The digital creative industry is one of Malaysia’s most active and fastest growing ecosystems. Malaysia Digital Economy Corporation (MDEC) chief marketing officer Raymond Siva says the industry, which includes animation, digital games and virtual effects (VFX) for TV and films, is currently valued at RM7 billion while exports have doubled to RM1.2 billion since 2014. 

Zeroing in on animation, Raymond says local animation studios have produced more than 65 original pieces of intellectual property (IP). This translates into an export value of RM170 million and a presence in more than 120 countries. 

“The Malaysian animation scene has a long-running history with the nation’s development, from being an outsourcing sector for animation powerhouses such as Japan and Europe to working on breakout content like Kampung Boy and Sang Kancil,” he says.

“The players then expanded into the big leagues with War of the Worlds: Goliath, Saladin and multiple VFX efforts like Life of Pi and X-Men: First Class. That and everything in between has set Malaysia apart from the rest of Southeast Asia as a power player.”

The local industry saw record after record being broken by its players over the past few years, especially in 2019. In fact, three animated movies released last year made it into the top 10 feature films of all time in the country (in terms of ticket sales), according to data by National Film Development Corp Malaysia (Finas).

Ranked No 3 on the list, Ejen Ali The Movie — produced by Primeworks Studios Sdn Bhd and Wau Animation Sdn Bhd — raked in RM30.5 million in ticket sales. Right behind it was BoBoiBoy Movie 2. Produced by Animonsta Studios Sdn Bhd (Monsta), the movie made RM29.57 million in ticket sales. Meanwhile, Upin & Ipin: Keris Siamang Tunggal, produced by Les’ Copaque Production Sdn Bhd, made RM26.2 million in ticket sales to land at No 6.

Monsta co-founder Kee Yong Pin says the record-breaking feats have put the spotlight on the local digital creative industry, with greater interest from the media, international players and the general public. However, the industry is no bed of roses as there are still issues to be worked out, he notes.

“It is good that we are getting a lot of attention, but the reality may not be as good as it seems. So far, in Malaysia, only the big companies with their own well-known IPs are enjoying good revenue flow. The smaller start-ups, which were inspired by these big players to join the industry, are struggling,” says Kee.

“Due to the success of these few players, the smaller players now have to face higher benchmarks when it comes to product creation and convincing investors, as they have different expectations compared with 10 years ago. Having said that, it seems like the industry is heading in a good direction and that homegrown animation is really making a mark in the region.”

Many of the larger studios currently enjoying success in Malaysia came from humble beginnings but they all had dreams of making it big.

Wong Cheng Fei and Ken Foong, for example, met in college and founded a computer-generated imagery (CGI) studio in 2001 to pursue their passion of making art. By providing outsourced services to interested clients, the duo grew the company and eventually introduced a game and animation studio called Lemon Sky in 2011.

“In 2011, we started to produce long-form animated series. The first was called Buzzy Bee and Friends. After that, we worked on many AAA projects such as the Gears of War and Uncharted series,” says Wong.

“We also worked with many huge studios around the world such as Blizzard, Sony, Capcom and Square Enix. Our first IP — an animated series called AstroLOLgy — was launched in 2015.” 

As one of the early players, Wong says it is interesting to see the exponential growth of the industry in Malaysia. He notes that in the early days, most studios were small, with fewer than 30 employees. Also, there were not a lot of successful IPs. 

While things are looking up, there are still a few issues that persist in the industry. The main one would be the lack of viable funding. 

“Creating successful IPs is very challenging, even for established companies. Investors are very careful about where they put their money and banks treat us as high risk. Not to mention, many players in this industry can still be considered new. Hence, they are not financially strong enough to land a good loan,” says Wong.

Monsta co-founder and CEO Nizam Razak concurs. He explains that while it is not difficult for smaller and younger companies to take off in Malaysia, thanks to government funding, as long as they have a good product, the problem lies in what happens during the growth stage when the companies need more than RM500,000.

“To produce an entire series, we need between RM5 million and RM20 million. We can no longer rely on the government for this, so we will need to go to investors or banks. This is where the problem lies. How do we ensure returns for investors? How do we reassure the banks that we will be able to pay them back?” says Nizam.

“If I am not mistaken, SME Bank and Bank Simpanan Nasional used to give out loans of up to RM5 million to players such as ourselves. But I think these are no longer available. Therefore, financing projects can be very difficult.” 

To solve this issue, it is not enough for players to have a good product. They must also be business-savvy, he adds. This means the players must be mentored properly so they can face banks and investors and convince them of the viability of their projects.

As a mentor himself for programmes under MDEC and Cradle Fund, Nizam says there is a lack of business mentorship for digital creative entrepreneurs. “What is needed is mentorship with a proper framework, one that allows for comments on the progress of the business. The mentors should not be limited to those in the digital creative industry. It could include broadcasters within and outside the country, policymakers and, in general, anyone involved in the whole supply chain.”

Another problem in the space is the lack of quality talent, says Wong. He points out that universities are struggling to catch up with the industry’s evolution, resulting in a mismatch between the industry needs and what is taught in class. As a result, about 20% of the talent in his studios are from overseas.

Nizam agrees, adding that certain universities have introduced digital creative courses just to jump on the bandwagon. Unfortunately, this results in graduates who are not skilled enough for the studios. 

Les’ Copaque managing director Burhanuddin Md Radzi, however, says his studio is not facing this problem, thanks to its training programme and animation academy. Realising this problem back in the early stages of the industry, he knew that he had to find a way to ensure talents could be groomed to fit the needs of the studio.

