i n dustr y updates a n d a n a l y ses f or sou n d busi n ess p l a n n i n g

A publication of the School of Economics, University of Asia & the Pacific, Philippines

In this issue
Feature

2 Motion picture industry: 11 Power & energy

An analysis of the explanatory Global Business Power expands Iloilo
power of brand-related variables plant
and word of mouth for industry
performance 11 Telecommunications
PLDT Unit to double number of Fibr-
John Harmon M. Camu powered villages in Phl
Josette Albertine S. Quintos
Althea Mae M. Salcedo
Rige Gabriel N. Tuason Industry statistics
Jovi C. Dacanay
12 Gross value added (GVA) in
financial intermediation
News

10 Agri-business
DA withdraws objection to corn exports

10 BPO
Call centers’ revenues to grow 19% in 2014

10 Construction
Cement sales up 6% in 2013

10 Electronics
Electronics makers hold employment
mission in Yolanda-hit provinces

10 Oil & gas

Nido Petroleum secures UAE investor for
Palawan venture
issn 0117– 1798

february The industry monitor is a monthly publication of the School of Economics of the University of Asia and the Pacific •
Pearl Drive, Ortigas Center, Pasig City, Metro Manila, Philippines 1605  •  Telephone: 637-0912 to 26; Telefax: 632-7968.

 2 0 1 4 The comments and views expressed in these papers are solely the responsibility of the authors and do not represent any
position held by UA&P. These papers may not be distributed in full or in part without prior written authorization.
Acknowledgements: Editing  Ma. Victoria Anastacio •  Layout  Rommel B. Casipit • Design  Art & Copy Communication
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 february 2014  F E A T U R E

Motion picture industry:

An analysis of the explanatory
industry monitor

power of brand-related variables

and word of mouth for industry
performance
According to the signaling theory, first-week moviegoers tend to decide whether or not to watch a film on the basis
of brand-related variables and movie attributes and not on the basis of the quality of the movie itself.
First of four parts.

John Harmon M. Camu

Josette Albertine S. Quintos
Althea Mae M. Salcedo
Rige Gabriel N. Tuason
Graduate Staffmembers
Industrial Economics Program
School of Economics, UA&P

and

Jovi C. Dacanay
Economist
School of Economics, UA&P

M
ovies are considered “experience goods,” whose content and quality are known
only after consumption.

Thus, consumers or moviegoers play a vital role in the
performance of a motion picture. Their word of mouth
is proven to affect the behavior of other moviegoers.
Moviegoers watch a movie in the first week because
they like the stars. If the stars are under contract with
separate production companies, the companies enter into
coproduction to get the stars together. After watching the
movie, moviegoers talk about it, either positively or negatively,
generating information about the movie through word of
mouth. If the word of mouth is generally positive, other
people are attracted to the movie and watch it themselves.
Gross revenue is therefore further explained particularly
by the three explanatory variables mentioned: star power,
coproduction, and word of mouth phenomenon.
Given the numerous issues and problems confronting
the Philippine motion picture industry, in this study,
the researchers aim to answer the question: In spite of the
losses in some major firms, how do the major players sustain
their market dominance?
Sub-problems:
1. How do word of mouth and star power affect
the industry players’ performance?
2. How necessary are these factors for gross
revenues?
3. What benefits can be derived upon determining
the strength of each variable in explaining gross revenues?
F E A T U R E 

Objectives of the Study is tested to determine its effect on industry revenues.

1. To analyze the effects of star power and Other determinants of sales are the number of screens
word of mouth in explaining industry revenues allocated to local films and movie attributes such as stars,
2. To assess which strategy should be highly genre, ratings, and producer reputation. The conceptual
prioritized to maintain market dominance framework is presented in Figure 1.
3. To formulate recommendations for the sustainability
of the local film industry
Figure 1 • Conceptual framework

Theoretical Approach
The framework used in the analysis revolves around
the economic concept of signaling. Since movies are Week 1 Week 2 Week 3
experience goods, individuals need to watch them to
formulate their judgment. According to the signaling
theory, first-week moviegoers tend to decide whether
Word of mouth
or not to watch a film on the basis of brand-related Star power
Word of mouth
Star power
Star power
Genre Genre
variables and movie attributes and not on the basis MTRCB rating
Genre
MTRCB rating
MTRCB Rating
of the quality of the movie itself. These brand-related Producer reputation
Producer reputation
IMDB
Competition for 1st Producer reputation
variables include the power of the lead stars to influence week
Competition
Competition
Days cinema
Days cinema
moviegoers through their large fan base and even
through promotions. Other movie attributes which
influence moviegoers to watch a film include the genre,
the ratings, the director, and the reputation of the Number of screens Number of screens Number of screens
producer.
The behavior of 2nd week moviegoers is different
in the sense that their decision-making process is
Ticket sales Ticket sales Ticket sales
dependent on the behavior of moviegoers in the 1st week
of a film’s screening. This is called the word-of-mouth
phenomenon, more formally known as the theory of Source: Authors’ framework
information cascades. Based on the Specific Model which
parallels the theory of information cascades, moviegoers
may have a high or low signal in the first week, and Industry background
these signals will generally cause individuals to watch a A. Industry definition
movie. However, in the third week, when Consumer A The 1994 Philippine Standard Industry Classification
(1st week) and Consumer B (2nd week) both have high (PSIC) classifies motion picture activities, along with
signals, Consumer C (3rd week), even with a low signal, publishing activities, radio and television broadcasting
will reject his or her own opinion about the movie given and programming activities, telecommunication
the high signal coming from the two other consumers. activities, and information technology activities under
This also works vice versa. If low-signals dominate in the the Other Community, Social, and Personal Activities
first two weeks, a moviegoer may reject his or her private (Section O). The motion picture industry, in particular, is
UNIVERSITY OF ASIA
UNIVERSITY OF ASIA

