can the philippine film industry follow bollywood?

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Vol. XXIV No. 3 May-June 2006 ISSN 0115-9097

Can the Philippinefilm industry follow

BollywoodBol lywoodBol lywoodBol lywoodBol lywood?

Editor’s Notes

5 Study underscores government’s rolein improving TV and film industries

6 Ms. Laurice talks about the Philippine film industry10 Call center: a sunrise industry?

What’s inside

he term Bollywood conjures images of Indian men and womenwearing mostly traditional Indian garb and acting in song-and-dance movies about love. Bollywood may be cheeky, obviously apun on the term Hollywood, but it has gained respect as it con-

notes the successful film industry of India that has become one of the larg-est in the world in terms of film production and admissions. Bollywood’scurrent worth of US$1.2 billion may be “peanuts” compared to Hollywoodearnings but industry players are expecting a growth rate of 18 percentcompounded annually for the next five years. The return on investmentfor Indian films is also high due to low production cost and high revenues.In 2004 alone, five Bollywood releases generated more than US$2 millioneach in the United Kingdom (UK) and the United States (US).

Can the Philippines be another Bollywood? Can it follow the relative suc-cess of India and other countries such as China, Korea, and Japan in pen-etrating the global audiovisual services (AVS) market? What would it taketo achieve Bollywood status? These are some of the questions posed byPIDS Senior Research Fellow Dr. Gloria Pasadilla and her associate Ms.Angelina Lantin in their paper titled Audiovisual services sector: can the Phil-ippines follow Bollywood? The study looks at the strengths and weaknesses ofthe Philippine AVS sector, especially the film and television industries. Italso evaluates the sector’s contribution to the economy, the factors thatinfluence and move the sector’s principal players, and the technologicaladvances that are changing the way films, TV shows, music, and other au-diovisual products are being delivered and used.

The entire AVS sector includes motion picture, radio, TV and other enter-tainment activities, and recording or taping of sound. This article particu-larly focuses on the Philippine film industry, its strengths and weaknesses,the challenges and opportunities it faces, and how the industry and gov-ernment can work together to help it cope with these challenges and be-come a stronger industry that may one day be another Bollywood.

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The film industry—informally called showbiz (a play onthe words show and business)—is an inescapable partof the everyday lives of most Filipinos. This industry orthe motion picture sector is part of the audio visualservices sector along with television, radio, and otherentertainment activities. This particular issue of theDRN focuses on the Philippine film industry.

There has been a lot of exciting developments in filmproduction technology but it remains to be seen if thelocal film industry can and will adapt to these changes.The faster it does, the sooner it can recover from itscurrently near-death state. This is tackled in the studyof Dr. Gloria Pasadilla and Ms. Angelina Lantin titledAudiovisual services sector: can the Philippines followBollywood? The study dissects the Philippine film in-dustry and compares it with India’s Bollywood and otherAsian countries’ more successful film industries. Point-ing out the strengths, weaknesses of, and threats tothe local film industry, the authors wonder if it can soarto the heights of Bollywood.

Renowned film director, actress and former chair ofthe Film Development Council of the Philippines(FDCP) Miss Laurice Guillen responds with an inci-sive and enlightening discourse on the state of the

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DEVELOPMENT RESEARCH NEWS May - June 20062

The Philippine film industryWhat it consists ofAt first glance, the Philippine film industry con-sists of actors, actresses, directors, producers,scriptwriters, and other people who are “visible”or in the frontlines. But the movie industry ismore than that. It is organized along sectoral andguild interests. There are guilds for producers,artists, directors, other creative talents, and crafts-men. All of these guilds are under the Film Acad-emy of the Philippines (FAP). In addition to FAP,there is the Film Development Council of thePhilippines (FDCP), which aims to uplift filmmak-ing by giving incentives and awards to well-madefilms. Its Cinema Evaluation Board gives eitheran A or B to a film that would entitle it to taxrebates of up to 100 percent.

Behind these well-known people in the creativedepartment are the players who largely make themoves that turn the wheel of the industry. Theseare the producers, distributors and exhibitors.Their roles are interdependent with one another.

Producers make the film by arranging the finances,casting and technical arrangements. They createfilms that they feel will suit the tastes of the view-ers. Some of the well-known producers are RegalEntertainment, Viva Films, Star Cinema, SeikoFilms, Solar Films, and OctoArts Films.

When the movie is finished, the producers thensell it to distributors who are responsible for mar-keting the film. They make promotional and ad-vertising activities through mass media. In thePhilippines, the major local distributors are alsothe production companies. Thus, they distributetheir own movies in the local market.

