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Investment Opportunities

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Submitted By pattao
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Investment Opportunities in the
Digital Content Industry in Taiwan
I.

Industry Definition and Scope
Taiwan's digital content industry includes eight sub-categories, of which five are

core industries while three are related industries. Core industries include digital gaming, computer animation, digital audio and video, digital publishing and archives, and e-learning. Related industries include mobile application services, web services, and content processing software.
Table 1 Scope of Taiwan's Digital Content Industry
Main categories

Related Industries

Digital



PC Games

Content

Gaming



Online Games

Processing



Software for Home Game

Software



Multimedia
Tools/Software
Embedded Software

Consoles





System Integration Service

Software for Commercial



Other Software

Game Consoles


Software for Mobile Devices



Textbooks

Mobile



Tools/Platform/System

Applications



Integration Services



Learning Hardware/Vehicles

Digital Audio



Digital Music

& Video



Digital Karaoke



Digital Video Broadcast



Video Rental



Digital Electronic Boards and

E-Learning




Web Services




Personal Image Authorization and Derivative Products

Digital



Content Publishing

Publishing &



Circulating Services

Archiving



Internet Content Provider

Internet Service Provider
(ISP)

New Media Animation





(ICP)

Movie Animation



Mobile Receiving Service and System Integration

Television Animation

Animation

Mobile Content Add-On
Services



Services
Computer



E-book Reader
1

Internet Data Center (IDC)

II.

Taiwan’s Industrial Environment
The digital content industry is a star industry of the new century, it

contain two economy indexes for developing knowledge -based and digital economy. More and more household broadband users and mobile internet access boost the development of the digital content industry in the world.
Taiwan network access popularization ratio has alread y over 50% and mobile internet customers are quickly increased. Hence the value added service has been emphasizes, with the improvement of information technology and communication devices, the digital content industry has significantly risen and benefited Taiwan.
According to a survey, the digital content industry production value in Taiwan is about NT$730 billion in 2013, compare to 2012 production value NT$633.8 billion grows up about 15.18%. The growth momentum is from the following factors. First, the teaching material content combines to learning terminal, which means the successful exportation of the intelligence classroom ; Second, the first year of digital TV drives more
IPTV customers ; Third, the rise of smart terminals enhance the acceptance and penetration of the Internet video, digital music services to followed by the new growth momentum of animated film which broke another box office record by live -action and animation blend story;
Another factor is that the mobile animation successfully enter the Chinese mainland niche market. Lastly, animation showcase and smart classrooms turnkey services, infuses into new business opportunities for digital content industry in Taiwan.

III.

Analysis of Industry Chain Gap
Most of Taiwan's digital content industry is relatively weak and dispersed which

has resulted in many gaps. The way to rectify this issue is outlined as follows:


Strategy 1: Establish a good environment and construct a sound foundation, especially in the area of intellectual property protection.
2



Strategy 2: The vastness of the Chinese market and culture could become motivating elements for foreign investment.



Strategy 3: Cut into the industrial chain through the use of partnerships with international companies which offer related technology, personnel, or products.



Strategy 4: Establish a developmental platform, enhance techniques of image processing, and actively training experts in digital content.



Strategy 5: Successfully expand the overseas market by helping businesses access dealers and distribution of information.

Patterns of cooperation between the digital content industry and foreign investment companies include:


Joint video production
- International cooperation in the production of a 3D animated movie.
- Co-production and distribution by the Taiwanese and international companies.



Establishment of a research center
- Strengthening of the cooperation pattern and establishing a base for digital content research.
- Using Taiwan as a base to expand into the Chinese cultural circle.

IV.

The Advantages of Investing in Taiwan

1. In 2013, Taiwan's digital content output value was estimated at NT$730 billion, a
15.18% increase compared with 2012.
2. The Ministry of Economic Affairs' "Digital Content Industry Development
Action Plan" has made Taiwan a highly successful model in terms of digital content development. Taiwan has become one of the leading countries to develop innovative entertainment and multimedia applications. In addition, the government is highly supportive of policies which foster preferential treatment and offers various subsidies.
3. In 2012, the total output value of Taiwan's digital audio and video industry was estimated at USD 2.26 billion, a 11.05% increase compared to 2011. The total digitization and the incorporation of cloud technology for television service
3

providers in 2012 will spur rapid growth in the digital audio and video industry.
4. The penetration rate of Smart TVs will jump from 20% in 2011 to 62% by 2014.
It is estimated that a USD 1.7 billion value output will be reached in 2014.