high signal in the 3rd week in favor of the low signals
from the first two weeks. In this study, the researchers
examine the demand for the industry as represented
by gross revenues and ticket sales given the different
determinants which can affect movie demand.
under Recreational, Cultural, and Sporting Activities.
The 2009 PSIC categorizes the motion picture industry
under Section J: Information and Communication (see
Table 1). This section includes the production and
distribution of information and cultural products, the
provision of the means to transmit or distribute these
& THE

Emperical Methodology and Conceptual products, as well as data or communications, information

& the

Framework 
Philippine Standard Industrial Classification, “Other
PACIFIC

The theory of information cascades and star power are Community, Social, and Personal Activities,” www.bles.dole.
PACIFIC

tested so as to determine the demand for local films gov.ph/beams/index.php/catalog/41/download/285 (Retrieved

represented by ticket sales, and the effect of coopetition July 2013).
 february 2014  F E A T U R E
technology activities, and the processing of data and
other information service activities. Publishing includes
the acquisition of copyrights to content (information
products) and making this content available to the
industry monitor
public by engaging in (or arranging for) the reproduction
and distribution of this content in various forms. All
the feasible forms of publishing (in print, electronic or
audio form, on the Internet, as multimedia products
such as CD-ROM reference books, etc.) are included
in this section.
There are four classes under this division: production,
post-production, distribution, and projection activities.
The first class includes production of theatrical and non-
theatrical motion pictures whether on film, television,
and DVD. The second class includes post-production
activities such as editing, titling, subtitling, and adding of
special effects, developing, processing and reproduction
of the film for theatrical distribution. These activities are
done in the film laboratories. The third class includes
distributing the film to theaters, television stations, and
other exhibitors. The last class includes the motion
picture projection in cinemas.
Table 1 • Industry codes for the movie industry
Item Code Description
Section J Section J: Information and communication
Division 59: Motion picture, Video, Television programme
Division 59 production, Sound recording, and Music publishing
activities
5911
Motion picture, Video, and Television programme
activities
Motion picture, Video, and Television programme post-
5912
production activities
Class
5913
Motion picture, Video, and Television programme
distribution activities
5914 Motion picture projection activities
Source: www.nscb.gov.ph
B. Product and services
Films are considered the products of the motion picture
industry. Films are produced by recording images from
the world with cameras, or by creating images using
animation techniques or special effects.

Philippine Standard Industrial Classification, “Motion
Picture, Video and Television Programme Activities,”www.nscb.
gov.ph/activestats/psic/publication/NSCB_PSIC_2009.pdf
Ibid., 2009.
 

Jehoshua Eliashberg, Anita Elberse and Mark Leenders,
“The Motion Picture Industry: Critical Issues in Practice,
Current Research & New Research Directions,” Marketing
Science 25, no. 6 (2006): 638-661.
These films are classified into different genres for
easier evaluation and comparison. All films have at
least one major genre, although a number of films are
considered crossbreeds or hybrids with three or four
overlapping genres (or sub-genres) that identify them.
Suspense-thriller, biographical, romance, and fantasy
are examples of sub-genres. The following are the main
film genres:
1.  Action: This type of film usually involves physical
stunts, chases, fights, and rescues. Oftentimes, it is two-
dimensional, meaning there are heroes (protagonists)
battling villains (antagonists).
2. Comedy: Plots are typically light, designed to
amuse and make the watchers laugh. It may be done
by exaggerating language and action. Among the forms
of comedy are spoofs, parodies, slapstick, romantic
comedy, and dark satirical comedy (black comedy).
3. Drama/Other: The tone and mood are serious,
and characters, settings, and situations are realistic. This
genre does not focus on special effects and other genres
such as comedy or action. Instead, it emphasizes plot
and character development and interaction.
a. Romance: stories that center on the positive
and negative sides of love between two or more
characters
b. Documentaries: stories that develop a true story
and are narrated in the presence of factual figures
and places explained by an expert on a certain field
c. Historical: films that revive the past through the
use of old-fashioned costumes and plots that bring
to the present the world lived in by one’s ancestors
C. Product process
Producing a film is a sophisticated process that requires
a complete specification of the conditions, materials,
and personnel needed to produce a film. The stages of
production are divided into three: (1) Preproduction,
(2) Production, and (3) Postproduction. The process
is sequential, so that the earlier stages have to be
significantly completed before one can proceed to the
next stage. The output of these production stages is then
distributed and exhibited. The last two stages are (4)
Distribution and (5) Exhibition.
1.  Preproduction The preparation for every element
in the filming process takes place in the preproduction
Tim Dirks, “Main Film Genres,” http://www.filmsite.org/
genres.html (accessed July 2013)