“Back in the 1980s, there were a lot of world-famous Malaysian animation series like Anak-Anak Sidek, Usop Sontorian and Keluang Man. But these productions relied heavily on a few comic artists. Any rifts between the comic artists and producers could have caused the studio to collapse,” says Burhanuddin. 

“When I started Les’ Copaque, I asked the pioneers of the company to create and document a process flow standard as well as a training module that all our talents could follow. This way, even if a key person leaves, another person can easily take over. That is why I can recruit anyone at all, be it fresh graduates or those with degrees in an unrelated field. 

“The head of modelling at our studio was an electrical engineer. One of our top modellers graduated in aeronautical engineering. As long as they are passionate and have a great attitude, we will bring them in.” 

To help solve issues with talent, MDEC is actively seeking to activate talent development in several ways, says Raymond. This includes sparking the interest of K-12 (from kindergarten to secondary school) students via programmes such as Creativity @ Schools, which trains secondary school students to be digitally skilled in 3D modelling, animation and game development. This allows them to explore a future career as a digital content producer. 

This year, MDEC launched the Digital Creative Content (DCC) Enterprise Development Programme, a structured training programme for new entrants to the industry focusing on animation, VFX and game development, with the objective of upskilling the local talent. So far, programmes such as C# programming, certified animation courses and industry marketplace pitching have been conducted, with more slated for the end of the year.

To assist in strengthening the skills of professionals in the sector, MDEC offers the Digital Content Enrichment and Up-Skilling (DICE-UP) programme, an initiative that provides financial incentives up to RM10,000 on skills development to strengthen and grow the digital creative content industry. 

Burhanuddin notes that the bigger challenge for local players is market access. A lot of the animation studios in Malaysia are doing outsourced work for clients from all around the world. Getting clients is difficult to begin with but with Covid-19, some studios that were already struggling financially had to close as they had limited ways of reaching prospective clients.

Speaking from experience, Burhanuddin says getting exposure outside of Malaysia is not an easy feat. For example, penetrating its now biggest market, Indonesia, was a long, arduous task for the team. 

“I tried and failed many times before meeting someone there and establishing a partnership, which got us a slot. The broadcasting company offered a revenue-sharing structure, which I accepted. But there were things I could not compromise on,” he says. 

“For example, they wanted to dub Upin & Ipin into Bahasa Indonesia, fearing that children there wouldn’t understand Malay. I put my foot down and said no, subtitles should do. True enough, the children there found Malay humorous and they learnt how to speak Malay simply by watching Upin & Ipin.”

The series was first shown on Televisi Pendidikan Indonesia (TPI) in 2009, two years after it ran in Malaysia. In 2010, TPI officially changed its name to MNCTV. Burhanuddin’s partner in Indonesia wanted him to move the series to another broadcasting station due to certain concerns, but he disagreed. 

“As far as I was concerned, the deal was clear. We didn’t feel the need to move. Since I had been working directly with the station all the while, they suggested that I just terminate the partnership. I agreed to that and paid my partner a year’s income as compensation. Unhappy with the dismissal, they decided to bring the case to court,” he says. 

“That was the time we realised that they had registered Upin & Ipin’s IP as theirs in Indonesia. We managed to get it back when we won the case. After that, we signed a new contract with the station, which increased our share tremendously and increased our playtime from half an hour to five hours daily. That really boosted our overall income.” 

The digital creative industry, specifically in animation, may have its gaps and barriers but it is still growing at a rapid pace. Nizam says that despite the challenges due to the Covid-19 pandemic, the company is still going full steam with upcoming projects. 

“Apart from BoBoiBoy, we will push a new IP called Mechamato. We have already signed with a very big broadcasting company to launch it in Asia-Pacific simultaneously. This is unlike what we did for BoBoiBoy, where we launched in Malaysia first, then Indonesia, followed by the other markets,” he says. 

Kee says the company has focused on securing a strong home ground over the past decade. Today, it is more international in its outlook. “Thankfully, consumers nowadays are more open to diverse content, which makes our products unique and appealing.” 

Meanwhile, Lemon Sky’s Wong says the company has a line-up of exciting projects on which it is working together with companies such as Square Enix, Blizzard and Dreamworks. It is also looking to create more original IPs and expand its studio. 

Similarly, Les’ Copaque is working on multiple projects, including what Burhanuddin describes as the company’s “ultimate project” — its own theme park. Inspired by Disney, he wants to build a theme park by working with government-linked companies, local manufacturers and vendors. Targeting to open its doors by 2022, the theme park will be aimed at local tourists as well as those from Indonesia, Singapore and Brunei. 

Recognising the potential of the creative content industry, MDEC — with the support of the Ministry of Communications and Multimedia — has developed the Digital Content Ecosystem (DICE) policy framework to further support and strengthen Malaysia’s regional leadership in digital content. Its ambition is to firmly establish the country as a regional powerhouse in a digital content ecosystem that is conducive, inclusive and globally competitive, says Raymond.

“DICE is a framework to support a 10-year policy direction to drive the digital content economy through its export potential and develop the human capital needed for this highly creative industry. MDEC will look at potential collaborations between the public and private sectors, as well as government, industry and academia, to further this ambition,” he adds. 

DICE will be activated in several ways, for example, through platforms that engage the ecosystem such as Kre8tif! and Level Up KL. These platforms assist the community in sharing insights and experiences, ensure that players engage with each other and learn from the world as well as build the market and business opportunity funnel. 

There is also direct assistance through MDEC’s Digital Content Grant (DCG), which enables creators to get their digital content IP developed, produced and marketed effectively. The DCG programme has been assisting Malaysian animation, VFX and game studios to get digital content IP into the marketplace since 2011.