Blitz plexes Indonesia

Exhibitor ready to develop market

By PATRICK FRATER

HONG KONG -- For the world's fourth most populous nation, Indonesia has a small movie sector. If decent figures existed -- and they don't -- they would probably show nationwide annual B.O. of $40 million-$50 million, less than Singapore, its city state neighbor with only 6 million inhabitants.

A new company, Blitz, aims to change that. It is opening Indonesia's first true multiplexes in a market largely comprised of single-screeners and three or four-theater cineplexes. Blitz is challenging a company that holds a near-monopoly in exhibition and distribution, and a status quo that has suited local and foreign companies for more than a decade.

Country's cinematic immaturity stands in contrast to other parts of a booming economy. Downtown Jakarta challenges any notion that Indonesia is a developing country. The capital is crammed with shopping malls of spiraling grandeur, linked by toll roads choked with powerful SUVs and Korean-made taxis.

Moreover, despite Indonesia's political instability and highly visible security, country's consumer economy is taking off. Malls are stuffed with stores repping the world's most upmarket brands.Country's mobile phone sophistication means Indonesia is often a launch territory for latest models by the likes of Nokia.

Blitz believes this makes the country ripe for a new movie model and will open its first nine-plex in a mall in Bandung, a university town of 5 million inhabitants 110 miles from Jakarta. That will be followed in November by an 11-screener in an upscale Jakarta mall. Two plexes are skedded for the following 15 months.

Company is headed by local businessmen Ananda Siregar and David Hilman, who have backgrounds in banking, architecture and the civil service. They have put about $12 million of their own coin into the project, topped up with $3 million of bank finance.

"We are only going to build complexes of eight screens or more, and only in key locations," says Hilman. Blitz's complexes will come with entertainment options such as pool tables and restaurants to make its cinemas destinations where youngsters will spend lengthy periods and plenty of cash.

"We are establishing links within the creative community and are betting heavily on the success of local films," says Siregar. "In a nine-screen complex we can offer four screens to the (Hollywood) majors with the remaining five programmed with a mix of local and foreign independent films."

Blitz's 11-screener with 3,100 seats in the Grand Indonesia mall also expects to host part of December's Jakarta Film Festival (Jiffy).

"What we are doing is nothing new, it's been done elsewhere," says Siregar, who points to modern complexes in Thailand, boasting combinations of regular and luxury theaters. Blitz is using Malaysia's Golden Screen as its technical consultant. "It is just that the incumbent doesn't feel it necessary to do it, because the people come anyway."

The country's main exhib, 21 Group, was founded in 1987 and became a private sector operator after the fall of the Suharto military regime ten years later.

But it retains some aspects of state control. It operates over 300 screens at 75 locations or approximately 90% of the country's commercial cinema screens. It is also the dominant distributor operating under three labels; Camila and Satrya, which handle Hollywood product, and Amero Mitra, which acquires foreign indie titles.

Local titles are often released on distribution-only terms, which see producers handling marketing and P&A costs. On a recent visit, the most prominent film outdoor advertising was for a producer-promoted film "Berbak suami" (aka "Love for Share"), while newspaper ads were largely of the simplest "playing now" variety.

No surprise, 21 Group argues that it is doing most to develop the market. "Last year we opened seven sites with 30 screens. So far this year we have opened four sites with 16 screens. We plan to open nine more sites this year," says CEO Harris Lasmana by email. "This year we expect to have more than 40 (Indonesian) titles for theatrical release."

There is little doubt that the movie industry in Indonesia could do better. M.M. Bakri, government director of film, says the import quota of 160 films per year and other internal restrictions were removed in 1997. But the number of films being released has barely budged since.

"Because nearly all the cinemas are owned by 21 Group, there are still limited opportunities for release," he says. "It is not the government's job to make the distribution choices, but it is clear that there are not enough cinemas."

And with the theatrical market restricted, consumers have turned to home entertainment and pirate discs.

Lasmana puts the ball back in Bakri's court on this issue. "I believe the Indonesian market will grow if the government can control the rampage of piracy."

