2010 Core IDM Flash Report _Public Version8

8/6/2019 2010 Core IDM Flash Report _Public Version8

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A study by Deloitte Consulting

2010

Interactive Digital Media

(IDM)Braving through the

economy wave


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Interactive Digital Media (IDM): Braving through the economy wave 1

Deloitte Consulting (Deloitte) conducted the Flash 2010 Report study onthe state of the Interactive Digital Media (IDM) sector in Singapore.Deloitte found that all IDM key indicators were displaying a healthygrowth for the period. For the entire sector, over 2008 to 2009, the ValueAdd (VA) has grown by +15%, revenues by +16%, employment by +7%(+505 jobs) and establishments by +10%. Deloitte also identified potentialopportunities to develop the sector through greater collaboration,increased focus on innovative niche services and by leveragingSingapores strategic position to reach out to the regional markets. Thestudy also establishes the long-term positive outlook by various industryparticipants.

Background to Flash Report 2010 study

The Singapore Media Fusion Plan strategic blueprint (SMFP) has set the ambitious agenda toposition Singapore as a global media city.

SMFP objectives are to enhance the economic contribution of Singapores media sector and create

new jobs; and its vision being to position Singapore as a trusted global capital for new Asia media.

Flash report project objectives and approach

The Flash 2010 Deloitte Consulting undertook was to measure the Core IDM Sector throughcarrying out research interviews and questionnaires to achieve a quadruple objective: size thesector, track the sectors key indicators and growth, monitor the top performers and trend-settersand more importantly, reach out to the IDM community.

The report is the outcome of an extensive market research conducted by Deloitte by directlyinterviewing and collected questionnaires from 110 respondents that are representing 152companies from across all IDM subsectors, tracking performance for 2008 and 2009. Deloittesapproach to researching and sampling the industry covers an estimated 21% of the companieswithin the IDM universe, which, contributes an estimated 80% of the value add created in 2008.

For the purpose of this study, The IDM sector is further subdivided into four Subsectors coveringthree verticals (1) Rich Media Publishing, (2) Mobile Media, (3) Virtual Worlds and GamesSubsectors; and 1 horizontal (i.e. Common Services Subsector), a detailed explanation of which isgiven below.

Core IDM subsector and inclusions

Table 1

Subsector Inclusions

Rich media publishing Interactive television and film

Interactive publishing

Interactive online media

Web 2.0

Learning Media

Mobile Media Interactive mobile

Pervasive computing and media


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Subsector Inclusions

Virtual worlds and games Games

Simulation and animation

Virtual worlds, Reality

Telepresence

Interactive Multisensory Interfaces (IMI) and immersive advertising

Common Services Business enablement

Digital delivery

Digital advertising

Approach and methodology

This study approach is broken down into three major stages.

Designed

approachResearch sector

Analysis and

recommendations

Figure 1

Stage 1: Designed approach Sampling methodology design, redefining the sector boundaries

and verification and validation from Economic Development Board (EDB), Infocomm Development

Authority (IDA) and Media Development Authority (MDA)

Stage 2: Research sector Carry out primary interviews and data capturing (qualitative and

quantitative) from players identified

Stage 3: Analysis and recommendations Designed sector profile for 2008 and 2009 based on

data collected and formulate the recommendations for the sector

IDM sector overviewIn spite of the economic downturn, the IDM sector demonstrated remarkable resiliency a

comparison of the growth with GDP of Singapore and Media sector VA further explains this point.

Figure 2


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The stronger IDM growth comparative to the GDP and Media sector VA is partially explained by its

relatively small base and its status as a growing industry.

Last year, the growth rate differential between IDM sector growth was about 23% over GDP,

whereas this year, the growth rate differential has come down to about 18% this year. In comparison

to the Media sector VA, the IDM sector VA grew 20% above Media VA growth in 2007-2008 and

about 19% in 2008-2009.

The Singapore IDM Sector has witnessed impressive growth since the inception of its initiative. The

sector contributed Singapore Dollars (SGD) 867M in terms of VA to the economy in 2009 and

showed a promising growth of 15% between 2008 and 2009. This growth, although lower than last

years (2007 to 2008) growth of 25%, still demonstrated impressive resiliency against the economy

backdrop.

Figure 3

Revenues in this sector also demonstrated a continued positive growth, amounting to an estimate of

SGD 1.5B in 2009, an increase of about 16% over 2008. Employment continued to grow at 7%

despite the economic downturn, however, lower than the earlier year growth of about 24%. It was

largely due to the fact that many of the companies were forward investing and hiring prior to the

economic downturn and in 2008 to 2009 became much more cautious in hiring. Total employment is

currently at an estimated of 8,117 with an addition around 505 jobs since 2008. This is due to some

large companies focusing in new areas within the Mobile Media subsector and development of more

interactive mobile applications.


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Figure 4

Over the three year horizon (2007 to 2009), VA has grown by almost 20%, from SGD 601M in year

2007 to almost SGD867 M in year 2009. In the corresponding period, employment grew by almost

15%.