Adapted from film genre description used by Fee, C. Edward.
“The Costs of Outside Equity Control: Evidence from Motion
Picture Financing,” Journal of Business, vol. 75, no.4 (2002).
F E A T U R E
stage. The producer and director are the central figures
in organizing the preproduction stage. Schedules are
set to organize the order in which each process of the
preproduction tasks of the director and producer is
planned and carried out.
2. Production “The start of production is the
moment when the score has been written, the musicians
are assembled, and the conductor raises the baton. The
ship has been constructed, the crew has been chosen,
and the captain pulls up the anchor.” Production is also
called ‘principal photography’ which is the period when
the first unit completes photography.
3.  Postproduction Much of what the audience
perceives on the screen is created during the
postproduction process, when the raw material
accumulated during the shoot is transformed into a
product. It involves editing of sequences and images,
as well as the sound that will be used for producing
the final product. It is also in this stage that finishing
touches are executed in film laboratories.
4.  Distribution Entering into the right theaters and
territories is crucial to the film’s critical and financial
success. A distributor must know that a character-driven
film without major celebrity talent in the cast may need
to be released in a few key territories at sites known to
attract the right kind of audience. Film distributors are
mainly responsible for getting the film into theatrical
release in movie theaters or cinemas.10 Distribution in
this industry involves interaction with two main groups
of customers: exhibitors and audiences. It encompasses
the physical distribution of the prints to the theaters or
cinema as well as the marketing activities in each of the
markets in which the film is released.11
There is also a subset of film distributors that deals
with nontheatrical distribution such as licensing to
television, airlines, video, and the Internet. These
activities are normally handled between the production
entity and television networks or syndication companies.
There are separate distributors for video and other forms
of electronic distribution. Since distribution covers all
these as well as film advertising, a distributor should
also work with various staff and agents and must know
media.

Ibid., 41.

Ibid., 225.

Ibid., 253.
10
Yager F. and J. Yager, Career Opportunities in the Film
Industry.(NY: Ferguson, 2009), 192.
11
Eliashberg et al., “ Critical Issues in Practice.” www.hbs.edu/
faculty/Publication%20Files/05-059.pdf (accessed July 6, 2013).