It seems logical that the Hollywood studios would applaud Blitz's attempts to grow the market. This has been the case with MegaStar, the new entrant in nearby Vietnam. But Blitz admits the majors have been "lukewarm."

Explanation may lie in Indonesia's geography, ethnic mix and politics, all of which are fractured and difficult to maneuver. "In a country where corruption is predominant, 21 Group is a reliable partner with solid reporting structure. Obviously we don't want to do anything to damage that," says a senior Asia executive of one of the majors.

"On the other hand, I can't see anyone allowing state-of-the-art multiplexes to stand empty for want of prints. I'm sure Harris will have to supply them."

Another difference between the two cases is that MegaStar is under the wing of Hollywood veterans Ted Shugrue and Tony Manne.

Blitz admits that many are waiting to see how the concept is executed.

"We can hardly wait to open for business," says Siregar. "That way, we hope to convince film suppliers and the private equity investors that have been circling, but not yet committed."

Achieving that may take a willingness to embrace not only exhibition, but also distribution. For that, Blitz has turned to San Fu Maltha, a former PolyGram exec who until this year co-owned A-Film, the largest distributor in the Netherlands. "Indonesia has a lot of potential, and I've been very impressed with Blitz, their ideas and their business plan," says Maltha.

Maltha and L.A.-based scout Mirjam Wertheim of Orange Entertainment are looking for single- and multi-territory acquisitions that could span other parts of Southeast Asia. The Cannes market is expected to see their first deals.

Read the full article at:
http://www.variety.com/article/VR1117943114.html

Telkomvision Takes a Run At Premiership TV Rights

The country’s second-biggest pay-TV provider, Telkomvision, appears to be on course to share rights to broadcast English Premier League football this week after a tender was held last month by the joint owners of the rights, ESPNSTAR Sports and All Asia Multimedia Network.

The rights, which are effective from this month for a year, were offered to a number of pay-TV providers on a nonexclusive basis.

“We submitted our bid earlier this month,” said Bambang Lusmiadi, the marketing director of PT Telkom subsidiary PT Indonusa Telemedia, which owns the Telkomvision brand. “We expect the announcement of the winner sometime this week.”

Lusmiadi said ESPNSTAR and All Asia Multimedia Network had offered Indonusa a share of the rights in June. He acknowledged that the company was interested in acquiring broadcasting rights because of the Premier League’s huge fan base in Indonesia.

He declined to disclose how much the rights to Premier League matches would cost.

“It would help us increase subscriber numbers and to add to our current Italian League matches,” he said.

“However, the rights are not going to be exclusive, meaning that we will have to share them with other broadcasters.”

The exclusive right to broadcast Premier League matches was purchased for $25 million last year by pay-TV provider Aora, which is owned by former Trade Minister Rini M Soemarno, her brother, Ongki M Soemarno, and Vice President Jusuf Kalla’s son Solihin Kalla, who holds a 5 percent stake.

Since 2007, ESPN has allowed some of the Premiership’s games to be broadcast by TVone after a request by the government.

If Telkomvision wins the rights, it would have to share them with Aora, at least initially. Gaby Motuloh, Aora’s corporate secretary, declined to comment on whether Aora would be interested in seeking an extension of its existing contract.

Indovision, the country’s biggest pay-TV provider, said that although it had also been invited to bid for a share of the Premier League rights, it had decided not to do so.

The Supreme Court in June upheld a decision by the Business Competition Supervisory Commission (KPPU) that ESPNSTAR, AAMN, and Astro, a subsidiary of Malaysian media giant Astro All Asia Networks, were guilty of operating a monopoly in respect to the 2007-2010 English Premiere League rights. Later the rights were transferred to Aora.

“If Telkomvision wins, it will definitely have an impact on the market. But it hasn’t happened yet and we’re still studying the situation,” said Arya Mahendra, the corporate secretary of Indovision, which is owned by Media Nusantara Cipta.

He said that after the rights were awarded to Aora, subscriber migration [from Astro] was not as large as expected.

