Strategic planning for the creative industry


(Vol. 3)

The Philippines needs to be ready to transform its animation sector as the animation services outsourcing business continues to evolve to support new business segments through new platforms, genres and ways.

The 2015 The Frost and Sullivan study came up with a list of global lessons to take full advantage of these global trends in the Philippines. The first obvious lesson is that the animation industry relies heavily on technology. Stakeholders in the Philippine animation industry should make sure that, from being market-leading in hand-painted artwork in the past, they should now continue to expand their footprint in the digital animation area by constantly analyzing the overall technology trends, especially the pool of skilled 3D. Animators Since digital animation is driven by constant technological innovation, emerging animators need to keep up with the competition by regularly updating their skills. This is a job for our design and computer technology schools that should offer a wide range of courses, some at the university level, but most of which should be tech-walk courses sponsored by TESDA (Technical Education and Skills Development). Authorities) and focused on skills development rather than obtaining a college degree. In fact, Miguel del Rosario, CEO of a leading animation enterprise in the Philippines, commented in a webinar on the creative industry that most of the people he hires do not have a college degree.

While technology is the key to setting foot in the animation outsourcing industry, it is also important to acknowledge the impact of establishing a unique animation strategy. For example, animation styles in the United States differ significantly from Japanese animation, or anime. Similarly, a production house in France would expect its outsourcing team to learn about the basic, basic do’s and don’ts created for French audiences. The ability to understand the differences across different animation markets can be the key to winning or losing a project. With that in mind, the talent pool within the sub-sector needs to be exposed to a wider range of animation styles and techniques so that they are more flexible in this highly competitive industry and therefore have the basic skills needed to market. We can take advantage of the fact that Filipinos are arguably the most exposed to other cultures, with Spain, the United States and even Japan colonizing for a short time. We can also benefit from a pool of Filipino workers who are part of the over 10 million foreign Filipino workers for a fixed period of time. Among them may be potential talents for the animation industry who will be familiar with the tastes of consumers of animation products in major countries like France, Japan, Spain, Germany, Italy and other developed countries where they have worked for some time. In general, after returning to the Philippines, we should spend a lot of resources on upswing, recycling and retouling on this OFW. Among other things, we can expect that they have developed a positive work ethic and values ​​in the developed countries where they have worked.

In many parts of the world, motivation plays an important role in the development of the local animation industry. Mature markets such as Canada and France, for example, still provide incentives through grants for the local animation sector. These grants are provided for the development of animation for the local market and local animation studios have a minimum requirement on the expected contribution percentage. The rest of the work can be outsourced, and this is where other outsourcing destinations, such as India and the Philippines, can take action and get some work done. Similarly, emerging destinations such as Singapore and Malaysia offer various grants and incentive schemes for local companies aimed at developing the overall national animation ecosystem.

In fact, the Philippine Creative Industries Council has come up with some recommendations, firstly to help the sector recover from the crisis caused by the Kovid-19 epidemic and secondly for the long-term development of the industry. Especially for the animation and game development sectors (digital marketing and software development together), it is recommended that they be classified as essential services and allowed to operate at 75% capacity in existing locations. Subsidies should be provided to set up agile digital service hubs around the National Capital Region to close productivity gaps. Government support for the long-term development of the creative industry in general will be discussed in another part of this series of articles.

Meanwhile, we will discuss the potential of the game development sector in the creative services industry here.

The game industry has become an integral part of mainstream entertainment and it is no longer limited to children or teenagers playing video games. People who play video games come from all ages and are of both sexes. When the Frost and Sullivan studies were conducted in 2015, the industry generated $ 80.5 billion worldwide and was expected to reach more than $ 100 billion by 2022. During the forecast period, it was projected to grow at an annual compounded rate of 5%. Online video, tablet and mobile games are among the expected video games to register the highest growth rate. Video game development is a very popular segment with about 60-80% of the segment being outsourced.

From a market driver’s perspective, new game platforms such as Internet games and mobile device games are helping to improve the overall video game industry and game development industry. Moreover, the industry has evolved and increased the supply of skilled talents for developing complex games such as Triple-A. In addition, the emergence of small developer companies known as “indie” developers and the driving force behind the growth of the ability to publish games directly on online platforms such as Steam. However, the growing advance investment costs required to develop games are seen as a major obstacle, especially for the game development industry. Video game publishers are also reluctant to explore new / emerging outsourcing destinations due to the lack of strong IP laws. Recent amendments to the Foreign Investment Law that allow 100% ownership of business ventures in the Philippines may be a solution to the lack of domestic capital. We can attract startups in game development founded by entrepreneurs from North America, Europe and Japan who want to use the huge Philippine human resource pool in this sector.

