TPP’s Impact on The Media and Entertainment IndustryNovember 2, 2016
Andrea DaSilva is a Senior Policy Analyst for Media & Entertainment Industries in Industry and Analysis’ Office of Digital Services Industries. She serves as Team Leader for the Global Media & Entertainment Team.
The Media and Entertainment (M&E) industry is one of the most vibrant exporting sectors of the U.S. economy – and with the help of the Trans-Pacific Partnership (TPP) agreement, M&E companies will experience increased benefits in high-growth international markets.
ITA’s comprehensive 2016 Top Markets Report for Media & Entertainment provides specifics on how this sector is expanding. It details export market prospects across four sectors, including book publishing, filmed entertainment, music, and video games, and provides a special review of the significant opportunities that will be generated for the M&E sector in TPP agreement countries.
TPP is anticipated to produce significant benefits to the U.S. Media and Entertainment industry, including robust growth rates, stronger anti-piracy protections, and unique opportunities for partnerships in licensing content.
Even after excluding the United States and Brunei, the ten TPP partner countries comprise $308 billion in M&E revenues for 2016. This trade zone will present opportunities for diverse sub-sectors, content, and delivery platforms. Opportunities across the TPP countries for M&E companies abound as policymakers focus on creating an equitable, fair, and accessible digital economy that protects intellectual property.
The TPP agreement has many essential components for enabling the M&E industry to share, create, and distribute content globally. Important facets and provisions of the TPP agreement include:
- Prohibition of customs duties on digital products so that M&E businesses that distribute products electronically are not disadvantaged.
- A clause detailing that imports of digital products (music, movies, videos, games, e-books and related entertainment software) are not subject to discriminatory taxation, outright blocking, or other forms of content discrimination.
- Promoting global interoperability, so U.S. companies are less likely to have to produce special hardware for each country in order to operate there.
- Promoting reasonable network access and competitive supply of telecommunications services, which enable communications and the distribution of M&E content and services.
- Ensuring a competitive digital marketplace so that small businesses, individuals and others can access and move data freely, with commensurate privacy protections; this in turn protects an open Internet and digital and online cross-border trade.
The policies and regulations governing M&E sectors are struggling to keep pace and remain relevant. Many foreign governments are pursuing trade restrictive barriers to protect their markets. The TPP agreement is designed to remove undue restrictions and ensure that U.S. media and entertainment companies can access the valuable opportunities in the global digital economy. Summary snapshots reflecting some of the potential TPP agreement opportunities are below:
Sub-sector: Video Games
Video games (especially digital) are growing exponentially across the globe, and there is no exception in the TPP countries. Every country is seeing major growth in this sector. The video games market is part of trend of transitioning to digital downloading platforms in TPP markets, with the Asian partner countries leading the way in growth: By 2019, Japan (17.1 percent CAGR, $707 million), Malaysia (19.8 percent CAGR, $38 million), Singapore (18.2 percent CAGR, $28 million), and Vietnam (24.1 percent CAGR, $14 million). These figures demonstrate the tremendous potential for U.S. companies to partner or license with in-country companies.
Country Case Study: Mexico
The sixth top market in the M&E Top Markets Report, Mexico has a booming M&E sector with the second largest media market in Latin America. Mexico’s M&E industry is set to grow at a 6.7 percent CAGR to reach $35.5 billion by 2019. The nominal GDP growth at 7.0 percent with an increasing household consumption, urbanization and broadband penetration (to reach 75 percent in 2018) signals a larger consumer base for M&E sectors. In 2010, the Mexican government launched a $20 million film tax incentive program aimed at encouraging both domestic production and foreign investment in the filmed entertainment sector. Piracy is a significant challenge, and neither the legal framework nor enforcement is particularly effective in protecting creative content, and therefore this is a major policy focus for the government to meet the standards of the TPP agreement.