August 1, 2007
By Thomas Schmid (Dukas)
Overall advertising spending in Thailand increased by 5.3 percent to THB82.15 billion (US$2.5 billion), a figure that adhered largely to predictions of industry insiders. Market intelligence companies including Nielsen Media Research reported a growth in spending for this segment of 7.15 per cent to THB49.02 billion (US$1.6 billion). But numbers can sometimes be misleading, as the main loser appears to be the television commercial segment. Even as the TVC segment’s share increased to 59.67 percent of total advertising spending, compared to 58.64 percent in 2005, it must be seen in relation to government policies that started to affect the industry in the final quarter of 2006. It was early October 2006 that the interim government installed by the military leaders of Thailand’s coup d’etat announced it would ban alcohol advertising. The move sparked an outcry from alcoholic beverage producers, importers and distributors. The government then suspended the plans but warned it was not indefinite. The authorities maintained a regulation implemented by ousted Prime Minister Thaksin Shinawatra’s government which allowed alcohol commercials to air from 10 pm to 5 am, a time window that discouraged companies to produce and air commercials, as they would be unable to generate any reasonable impact. At the same time, TV stations afraid of losing much needed revenue resorted to raising airtime fees. Advertisers that were not affected by the restrictions imposed on alcoholic beverage firms took over the airtime slots left vacant. Thus, the apparent growth in the TVC segment cannot be necessarily attributed to an actual increase in the number of commercials produced, but rather the raise in airtime fees that had to be shouldered by advertisers of ‘unrestricted’ commercials. With a myriad of agencies and TVC production companies battling it out for their slim individual slices of the pie, the only solution was to market their services more aggressively to manufacturers of other, less ‘offensive’ – and less lucrative – products than alcohol. A concurrent deterioration of consumer confidence brought on by political insecurities and rising consumer product prices has caused many manufacturers to revise down their available advertising budgets. This downward trend may continue through 2007 if some of the more pessimistic industry players are to be believed. “Net billings of the media industry for 2007 will contract by 10 per cent,” foreshadowed Witawat Jaypani, president of the Advertising Association of Thailand. This assessment seems credible in light of the Thai cabinet’s approval of the draft bill on the total ban of alcohol advertising on 13 March 2007. The draft has since been forwarded for deliberation by the National Legislative Assembly and if ratified, it will be signed into the law after its required posting in the Royal Gazette, a process that may last from a few months to half a year. Even if alcohol commercials account for only 4 percent of all televised advertising according to Nielsen Media Research, the impact is bound to be felt by the media industry in general with the ban encompassing TVCs, commercials in theatres, print or online ads, as well as any alcohol brand logos on promotional materials including beer garden umbrellas, t-shirts, stickers, coasters, posters and flyers. The only exception will be alcohol commercials that come packaged with foreign programming, e.g. during live sports broadcasts. Further, on 5 July 2007, the National Economic and Social Advisory Board called for measures to control snack and junk food advertisements in the interest of children’s health. If the recommendation is signed into the law, snack and junk food ads will be banned from airing during children’s programmes. Production houses will also be barred from using child actors or popular cartoon characters in ads. Another potential legal hurdle is in the form of a draft necessitating the rating of all TV programmes into five categories corresponding with age brackets of the target audiences and the setting of times during which these programmes can be aired. This system will not allow advertisers to air their commercials during blocks in which they do not ‘belong’. Programmes with ‘content requiring parental guidance’, e.g. soap operas in prime time slots could be relegated to air between 9 am to 4 pm on weekdays and 8 pm to 5 am on weekends and public holidays. The ramifications of such a system are likely to bear down heavily on advertisers, TV programme producers and TVC production companies. “Setting a single rule on broadcasting times will ruin (the diversity) of TV channels because all stations will look the same. Advertisers will fight fiercely to buy airtime for certain slots (as certain commercials can only be broadcast during certain time periods),” said Jamnan Siritan, president of the Radio and Television Broadcasting Professionals Association. Advertising agencies and production companies are already bracing themselves. A fair year for the post production industry The same cannot be said of the local post production industry which enjoyed a relatively prosperous year and is looking to similar fortunes in 2007. This may be that the industry consists of a handful of major players and a large school of smaller scale companies trailing in their stern waves and picking up the leftovers discarded by them. While most conceded business did not develop as well as they have hoped, overall satisfaction prevailed and the outlook for 2007/8 is largely optimistic although little actual growth is predicted. The big advantage of local post production houses could be that they have an option to spread out their marketing. While some opt to focus primarily on processing local TV commercials, others concentrate on drawing business from abroad, and both groups may take on feature films. Final Cut claims to have postproduced 124 local and 35 foreign TVCs in 2006 compared to an expected total of 200 local and 50 foreign commercial in the year. A company with bearings towards foreign commercials is Soho Asia which claims that 75 percent of its business has been from overseas. Roger Hoare, the company’s managing director, expects the ratio to remain relatively stable with a slight increase in favour of local commissions. The Post Bangkok’s general manager Nicholas By Thomas Schmid (Dukas) Chan anticipated