A variety of strategies is used to get people to buy
tickets to movies such as holding advance screenings for
key journalists or opinion leaders and creating elaborate
contests open to the public wherein winners can see
a movie prior to normal screening. When television
advertising is involved, commercials have to be made.
The making of a trailer is a tricky business. It must
not give too much or too little information but just
enough to entice people to watch the movie.12 All in
all, distributors have many factors to consider, including
the right release date, the behavior of their target market,
the competition at the time of release, and the best way
to market a particular movie.
5. Exhibition  Exhibition refers to activities performed
by theater chains and individual theater sites.13 Theater
chains have virtually taken over the exhibition business,
and they have their own buyers and bookers who attend
screenings prior to a film’s release. Theater owners
should know which movies interest its market. Theater
location must be strategic enough, that is, where there
are enough people and there is easy access by driving.
There has to be the right relationship between theater
characteristics, which are price and quality, the distance
consumers have to travel to theaters, and their demand
for movies.14 Exhibitors are also responsible for tracking
box office receipts, meaning they have to keep the books
as up-to-date as possible. In addition, they often have
to give concessions to distributors to get blockbusters,
in which they will agree to show a less desirable film in
exchange for showing a movie that will fill their theater.
Aside from advertising and marketing, theatrical
exhibition is also one of the major factors in persuading
the public to see a movie. Prior to and during theatrical
release, there is a combination of advertising, media
attention, and word-of-mouth communication.
D. Historical background of the film industry
Prior to the existence of Philippine cinema, theater was
already embedded in the country’s national culture. In
early societies, ritual practitioners already had the habit
UNIVERSITY OF ASIA
UNIVERSITY OF ASIA
of performing their dance dramas through imitative
communal dance, which aimed to assure the Earth’s
fertility, proper regulation of seasons and elements, and
augmentation of harvest and in warfare activities.15
12
Yager and Yager, Career Opportunities in the Film Industry,
204.
& THE
13
Eliashberg et al., “ Critical Issues in Practice.”
& the
14
Ibid.
Arsenio Bautista, “History of Philippine Cinema,” National
PACIFIC
15
Commission for Culture and the Arts (2011), 1-3, http://www.
PACIFIC
ncca.gov.ph/about-culture-and-arts/articles-on-c-n-a/article.
php?i=115&igm=1 (accessed July 7, 2013)
 february 2014  F E A T U R E
By the turn of the 19th century, zarzuelas and vaudevilles
became prominent among Filipinos from all over the
country. They participated both as actors and audience in
this type of performance art. A zarzuela was characterized
industry monitor
as a traditional, satirical-themed Spanish one-act opera
while the vaudeville was a stage show with a variety of acts
wherein actors engaged in dancing, singing, and comedy
to passionately prove their art of entertainment.16
During the 19th century, the motion picture was
introduced in the country by Spaniards. Silent films
arrived in the Philippines. There was no stable audience
for films at that time. The change happened when the
Americans made a film that illustrated the execution
of Dr. Jose Rizal. Filipinos’ sense of nationalism rose,
leading to the production of the First Filipino film
entitled Dalagang Bukid, which was helmed by Jose
Nepomuceno, the Father of Philippine Movies. The
zarzuela-based film set the tone for the emerging
popularity of Philippine literature-related themes and
was released on September 25, 1919.17
During the 1930s and the 1940s, Julian Manansala,
the Father of Nationalistic Films, produced and directed
Patria Amore. The said film helped in establishing the
market for Filipino films. Film artists and producers
strayed from the guidelines and commented on socio-
political issues, using contemporary or historical matter.
The industry was put under a command during
the Japanese invasion in the early years of the 1940s.
During the three-year occupation of the Japanese, the
Japanese dominated the market with the influx of films
coming from their region. The Philippines served as an
important market for Japanese films.
From 1919 to 1940s, the trends of Philippine films
can be deciphered by analyzing the popularity of genres
at that time. Specifically, dramas and zarzuelas were
dominant influences. Soon enough, action movies began
to be the norm. From the stratification considered before
which was religion, the basis soon became Philippine
literature. The industry still managed to compete despite
the arrival of Hollywood movies. It was evident then
that the habit of moviegoing was already rooted in the
country that time.18
To date, the decades of the 1950s and the 1970s
are considered the Golden Ages of Philippine Cinema.
16
Ibid., 2011.
17
Nadi Tofighian, “The Role of Jose Nepomuceno in the
Philippine Society” (2005), 9-14, http://su.diva-portal.org/
smash/get/diva2:200615/FULLTEXT01.pdf (accessed July 8,
2013)
18
Nick Deocampo, Film: American Influence on Philippine
Cinema (Manila: Anvil Publications, Inc., 2011).
Filipinos films during these periods were considered
undisputed leaders in the continent’s film scene and
garnered international recognitions from different
award-giving bodies across the world such as the
Cambodian, Berlin, and Asian Awards.19 The period
of 1950s mirrored the rebuilding and dominance of
cinema.20 This decade was considered the “First Golden
Age of Philippine Cinema” due to the discovery of new
cinematic techniques which increased both local and
international markets’ awareness of Filipino movies.21 In
terms of output, the film industry was able to produce
an average of 350 films a year. The establishment of the
First Golden Age can be explained by the emergence
of studio systems in the country. The Big Four which
monopolized the industry at that time were the LVN
Pictures, Sampaguita Pictures, Premiere Productions,
and Lebran International.22
During the 1960s, the industry suffered a decline
due to labor-management conflicts and the increasing
demand for foreign films that mostly consisted of
action and sex films. The genre of “bomba pictures”
appeared at the end of the decade. These had explicit
sex scenes and were shown in provinces by small-scale
film distributors.23
The Second Golden Age was achieved in the period
1976-1986 under the Marcos administration. Young
filmmakers debuted and made a mark in the industry in
the persons of Lino Brocka, Eddie Romero, Mario O’
Hara, and Ishmael Bernal. Independent film companies
such as LEA Productions, Regal Films, Viva Films, Seiko
Films, and a lot more emerged.24 A regulatory board was
established to ensure the public of the proper censorship
of films. This was called the Board of Censors of Motion
Pictures (BCMP), which is equivalent to the present-day
MTRCB. The collapse of the studio movement paved
the way for the rise of independent film outfits and new
product designers, writers, and editors.25
In the 1980s, the decade when the former president
Ferdinand Marcos was subjected to People Power, film
producers and directors incorporated in their movies
the hardships, cruelty, and tyranny experienced by
19
Bautista, “History of Philippine Cinema,”, 1-3.
20
 Anonymous,“History of Philippine Cinema”.Philippine
Journeys (n.d.), http://www.aenet.org/family/filmhistory.htm
(accessed July 8, 2013).
21
Ibid., n.d.
22
Joseph Palis, Cinema Archipelago: A Geography of Philippine
Film and the Postnational Imaginary (Chapel Hill: University of
North Carolina, 2008), 115-119.
23
Ibid., 116.
24
Ibid., 117.
25
Ibid., 117.
F E A T U R E 

Table 2 • Contribution of movie industry to GDP

Gross Household
Domestic Final
Number of films with Product Percentage share of gross Consumption Percentage share of gross
Year Gross revenue Average revenue
reported gross revenue (GDP) in revenue to GDP Expenditure revenue to HFCE
current (HFCI) in
prices current prices

Local Foreign Total Local Foreign Total Local Foreign Local Foreign Total Local Foreign Total

2008 20 150 170 1.133 3.358 4.491 56.6 22.4 7,720,903 0.015 0.043 0.058 5,739,592 0.02 0.059 0.079

2009 20 141 161 1.119 3.806 4.925 55.9 27 8,026,143 0.014 0.047 0.061 5,993,427 0.019 0.064 0.083