The Indo-Pacific region leads the overall market for game development, followed by North America and Europe. Demand in this region is fairly balanced as each market contributes about one-third of the total share. The Latin American market is still relatively small, at only 5% of the total. From the perspective of a sub-segment demand across all regions, the console market is the biggest contributor, then online gaming. Most game development is related to the production and testing stages of outsourcing. These include works such as art, localization, audio and music outsourcing. The most developed world destinations for game development outsourcing are India, China, Brazil and Poland. Vietnam, the Philippines and Chile are among the emerging destinations for the industry. These emerging markets are constantly improving their capabilities and service offers and could pose a serious threat to mature destinations in the next few years, as is true of other industrial sectors that still rely primarily on human resources. Despite AI and robotization, the Philippines has the distinct advantage of being one of the few emerging markets with a young, growing and English-speaking population.

Most of the game development outsourcing business in the Philippines involves multimedia testing and certification, game porting across multiple platforms, and artistic / animation design work. They provide game operation support, quality assurance and special support. Game development companies in North America, Europe, and Japan continue to outsource key labor-intensive functions of value chains in the Philippines due to low labor costs and the availability of animation / graphic design platforms. Clients of traditional North American animation studios who have traditionally outsourced 2D animation work in the Philippines have also outsourced game development-related work in the country to match talent needs.

One trend that will intensify as the world recovers from the COVID-19 epidemic is the growing dominance of Indo-Pacific.StayThe overall demand for the game development industry c region. Although the most well-known video game market in the US and Europe is Indo-PacificStayArea C is already the largest world market. Although Japan, South Korea and Australia have traditionally been large markets, China has led and is expected to become the largest market (as in the case of virtually all consumer goods and services). Just before 2015, the Chinese government lifted a 14-year ban on gaming consoles, which eventually allowed console gaming giants such as Microsoft, Sony and Nintendo to enter the market. Moreover, Singapore and Malaysia have been open to the video game industry for more than three decades. The growing consumer markets in the leading ASEAN countries, such as Indonesia, the Philippines, Thailand and Vietnam, are bound to embrace their video game culture more aggressively.

There is also good news for the SME sector, which consists of gig entrepreneurs or freelancers.

In the past, large established video game development houses dominated the industry due to the high investment costs (forthcoming) requirements for video game development. However, things are slowly changing with the advent of new platforms like mobile and tablet games where development tools are easily manipulated by a single or small group of video game developers, thus leading to the creation of a wide-market indie developer. Some of these indie developers have come up with creative ways to raise funds, such as crowdfunding, to finance development costs when large sums of capital are needed. Furthermore, with the availability of digital distribution, market challenges are reduced, enabling developers to bypass large publishers for game distribution. Indie game developers, due to their limited budgets, tend to be more creative in exploring new or unusual gameplay styles, introducing a mix of genres in a single game and experimenting with obsolete low-resolution graphics: retro-creation, for example. Themed video games.

Clearly, all of these bright prospects are beneficial for the PhilippinesStayThe demand for game development from the growing market will be ineffective if the required skills are not available.

The Frost and Sullivan survey suggested that the Philippines should begin exposing high school students to the possibilities of working in the game development industry as it would help build a technically strong talent pool and shape the long-term potential of the local industry. Unlike the animation industry, where a college degree is not a prerequisite for developing the necessary skills, the whole process of learning to develop video games is no less challenging than becoming a software engineer. Students need to learn multiple subjects related to mathematics, physics, designing and programming which can be quite intellectually demanding. Among the professions that can be presented to senior high school students following the STEM (Science, Technology, Engineering and Mathematics) track should be game development. Since many of them are probably already addicted to playing video games, it won’t be any differentStayCulture to educate them about the potential for long-term careers in the game development industry.


Bernardo M. Villegas has a PhD. Emeritus Professor of Economics from Harvard, University of Asia and the Pacific, and Visiting Professor at IESE Business School, Barcelona, ​​Spain. He was a member of the 1986 Constitutional Commission.

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