Overview by company size and origin (20072009)

The current study has identified 731 establishments that are in the IDM sector space to date. This

figure represents a 17% growth over 2007 to 2009. In terms of the origin of establishments in the

IDM sector, 80% of the IDM sector establishments are the local companies and are growing at 18%

over 2007 to 2009 (total of 165 companies) and 20% are foreign companies growing at 13% over2007 to 2009 (total of 32 companies).

Figure 5


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The impressive growth rate (about 18%) of local company count can be largely contributed to

various initiatives/programs taken by MDA (Media Development Authority of Singapore) and IDMPO.

In the period, many foreign establishments also entered Singapore (growth of about 13% in

company count), which proves that Singapore is on its target to position itself as a trusted global

capital for new Asia media.

Figure 6

The IDM sector is still predominantly driven by the Small and Medium Enterprises (SME) companies

that cover 68% of the IDM sector establishments. Whilst the large companies accounts for 19% and

start-ups accounts for 13% of the IDM sector establishments.

Figure 7

The IDM sector VA is predominantly contributed by local establishments with 68% of total share of

VA (SGD586 M) and growth rate of 20%, as compared to about 19% VA growth for foreign

establishments (between 2007 to 2009)


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Figure 8

The IDM sector VA distribution is primarily from large establishments, which covers about 59%of

total VA. However the growth rate of Start-ups is significant (~almost 162%) due to a very small

base and the stimulus program from done by MDA.

Figure 9

The IDM sector employment is predominantly contributed by local establishments with 68% of total

employment (5,516) and growth rate of 17% comparative to 11% growth rate for foreign

establishments.


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Figure 10

Most of the IDM sector employment contribution is coming from large and SME establishments with

48% and 46% respectively of total employment. Within large and SME organizations, employment

growth rate of large organizations is a bit higher than SME (14% as against 10%). Overall, the Start-

up category is showing the fastest growth (157%) due to the stimulus program from done by MDA

and a very small base.

IDM sector performance comparision

International comparison also highlights that the Singapore IDM growth rate has been largely in line

with comparable sectors globally.

Figure 11


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In terms of forward outlook, most of the companies interviewed were generally positive on the sector

performance and long-term future outlook.

IDM sector long term projections

It is expected that the IDM sector will achieve ~S$1.7B VA in 2015 growing at a 15% CAGR in the

most likely case (Robust growth scenario).

During the study, the companies interviewed highlighted few key factors that are critical to the long

term growth of this sector in Singapore primarily infrastructure and conducive ecosystem to

stimulate IDM sector. These factors are also emerging as key attraction for more foreign IDM

companies to move to Singapore.

The study also highlights that there are great potentials in accessing the international markets from

Singapore. IDM sector companies are expanding to China, USA, Middle East, and Europe.

Emerging opportunities

It is expected that few specific opportunity areas will emerge (high contribution to future VA and

relative impressive growth):

Interactive Publishing and Interactive online media services within Rich Media Publishing

Interactive Mobile services within Mobile Media

Interactive Games and Simulation and Animation services within Virtual Worlds Games

Digital advertising services within Common Services

However, going forward, talent shortage across various levels and expertise, especially in the

technical area, emerges as one of the key concerns by majority of the respondents.

Over to 2010

The year 2008 and 2009 has been the year of braving through the economic downturn and a largenumber of companies expressed greater prudence in coming time. Singapore IDM sector is gaining

traction and niche IDM services that are gaining presence in the world. Moving towards 2010, IDM

sector players are more actively looking at new opportunities, new markets, and new services to be

rolled out not only in Singapore but also to the world.


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Sources

Annual Business Inquiry - Office for National Statistics, UK Software, Computer Games andElectronic Publishing, 2010

Asia Pulse, China's Online Advertising Market Size Tops Us$3 Bln In 2009, 2010

Budde, Australia:Digital Economy, 2010 Deloitte Consulting, IDM Sector primary interviews, research and estimates, 2010

Department of Statistics, Monthly Digest of Statistics, May 2010

Department of Statistics, Occasional paper on economic statistics : the information andcommunication technology sector in Singapore economy

India Tech Online, FICCI KPMG: Time to get animated, 2010

Media Development Authority Strategic Planning Group, Media Value Add, 2010

PR Newswire, Frost & Sullivan: Generics & Biopharma Poised for Growth in Asia, 2010

US Commercial Services, Canada:Entertainment Software Industry, 2010

US Entertainment Software Association


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Acknowledgments

Deloitte would like to acknowledge the contributions of the numerous individuals and companies

who participated to this study. Their contribution proved to be invaluable.

For more information, please contact:

John E. Goeres

Partner, South East Asia,

Telecom, Media, and Technology

[email protected]

Albert Tan

Director


[email protected]

Piyush Jain

ManagerTelecom, Media, and Technology

[email protected]

Badhurunnisa Hameed Sultan

Consultant


[email protected]

Ayuthia Amanda

Analyst


[email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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2010 Core IDM Flash Report _Public Version8

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