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The dangers of drawing on subsidy

Wayne Dearing, founder and managing director, Top Draw Animation says that new subsidies available in Singapore and Malaysia may do more harm than good to the kids TV business.

TV animation is difficult to finance – it always has been. I’ve heard the same complaint over and over for the thirty years I’ve been active in the international production market.

That said, there’s no denying that it has become particularly tough post-recession. Production budgets have halved since the early eighties and overseas production houses have arguably been hardest hit. It’s difficult to consider how an industry sector can survive such prolonged pressure, but the animation sector has, through the exploitation of cheaper labour markets, the continued application of new technologies and, most recently, through direct investment in productions. While coproductions between producers and overseas studios are now commonplace, a new phenomenon has recently gained prevalence in the industry – subsidy.

Most notably, Singapore and Malaysia have created bodies to subsidise production costs through the Media Development Authority (MDA) and the Multimedia Development Corporation (MDeC). They provide various initiatives, including investment funds and significant tax breaks, to their local studios. The temptation to chase this new money, while understandable, cannot replace sensible, commercial decision-making processes. Producers still need to be sure that their chosen studios have the proven skill set for the job, as well as the internal resources necessary to fulfil their production and creative obligations. The criteria for choosing a studio should not solely rest on its ability to access some new government fund. History is littered with productions gone wrong and, when they do, are expensive and time-consuming to fix.

Highly subsidised markets include Canada, Australia and France and all of them operate high-value broadcast markets that can contribute substantial percentages of the country’s overall GDP. The broadcast values in Singapore and Malaysia are much smaller, and the main agenda of these investment subsidies is to create employment through the artificial (or at least accelerated) creation of an industry.  Therein lies the quandary. Both of these territories lack the labour resources necessary to fulfil production obligations – both in terms of numbers and experience – and are forced to import those. The result of this is not just the artificial creation of an industry, but the artificial creation of a workforce to populate it. This is already happening. A steady stream of experienced and talented Filipinos have been poached by Singaporean and Malaysian companies in order to fulfil their production obligations.

I think it is reasonable to surmise that these territories, both proudly rich in culture, will be looking to direct industry assistance towards promoting these cultures through the creation of local content. Here lies a very real and relevant danger. Localised Eastern content can be hard to sell internationally. Not only is it unlikely to appeal to Western audiences, it is not guaranteed to pass rigorous compliance proceedings.

While the Philippines boasts no government subsidies, its relatively low labour costs provide highly competitive value and a wealth of experience stemming from almost 40 years at the forefront the industry. This experience cannot be artificially created. And nor can the essential traits it brings to a coproduction; reliability and the guarantee that work will not only be completed on time, but to the highest standards.

The attraction of working with a heavily subsidised country is understandable on the surface, particularly in the current economic climate and there are some great examples of such coproduction agreements working. However, the word ‘subsidy’ brings connotations of free money, but when you take into account the potential costs associated with inexperience and non-performance issues, that is probably not true. Ultimately, a Singaporean or Malaysian subsidy deal is unlikely to be cheaper and there are better alternatives to be had.

What Malaysia and Singapore are attempting – the artificial creation of an entire industry – is not always healthy and can show through in the quality of the work. Both lack the expertise and resources required to process the amount of work they’ve targeted and both rely heavily on overseas talent to fill this gap. If the talent is there, the industry will grow organically – the very fact that Malaysia and Singapore rely on subsidies to attract work is warning sign enough.