What about foreign films? They have their owndistribution system namely, Buena Vista PicturesDistribution, Sony Pictures Entertainment,Metro-Goldwyn-Mayer Studios, Paramount Pic-tures Corporation, 20th Century Fox CorporationUniversal City Studios LLLP, and Warner Bros.Entertainment. Certainly, the foreign distributorshave the edge over the local ones in that theyhave access to different markets worldwide, es-pecially in the US. They also have more funds tomarket and promote their films, and have built areputation as effective distributors. Furthermore,because of the size and portfolio of their film of-ferings, the foreign distributors dominate the ma-jority of screens in the country, leaving only ahandful of screens to local distributors.

Last in line in the flow of business in the film indus-try are the exhibitors. These are the firms respon-sible for showing the movies in theaters that aremostly located in Metro Manila. Out of the 373screens in the country, 215 (57.6%) are in MetroManila.

Contribution to the economyWith entertainment such a big part of Filipinos’lives and with moviemaking a rich part of thecountry’s history, the study also looks at the eco-nomic value of the local film industry in terms of itscontribution to the national coffers. Figures showthat the local film industry is not yet a significantcontributor to the economy. The industry’s P8.7billion gross value added (GVA) in 1998 translatesto a measly 0.98 percent share in the gross domes-tic product (GDP) and only 0.94 percent in thegross national product (GNP). The same holds truein terms of employment: data in 1994 revealed that15,517 individuals (excluding actors and actresses)made a living under the sector, which represented0.06 percent only of the total labor force in thecountry. But these figures may change significantlyin the near future: first, the industry’s GVA of 18.12percent indicates a bullish growth compared to theGDP growth of 15.99 percent; and second, its totalemployment growth is impressive at 13.81 percent.

Industry performanceUsing a SWOT (strength, weaknesses, opportu-nities, threats) analysis, the study looks at the per-formance of the film industry and how it couldrise from its present slump and go on to succeedand become another Bollywood.

The principalstrength of the Phil-ippine film industryis the abundant tal-ent of Filipino artistswhich has beenwidely recognizedaround the world.Over the years, sev-eral films have re-ceived many awardsfrom various filmfestivals in differentcountries.

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StrengthsThe principal strength of the Philippine film in-dustry is the abundant talent of Filipino artiststhat has been widely recognized around theworld. Over the years, several films have receivedmany awards from various film festivals in differ-ent countries. The study lists 25 local films thatwere internationally recognized, the earliest ofwhich was shown in 1957. Of late, Magnifico, afilm directed by Maryo J. delos Reyes in 2003about a boy who unexpectedly tries to help hisfamily survive their hardships through his com-passion, conviction, and courage, had won as bestfeature film at the 2003 Hawaii International FilmFestival and at the 27th Kinderfilmfest of the 2003Berlin Film Festival. Locally, it won the FAMASand PMPC Star Awards for Best Picture. It wasalso recognized at the 2003 Karlovy Vary Interna-tional Film Festival, Pusan Film Festival, FukuokaInternational Film Festival, and Montreal WorldFilm Festival. It was also invited to participate inthe 2004 film festivals in Bangkok, New York,Amsterdam, Italy, Indonesia, UK, and Germany.

Babae sa breakwater, a film by Mario O’Hara, alsoearned rave reviews at the 2003 Cannes Interna-tional Film Festival for its social treatment of pov-erty-stricken Filipinos living around the breakwa-ters of Manila Bay. It also competed in the Interna-tional Short Film Festival in Clermont-Ferrand,France.

Seiko Films’ Bridal shower, a sex comedy about threewomen and their relationships, was warmly receivedat the Singapore International Film Festival and theUdine Far East Film Festival in Italy. It also per-formed well at the Asian American InternationalFilm Festival in New York and the Cinefan 6 AsianFilm Festival in New Delhi, India.

Similarly, Unitel Pictures’ Crying ladies managedto be both commercially and critically success-ful—an unusual feat considering that awards areusually the kiss of death at the box office. Indeed,Magnifico and Babae sa breakwater were flops at thetills. From a Palanca award-winning script, direc-tor Mark Meilly’s Crying ladies was about profes-sional mourners who are hired by traditionalChinese families to emphasize the importance ofthe deceased when they were still alive. The filmwon the Best Director and Best Picture awards atthe 2003 Metro Manila Film Festival.

During the 32nd Brussels International Indepen-dent Film Festival in 2005, actor Cesar Montanobagged the Grand Prix Special Du Jury, the thirdhighest award for achievements as actor and di-rector in the film Panaghoy sa suba.

In addition to talented artists, exhibitors are alsoone of the strengths of the industry because a bulkof the revenues of the producers comes from boxoffice receipts. For instance, Star Cinema, one ofthe major production studios, earn about 60 per-cent of its revenue from cinema, 30 percent fromvideo, and 10 percent from television.