V.

Business Opportunities and Potential
According to a study, it is estimated that Taiwan's Industrial Value Output in

2012 was USD 21.12 billion, a 5.59% increase compared to the USD 20.01 billion generated in 2011. The fastest growing sub-category is the digital publishing and archives industry. The advent of e-books and the iPad was credited for the staggering growth. Table 2

Taiwan's Digital Content Industrial Output Value in 2012

Games

2011
2012
Annual
Growth
Rate(%)

Animation Publish
-ing/
Archives
14.53
1.5
23.87
13.56
1.76
17.1
-7.15
14.77
-39.59

(Unit: 100 million USD)
Video E-Learn Mobile
Content
Web
-ing
Applica
Processing Services
-tions
Software
19.8
11.07
24.37
58.03
46.93
22.26
15.5
28.16
64.73
48.1
11.05
28.58
13.45
10.35
2.43

Source: Digital Content Industr y Promotion Office, Ministry of Eco no mic Affairs

1.

Computer Games
Because of the relative ease of producing web games and SNDS social games,

more and more medium and small business owners have begun to explore this area of development. To increase profit margins, more and more companies are developing web games.
2.

Computer animation
The animation industry in Taiwan can be mainly divided into TV animation, film

animation, new media animation, and personal image authorization and derivative products. In 2012, the output value of computer animation in Taiwan was around USD
176 million, a 14.77% increase from 2011.
3.

Digital audio and video
In 2012, the total output value of Taiwan's digital audio and video industry was

estimated at USD 2.26 billion, a growth rate of 11.05% over the USD 1.98 billion
4

generated in 2011.
(1) Digital television service:
In order to promote the development of digital television, the government has shut down analog television on June 1st, 2012. In the future, all production from the content industry will be broadcast over cloud platforms, thus accelerating the rate at which Taiwan’s digital audio and video industry adopts cloud technology, multi-screen functionality, and other future technology trends.
(2) Digital audio and video broadcasting:
The quantity and quality of Taiwanese idol dramas have already reached the point at which they are suitable to be exported overseas. Patented rights have already been sold to China, Hong Kong, Macau, Singapore, Malaysia, Indonesia, Vietnam,
Korea, Japan, North America, New Zealand, and Australia. The advantages associated with television show content already exist.
(3) Digital Music:
The development trend in Taiwan differs from other places around the world.
Compared with other countries, online stores (such as Apple's iTunes) which offer bundled sales of digital products and music are have yet to become mainstream in
Taiwan. This presents a burgeoning opportunity for foreign investors to introduce a new commercial platform.
4.

E-Learning
In 2012, Taiwan's e-learning industry had an output value of around USD 1.55

billion, a 25.58% growth from 2011. The rapid growth of mobile devices in the past 2 years, especially the launch of the iPad and tablet PCs, has not only fostered the growth of the entertainment and games industries, but has also promoted children's learning and school education applications.
5.

Related Industries
In 2012 the output value for related industries was around USD 14.1 billion, with

an average growth rate of 8.27%. The breakdown of output value for mobile applications service industries, content processing software industries, and web services industries are USD 2.82 billion, USD 6.47 billion, and USD 4.81 billion, respectively 5

VI.
1.

Policies and Incentives Measures
Digital Content Industry Development and Assistance Project (DCDA)
The Bureau of Industrial Development employed an innovative plan to subsidize

the review mechanism which encompasses the creative digital content industry, a viability study, development of creativity, product development, derivative products, and application service development. All of the above mentioned items are eligible for subsidies which could amount to as much as 50% of the total cost.
2.

Important points for digital upgrading of the film industry
Encouraging the purchase of digitization equipment and technology as well as

assisting in the training of specialists in the field of digitization are crucial objectives.
Constructing a digitalized entertainment environment, promoting the overall development of the film industry, and elevating the standards of film post production will also be essential. Eligible businesses include those that are established in accordance with Taiwan's film law.

6

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