Invest in TaiwanDepartment of Investment Services, MOEA
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Taiwan's digital content industry, identified by the government as one of two star industries in the Two Trillion, Twin Stars plan, includes computer animation, digital games, e-learning, mobile applications and services, data streaming and video conferencing, interactive television, digital archiving, digital publishing, digital broadcasting, digital music, multimedia software products and services. Taiwan has many advantages for developing this industry, including strong information and communications industries, a thriving publishing industry, a high penetration of cable TV and broadband networks, and world-class production capabilities in its movie and advertising industries. Not only do the information technology hardware and services industries depend in part on digital content to drive demand, the digital content sector is also getting a boost from the proliferation of IT products and services. The symbiotic relationship resulting from the convergence of the 4Cs, computers, communications technology, digital content and cable television and broadband, is expected to increase the production value of digital content in Taiwan.
The government agencies responsible for the promotion and development of Taiwan's digital content industry are the Industrial Development Bureau (IDB) under the Ministry of Economic Affairs as well as the Council for Cultural Affairs (CCA), Government Information Office (GIO) (both under the Executive Yuan) and the newly formed National Communications Commission (NCC). The IDB promotes the industry as a whole, but primarily focuses on gaming, animation, digital film and Internet-related products and services. The CCA oversees the development of cultural and creative industries, including digital music, theater, and film, while the GIO focuses on digital television and digital broadcasting.
According to the Digital Content Industry Promotion Office (DCIPO), Taiwan's digital content industry was valued at NT$340 billion as of the end of 2006, growing at an average rate of 15% per year for the last three years and 17% over the last year. Between 2003-2006, investments in the digital content industry totaled NT$47.3 billion, while funding for international collaboration projects amounted to NT$9.3 billion. Companies with their own brand gaming and animation products have been the recipients of the greater proportion of investments in the digital content area over the last two years. At current count Taiwan has more than 3,000 digital content companies, employing approximately 70,000 people.
With the evolution and convergence of communications and media technologies, the government is actively promoting several cross-agency initiatives to spur the development of Taiwan's digital content industry. In January 2007, The Executive Yuan convened a meeting of the Digital Content Industry Promotion Task Force Committee, announcing plans to assist Taiwan's digital content industry output reach NTD 600 billion by 2011. With the NTD 600 billion projection as a target, from 2007, the government will aim for an investment amount of approximately NTD 25 billion per year in the digital content industry, with NTD 10 billion coming from international cooperation. The plans have also set additional targets for 2011, with digital content industry exports comprising 30% of output and growth of 4% for self-copyrighted products. Of these products, digital games, computer animation, digital video and sound, mobile applications, e-learning -- taken together -- would see growth of 40%.
Taiwan's major players in the gaming area include XPEC Entertainment, InterServ, Softworld, Softstar Entertainment, Gigameda, UserJoy Technology, Unalis Corp, Digicell, TWP Corp., and Gamania. In the 2D animation area, Wang Film Productions and Hong-Ying Universe are the largest animation production studios in Asia. CGCG, Digimax, Leader, SMEC, Imagetech are well known for 3D computer animation and post-production services provided to an international client base. Other companies gaining recognition in the animation area include Tvbean and Double Edge Entertainment. Web animation studio, Spring House, has been recognized by the international Chinese community for its virtual character A-kuei and other creations. In the digital publishing area, Wordpedia.com, UDN.com, Cites Publishing Group, and Carry International Technology have had significant success in the last few years. And the in digital archiving area the focus has been on cultural and artistic imagery, video, and sound recordings, with Franz leveraging the vast treasures of the National Palace Museum; Wordpedia.com developing online databases of educational audio-visual content; Artkey developing licensing systems for their archive of cultural and artistic imagery; Top Photo Group operating a website for their large collection of stock photos and imagery; and Transmission Books & Microinfo creating digital publications of classical books and publications. In the area of multimedia tools and software, Cyberlink, Ulead and Penpower are well established producers of image and video processing software and optical recognition applications that are bundled with top-selling desktop and notebook computers worldwide.
With its cultural and technological strengths and the government's steadfast commitment to establishing Taiwan as a digital content hub for the Asia-Pacific and global Chinese-language markets, investment opportunities abound for foreign investment in the areas of education and training, technology cooperation, co-production and co-marketing ventures.
Also, as Taiwan's broadband and wireless communications infrastructure projects move toward completion, and payment, data protection, and regulatory mechanisms are put in place, digital content industry areas with higher growth potential include digital animation and film; digital video and audio applications; mobile applications and services; e-learning; and digital publishing and archiving.
According to an IDC survey, Taiwan's online gaming market in 2005 was valued at US$210 million, registering year-on-year growth of 12.1% compared with the figure for 2004. Taiwan's online game market is Asia-Pacific's third largest (excluding Japan), just behind Korea and China, but still 6.4 times the size of Thailand's, which is Southeast Asia's largest market. Recreationally oriented digital games saw market share growth of the overall digital game market from 23% to 30% from 2004 to 2005. However, the lion's share was still in the board and card game area at 47% as of 2005, with remaining share being taken up by motion-oriented and puzzle-type games.