WeaknessesProbably the major weakness of the film industryis the huge production cost. A producer musthave a gross income of P12 million from a P4million budget in order to break even. Two-thirdsof the gross income goes to theater owners andtaxes, and the remaining one-third goes to theproducer. The industry’s star system whereinmajor actors/actresses demand a talent fee of P3-P4 million as well as rights and other fringe ben-

Jollywood?

RP film products find overseas markets.

A news article in the February 3, 2005 issue of the Philippine Daily In-quirer reported that GMA-7’s “Mulawin” will be translated to Bahasa In-donesia and will be shown in that country in March 2005. GMA-7 execu-tives also revealed that the network likewise reached an agreement witha Cambodian TV network in June 2005 and the same television serieshad been translated in Khmer and had begun airing last September.Plans are under way to syndicate other programs for distribution in South-east Asian countries.

In the same news article, it was reported that former President FidelRamos led a Philippine delegation that went to Calcutta, India last Janu-ary to attend a film trade mission. Tony Matoto, chief of staff of Presi-dential Adviser for Entertainment Vic del Rosario, reported that Mr. Ramosintroduced Filipino films as Jollywood, a play on the highly-successfuland popular local fast food chain and probably as homage to India’sown successful Bollywood. Mr. Matoto said that it is a way of identifyingPhilippine movies. Mr. Del Rosario had said in other interviews that thePhilippines is targeting the Mumbai market which is used to watchingforeign films and exploring the possibility of co-producing Indian filmsand/or Filipino films.


efits also plague the industry. These superstarsmost often cause delays in shooting the film, thusfurther jacking up the production cost.

Problems in distribution also hamper the growthof the industry. Film piracy, in the form of unau-thorized airing, exhibition, and distribution ofmovies in homes, video theaters, buses, hotels,ships, and other establishments cost a huge dentin the profits of producers.

Furthermore, the study notes that the Philippine filmindustry is among the most heavily taxed in Asia.Among such taxes are the 30 percent amusementtax; 10 percent value-added tax (VAT); P0.25 cul-tural tax per ticket; P8,000 to P10,000 classificationfee for the Movie and Television Review and Classifi-cation Board (MTRCB); custom duties on film nega-tives; and 32 percent corporate tax. Apart from thesetaxes, import taxes usually at six percent and costingthousands of pesos are also slapped on machineriesneeded for film production on equipment.

Indeed, the study points out that the skyrocket-ing production cost is one important factor inthe decline in the number of produced domes-tic films. In 2003, there were 109 local filmsagainst 266 foreign ones. The yearly average ra-tio of local to foreign movies is only 157:442.

OpportunitiesAccording to the study, opportunities lie in tar-geting two types of moviegoers: the local and in-ternational viewers (overseas Filipino workers andFilipino migrants). Producers could export mov-ies to countries where there are huge numbers ofFilipino workers and migrants such as SaudiArabia, US, Canada, and Australia. NeighboringEast Asian countries like Singapore, Malaysia,Hong Kong, and Taiwan can also be potentialmarkets for local films because of similar cultureand lifestyle.

Film companies can also earn additional incomeby tapping the local market through Internet con-nections and mobile telephones. Movies could beeasily distributed online; movie clips, wallpapersand ringtones may be downloaded by cell phones.

ThreatsThe constant threat to the industry—even dur-ing its glory days—is the popularity of foreign

films. In terms of quality, story, and visual effects,foreign films have been giving local movies adrubbing at the box office. Local films tend torun along the same plot of love triangles, gay slap-stick, poor martyr roles, and revenge themes thatturn off many local viewers. Thus, the prevailinggeneral impression is that local movies are pa-tronized only by low class viewers, except for afew quality films that get the attention of the Aand B crowd.

ConclusionIn order to uplift the current situation of thePhilippine film industry, the study recommendsseveral prescriptions.

First, promote films in the global market by hav-ing a Philippine booth in major international filmfestivals and ensuring the participation of high-quality Filipino films. In this way, internationaldistributors could view Filipino films and get theminterested in buying and distributing our filmsin different countries.

Second, co-produce films with international pro-duction companies. The additional investmentand capital may be used in making good filmsand in marketing them.

Third, have more trainings, seminars, and festi-vals for directors, scriptwriters, and productionstaff. A welcome development has been the es-tablishment of the Cinemalaya Philippine Inde-pendent Film Festivals that aims to discover andhonor works of independent film makers who cre-ate movies with fresh insight and artistic integ-rity. It also seeks to invigorate the industry by de-veloping a new breed of Filipino film makers.

