what needs to be done to ensure an outcome that actually strengthens an industry rather than populate it with the next gen of “grantrepreneurs” that own no IP and may be putting food on the table but they aren’t necessarily building viable businesses. But that’s a discussion for a different day...

Netflix

This one is plain and simple. The global streamer isn’t saying what percentage of its US$15-billion global content budget is allocated to Asia or what the deals involve, but it’s clear that there’s a whole lot more this year than there was last year. Just to give you an idea, the most expensive TV ever made in Korea is Studio Dragon’s Arthdal Chronicles for CJ ENM-owned tvN in Korea and Netflix everywhere else. The 18-episode historical fantasy is said to have cost around KRW54 billion/US$44.5 million, or US$2.4 million per episode. Arthdal Chronicles’ budget is believed to have been more than double that of Mr Sunshine, also for tvN (Korea) and Netflix. The 24-episode Mr Sunshine had an est. budget of KRW30 billion/US$25 million. Rumours are that Netflix’s Ghost Bride is also coming in at around US$1-million per episode. The best case scenario is that Netflix’s spending spree continues, that Disney starts spending, that iflix gets IPO money and boosts spending, and that Hooq persuades Singtel to spend more. There is little to zero expectation that any other Asian market in the Netflix orb can/will match that in dollar terms. Either way, will the Netflix effect on production spend in Asia fall to nothing? Unlikely.

Indie content investment funds

There’s clearly a lot more money for content if you are in India (fighting for the hearts & eyes of a billion+ people) and in Korea (where budgets are already gigantic compared to the rest of Asia, and where, it has to be said, indie producers have a long-running set of gripes around rights) than there is anywhere else. Last year, India and Korea accounted for more than 75% of video content spend (including massive sports rights costs in India) across seven markets, according to Media Partners Asia’s (MPA) Asia Video Content Dynamics report. The bulk of this comes from straight channel commissions, says MPA VP, Stephen Laslocky. Production houses – like the Aditya Birla Group’s Applause Entertainment – willing to deficit finance (ie. put their money where their mouths are on quality in order to hold onto some of the IP) are the exception rather than the rule. Our question is all about where that kind of money is coming from for producers. Watch this space.

Advertiser funding: the next generation

The emergence of premium production and story telling that integrates brand values (as opposed to products) into its heart, soul and DNA is a wonderful idea. Don’t get me wrong; there’s absolutely nothing wrong with the advertiser-backed shows pairing entertainment with brand goals/campaigns/values, telling heartwarming and/or uplifting stories that get trillions of online views about young girls/old people/diversity/triumph over adversity/good vs evil/honesty over temptation... That’s not what I’m talking about. I’m also not talking about brand-backed shows driven by channel sales execs who cede creative control to their marketing clients. I’m talking about big-picture strategic investments in film or TV projects divorced from the person whose KPI is a spike in product sales, on-screen seconds, or social influence. And on the way owning maybe owning some of the IP and benefitting from having skin in the game. Will it happen? With the right people... sure. Why not?

Published in ContentAsia Issue Four 2019, 26 August 2019