4.1.1 Industry Structure
As discussed in Chapter Two (see section 2.1.2.2.1), industry structure is influenced by the number of firms that compete in a given industry (Shughart & William, 2008).
In turn, the number and size of firms that compete in the market depend on the entry barriers: thus, if there are high entry barriers, only a few firms will succeed in entering this market (Porter, 1980). There are very high barriers to be faced when entering the animation industry in Saudi Arabia, which will be discussed in more detail later in this subsection. These high entry barriers shape the Saudi animation industry, as there
3 A Saudi television channel for children established in 2009 under the administration of the General Commission for
Audiovisual Media, under the umbrella of the Ministry of Cultural and Information
only a few firms can manage to enter the industry. However, there are also a number of television production firms, whose main activities concern television drama, but which have produced animation by using outsourcing to countries such as Egypt, Syria, Jordan, and India. Statistical data on the actual number of animation studios in Saudi Arabia is not available; the available data reflects the number of firms within the motion picture industry in general, which includes media production companies that produce TV drama series and programmes. According to the Saudi Central Department of Statistics and Information, the number of firms in the motion picture industry was 187 in 2014 (Saudi Central Department of Statistics and Information, 2014). However, by tracing Saudi animation films and series that are broadcast on Saudi public and private television channels, it is clear that there are only five animation studios that specialize in producing animation series and films that get shown on these channels. These studios are OKtoons, Khalid al Dakheel Cartoon Production, Myrkott, Assattier and Barajoun entertainment. Additionally, a number of advertisement agencies produce advertisements using animation techniques.
To identify the barriers that constrain the Saudi animation industry development, the researcher sought to triangulate the data sources, for greater research validity. This involved obtaining information from different perspectives, as suggested by Patton (1999). Thus, this study compared the data gathered from different industry stakeholders including interviews with studio managers, TV channels managers and higher education course leaders, as well as other sources such as institutional websites. According to interviews with Ossamah Khalifah, a pioneering Saudi animation producer (2012) and the owner of OKtoons animation studio, there are high barriers for entrepreneurs entering the market. One of the entry barriers is capital
requirement, because establishing a business in animation requires a large budget to cover initial outlays on professional equipment such as advanced software and hardware. Furthermore, Khalifah pointed out that hiring a qualified workforce is one of the main aspects that increases the capital requirements. Due to the absence of skills providers in Saudi Arabia offering animation courses, he was forced to set up a production studio in Turkey, where there is a skilled workface already available. This makes managing the business more challenging because it requires additional travelling, even though he makes maximum use of advanced technology to facilitate communication. To triangulate this data regarding the absence of workforce, reviewing the official website of universities in Saudi Arabia was conducted. It was found that only one university, Effat University in Jeddah, offers deep specialisation in animation, with an established animation track within its visual and digital production course since 2013. However, there are nine universities that offer related course such as graphic design and multimedia design (see Table 3). Additionally, Khalifah believes that one of the reasons that capital requirements are a major barrier to new participants entering the animation industry is the absence of government and private investment in animation production. Thus, any entrepreneurs must incur all the costs alone. K.A, another pioneering Saudi animation filmmaker, agrees with Khalifah that there is an absence of government and private support and investment.
An interview with K.A (2012) showed that, although that he has won regional awards and international online awards for his short animation films, he originally faced challenges from the Saudi community that constrained him from establishing an enterprise in animation due to the high risk of failure. Similarly, Abdulaziz Al-Muzaini, the co-founder of Myrkott Animation Studio, also blamed the shortage of investment in local production for difficulties in entering the animation business,
despite the reputation that his studio has since achieved. To discover the rationale behind this absence of investment in Saudi animation, gathering data from the opposite perspective was required. Thus, interviews with a number of Saudi television channel managers were conducted as they are the buyers. According to Sanna Mhumenah, the manager of Ajyal channel, this absence of investment reflects the cost disadvantages of Saudi production, which is another entry barrier that the Saudi animation industry faces. This disadvantage is combined with the issue that Saudi productions tend to be poor quality compared to the imported international productions that the Saudi television channels broadcast. She pointed out that it is better value to pay more for an animation production produced by international studios, particularly American studios such as Warner Bros, Hanna Barbera, and Disney, because their productions are always excellent quality due to experience.
Khalid Albeit, the manager of the Saudi channel, argued that imported animation has a cost advantage because of its high quality in terms of the drawings and movement of the animation content; the stories and scenarios of imported animation are made by professionals in children entertainment, and the sound effects in imported animation are more appropriate that those in local productions. Similarly, Ayman Aljubaly the manager of the Simsim channel4 claimed that local production has cost disadvantages because of its poor quality in terms of content and story. He pointed out that it is more efficient to broadcast imported animation as the price of imported animation, even adding the cost of dubbing it into Arabic, is much cheaper than buying local production. Moreover, Aljubaly stated that even outsourcing is more beneficial than buying from local producers, as outsource providers produce higher quality work than local creators. Thus, the majority of animation content on Saudi television channels,
both private and public, is imported from international studios or outsourced to neighbouring countries such as Egypt, Syria, or Jordan, or Asian countries such as Malaysia and India.
A further entry barrier for potential Saudi animation industry entrants is the absence of distribution channels. The animation industry in the country has very limited distribution channels, and these mainly depend on direct personal contact; here, the creator, either the animation studio or a producer, presents a pitch of the animation project to a sponsor or line producer such as a television channel or media production firm in order to persuade them to invest in this project. In some cases, the creator could be a writer who has a story that could be adapted and developed as an animation film or television series. This process usually takes place in a media market place, where different media maker firms gather to market their projects to buyers.
However, Khalifah pointed out that in Saudi Arabia, there is an absence of such distribution channels. Consequently, it is difficult for animation studios to reach key buyers, storywriters, or even partners who could help to defray the high budget costs.
In addition, it is very difficult for animation entrants to contact these buyers directly due to the weak infrastructure in Saudi Arabia, which means that there is a lack of, for example, official web sites with active contact details. Similarly, Al-Muzaini argued that there is an absence of distribution channel in Saudi Arabia for the animation industry; in particular, he faced difficulties in obtaining a license to establish his Studio. This author has certainly found that even collecting data for this research was challenging due to difficulties reaching the television managers for interviews in the absence of formal contact information. Thus, interviewing these individuals required seeking personal contacts by networking with peers already working in the television
industry.
In light of this information, the barriers creating obstacles to new entrants to the animation industry market in Saudi Arabia become clear.