Fourth, go digital. The study states that digital tech-nology will help solve many problems plaguing theindustry such as production and distribution diffi-culties. In terms of production, replacing films withdigital video would considerably lessen the cost be-cause films are a hundred times more expensive.Digital technology is very flexible and easy to use,and eliminates the costly process of converting filmfootage to digital format and back again to film. Thevisual quality of digital films also does not deterio-rate with frequent showing unlike film. In terms ofdistribution, on the other hand, digital technology

. . .Go digital. Thestudy states that digi-tal technology willhelp solve manyproblems plaguingthe industry such asproduction and dis-tribution difficulties.In terms of produc-tion, replacing filmswith digital videowould considerablylessen the cost be-cause films are ahundred times moreexpensive.

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The government has a vital role to play in up-grading the television and film industries in thecountry. According to a study by the state thinktank Philippine Institute for Development Stud-ies (PIDS), there are some lessons that can belearned by the Philippines on how other gov-ernments such as Korea, China, and India tryto nurture this cultural sector.

“Instead of protecting and restricting the indus-try, the government would, perhaps, be better ableto support the industry through an improved in-stitutional framework that would be able to grantincentives and promote and develop true creativetalents,” said Dr. Gloria Pasadilla, PIDS senior re-search fellow, and her associate Angelina Lantinin their paper titled Audiovisual services sector: canthe Philippines follow Bollywood?

The authors cited the success of the Koreandramas in the international market as an ex-ample of a successful collaboration between thegovernment and the industry players.

In Korea, for example, the Ministry of Cultureand Tourism has different divisions that over-see the various aspects involved in the develop-ment of media and culture. The Korean Na-tional Tourism Organization (KNTO), in asso-ciation with the different travel agencies, alsooffers tour packages that focus on soap operashooting locations. For the part of the industryplayers in Korea, they are making sure that thetelevision programs they are producing do notonly have local appeal but an international ap-peal as well.

In the Philippines, Pasadilla and Lantin notedthat the main weakness of Philippine TV showsis their lack of cultural content and taste. Thus,they suggested that government, in cooperationwith network companies, may provide incentives

Study underscoresgovernment’s role in improvingTV and film industries

for good scripts such as sponsoringtrainings and scriptwriting contests.

“This is vital in the development of creative pro-grams and sensible storylines that depict not onlyFilipino characteristics, culture, and daily reali-ties but also, preferably, allow other countries tohave a more favorable impression of the Filipinopeople, considering the bad press which the Phil-ippines receive abroad,” the authors explained.

The study cited the case of Iran which managedto produce films that changed the perception ofother people of their country and of their people,as opposed to its political side that are read innewspapers.

Another big hurdle for the industry in produc-ing quality programming is the lack of moderntechnology. Since television companies are con-sidering to export their programs, the programsshould be at par with the foreign programs interms of graphics, sounds, and other aspects ofthe visual effects. This will entail a modern cam-era and other equipment that will be used inshooting the Filipino dramas.

It was suggested that the government can sup-port the television industry in the form of lowertariffs for the importation of the equipment andmachineries needed to produce quality films atlower cost. This can be done for at least a shortperiod of time while the industry is adjusting withthe developments.

In addition to tax reduction, the PIDS study rec-ommended the possibility of allowing foreign in-vestors to invest in the industry. In this way, tele-vision companies will have additional capital forthe modernization. Currently, no foreign inves-tors are allowed to invest in the mass media sec-tor, including the television industry. GGM


Current state of the Philippine film industryIn the 1960s, the Philippines was second only toIndia in film output. Today, India is still the first,the United Sates (US) is second, and the Philip-pines is eighth. There was a time when we weremaking 300 films a year. In 2003, there were 86films and in 2004, there were 54.

The Film Development Council of the Philip-pines (FDCP) identified the reasons for the de-cline of the Philippine film industry (not neces-sarily in the order of gravity): piracy, other enter-tainment options, heavy taxation, and low qual-ity of films.

Apart from being a highly taxedindustry, the other factors areproblems not exclusive to thePhilippines. Piracy, for example,also affects the US, India, Japan,China, and Hong Kong. But theyseem to have anticipated thesefactors by as much as 15 years.Hence, the Philippine film indus-try has been overtaken by thesecountries. Still dominating themarket is the US that has aggres-sively pushed its market world-wide. Although India exceeds USproduction output by as much as50 percent, the latter’s budget is

22 percent more than that of India, a large partof which goes to special effects, postproduction,and marketing.

By raising the bar on special effects andpostproduction, the US sets the benchmark forinternationally accepted standards for film enter-tainment. Today, there is hardly any theater inthe world that does not exhibit Hollywood films.Film audiences worldwide who have been steadilyexposed to American films will accept only prod-ucts that match American-made goods.

Asian film-producing countries such as Japan,Korea, and China have demonstrated how theytry to match Hollywood-set standards in order tocompete. So far, China has had the most successin penetrating the American market. For ex-ample, Asian martial arts have greatly influencedfight scenes in the American films Matrix and KillBill. On the other hand, Crouching Tiger, HiddenDragon is already a benchmark and has made in-ternational celebrities of its stars. These are Asianculture-based films that match the technical stan-dards of Hollywood films.

