Philippine Animation Industry: Issues, Strategies for Competitiveness, and Options for Trade Negotia

1
Philippine Animation Industry Issues, Strategies
for Competitiveness, and Options for Trade
Negotiations

• Gloria O. Pasadilla
• Senior Research Fellow
• PIDS
• May 23, 2005

2
Background

• Brief History of Philippine Animation
• Global Market for Animation Services
• Current State and Domestic Issues
• Implications for Trade Negotiations

3
Brief History

• Animation was first introduced in the Philippines
  in the 1950s 47 years after it began in the US
• The industry blossomed only in the late 60s to
  the late 80s after Japanese anime was introduced
• First Philippine animation production was
  introduced in 1979 a 60-minute story based on
  the adventures of Lam-ang

4
Brief History

• Beginning the late 80s, the Philippines has
  emerged as a competitive country for
  subcontracted animation works (Optifex,
  AsianAnimation and Filcartoons)

5
Global outsourcing market A long way to go for RP
Figures in billions. Global 2002 RP
2001 Finance and accounting only Source BOI
6
Animation to grow fast albeit at much lower rates
than other BPOs
Projected Philippine ITES Revenue in US Million
Source DTI Business Plan for ITES
7
Global prospects

• Recently, countries like China, South Korea and
  India are major global destination for outsourced
  animation services
• India and South Korea are taking over the market
  with at least 50 of global outsourcing revenues

8
S W O T

• In the past, Filipinos natural creativity and
  affinity with Western humor and culture together
  with competitive wages, made the animation
  industry highly competitive

9
Some identified Issues Strengths and Weaknesses

• Strengths
• Large pool of possible talents for animation
• Natural affinity with western humor and culture
• Historical tradition

• Weaknesses
• Increasing wages
• Limited technical knowledge of advance animation
  technologies (3-D, flash animation)
• Low end of the value chain

10
Some identified Issues Opportunities and Threats

• Opportunities
• Availability of and access to technology
• Sustained growth in the global outsourcing market
  for animation

• Threats
• Rise of India and possible emergence of China
• Brain drain of local pool

11
Current state of the industry

• 21 animation companies with about 7 companies
  focused on export services
• Export-oriented firms are mainly subcontractors
  of large global animation studios
• Limited backward and forward linkages (e.g.,
  limited original Filipino animation programs).
• Activities remain focused on low value added
  activities

12
Addressing the issues

• What is the state of competition in the local and
  foreign animation industry? How can the local
  animation industry respond to it?
• What value-added activities in animation the
  Philippines can go into?
• What are the strategies needed (a) to hurdle the
  current brain drain problem affecting the
  industry and (b) to move up the value chain
• Technical capacity needs and education curriculum
  assessment

13
Options for Trade Negotiations

• What are the technical capacity needs where
  foreign assistance can be tapped?
• How can international trade negotiations be used
  to help improve the sector?
• Identify barriers to trade on market access,
  national treatment, regulation in destination
  markets, if any
• Facilitating policies in markets which can be
  locked in through negotiations
• Other trade support (e.g. promotion) which
  government can extend

14
Philippine Animation Industry Issues, Strategies
for Competitiveness, and Options for Trade
Negotiations

• Gloria O. Pasadilla
• Senior Research Fellow
• PIDS
• May 23, 2005