2010 18 131 149 1.297 4.29 5.587 67.3 32.7 9,003,480 0.014 0.048 0.062 6,442,033 0.02 0.067 0.087

2011 23 129 152 1.547 4.48 6.027 6.3 34.7 9,734,783 0.016 0.046 0.062 7,142,606 0.022 0.063 0.085

Source: National Statistical Coordination Board (NSCB)­—Philippine Statistical Authority (PSA)

the people during Martial Law. In 1985, two movie
governing bodies were created to help the industry. These
are the Movie and Television Review and Classification
Board (MTRCB) and the Videogram Regulatory Board
(now known as the Optical Media Board) that primarily
aimed to combat piracy.26
From the 1990s and up to the present, there seems to be
a repetition of genres, plots, styles, and characterizations.
The producers seem to be more profit-oriented. But still,
we are recognized today in different international film
festivals, such as the Cannes Film Festival.27 the foreign films’ contribution which resulted in a 1.6%
“Digital computer technology has brought us to
the next decisive historical and discursive caesura. We
are in the backslash.”28 These digital films open new
market opportunities for the industry. According to the
Executive Director of the Film Development Council
of the Philippines, the shift to digital filmmaking has
provided the country a better chance to produce more
quality films and more quantity of films because several
digital effects can now be altered using technology.
Furthermore, film experts believe that the cinema “will
be invigorated by the fresh blood injected into it by the
digital filmmakers.”29
E. Industry and the macro economy
1. Contribution to GDP The National Statistical
Coordination Board (NSCB) had recently revealed that
movies. Despite having fewer national releases, on the
average, a local film earns twice as much as foreign films.
As regards the contribution to the Gross Domestic
Product (GDP), in 2011 (see Table 2), total revenues
from both local and foreign movies constituted 0.06%
of the total GDP (0.016% coming from local films and
0.046% coming from foreign films).30 For two years,
2008 until 2010, the industry’s GDP contribution slowly
increased. During the years 2009 and 2010, local films’
contribution was stagnant, but there was an increase in
overall increase in 2010. For 2010 and 2011, the overall
contribution of local and foreign films was stagnant. Even
though local films’ contribution increased from 0.014%
in 2010 to 0.016% in 2011 or a 12.5% increase, there
was still a 12.5% decrease in foreign films’ contribution
to GDP from 0.048% in 2010 to 0.046% in 2011 so
that the overall contribution of the industry to GDP in
2010 and 2011 remained fixed at 0.06%.
2. Contribution to employment According to the
latest statistics provided by the National Statistics
Office for the year 2009, employment under the overall
community, social, and personal service activities
establishments reached 87, 438, and 95.2% (83,271)
of them were paid while 4.8% (4,167) were working
owners and unpaid workers (see Figure 2). Only an
estimated 18,000 (13.0%) employees were classified
UNIVERSITY OF ASIA
UNIVERSITY OF ASIA

on the average, Metro Manila Film Festival (MMFF) under motion picture, radio, television and other related
entries generate more or less half-a-billion pesos, an activities.31
amount constituting 10% of the combined local and 30
Dr. Romulo Virola, “Now Showing: Panday, Nag-Shake,
international revenues of motion pictures screened in the Rattle, and Roll,” Statistically Speaking (February 13, 2012),
country and one-third of the total domestic gross of local http://www.nscb.gov.ph/headlines/StatsSpeak/2012/021312_
rav_mpg.asp
26
  Aruna Vasudev, Latika Padgaonkar, and Rashmi 31
 National Statistics Office, “2009 Annual Survey of
& THE

Doraiswamy, Being and Becoming the Cinemas of Asia (New Philippine Business and Industry (ASBPI) – Other Community,
& the

Delhi: Mac Millan, 2002). Social, and Personal Service Activities for all Establishments:
PACIFIC

27
Anonymous,“History of Philippine Cinema.” Final Results”, Social and Personal Services Activities (February 6,
PACIFIC

28
Kristen Daly, How Digital and Computer Technologies are 2012), http://www.census.gov.ph/content/2009-annual-survey-
Changing Cinema. (2008), 1. philippine-business-and-industry-aspbi-other-community-
29
Palis, Cinema Archipelago, 139. social-and-0
 february 2014  F E A T U R E

television and other entertainment activities having the

Figure 2 • Contribution of film industry to employment
second highest average annual compensation (see Figure
Library & archives, museums, and 4).34
other cultural ac�vi�es, 1%
News agency ac�vi�es, 0%
Sewage & refuse diposal, sanita�on, Figure 4 • Contribution of film industry to compensation
industry monitor

and similar ac�vi�es, 1%

(GDP)
Mo�on picture, radio, television,
and other entertainment
ac�vi�es, 13%
Average annual compensation per paid employee for other community, social and personal

Average annual compensa�on per paid

service activities establishments for all employment sizes by industry group: Philippines,

employee (in thoousand Pesos)

2009
2500
Other service ac�vi�es, 62% 2204
Spor�ng and other
recrea�onal ac�vi�es, 2000
23%
1500