ContentOn the statement that most Filipino films havethe same plot, this is already being addressed. TheFDCP’s predecessor, the Film Development Foun-dation of the Philippines, conducted a yearlyscriptwriting workshop and scriptwriting contest.Out of these contests came scripts like Magnifico,Santa Santita, and many others. Star Cinema andABS-CBN also conducted similar annual contests.Film producers also look into the winners of

MS. LAURICE talks aboutthe Philippine film industry

Excerpts from the response and comments ofMs. Laurice Guillen-Feleo, multi-awarded actress, film director,

and CEO and chair of the Film Development Council of the Philippines (FDCP),on the paper authored by Dr. Gloria Pasadilla and Angelina Lantin

titled Audiovisual services sector: can the Philippines follow Bollywood?


Palanca Awards. They have started to recognizethat they need stronger film content. Cine Ma-laya, a scriptwriting and finished film competi-tion festival that started this year, already pro-duced nine full-length feature and six short films.Independent filmmakers also came out withscript-driven films.

ProductionThe budget for producing Philippine films is very,very low compared to our Asian neighbors. Lo-cal mainstream cinema still maintains the star sys-tem where the bulk of the budget goes to actorswith big names. Also, there are facilities for pro-ducing films but these are rented out based oncommercial rates. Equipment rentals and rawstock are subject to tax. The celluloid or raw stockincludes the positive print, negatives, positives,printing, and the sound negatives. These are allimported. We have no sound studios so we can-not shoot anytime at regular working hours. Thus,our films are mostly dubbed.

PostproductionPostproduction is a low-budget process. The ironyis that comparatively little time is allotted topostproduction of local films than in production,which stretches out because it is dependent onthe availability of actors and location. One monthfor postproduction does not give enough time toimprove and correct a film.

There are three film laboratories in the countrybut for the processing of celluloid, producers goto Hong Kong, Thailand, or Australia. Thailanddoes not produce film as much as the Philippinesbut the former has the infrastructure and tech-nology. It invested in sound studios and labora-tories, thus attracting foreign filmmakers to havetheir prints processed in Thailand. The Philip-pines cannot do the same because it cannot meetinternational standards.

There are also not enough number of accred-ited technicians. The guilds have not initiated anyprogram or activity to upgrade the skills of theirtechnicians. Not one in the Kapisanan ng mgaDirektor ng Pelikulang Pilipino (KDPP) is ac-quainted with nonlinear and digital technology.As part of the internationally accepted standardfor filmmaking, the minimum requirement forsound is Dolby digital. However, I can identify

only one technician and one production housethat are acquainted with it.

On theatrical/movie projection, few theaters inMetro Manila have facilities for Dolby Digitalprojection. Most have mono projections. Fewertheaters have the facilities for digital film projec-tion which entails renting or having digital pro-jection facilities on top of theater rentals.

Promotion and marketingThe promotion of Filipino films is directed at thedomestic market only. Film producers with net-works necessarily have the advantage. They canpromote their films within two weeks before ac-tual showing while others cannot. However, in-novative producers tie up with telecommunica-tions companies like Smart or Globe. On anotherhand, the marketing budget for the local marketis not sufficient because the advertising rates fortelevision are prohibitive.

The demography of film audiences has alsochanged. Previously, the audience for drama filmswas predominantly female. Now, the audiencesare those in their 20s and early 30s. This is thenew film audience that comprises 99 percent ofthe total population of filmgoers.

Preservation of filmWhat is the implication of not having a film ar-chives? Film is a prominent instrument for trans-mitting culture and cultural identity among Fili-pinos. Because of films, the Filipino language waseasily learned. Conversely, the disadvantage of nothaving an archive is that there is no popular toolto reinforce our identity and culture.

Maintaining a film archive is the last in the man-date of the FDCP but the small budget allocationis only enough for operations. FDCP thus tries tosave money from the income on rebates to beable to address this problem.

Film is a prominent instrument for transmitting culture and culturalidentity among Filipinos. Because of films, the Filipino language waseasily learned. Conversely, the disadvantage of not having an archiveis that there is no popular tool to reinforce our identity and culture.


Film industries of other Asian countriesAsian countries have anticipated by 15 years thedevelopment of technology and globalization.What have they done?

Promotion in the global marketOther Asian countries like South Korea havemade sure that they are present in all the im-portant festivals and markets in the world. Inthe Cannes Film Festival, all the film-producingcountries in the world had a booth except Viet-nam and the Philippines. With no booth in thefestival, it is as if a country’s film industry is non-existent because this is where distributors shopand buy them.

