Economic Mid-Year 2001

Weak economy
curbs spending

Bamrung Amnatcharoenrt

MEDIA/ADVERTISING

Advertising and media agencies project a shap decline in ad spending in the second half of this year, with a cut in media spending by firms, especially makers of consumer products. But Thai movies are a rising star on the world scene

Thailand's media industry is projected to grow only slightly for the remainder of this year due largely to the economic uncertainty and a slowdown in the world economy, particularly in the United States and Japan.

Some executives believe the industry could record zero growth at the very worst, which would still be better than the dark days following the mid-1997 ecoomic crisis.

Despite the gloomy outlook, however, the media industry is a rising star. But industry analysts agree the movie business is playing a bigger role than any other sector in the industry, both at home and in the international rnarket, putting Thai films on the world movie map.

For the remainder of the year, Thai films are expected to show an even stronger performance at the box office, even outperforming their HolIywood counterparts.

DECLINE IN AD INDUSTRY

According to advertising and media agencies, the industry will face a sharp decline in advertising spending in the second half of this year.

They said the industry's annual growth rate would be not more than 10%. Last year media spending was worth about 50 billion baht.

A cut in media spending by firms especially in consumer products, is among the main reasons for the downturn. Executives said consumer-product giants had cut their budgets by 20% in line with a slowdown in sales.

Leading advertisers such as Unilever Thai Holding and Procter & Gamble Thai Manufacturing (ThaiIand) Co, which are reducing their global workforce, are also likely to reduce advertising of some products.

"Makers of good quality products are usually the last to cut advertising spending, so it may mean that we are on the verge of another crisis," said a source.

In the current revenue crunch, television producers are also offering Iarge discounts on their airtime slots. JSL Co and Workpoint Entertainment Co, the country's leading television producers, are examples of this strategy.

This year, media agencies said discount offers have been as high as 40%, compared with 30% last year. "We are beginning to see bad signs from the United States and Japan. While we do not know the extent of the impact, we do know that the kind of spending recorded in the first quarter is unlikely to recur," said Pinit Chantaprateep, senior vicepresident and executive creative director of J. Walter Thompson Co.

"It is a challenging year for the industry. We hope the industry will achieve a 10 growth, although it will be a tough target," said Parames Rachjaibun, president of the Advertising Association of Thailand.

He said that in the first quarter of this year, media spending achieved Its growth projection of 7.6% to 12.38 billion baht.

However, he said the figure might be misleading because growth came from higher rates of media-spending since last November, not from real media consumption.

"I believe real growth in the first quarter was at 3% because of media inflation. Since the 1997 economic downturn, the growth rate has been frozen and started to increase only last year," Mr Parames said.

According to ACNeilsen International, during the first five months of this year, media spending grew 9.3% to 19.77 billion baht, compared with the same period last year.

Transit advertisements mainly on the BTS skytrain, tuk tuks and buses showed the highest growth of 62.99% followed by outdoor advertising with 22.14% growth.

Executives said the significant growth in the two categories reflected the current industry downturn and economic decline.

They said those spending on advertising looked for the most effective media, and at the same time, the most cost-effective.

The telecommunications sector would be the biggest advertising spender for the rest of this year, followed by consumer-product companies and government agencies, Mr Parames said.

But ad spending for alcoholic products, excluding beer, are forecast to fall, reflecting budget constraints among consumers.

"Last year, the industry went along steadily because it was driven by political parties and their election spending. This year we hope government agencies will spend more on the media," Mr Parames said.

SILVER-SCREEN STARS

This year, many analysts argue, is shaping up the best ever for the Thai film industry. It is projected that ticket sales will reach one billion baht, skyrocketing frorn 200 million baht recorded by the local industry last year.

A total of 12 Thai films are expected to be released this year, and six were already in theatres in the first five months of this year, with estimated combined ticket sales of about 400 million baht.

The gory historical drama Bang Rajan was tops at the box-office with 150 million baht in ticket sales, breaking last year's box-offlce of 100 million baht by Satree Lex (Iron Ladies), a comedy about a local trans-sexual volleyball team.

The comedy-drama Killer Tattoo earned over 110 million, and the erotic Mae Bia, based on a popular novel, grossed 52 million baht.

In August, the 400-million-baht historical epic Suriyothai, directed by M.C. Chatri Chalerm Yugala, is expected to become the box office hit of the year, as well as the biggest-ever of the year, as well as the biggest-ever Thai film in terms of earnings, with at least 300 million baht in local ticket sales.

If that mark is achieved, it will break the 213 million baht record set by Titanic in 1997.

"At the moment, anything can happen in the Thai film industry. Thai films are playing a bigger role in the industry. It will be more visible in the second half of this year after the release of Suriyothai," said Visute Poolvoralaks, managing director of Tai Entertainment Co, which produced Satree Lex.

Executives of major Hollywood distributors say this year it has become commonplace for a local movie to earn 100 million baht in ticket sales.

They agreed that this was because Thai films had greatly improved their production quality and were catching on with local audiences.

"Thai films outperform Hollywood ones. Beyond their improvement, probably audiences are losing interest in Hollywood films because of an excess of supply," an executive at a Hollywood distributor said.

Among the big Hollywood movies appearing or scheduled for local the World World ll eplc lrom IU Vista International; The Mummy Returns, a new version of Planet of the Apes directed by Tim Burton from Fox and Jurassic Park III.

Pearl Harbour is expected to surpass 100 million baht in ticket sales.

"In the second half of this year, the movie business will be tougher, especially for local movies like Suriyothai, but Hollywood films try to avoid confrontation with their premiere screenings," one distributor said.

With huge successes at home, Thai film producers are also looking to the export market.

Mr Visute said Thai films were second to none in the region for production and creativity.

Tai Entertainment was ready to be a regional player if given the opportunity, he said.

Satree Lex, for example, was shown in 10 countries, both in Europe and Asia. Mae Bia was also exported to Malaysia, the Philippines, Indonesia, and Singapore.

Tears of the Black Tiger, known locally as Fah Talai Jone, a movie about a 1950s Thai gangster produced by Film Bangkok, was bought by Miramax.

The film was shown at the Cannes Film Festival this year.

"The firm sees a big opportunity in the film industry. We will concentrate more on film production. Our market will not only be Thailand, but will be international," said Chatchai Thiamtong, vice-president of BEC World Plc, the operator of television channel 3 and its movie arm, Film Bangkok.

The erotic period drama Jan Dara, which is in the post-production phase, is expected to make inroads in the international market.

lt is the first Thai-Hong Kong co production ever made, and is seeking to capture the pan-Asian market.

To cash in on its popularity, RS Promotion 1992 Co, the country's second biggest record firm, is seeking overseas production partners and is trying to export films to Asian markets.