1000
243.8 361.3 322.3
500
171 142.3
0
Source: NSCB­­­-PSA Other News agency Motion picture, Sporting and Sewage & Library &
community, activities radio, television, other refuse diposal, archives,
social and and other recreational sanitation, and museums, and
personal service entertainment activities similar activities other cultural
Employees belonging to sporting & other recreational activities activities activities
Industry group
activities garnered the highest number of workers per
Source: NSCB­­­-PSA
establishment at 35,500 or 40.6% (see Figure 3). Ranked
second was the other services activities industry with
31,400 workers or 35.9%, followed by motion picture, The total revenue earned by the sector in 2009
radio, television & other entertainment activities with amounted to Php 125, 176.6 million. Motion picture,
18,100 workers or 20.7%.32 radio, television and other entertainment activities
generated the second largest revenue of Php 43, 738.3
Figure 3 • Contribution of film industry to GDP
million or 34.9% of the total (see Figure 5). Costs of
the sector excluding compensation paid to employees
Distribution of employment for other community, social and personal service activities
totaled Php 63, 125.4 million, and the motion picture
establishments for all employment sizes by industry group: Philippines, 2009 industry group had the biggest share of costs at 46.5%
40
35
35.5
31.4 or Php 29, 342.5 million.35
30
(in thousands)
Employment

25
20 18.1 Figure 5 • Distribution of revenue and cost to industry
15
10
groups
5 1.7 0.7 0
0
Sporting and Other service Motion picture, Sewage & Library & News agency Distribution of revenue and cost for other community, social, and personal service
other activities radio, television, refuse diposal, archives, activities
activities establishments for all employment sizes by industry group: Philippines, 2009
recreational and other sanitation, and museums, and
activities entertainment similar activities other cultural 80
activities activities 67.77
70
Revenue and Cost
(in million Pesos)

Industry group 60
43.74
50
Source: NSCB­­­-PSA 40
24.79 29.34
30
Revenue

20 9.92 6.62
Cost

10 2.61
1.87 0.60 0.09 0.54 0.04
With 14 as the average number of workers per 0
Sporting and Motion picture, Other service Sewage & News agency Library &
other radio, television, activities refuse diposal, activities archives,
establishment for each sector, sewage and refuse disposal, recreational and other sanitation, and museums, and
activities entertainment similar activities other cultural
sanitation, and similar activities industry recorded the activities activities
Industry group
largest average number of workers per establishment
Source: NSCB­­­-PSA
at 35. Next was the sporting and other recreational
industry with 25 workers. The other service industry,
with an average of 8 workers, ranked last.33 Revenue-cost ratio, the revenue generated per peso
In connection to employment, the National cost, amounted to Php 1.98.36 For motion picture,
Statistics Office (NSO) also provided the statistics radio, television & other entertainment activities alone,
on compensation of employees in the industry. The revenue per peso cost was Php 1.49 which means that
overall compensation for this sector totaled Php 20, for every peso spent by the industry, Php 1.49 was
298.4 million in 2009, with the motion picture, radio, generated.
34
Ibid.
32
Ibid. 35
Ibid.
33
Ibid. 36
Ibid.
F E A T U R E 

The total average value added per worker of Other
Community, Social and Personal Service Activities
establishments in 2009 was P18.8 million. Value added
per worker is a measure of labor productivity. The
motion picture industry sector ranked third with P1.03
Figure 6 • Distribution of value-added per worker for other
community, social, and personal service activities
Distribution of Value-added per Worker for Other Community, Social and Personal Service
Activities Establishments for All Employment Sizes by Industry Group: Philippines, 2009
18000
16000 15472.6

Value-added per worker

(in thousand Pesos)
million value added per worker (see Figure 6).37 14000
12000
10000
8000
F. Linkages with the rest of the economy 6000
4000
835.4 1370.2 1031.1
Table 3 summarizes the many linkages of the movie 2000
506 303.7 133
0
production-distribution industry with the rest of the Other News agency Sporting and Motion Sewage & Library & Other service
community, activities other picture, radio, refuse diposal, archives, activities
economic sectors. social, and recreational television, and sanitation, and museums, and
personal activities other similar other cultural
The second part of this four-part series discusses the service
activities
entertainment activities
activities
activities

industry’s supply conditions. IM Industry group

Source: NSCB­­­-PSA
37
Ibid.

Table 3 • Linkages with the rest of the economy

Motion picture and video production industry Motion picture projection industry

• High direct linkages

• Intermediate demand industry
General distribution • Low direct forward linkages
• Total final demand of the industry is a negative value due to very high
structure • May be considered as a final demand industry.
imports which may imply that the industry imports many commodities
from abroad in order to produce the final output which is the movie itself.

• Two most important destinations of output: (1) manufacturing and (2)

• Private Services Industries is shown to be an overwhelming
motion picture projection industry with 74% and 25%, respectively.
receiver of the industry’s outputs with 98.3%.
Intermediate • Used as inputs for the manufacturing and motion picture projection
• Private services include the exhibition of films in cinemas
demand structure industries in order for them to complete their final products.
which is the final destination of output
• Revenue is mainly sourced from these two industries and therefore relies
on the purchase of their output.