Co-production of filmsTo make it in Cannes, one needs to have either aco-production or collaboration, including sharingof artists, production crew, and technology. In-creased capital through co-production is neededto be competitive in the world market.

Research and development (R&D)Aside from Samsung trainings, Korean filmmak-ers have other trainings to upgrade their skillsin order to keep up with technology, acquiredequipment and infrastructure. The Philippinesused to be one of the favorite shooting sites forAmerican films because of good local crew andcheaper location. Today, it is different with cur-rent problems in security, local governmentunits, and lack of sound studios as well as infra-structure.

No heavy taxesThe industry channels about 52 percent of theprofits for taxes over and above the payment ofamusement tax, the highest among Asian coun-tries. Other countries like Japan do not chargeamusement taxes at all.

Generally, 23 to 30 percent of the gross incomegoes to taxes. When an average good drama filmthat costs P15 million to produce is shown, a pro-ducer has to gross P45 million in two weeks in or-der to break even. Considering that there is com-petition from Hollywood films at any time of theyear, it will be a wonder if a film can last one week.And whether the producers make money or not,taxes are still paid.

Film archivesMost countries have film archives and film mu-seums. They store and restore their films. Theyalso acquire films of other countries. Fukuoka’sannual festival, Focus on Asia, goes all around Asiato bring films into Fukuoka so people will seewhat Asian films are being produced and whatAsian films are saying. It gives the viewers a senseof Asian identity. The organizers also buy theprints of films they show in the festival. Once Igot a request from the Cannes Film Festival tosend them screeners because they were invitingus to be in the Cinema du Monde as one of theseven countries that will show our films in oneday. Sadly, I had to request Fukuoka andSingapore to lend us their copies of our films.

Our shortsightedness in this case is obvious nowthat there is digital technology and renewedinterest in Filipino films. We have nothing toshow. It’s as if we never had a history.

Hosting of international film festivalsThe last strategy of other nations is to host in-ternational film festivals in their countries to pro-mote their films, their industry, and theircountry’s tourism.

On the paper’s SWOT analysisThe predominant strength of the film industrythat the authors mentioned is its world-class art-ists and the films that figured in some film festi-vals. But it should be noted that since 2003, wehave had hundreds of films produced but onlyover 20 films have been shown in major film fes-tivals. For instance, Babae sa breakwater was shownat the Cannes 15 years after the last was shown.Not since Mike de Leon and Lino Brocka havewe had a film invited there. Fortunately, we alsogot invited in 2004 and 2005. We had four full-length films and two short films shown at theCannes Film Festival. Of course, this is no meanachievement as the Cannes is the mother of allfilm festivals. But we should have more shown.

A large population of overseas Filipino audiencethat craves for Filipino films is also a majorstrength. For example, American adobo is a co-production shot in America and was done likeany independent film. It was shown in New York,San Francisco, and Los Angeles. Twenty percentof the viewers were Americans. Crying ladies had


the same demography. We already have a poten-tial global market. This is a market that has neverbeen reached.

One of the weaknesses listed is the inroadsmade by cable and television, which has erodedthe audience for theatrical exhibition. Theauthors are looking at the film industry differ-ently. These inroads by cable and television,what we call other entertainment options, may notnecessarily be a bad thing when you are think-ing about productivity because the content isstill in demand for those who produce films.In fact, there is not enough content producedto meet the supply. That’s why the idea ofDream Satellite has not really been in opera-tion. They beam through satellite the film thatwould be showing simultaneously in theatersthey will be building. They have not gone intothat for lack of content.

It is interesting that the reverse is starting to bepracticed. The recent Manny Pacquiao boxingbout was watched in two cinemas in Megamall.They have started to experiment with the pay-per-view which is a development worth watching.They announced that there will be other pay-per-view features on their screens but let us see be-cause, again, they do not have enough contentor enough Filipino films to show.

Biggest weakness of the industryThe biggest weakness to my mind is theantiglobalization attitude of many mainstreamindustry players and the lack of support by gov-ernment. These are the people who have madeit their mantra to say that the film industry isdead. This is the mantra of people who shirkand who are antiglobalization. They say thiswithout really analyzing why, much less ac-knowledging the real challenges that face theindustry. They fight to retain the star systemand formula films, they compete for the dimin-ished domestic audience, they resist technologi-cal development, and yet they wonder why thefilm industry is dead.

I am referring to mainstreamers in the film com-munity, which includes the guilds and the FilmAcademy of the Philippines. As I said earlier, thereis an entire guild of directors who do not do non-linear or digital film production. I really feel that

it is about time that these people learn— if theywant to continue—because that is where the fu-ture is.

Why do we not have a booth in Cannes or in HongKong? We have had modest savings at FDCP andit can pay for the booth for the duration of thefestival. But I would have to talk to the producersone by one and only those who are forward-look-ing will listen. But FDCP cannot market the filmsfor them because FDCP is government. So thereis no push from the mainstream.