The country had about 850,000 pay-TV subscribers in 2008, accounting for 2.13 percent of the estimated 40 million households with TVs.

http://thejakartaglobe.com/business/telkomvision-takes-a-run-at-premiership-tv-rights/321716

An Inside Peek Into the World Of Jakarta’s Illegal DVD Trade

“Freddy” — who entered Jakarta’s huge pirated video and later pirated DVD market more than 20 years ago — has experienced police raids several times. Yet, he’s still in business.

Shedding new light on the depth of the market, how it works and why pirated DVD stores continue to flourish in Indonesia, Freddy told the Jakarta Globe over the weekend: “It’s a lucrative business. As long as they are people buying, we’ll continue to sell pirated DVDs.”

Freddy claims to make Rp 300 million ($25,500) a month selling DVDs, adding that some of his friends even make more.

Freddy, not his real name, owns three stores in Jakarta and is very particular about their location. He prefers smaller, middle-class malls over the more elite retail areas, largely due to the demography of the buyers and “security.”

“Places like ITCs [Indonesian Trade Centers, malls dedicated to small- and medium-sized enterprises] are the favorites,” Freddy said. “They have many exits and the layouts of such malls are like labyrinths, enabling us to escape whenever the police raid the place. Usually we rely on the doorman or the security guards to alert us and we immediately stash our goods and shut down the stores.”

There are a number ITCs throughout the capital, and each one can host up to 10,000 stores that sell a huge range of different products, enabling pirated-DVD outlets to be unobtrusive.

The ITCs are also divided into hundreds of blocks of stores. Navigating through them can be disorienting.

One South Jakarta mall, categorized as an ITC, has an entirely separate section dedicated to pirated DVD stores, which can remain hidden to first-time visitors.Denny, a frequent buyer there, said he was once trapped in the section when the police arrived.

“They immediately cut off the section by closing down the metal gates and rolling doors,” he said.

“They also turned off the lights at the section entrance and put trash bins and scaffolding in the way to make it appear that this part of the building was not used or under construction.

“Inside, it was business as usual. My heart was racing. A sales girl told me that raids like that are frequent and that they never get caught. She even showed me a secret exit stairs for ‘just in case’ and continued to offer me DVDs.”

Some people are not as fortunate. Police and the government brag about their achievements, boasting that more than four million illegal DVDs were confiscated last year and more than 100 sellers were prosecuted.

“Four million? The number is far more than that,” Freddy said, indicating the raids would not put a dent in the market. “I say in Indonesia, there are at least a hundred times more.”

The International Intellectual Property Alliance estimates that each year, the US music and film industry loses more than $205.2 million due to copyright piracy in Indonesia.

The alliance ranks the country among the biggest offenders in the world and places it on a watch list year after year.

Pirated DVDs, Freddy said, can be categorized into certain groups based on their quality and origin.

Low-end DVDs are recorded using a camera smuggled into movie theaters and the quality is usually amateurish. He sells those kinds only for movies that are currently, or yet to be screened, in Indonesian theaters.

“The people recording them are usually slackers wanting to get some quick money,” he said.

“You can take your recorded materials and send it to an agent. The agents pay you a fixed rate based on the popularity of the movie. If your materials are pornographic, you can get up to Rp 100 million.

“It pays to be the first. About one week after a movie is screened you can find the pirated version,” he added.

For the higher-quality DVDs, people have to wait up to a month after a movie is released, Freddy said.

“The pirates work with a local theater and copy the reels on to a DVD master, which is then duplicated,” he said. “That’s why the quality is better. For non-English movies, we usually import them. All they have to do is to sneak one master copy in and the movie is pirated.”

Freddy said that the pirating business is as elaborate as the legitimate movie industry.

“They have their so-called production house, they have translators of every language imaginable, they have factories, graphic designers, distributors, wholesalers,” he said.

“We retailers never meet these people. It’s a business that relies on secrecy, much like selling drugs. It’s cutthroat, too.

“Often, the pirated DVDs get pirated by amateurs. I guess that’s karma,” he said with a laugh.

Jakarta Post
http://www.thejakartaglobe.com/home/article/9926.html