• Purchases of its output by personal consumers is nil or even negative. A

• The final output, which is the exhibition of films, is
large allocation of its output is toward the import sector which may imply
concentrated on the personal consumption expenditures
that the final output is not for the consumption of private consumers.
Final demand sector of the GDP. Naturally, the purchasers of exhibited
Naturally, the film has to be exhibited first before the general audience
structure films would be individuals classified as consumers who buy
(private consumers) may purchase the good.
tickets of the films.
• The high value of imports implies that there is a large number or high
cost of imported products/services from abroad.

• 70.91% of total input is allocated to the total intermediate

• Intermediate input industry which means that the industry has less direct inputs
Cost production
forward linkages but more backward linkages as it accepts outputs from • 29.09% is allocated to the total primary inputs
structure
other industries for the production of its own outputs. • High backward linkages with other industries implies that it
uses outputs of other industries as inputs.

• The top three industries whose outputs are used by this

• Most important source of inputs: manufacturing industry which accounts
Intermediate input industry as inputs are manufacturing (34%), motion picture
for almost 80% of the industry’s inputs, and thus has a high bargaining
structure and video production and distribution (32%), and electricity,
power as a supplier
steam and water (18%).
UNIVERSITY OF ASIA
UNIVERSITY OF ASIA

• Compensation of employees has the highest percentage among other

primary sources of inputs which implies that the labor force is the most • Compensation of employees is the highest contributory
Primary input important component for the industry to complete its final product and be factor of primary input (41.41%), followed by physical capital
structure sold to other industries as inputs. (30.73%).
• Other important primary sources of inputs are operating surplus (27%)
and depreciation (22%).