local and foreign commercials to weigh in 80 percent and 20 percent respectively. All companies were adamant they did not rely solely on expensive hardware and software upgrades, but also the employment of skilled artists and marketing strategies. “We have a very good reputation in terms of quality output and strict adherence to schedules, as well as investments in both equipment and skilled manpower,” Chan said. Several companies are expecting the recent strength of the Thai Baht against the US Dollar to result in more sluggish business from overseas in the foreseeable future, particularly as customers come from Pakistan and India. “(The devaluation of the US Dollar) has hurt us significantly, because major clients (from these countries) have their currencies linked to the dollar. Soho works on a Baht rate card and given that the clients pay in dollars, our services must match the increase in cost to our clients or we have to reduce our Baht prices to keep in step with the falling dollar,” he explained. “There are the matters of distance, traveling and accommodation in addition to production costs. In the past 3 years, our foreign customer base has declined and there is a tendency for this to continue (if the Baht strengthens further),” added a Final Cut spokesperson. Expansion beyond Thailand seemed to be on the agenda of all interviewed parties. “Soho will be making aggressive steps to strengthen our position in the region. Upgrades include the installation of a DI suite and putting data output on the Spirit. The US is our prime target for DI as there is a huge market in lower budget movies in the US$2 – 15 million bracket,” Hoare said. “We are interested in Hong Kong, Japan and Sngapore as their markets are very stable. We are also glancing at newly emerging advertising markets such as Vietnam, China and Malaysia,” added the Final Cut executive. And while work on local TVCs remains as the principal agenda, The Post Bangkok’s Chan declared his company’s “new targets for marketing are Europe and the US.” Less dependency on local economic forces and the freedom to look abroad coupled with limited competition may afford Thailand’s post production industry yet another year in relative security. Stability on the production front While many nostalgics have ranted about the ‘glorious times’ of Thai cinema in the 1960s and 1970s when the country produced more movies per year than the UK, those proponents have failed to acknowledge that practically all the movies then were of poor quality and were generally shot on a very small budget. In that respect, Thailand’s movie production industry has experienced an almost magnificent transformation over the past decade as gone are the times when movies of poor standards were shelled out to entertain undiscerning masses at a speedy rate. Now, an increasing number of Thai movies earn accolades at annual international film festivals worldwide as production budgets and production values increase. Some 40 local movies were produced in 2006 as opposed to an estimated 50 this year, a number which has remained rather consistent over the past decade. A reason may be best explained by Avant’s producer Jantima Liawsirikul: “Thai audiences generally expect local movie line-ups to change once a week. Based on that, the saturation point is reached by 40 to 50 releases each year. The local market cannot sustain more, especially if we consider that there are also many films from abroad including Hollywood blockbusters.” Avant, a subsidiary of RS Public Co., Ltd., released 5 movies in 2006 and is planning 9 for 2007. Production costs have risen from THB10 million (US$295,000) per movie 5 years ago to approximately THB34 million (US$1 million) currently. “We are striving to improve the quality and production value to meet international standards and ensure that the movie can also be screened outside of Thailand,” said an executive of Kantana Group, the country’s oldest entertainment conglomerate, preferring to remain anonymous. The move to raise standards of domestic films has not gone without rewards as several Thai films have earned accolades from international film festivals including Apichatpong Weerasetthakul’s cryptic art movie Tropical Malady which won a Golden Palm award at the Cannes Film Festival in 2005. Having attracted kudos at Cannes for his latest film, Weerasetthakul voluntarily stopped the release of his movie in Thai theatres earlier this year as he did not agree with the country’s film censorship laws which date back to 1930. He protested against cuts made to his movie which he deemed to have been made rigidly by the Censorship Board. The offensive scenes included a Buddhist monk playing a guitar and a physician kissing his doctor girlfriend in a hospital corridor. This led The Bangkok Post’s film critic Kong Rithdee to bash the authorities in his column: “They just adore their scissors, these selfappointed dogs…” Thai erotic film Ploy which screened at ‘Cannes’ ‘Directors’ Fortnight’ also suffered 8 cuts demanded by Thai censors. “The censored version is actually more erotic than the original cut, because you can imagine much more. Funny.” Director Pen-Ek Ratanaruang commented sarcastically. While Thai movies may be suffering from tight regulations now, the situation looks to improve as the Thai government has agreed to review and amend the Film Act of 1930 to be “in line with contemporary demands”. Overall, the year still saw the Thai film industry enjoy some levels of success. Local 3D-animation feature Khan Kluay earned an astonishing THB100 million to date although it was released only in late November 2006. The trilogy of King Naresuan, one of the country’s revered kings in a time when Thailand consisted of competing city states before merger as ‘Siam’, broke all box office records even in the face of Hollywood blockbusters like Spiderman 3. King Naresuan’s final installment and culmination of the story is slated for release in December this year with expectations of even greater box office success. RS Promotion, under its sister company, Avant, released comedies as the Noodle Boxer, which performed well in Hong Kong and Taiwan. GTH (Grammy Tai Hub) also enjoyed local success with horror flick Dorm and comedy See How They Run. With Thailand’s movie industry doing well and getting better, the home-bred and oriented industry appears to have finally found its place in the world.