This article first appeared in Digital Edge, The Edge Malaysia Weekly on September 27, 2021 - October 3, 2021

The film industry in Malaysia has been one of the worst industries affected by the Covid-19 pandemic, caught in what can only be described as a double whammy — restrictions on filming activities coupled with cinema closures.

Months of production planning and coordination work came to a grinding halt due to movement restrictions. Filming activities were prohibited from the start of the Movement Control Order (MCO), loosening only in February this year to allow filming in a limited number of studios officially recognised by the Malaysian authorities. And even there, location limitations hampered efforts to produce feature-length films, reducing the total industry output for the year.

Even before the pandemic, the number of local feature films was already declining at a steady rate. There were 47 films screened in 2019, down from 59 and 54 in the two previous years, according to the National Film Development Corporation (Finas). The pandemic escalated the problem, cutting that figure by more than half to 23 films last year and only three films on-screen so far this year.

Meanwhile, cinema closures have resulted in major losses in ticket sales at the box office. For example, local action-comedy film Bulan dan Pria Terhebat had only been screened for less than a week before the national lockdown kicked in, barely earning enough money to recoup the nearly RM4 million that went into production costs.

Despite the pandemic shaking up the entire industry, it is simply an event that uncovered several underlying systemic problems that have long affected Malaysian show business — namely, an ineffective commercialisation model and the lack of international market penetration.

According to Longhouse Films Sdn Bhd co-founder and managing director Dianne Tan, many local productions adopt a “film first, commercialise later” approach, while being heavily reliant on box office ticket sales as their main source of revenue. The pandemic, which shut down cinemas nationwide, also put paid to most income opportunities for the industry.

Before the pandemic, gross ticket sales from local feature films were RM170.4 million and RM144.71 million in 2018 and 2019 respectively, according to Finas. That figure declined drastically to RM11.62 million last year and only about RM140,000 so far this year — a trickle of what it used to be.

“This is a workflow problem. The process usually starts with someone having a great movie idea and they look for investors willing to provide the funds to do it. What many of them do not prioritise is the commercialisation of their films. This is because they operate from a marketing point of view,” says Tan.

“Before the pandemic, their biggest concern was whether the theatres would screen their movie or not, and work backwards from there. This is very different from overseas, where they guarantee the distribution first before production.”

If cinemas were the bottleneck, partnering with international over-the-top (OTT) platforms such as Disney Plus, HBO Max and Netflix would seem to be the most straightforward solution. Tan says these platforms are actively seeking localised content to increase their global reach.

However, getting local films onto these platforms often hits a snag because the content created does not cater for an international audience in terms of the themes and story direction. This has resulted in an odd chicken-and-egg situation in terms of content and distribution.

“If you look at the Malay-sian film industry today, most of the movies are geared towards the safe, domestic market because they have an audience here. They seldom think about bringing their films overseas because they may think that they are not big enough to compete with the international players, or that their production budget is not that large by comparison,” Tan explains.

Yet, the strong emphasis on the local market can also be explained by the lack of international distribution channels avai-lable to local filmmakers. International OTT platforms pushing for localised content are a fairly recent phenomenon and have yet to reshape the local industry landscape.

“Before international players came in, the main outlets where filmmakers could distribute their films were only Astro, RTM, Media Prima and local theatres,” says Tan.

To address these issues, Longhouse Films aims to facilitate global distribution and film production into and out of Malaysia. On paper, it is a Kuching-based film investment and production house. In reality, it wears more hats.

For one, the company serves as a partner,  facilitating overseas studio productions in Malaysia by providing connections to local talents and resources. It also helps local filmmakers bring their films overseas through existing partnerships with major portals such as Netflix, Youku and iQiyi.

Tan says Malaysia is a great place to grow an international creative industry. She points out that Malaysians are great storytellers and can speak various languages, enabling production crews access to both Chinese and Hollywood productions. In terms of artwork and set designs, Malaysians do not lag far behind and are only lacking in opportunities to showcase their skills, she continues.

Great talents have also sprouted from Malaysia. Longhouse Films co-founder and CEO Jon Chiew has about 26 films under his belt and in 2018 produced Chinese blockbuster hit Hello Mr Billionaire, which generated RMB2.5 billion at the box office, making it the fifth-highest-grossing film in China that year.

And who can ever forget the household names of old and new, such as the late Yasmin Ahmad and P Ramlee, Tan Sri Michelle Yeoh and even Fattah Amin and Remy Ishak?

Longhouse Films also serves as an educator and investor, funding only film projects that show great marketing potential due to the high costs involved. It also works with Malaysia Digital Economy Corporation (MDEC) and MyCreative Ventures to help educate local filmmakers and animators on the international media landscape.

For example, internationalising local films is not a simple matter of changing the film from the Malay language to English, but finding the right story elements that attract an international audience as well as the accompanying advertisers, Tan stresses.

“The Malaysian films that make it big are from the horror genre. If we can find the right ghost story to market overseas, subtitling is generally good enough. At the end of the day, it is all about finding out who is willing to pay the advertising and promotion costs for you to distribute your film overseas,” she says.

