Dynamic development in local television industry

Dynamic development in local television industry

By Marselli Sumarno

JAKARTA (JP): The emergence of five private televisions in
Indonesia over the past six years has triggered an explosion in
local TV production houses and commercials. There is brisk
competition to win the hearts of TV viewers in commercials.

Fortunately the stations do not have to vie with government-
owned station TVRI, which celebrated its 33th anniversary
yesterday (Aug. 24), for commercial accounts. Private TV
stations, however, do have to contribute a part of their income
from commercials to TVRI. Minister of Information Harmoko said
last year that they should hand over 12.5 percent of the money
they generate from commercials to TVRI. This state television,
which now covers 80 percent of Indonesia's territory, also
receives revenue from television license fees collected from TV
owners.

In line with the pace of economic progress, more money has
been spent on advertising. The significant growth of four
business sectors: automotive, pharmaceuticals, household goods
and the property business, has greatly contributed to the
increase of spending on commercials. This year TV advertisement
spending is estimated to reach US$350 million.

Is the "advertisement cake" big enough to be distributed
between the five private TV stations, whose average overhead cost
is $4 million each month?

Last year the biggest portion of commercials went to RCTI (41
percent), followed by TPI, SCTV and ANteve. The composition of
earnings from advertisement this year will obviously change
because of the emergence of Indosiar in January. Indosiar soon
won public attention by telecasting good quality films from the
U.S. and Hong Kong.

Apart from vying for advertising clients, private TV stations
are also engaged in a competition to expand their national-scale
broadcasting networks and to attract viewers. New tactics have
been launched to steal people's hearts. For example, in May
ANteve joined hands with MTV Asia Network with an inauguration
which was symbolically marked by superstar Jon Bon Jovi being in
town. Under this cooperation, some 4 million viewers of ANteve
can now watch MTV musical programs for six hours a day in three
sessions of two hours each.

The competition between private TV stations is becoming
tougher, but at the same time there is dynamism in terms of
business.

The number of locally produced TV films, miniseries and
serials (known here as sinetron) rocketed to 730 last year. That
was up from just 112 in 1990. This year the total is expected to
reach 800.

There is a demand for more and more local programs. However it
is not that easy to meet the demand. An imported program can be
purchased at a low price, ranging from between US$1,500 and
$2,500, but the production of a local program of the same
duration may cost between $20,000 and $30,000. Meanwhile, the
rate of booking a locally made commercial at prime time is only
$4,500 while that of an imported one is between $5,000 and
$7,000.

There is an indication of saturation in local programs,
particularly TV films. Some are boring while others are
carelessly made. A few, however, have really won the hearts of
viewers of all walks of life, for example Si Doel, Anak Sekolahan
(Doel, the Graduate), a drama comedy directed by Rano Karno, who
is also in the main cast. This comedy, telecasted by RCTI, which
celebrated its 6th anniversary also on Aug. 24, is simple but
fresh.

Si Doel was the most popular program in Indonesian TV history
in 1994. While this year it seems that the title is to go to The
Return of Condor Heroes, a Hong Kong kung fu serial, which was
aired by Indosiar.

Another phenomenon which is worth exposing here is the boom of
telenovellas (Latin America miniseries). These include Maria
Mercedez, Kassandra, Valerie Valerie, Ines the Secretary, and
Simplementa Maria. One of the reasons why telenovellas have
become popular is because they are dubbed in Indonesian, although
the quality of dubbing is poor.

The competition goes on and on. Now the TV stations have new
competitors they must reckon with, namely foreign TV broadcasting
networks. These foreign TV stations, which get into people's
houses through satellites, must be taken into account because the
Indonesian government has permitted ownership of parabolic
antennas and adopts an open sky policy.

The Indovision Group, the licensed holder of cable TV
broadcasting in Indonesia, and PT Matahari Lintas Cakrawala, as
its customer service department, have served as agents for the
American "Gang of Five" group made up of CNN, ESPN, HBO Asia, The
Discovery Channel, and TNT & The Cartoon Network.

As of last June, Indovision serves about 10,000 houses and
18,000 hotel rooms. Peter Gontha, president of Indovision,
expected that eight percent, or around 1.4 million, of
Indonesia's estimated 17 million households with TVs will become
subscribers to Indovision.

Indovision also established cooperation with Star TV in April.
Jakarta has since become the headquarters of Star TV for
Southeast Asia. This TV network has appointed David Dennis as its
Southeast Asia Regional Director.

"The largest business potential over the next five years in
Southeast Asia is here," David Dennis said to Variety
entertainment weekly. Star TV has set a target of some 70,000
subscribers in Indonesia.

According to research conducted by the Ministry of
Information, 70 percent of a total of between 800,000 and one
million owners of parabolic antennas use their antennas to
improve the quality of local TV transmissions. There may be a
shift in the use of parabolic antennas in future. But one thing
is sure: the TV industry in Indonesia reflects a dynamic
business.