As an increasingly important Chinese-language communications, entertainment and media hub, the Taiwan market is ripe for audio and video data processing, streaming and broadcast technologies. The recent roll-out of interactive digital television services in June 2004 has also created a steady demand for innovative digital television content and services. The digital audio and video application market, covering digital film, online video, multimedia on demand (MOD), wireless ground broadcasting, cable broadcasting, and wireless satellite broadcasting, digital music, digital broadcasting and CD/VCD/DVD publishing/leasing, digital content licensing, sales distribution and events, was valued at NT$34.4 billion in 2005 and expected to surpass NT$36.8 billion for 2006, showing year-on-year growth of 12%. The greater portion of revenues are generated by music and video content and applications, which accounts for 63% of the total market value. As people gradually become more accustomed to enjoying their music and films online and as subscriptions for MOD services increase, the market value for online music and videos is expected to see continued growth. Revenues from DVD sales, on the other hand, have slid, while DVD rentals have registered only slight growth. This trend indicates that the major market opportunities will be in wireless broadband, digital television and broadcasting, online MP3 service areas.
With one of world's highest mobile phone penetration rates and a quick uptake of camera phones, PDAs, PC phones, and other multimedia wireless communications devices rivaling Japan, Taiwan boasts a host of investment opportunities in the wireless and mobile applications and services sector. It covers video conferencing, mobile television and program broadcasting applications, and location-based services, as well as personalized mobile applications and services for e-books, music, blogs, games, and so forth. Since launching 3G technology in the third quarter of 2005, users of mobile phone services are growing again and as of January 2006 totaled 21.36 million with a 93.7% penetration rate. The market value of services provided in the wireless and mobile applications and services amounted to NT$18.4 billion in 2005, while the figure for 2006 is estimated at NT$26.3 billion, 75% of which was for delivering mobile phone connection services. Since 2006, the faster throughput speeds of Taiwan's 3G communications services and expanded functionality supported by 3G mobile phones enabled telecom operators to provide video conferencing, MP3 music downloading, video streaming, etc. As more value-added services become available over the coming year (2007), the market is expected to see continued growth as service providers strive to meet huge consumer demand.
The corporate training, professional skills and certification, higher education, government, K-12 education, and other consumer market are the most mature areas of Taiwan's e-learning industry. According to the Institute of Information Industry's Digital Education Institute, in 2006 Taiwan's e-learning industry output was valued at NT$9.427 billion, which grew by 44.6% over 2005's figure of NT$6.5 billion. Thus companies in the sector maintain an optimistic outlook for the industry's development potential. Language education and training, especially of English and Chinese as a foreign language, also presents new business opportunities for e-learning platform and content providers targeting not just Taiwan, but also the Greater China market.
Internet and online services include Internet connection services, online data storage services, online content and online application services. Major industry areas include combined cable television and Internet services, online bidding and shopping services, social and interactive networking services ("Web 2.0" services), data access services, application service provisioning (ASP), Internet access services, collocation and web hosting services, and online application services. The last few years have seen a number of cross-industry ventures start to produce new products and services as well as vertical integration investments, such as Webs-tv.net's acquisition of Gigamedia's ADSL unit and Yam.com. Similarly, ERA Digital has added AZIO co. Ltd. and im.tv to round out a three-pronged market strategy to become the leading online multimedia platform in the Chinese-speaking market. The Kinpo Group (computer and electronics manufacturing) and Formosa Plastics (petrochemicals and plastics) are two other conglomerates that have recognized the importance of online multimedia and services, and thus have established the joint venture, Yes Digital Multimedia Co., to develop market opportunities.
Taiwan's ambitious e-government and information society initiatives being spearheaded by the Research, Development and Evaluation Commission (RDEC) under the Executive Yuan and other government agencies have created significant demand for online publishing software and applications as well as document storage and exchange platforms. Aside from electronic publishing platforms, other opportunities exist for content authoring tools, content management systems, digital rights and assets management solutions, data compression technology and large-scale archiving solutions. The estimated value of Taiwan's digital publishing and archiving industry in 2006 was NT$5.1 billion, which is approximately 18% growth over 2005's figure of NT$4.3 billion. Taiwan's digital and online book industry got off to relatively late start, but is now expected to grow over the next few years.
The multimedia tools and software area of the digital content industry covers digital content and media production tools, content development and management platforms, end-user software, application services and so forth. Already a relatively mature industry area, data shows that the market was valued at NT$144.9 billion in 2005, with estimates for 2006 expected to reach NT$169 billion. The industry is also expected to continue on this steady growth path for the next few years.
Being a leading Internet company in Korea, SK Communications (corp.nate.com) was merged in 2003 with Cyworld (www.cyworld.com), a personal media networking service. Cyworld provides users with template-based homepage service and the means to link them to the users' network of friends and acquaintances. Awarded "Most Innovative Application/Product of the Year" at the 2005 Frost & Sullivan Asia Pacific Technology Awards, Cyworld boasts more than one-third of the Korean population as registered members. Cyworld services are being launched in Taiwan through Cyworld Taiwan Ltd., a joint venture company between SK Communications and ideaCulture, Ltd. (Hong Kong). ideaCulture, Ltd. (www.cherrypicks.com) provides wired/wireless application services and content, and has a strong presence in Asia.
Founded in 2000 and based in Seoul, Korea, Webzen has become a leader in the MMOG market and has developed some of the world's top online game and client/server technologies. Established in August 2004, Webzen Taiwan Inc., Webzen Inc.'s first overseas branch, has successfully launched the company's online game product MU Online to the Taiwan market. In January of 2005, Webzen announced its entry into the U.S. games market with a new subsidiary, Webzen America, based in Los Angeles.
Sources: MOEA DOIS, MOEA IDB Digital Content Industry Promotion Center, GIO, Commercial Times, Economic Daily News, Business Next, Taipei Times, Cyworld Taiwan's website, and Webzen Inc.'s website.
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