Of course, Longhouse Films has several of its own production projects as well. Movies in the pipeline include a Korean English film shot with both Korean and Malaysian artists, as well as an animation film for China Central Television (CCTV) on the giant pandas loaned to Malaysia.

All three founders of Longhouse Films have extensive experience, having worked in the international entertainment business for more than 20 years. The other founder — apart from Tan and Chiew — is creative director Foo Sing Choong, who won an award at the 43rd Golden Horse Awards in Taiwan for best visual effects for his 2006 film Silk.

Of all the hats Longhouse Films wears, by far the most interesting would be that of a marketer, where it finds interesting ways to commercialise films with the help of data analytics and branding. Not only is the company looking at linking local films with the rest of the world, it is also tying them to products, particularly for e-commerce.

One of the unique observations she made in China is the industry’s ability to sell products through movies and TV shows. It involves three key components. First, a production studio partners with an existing e-commerce platform that can distribute products regionally, and create websites featuring all the branded products that were on display during a show.

The TV show would incorporate both soft and hard advertisements, such as product placements within the show itself and commercial breaks featuring cast members from the show endorsing the products directly. This is followed by a QR code displayed on-screen with the embedded discount and voucher codes.

Delivery methods may differ, such as using smartphone notifications instead of QR codes, because platforms such as Netflix do not provide mid-show advertisements. However, the underlying objective of pushing audiences to visit the e-commerce links remains the same.

Phase two involves launching cross-channel social media campaigns. Social media content from talent influencers, branded products and the official TV show itself will play off each other, linking posts and profiles to direct online traffic to one another. The final phase involves offline promotions, such as meet-and-greets, showcases and premiere screenings.

This represents a pivot from how the local show business operates from a commercial point of view. It is now increasingly difficult for feature films to exist as a standalone medium. Instead, they are being broken down into pure content not too different from TikTok shorts and YouTube videos. For films to be commercially successful, their associated film stars, partnering brands and the show itself need to have a strong social media presence and marketability as well.

With films being reduced to pure forms of digital content, it is now easier for viewer metrics from the different platforms to be identified and quantified, be it social media or OTT. This makes it possible to collect big data and incorporate advanced technologies such as artificial intelligence (AI) into the mix.

From this point onwards, films will be viewed as conventional advertising channels. By using advanced analytics tools, partnering brands can easily track their returns on investment. Production studios will also be able to gain visibility over the performance of the various film projects while seeing where audience demand and trends are leaning towards.

Although commonplace in China, Tan points out that this industry practice is not well established in Malaysia or even Southeast Asia, representing an untapped commercial opportunity. Longhouse Films plans to implement this commercialisation method in the local market for some of its projects from October.

“Actually, this type of [audience to customer] conversion rate is very high. In fact, it is the highest in the industry right now — better than most social media channels. We have observed this while building this type of product in China for the past eight years,” Tan says, adding that the company believes the industry in Malaysia will be moving in this direction.

She says her five years of experience managing fans has taught her not to underestimate the might of fandoms. For example, she recalls working with a lollipop brand and a Chinese actor at the peak of his career. The actor was tasked with licking a lollipop on camera, and the product was sold out within 10 minutes of the initial screening. Interesting parallels can be made with the McDonald’s BTS campaign launched earlier this year.

One of the topics frequently brought up during discussions with Tan is the conflict between the creative and commercial aspects of filmmaking. At its core, feature films are mainly creative mediums to showcase emotional and plot-driven stories, and the heavy emphasis on commercialisation may stifle both the director’s creative vision and viewer experience.

Tan points out that films generally follow two routes — the creative path of independent films and commercial movies looking to make a profit. For a film production company to survive, it needs both, she says, where the income generated from commercial projects is used to subsidise the cost of independent films.

“Independent films can go ahead and win plenty of awards, but unfortunately we still live in a world of dollars and cents. The creative industry is an upcoming industry and there are many ways to monetise it. It is hard to say if it is good, bad or the norm, but by implementing this commercialisation system, we can help grow the industry and pave the way for everyone to make a better living from filmmaking,” Tan says.

It was not difficult to convince film directors and producers to accept this change, with partnering brands welcoming the idea, she says. By helping filmmakers remove their concerns about funding, it allows them to focus on their creative pursuits in filmmaking.

For Longhouse Films, this allows it to introduce new data collection and processing methods to make selling a film easier and much more targeted. Tan acknowledges that what it is doing is not exactly new, but simply a matter of replicating a highly proven model that has found plenty of success overseas.

“This is an evolution of TV commerce, where the audience can purchase products or services viewed on TV,” she adds.

“Today, selling products directly on TV and through phone calls no longer work. Except for e-commerce sites, this type of system needs to be done entirely in-house. This is because we need to store and analyse large sets of data, and we need to have the support of all the various platforms. That is how we are able to combine TV shows, movies and social media platforms and monetise them as a whole.”

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