Tuesday, January 11, 2005

Bearish on Thai film

The Bangkok Post today ran a financial analysis of the past year in Thai film. The article by Christopher E Knight of PricewaterhouseCoopers Thailand noted that the Asia-Pacific region will be the spot that will see the fastest growth in the entertainment and media industries over the next five years.

However, he questioned whether Thailand's local film industry would reflect similar growth.

An indicator used for measuring growth in the filmed entertainment industry is box office revenues. In most countries, US films are consistently predominant in generating box office revenue. The exception to this is primarily in countries, such as China, that impose quotas to restrict the number of foreign movies that may be exhibited.

Local films are a variable component and the key to box office revenue growth. Improving local product should therefore increase audience interest and generate box office revenue growth. Note that the emphasis is placed on improvement of the quality of local product rather than increased quantity. In 2004, the number of Thai feature films released increase to 47, but only two Thai films managed to place in the top 10 (see chart).

In contrast, only 13 Thai films were released in 2001, but two of these films, Suriyothai and Bang Rajan, were in the top five and generated more than 240 million baht in box office revenue. Only eight Thai films, a low for modern Thai cinema, were released in 2000, but the number one film for that year was Satree Lek (Iron Ladies).

Despite the importance placed on box office revenue, it should not be equated with profitability. Of the 47 Thai releases in 2004, it is estimated that the average box office return per film was approximately 16 million baht. The average cost to produce and release a movie is Thailand is approximately 25 million baht. It doesn't take a chartered accountant to determine the sustainability of the industry given these numbers. The growing trend of shorter theatrical-to-video release windows, as well as film piracy, further impair theatrical box office returns.

Given the creative and artistic elements involved in film, it can often be overlooked that film making is a business, and like other businesses it must to profitable to grow and survive. What strategies should producers be looking at to get a fistful of dollars? There are many and as each picture is different, so too are the models and strategies used.

Product placement does not necessarily create an additional revenue stream, but it can generate funds allowing a producer to reduce production costs. Outside of Hollywood, product placement appears to be underutilised.

Merchandising rights, which include the manufacturing, distribution and sale of items such as posters, T-shirts and toys bearing the names of film characters, movie stars, film company logos and still photos from a movie, are licensed by production companies creating additional revenue from a movie. With Thai movies getting broader releases, there is a greater potential to exploit these rights successfully as musical rights and compact disc sales have been successfully exploited.

DVD and home video sales are changing the way studios view their returns. Hollywood studios have realised that theatrical flops as well as blockbusters stand to make greater returns in DVD and home video sales. Studios are therefore offering home video and DVDs sooner to increase revenues and piggyback on the marketing investment made for the film's theatrical release. With consistent enforcement of intellectual property rights in Thailand, the home video window could turn out to be more lucrative than the theatrical window.

I have to agree wholeheartedly on the merchandising aspect. For example, Citizen Dog boasted an eye-catching series of ads. But that was about it. Some cartoon characters were designed along with the campaign, but underutilized. They could have been given away at the theaters or offered as free gifts at petrol stations or fast-food restaurants. Also, where was the soundtrack album for Citizen Dog? Music was integral to the film. I would have been interested in a soundtrack CD, but it wasn't released. Seems there isn't enough interest in the old songs used in the film. But I feel more merchandising would have helped sell this film to the Thai public.

Oh, and I'm still looking for a figurine of Boonlueng, the water buffalo from Bang Rajan. That would have been cool.

Here's a look at the overall top 10 at Thailand's box offices last year. It gives a better reflection of the state of the Thai movie industry (figures in millions of Thai baht):
  1. Spider-Man 2 157.4
  2. Harry Potter and the Prisoner of Azkaban 148.8
  3. Shutter 115.8
  4. The Day After Tomorrow 109.4
  5. Anaconda 2 94.9
  6. The Bodyguard 78.5
  7. Troy 77.9
  8. Resident Evil 2 67.5
  9. Van Helsing 67.3
  10. I, Robot 65.2

( Cross-published at Rotten Tomatoes)

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