Long-term solutionsIf we want to catch up with our neighbors, thesolution is staring us right in the face—digitaltechnology. For those who prefer to shoot in cel-luloid because digital is not as good as celluloid,Sony has a new HD camera using fiber optics tech-nology that can produce resolution four timesbetter than celluloid. Theater owners such as theSM malls want to fit their theaters with digitalprojection (the size of their theaters require pro-jectors with very powerful lumens at 12,000)which costs about P1 million per projector.

Why is it important to go digital?

A film producer does not need more than P2million to go to a laboratory. Shipping, storing,and subtitling is so much easier and accessible.In CineMalaya, we gave P500,000 seed money toeach filmmaker and they were able to come upwith a film using a miniDV. They showed a filmcalled Bigtime with just a little bit more than thegrant. But it had good sound and was shown: shoton miniDV only. So that will bring down the pro-duction cost. There is also a niche of audience.There is no need for a big box office, just limitedtheaters with longer run or a short run with moretheaters. These are alternative distributionschemes.

In conclusion, I would like to seriously proposethat tax breaks or tax holidays be considered fora given period so that theater owners and filmproducers could acquire the equipment theyneed. Even Sundance, which was just doing festi-vals before, now concentrate on the developmentof cinemas with digital projection because that isthe way to the future. If we can do that, we havehope of catching up. DRN

If we want to catchup with our neigh-bors, the solution isstaring us right in theface—digital tech-digital tech-digital tech-digital tech-digital tech-

nologynologynologynologynology.....


The call center industry is one of thecountry’s bright prospects in the area ofbusiness process outsourcing (BPO). It

started in year 2000 and became a significant activ-ity in the services sector. In 2004, the country cap-tured 20 percent of the total world market share incontact center services and is estimated to capture50 percent of the total English-speaking world mar-ket by 2008. Some industry analysts projected thatmore than a million Filipinos will be employed inthe call centers in year 2010 and can bring aboutUS$12 billion revenue to the country.

A call center is a centralized office used for thepurpose of receiving and transmitting a large vol-ume of requests by telephone. The agents, oftencalled as customer care specialists or customerservice representatives, handle the inquiry of thecustomers on behalf of a client via voice call. Theclientele includes telemarketing services, banksand financial services, computer product helpdesk, transportation and freight handling firms,and information technology companies. A callcenter does not only serve as a venue for thetelemarketing of products and services but alsoprovides solutions to problems and customers'complaints on certain products and services.

The size of call center operations is describedaccording to the number of “seats” available. Aseat is a work station with a computer terminal

Call center: a sunrise industry?*

and a telephone line which two or three peoplecan use in alternate shifts to provide a 24-hourservice. There are two types of services in a callcenter: the inbound and outbound services. Theinbound services deal with customer inquiriesand technical assistance. This is usually doneduring night time in the Philippines which isequivalent to day time in the United States. Theoutbound services, on the other hand, deal withtelemarketing services and follow-up calls. Thisis conducted during off-peak hours, usually daytime in the Philippines.

Market share and structureThe Philippine BPO sector grew from $350 mil-lion in 2001 to $1.65 billion in 2004 in terms ofrevenue. The biggest subsector is the customercare or call center that captured 53 percent ofthe total BPO sector (Figure 1). According to theDepartment of Trade and Industry (DTI), thereare approximately 37 firms in the call center in-dustry catering to the US and British markets.

The Philippines had 20,000 seats in 2003 thatincreased to 40,000 seats in 2004. The 100 per-cent growth in the number of seats puts the coun-try directly behind the major players in the in-dustry. Assuming there are three people in oneseat, the number of employed people in the in-dustry increased from 60,000 agents in 2003 to120,000 agents in a span of one year. The em-ployment opportunity from the call center iscomplemented by the attractive salary and ben-efits that firms offer, which is approximately $300to $350 a month for an entry level position.

The Philippine advantage and challengesThe country emerged as a popular site for contactcenter destinations in Asia because the Filipinos pos-sess innate advantages that are attractive tooutsourcers. However, there are also some areas and

Jennifer C. de Castro**

*Economic Issue of the Day, forthcoming, August 2006.**Research Analyst II, Philippine Institute for Development Studies.

Softw are16% Customer

Care53%Medical

Trancription29%

Animation2%

Figure 1. RP BPO industry structure, 2004


challenges that need to be addressed in order tosustain the BPO projects in the country.

The Filipinos’ command of the English languageis one of the biggest pull factors for firms to setup their operations in the country. Further, theimproved telecommunication infrastructure au-gurs well for the provision of telecommunication-related services. A side advantage is the quick andsmooth cultural assimilation of foreigners man-aging the call centers.

