Taiwan Today

When ROC President Ma Ying-Jeou met with the Association of Terrestrial Television Networks Feb. 4, he said digital convergence brought with it many industrial development opportunities along with many challenges. Smartphones and tablet devices are already mainstream for the younger generation. The next wave of industrial competition will focus on the production of quality content, Ma said. Moreover, as TV programming already suffers from a surfeit of overseas content, urgent remedial measures are required, he added. Digital convergence, with the migration of media to the web and the latter’s wide diffusion, has brought the following shocks and challenges. First, the appearance of smartphones and tablets has altered the way in which people watch TV, turning them from passive into active consumers, no longer stuck in front of the screen. The Internet gives them more choice in what to watch, but this has also shrunk the market for conventional TV advertising. Second, web migration has made it easier to watch externally sourced programming, especially with the availability of ever-expanding mainland Chinese web TV services, from firms such as PPStream Inc., Youku.com Inc., Tudou Inc. and Funshion Online Technologies. These services are also accessible to Taiwanese consumers free of charge, which, although expanding viewership for locally produced content, also undermines the future development of the nation’s emerging content providers. Third, following the opening up of the cable TV market, the NT$28 billion (US$946 million) advertising budget had to be split between over 100 channels, leaving them with limited budgets for actual program production after covering operational overheads. The situation can only get worse, with digitalization increasing the number of channels without an increase in the revenue pie. Given the legal constraints on the percentage of content that has to be produced by the station, TV stations seek to boost advertising revenue to compensate for the funding shortfall by externally sourcing programs or by running repeats to fill in the gaps in the schedule. Fourth, mainland China and South Korea have replaced Japan as the main source of imported programs, but in all three countries the larger markets or other forms of support mean program budgets can be three to five times larger than in Taiwan, allowing higher quality and great variety. Taiwanese stations are keen to import these popular foreign shows, as it is cheaper and less risky than producing their own material. To meet the challenges of this changing market and boost the volume and quality of Taiwanese production, the government should focus on the following aspects. First, the government should expand subsidies and incentives. The current high definition TV development plan subsidizes Taiwan-produced programming to the tune of NT$500 million. Besides thinking of how to increase the effectiveness of this subsidy the government should take a more active role, such as by establishing a system for the valuation of intangible assets, providing marketing incentives and offering better access to financing. Second, the government can increase the number of wireless platforms that must be carried. As a result of either future legislative amendment or government directive, operators with 15 digital channels can expect to be allocated cable channels, and may further be given the opportunity to widen their operational base to include new media like Internet Protocol TV. Third, the quota for home-produced content could be revised—for wireless and cable TV stations it is set at 70 percent and 20 percent respectively, compared to South Korea’s 80 percent and 50 percent—or mainland China’s example of setting restrictions on foreign content in peak viewing hours could be followed. A new way to survey ratings must also be urgently established, given the combined effect of TV digitalization and new media on viewing habits. Creation of an independent body would be the fairest and fastest solution. Finally, from both a linguistic and geographical standpoint, mainland China is a market that cannot be ignored. Attempts should be made to go through cooperative economic mechanisms—such as the Cross-Straits Economic Cooperation Framework Agreement (ECFA) or the relevant TV and cultural development committees—to break through mainland China’s limits on foreign content. Issues of quality content production cannot be separated from questions of cultural creativity and the integration of government and producer resources, but “even a clever cook finds it hard to cook without rice.” It is only by strengthening the supporting infrastructure, eliminating regulatory obstacles, urging increased investment in talent and program content, and boosting cross-industry productivity and added value, that a domestic TV content industry, which has long been in the doldrums, can be helped back onto its feet. (SDH) (This commentary originally appeared in the Economic Daily News Feb. 24, 2013.)