In fact the forecast indicates a compound annual growth rate of 4.7 per cent over the 2003-2007 period, marginally below the global average of 4.8 per cent. At that level of growth the region will still represent no more than 20 per cent of the global industry.
Disappointment is of course relative and in this case maybe it says more about my expectations. Perhaps, after working in Asia for the last 16 years, I have become used to all the hype about the region being the 'bright spot' for many global companies - particularly those in the media sector.
For a while of course, particularly in the heady days at the turn of the millennium when advertising growth was 11 per cent, it was true. But what is happening now?
The picture is troubling but of course, as with all regional aggregate numbers, the devil or saviour is in the detail.
The devil is of course the performance of Japan, which still represents approximately 60 per cent of the total E&M industry in Asia. The Japanese economy and hence its E&M market is still likely to remain flat until 2006-7. The saviour is China and, to a lesser degree India, whose combined growth rates will be in order of 8-9 per cent.
However, what the data hides is the revenue that is currently leaking from the system or value chain. I am of course referring to piracy or illegal usage. The losses from piracy, whether it be of VCD/DVDs, illegal downloads and copying or from the illegal usage of broadcast signal through illegal set-top boxes, is enormous.
There are various organisations that are trying to measure the totality of this but across the region the amount will be very significant. This is costing hundreds of lost jobs in the industry and we need:
- improved legislation
- greater political will to enforce the rules
- investment in technologies to beat the pirates and
- public education as to the impact of piracy
It was great to see recent success of the Cable and Satellite Broadcasters Association of Asia (Casbaa), on behalf of a number of broadcasters, in successfully prosecuting traders who were profiteering from the distribution of illegal set-top boxes in HongKong, where the level of losses in this area alone are US$40 million. There are problems throughout the region and all of us should support the efforts of Casbaa as well as the Motion Picture Association and others in their efforts. We all have our livelihood to lose if they don't.
A final observation from the forecasts is that the compound growth of ad spending in the region for the next five years is 3.1 per cent whereas consumer access spending on E&M is growing by 5.4 per cent. It would appear that the driver for this is broadband where the number of wired homes in Asia by 2007 will be 50 million, up from 13.5 million in 2002. There is a clear need for media companies to tap into this either through revenue sharing deals or by moving along the value chain. Failure to do that, or to otherwise leverage its content over multiple platforms and hence enjoy the benefits of economies of scale will result in cost cutting being the only option.