It is anticipated that demand for contact centeremployees will continue to increase in the nearfuture. However, there is also a possibility thatthere will be a shortage of qualified employeesdue to the deteriorating quality of the country'seducational system and lack of communicationtraining needed by the industry. To address thischallenge, the Philippine government, throughthe DTI and in partnership with various educa-tional institutions, included BPO-related coursesin the curriculum of some of the colleges anduniversities in the country.

Other challenges that the industry faces are theunstable political environment and the wide-spread rumors of kidnapping and terrorist at-tacks, all of which drastically affect investor con-fidence and reduce the potential for increasedinvestment in the outsourcing services. As such,the need to improve the peace and order situa-tion in the country is very crucial. The high costof power is also regarded as a major challengethat impedes the operation of BPO companies.A solution suggested is the “peak-load” pricingof electricity which essentially lowers the electric-ity rate for night operation of BPOs. The Philip-pines is referred to as the “best-kept secret”among contact center providers. Because of this,more effort must be exerted in the global com-

munity to promote the Philippines as an invest-ment destination.

The call center industry may be regarded as asunrise industry that will provide jobs for Filipi-nos and dollar revenues for the country in thecoming years. While the Philippines is recognizedas one of the popular sites of contact center des-tination in Asia, there is stiff competition fromother countries like China (Table 1). Local poli-cies and initiatives should be designed to sustainthe growth of the call center industry.

ReferencesRodolfo, Ceferino. 2005. Sustaining Philippine

advantage in business process outsourcing. Uni-versity of Asia and the Pacific.

Huang, Francis L. 2003. The Philippines answersthe call: contact center industry 2003. The SGVReview.

De Ayala, Jaime Augusto Zobel II. 2003. The chal-lenges and opportunities in the Philippine ser-vices Sector. The SGV Review.

Wikipedia. n.d. [online] http://en.wikipedia.org/wiki/Call_center_industry_in_the_ Philippines.

Advantages Issues and Challenges

English proficiency and superiority Deteriorating education systemof verbal skills Unstable political environment

Affinity to US culture Inadequate marketing onLow cost of labor Philippine advantageLow cost of real estate High cost of powerWorld class telecommunication

infrastructureHigh level of satisfaction from

expatriates regarding quality of lifeand cultural assimilation

The Filipinos’ command of the English language is oneof the biggest pull factors for firms to set up theiroperations in the country...A side advantage is the quickand smooth cultural assimilation of foreigners managingthe call centers.

Country 2003 2004f Growth (%)

Australia 135,000 146,000 8India 96,000 158,000 65China 38,000 54,000 42Philippines 20,000 40,000 100New Zealand 12,000 13,500 13Thailand 11,000 13,000 18Singapore 10,000 10,100 1Hong Kong 10,000 10,700 7TOTAL 332,000 445,300 34

Table 1. Number of seats, 2003-2004

f - forecastSource: Conboy as cited in Huang (2003)


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DEVELOPMENT RESEARCHNEWS

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J. Estrabon, Layout and Design.would solve the problem of exorbitant distributioncost. Producers spend huge sums producing filmprints and then shipping the heavy reels to theatersaround the world, only to collect them again afterthe run. They take a lot of risk sending a film to a lotof theaters. With digital films, there are no more ship-ping costs because the files can be sent via broad-band cable or satellite. It also costs the productioncompany not a single centavo more if it exhibits themovie in one or 100 theaters.

With the future of Philippine film industry seem-ingly dependent on the shift to digital technology,the Philippine government can help by exemptingdigital film equipment and machineries from taxesor by reducing such taxes. These equipment andfacilities are expensive and require a lot of invest-ment. The government can also provide tax incen-tives for investors and theater owners in upgradingtheir cinemas. These measures are precisely whatthe Indian government did to help its film industryand its actions were richly rewarded. Just look atBollywood now. BFG

film industry from a veteran insider’s point of view.Both authors and Ms. Guillen may have differingtakes on the state of the film industry but they agreeon one thing: for the local industry to catch up withits neighbors—and yes, probably even manage totouch the coattails of Bollywood—the local industryhas to embrace and take full advantage of the ben-efits of digital technology, one of which is the sig-nificantly lower production cost. In addition, it wouldalso be beneficial to change attitudes and work eth-ics in this industry of glitters and make believe. It isstriking that rumors and scandals of actors, and theins and outs of showbiz culture may fill the head-lines and occupy precious airtime news. But the fu-ture of this industry, indeed as in most industries,still depends on the bottomline. The faceless mov-ers behind the silver screen, who represent the busi-ness side of the industry, will always seek profit-ability and going digital will ensure that. Fortu-nately—or not— regardless of who gets the trophiescome awards night.

Bollywood from page 4Editor’s notes from page 1

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can the philippine film industry follow bollywood?

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