Arguments for coordinated private sector investment and proactive government incentives make sense only if there is a sustainable competitive position to be obtained. This always takes some proving when new technologies are being applied and markets are latent. However we believe Australia has a strong position in the region today and that early moves can be taken to lock in that advantage for the next decade or more, by anticipating and planning for the move to on-line delivery of interactive multimedia content.
Australia's competitive position within the Asia-Pacific region is strong today for several reasons:
A larger population of CD-ROM players is expected to be maintained in Australia through to 1997 relative to all Asia - Pacific markets except Japan (Figure 21).
Although the demographics of major Asian markets suggest local sales will outgrow Australia within a few years, this allows time to develop the content and the channels of distribution that will allow Australian developers access to these markets.
We have conducted a brief survey of the state of development of the Asian CD-ROM content development industry. It is a rudimentary market (Figure 22), but the distribution channels for local and international titles are now coming into place.
Figure 22: IMM industry scale in Asian markets
Number of IMM Participants in distribution channel
development teams
Australia 30* 20 major distribution companies Many
dealers
Taiwan 15 10 major distributors 100 dealers
Hong Kong 3 8 major distributors 50 dealers
Thailand 2 3 major distributors 60 dealers
China 5 5 major distributors 100 dealers
Singapore 5 5 major distributors 50 dealers
New Zealand 5 Underdeveloped ie. mail order and
computer resellers
South Korea 10 Key computer companies control dealerships
Malaysia 2 5 major distributors 100 dealers
India 15-20 Computer stores primary channel for
distribution
*Excludes academic sector
Source:- Survey by Double Impact MultiMedia, August 1994
The comparative cost of the value-added elements for content production activities mandates that Australia takes a high value and high quality approach to multimedia content development. For example, software coding and animation production houses are now established in developing countries (Indonesia, Vietnam, Philippines, China, India), where wages for equivalent skill may be US$50 per day versus A$150-300 per day in Australia. We know of one Singapore based post-production house that has set up local editing capability in six South-East and South Asian countries, to take advantage of local costs and to address the aspirations of every community to maximise local value-added.
The overriding question is how to sustain Australia's present competitive advantage in content development. We have seen how the global pricing and production economics of IMM title production require access to large consumer markets. For Australia, content industry growth in general demands international consumer access at highly competitive cost: this is especially so for interactive multimedia title developers. The objective must be to access millions of consumers, thus empowering much larger numbers of Australian residents to participate in the content creation process (Figure 23).
Distribution mechanisms are required that allow this market access. In our view, this will only be truly achievable when interactive multimedia products and services can reach consumers through on-line delivery, using international telecommunications networks. Even the global publishers are constrained by the shelf space problem for physical media, like CD-ROM, as we have noted.
Many observers believe that on-line services are now poised for very rapid expansion, as the global installed base of IMM-capable PCs becomes significant. Network connection costs are now affordable for the customer equipment end, being capable high speed modems and, in some markets, consumer ISDN network terminating cards. The critical take off point will probably occur when the huge budgets for product advertising and corporate communications are redeployed into on-line services, away from mass distributive and broadcast media. If one million Australian households have multimedia PCs in 1996, and if most of those are network-connected via <$100 modem cards, then it is anticipated that the directors of those product and corporate communications budgets will commence to move to new, targeted strategies. On-line services will then have the economic base of sponsor and advertiser support as well as consumer call charges.
The time has now come for content developers and publishers to prepare for participation in this on-line era of the second half of the nineties and beyond. This is the key to securing a sustainable market base to support a viable Australian multimedia industry.