Source: NSO
& THE
& the
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 february 2014 10
AGRI-BUSINESS
DA withdraws objection to corn exports
The Department of Agriculture (DA)  is now
industry monitor
amenable to allowing the exportation of corn grits to
enable farmers to gain a foothold in foreign markets
ahead of the economic integration of Southeast Asia
by 2015. DA would propose to the National Food
Authority (NFA) Council that farmers be allowed
to export corn to enable them to develop markets in
neighboring countries before the full implementation
of the ASEAN Free Trade Agreement (AFTA) in
2015. Allowing the exportation of corn grains would
also protect farmers from  possible domestic supply
glut as a result of anticipated surplus. Corn production
in 2013 reached 7.40 million (M) metric tons (MT),
slightly down from the 2012 production of 7.41 M
MT. The Philippines remains self-sufficient in corn,
but production targets are still being reviewed to meet
the rising feed demand of livestock raisers especially
now that new foreign markets have opened. This year,
the Philippines aims to surpass its current sufficiency
level to enable corn producers to both export and
meet domestic demand. Despite good production,
the government was hesitant to allow corn producers
to export to keep domestic supply stable. Only 15%
of the domestic harvest is dried properly while the
rest are dried along public roads. Export grade corn
must have a moisture content of only 14% and zero
aflatoxin level which is attainable though the use of
modern drying technologies.
Source: Philippine Star Online, 30 January 2014
BPO
Call centers’ revenues to grow 19% in 2014
Call centers across the country today projected their
revenues to grow by as much as 19% year- on-year in
2014 due to demand for voice service in new markets.
The Contact Center Association of the Philippines
(CCAP), the biggest group of call centers in the
country, said the expansion of existing companies and
the entry of new players as well as the depreciation
of the Philippine currency will boost the industry
this year. The CCAP did not divulge the earnings of
Philippine call centers last year. In 2012, the local call Nido Petroleum secures UAE investor for
center industry earned $8.7 billion.    Palawan venture
Source: Philippine Star Online, 28 January 2014
n ews
CONSTRUCTION
Cement sales up 6% in 2013
Cement sales grew 6% in 2013 from a year ago
amid strong construction activity according to the
Cement Manufacturers Association of the Philippines
(CeMAP). Data from the CeMAP showed total
cement sales reached 19.445 million (M) metric tons
(MT) last year from the 18.356 M MT sold in 2012.
For the fourth quarter alone, cement sales went up
2.1% to 4.503 M MT compared to 4.409 M MT
in the same period in 2012. The huge budget of
the Department of Public Works and Highways for
infrastructure spending would support higher cement
sales this year according to CeMAP. More investments
in mass housing will also drive higher cement sales.
Source: Philippine Star Online, 26 January 2014
ELECTRONICS
Electronics makers hold employment mission in
Yolanda-hit provinces
The Semiconductor and Electronics Industries in
the Philippines Inc. (SEIPI) plans to conduct an
employment mission to provide jobs in parts of the
country devastated by Super Typhoon Yolanda.
Following an employment mission conducted by the
SEIPI earlier this week in Ormoc City in Leyte, the
group said in a statement that it intends to organize
another mission for other areas hit by the typhoon.
Five of SEIPI’s member firms HGST Philippines
Corp., Epson Philippines, Microsemi Corp., Testech,
Inc., and Alliance Mansols, Inc. participated in the
recent mission. The five companies required a total
of about 1,500 jobs for operators, technicians,
engineers, and other professionals. The group chose
Ormoc for the employment mission as it was assured
by the city’s Public Employment Service Office that
many residents there are looking for quality jobs. The
electronics industry offers quality jobs to workers as
well as above-average minimum wage and benefits.
Source: Philippine Star Online, 26 January 2014
OIL & GAS
Nido Petroleum Philippines Ltd., an Australia-listed
n ews
oil and gas company, has secured a new investor for
its oil exploration project in Northwest Palawan. In
a disclosure to the Australian Stock Exchange, Nido
said it has entered into a farm-out agreement with
United Arab Emirates (UAE)-based Dragon Oil for
Service Contract 63 in Northwest Palawan. Under
the two-phased deal, Dragon Oil will acquire a 40%
participating interest in SC 63 from Nido’s current
50% participating interest in the service contract. To
earn its 40% interest from Nido, Dragon Oil will pay
on behalf of Nido 56% of the cost of the Baragatan-1
exploration well based on a $25 million (M) cost cap.
For the second stage of the farm-out agreement, Nido
will seek to secure an additional 10% participating
interest in SC 63 from the Philippine National Oil
Co. (PNOC)-Exploration Corp (EC). PNOC-EC
is the exploration arm of state-owned PNOC. Thus,
Nido will then have a 20% working interest in SC
63 and will then contribute $2M towards the cost
of the Baragatan well. This contribution is based on
an estimated cost of $25M. Nido and PNOC-EC
welcomed the entry of Dragon Oil, an independent
oil and gas exploration company, which has projects
in Tunisia, Iraq, Afghanistan, and Egypt.
Source: Philippine Star Online, 17 January 2014
POWER & ENERGY
Global Business Power expands Iloilo plant
Global Business Power Corp. (GBPC), the power
generation arm of the Metrobank Group, is expanding
its power plant in Iloilo on the back of the growing
economy of the province. The province has witnessed
a dramatic resurgence of business and the emergence
of new industries like business process outsourcing
(BPO) since the completion of its 164-megawatt
(MW) clean coal-fired plant in 2011. GBPC unit Panay
Energy Development Corp. is building another 150-
MW coal-fired power plant in Iloilo which will start
in the middle of the year. Its commercial operations
are programmed by July 2016. Development projects
in the pipeline in Iloilo also include the 75-hectare
Iloilo Business Park of Megaworld Corp. This will
be home to the state-of-the-art Iloilo Convention
11
Center, luxury hotels Richmond Hotel Iloilo and the
Courtyard by Marriott Hotel, as well as BPO office
buildings and residential condominiums. Other
projects include the 20-hectare Atria Park District
of Ayala Land, the 20-hectare Gaisano Business
Center, and the high-rise commercial and residential
condominiums of Double Dragon Properties.
Source: Philippine Star Online, 31 January 2014
TELECOMMUNICATIONS
PLDT Unit to double number of Fibr-powered
villages in Phl
PLDT Home, a unit of dominant carrier Philippine
Long Distance Telephone Co., expects to double the
number of villages covered by its fiber-to-the-home
service as it expands to other areas outside Metro
Manila. According to PLDT vice president and head
of Home Broadband Gary Dujali, PLDT intends to
double the 1,000 villages powered by PLDT Home
Fibr this year. PLDT Home Fibr currently covers
1,000 villages in the National Capital Region including
the cities of Makati, Mandaluyong, Muntinlupa,
Parañaque, Quezon, Pasig, San Juan, and Taguig.
The service is also available in several villages in Cebu
and Davao. As part of PLDT’s transformation into a
multimedia company, PLDT Home introduced a new
innovation that would transform ordinary TV into
Internet TVs with technology TVolution. Powered
by quad-core processors, the TVolution operates
on an Android-based platform and connects to any
HDMI-ready TV and syncs with a PLDT Home Fibr
WiFi connection. The TVolution allows customers
to stream blockbuster movies and TV series straight
from the Internet, using their PLDT Home Telpad
or any Android device as remote control. Its features
include 4GB of internal data storage, a microSD card
slot, WiFi, Bluetooth, HDMI input and output, and
UNIVERSITY OF ASIA
UNIVERSITY OF ASIA
two USB ports. Mr. Dujali stated that subscribers
only need to make a minimal addition of P199 to
their monthly Fibr subscriptions to gain access to
a whole new world of content online through their
televisions.
Source: Philippine Star Online, 31 January 2014
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 february 2014 12 statistics

Gross value added (GVA) in financial intermediation

Q1 2011 to Q4 2013 (current prices)
Unit: P million
2011 2012 2013
industry monitor

Industry/industry group Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Banking Institutions 79,352 78,830 75,983 74,950 89,295 86,315 82,862 81,538 105,763 94,256 99,617 92,847

Non-bank financial
43,058 73,544 49,334 57,697 48,636 82,578 56,058 65,382 61,517 93,043 61,049 73,062
intermediation

Insurance 27,296 26,766 29,054 29,830 30,185 29,127 34,488 33,980 38,004 36,201 38,435 39,642

Activities auxiliary to
8,397 10,523 9,227 10,248 9,072 10,882 10,451 12,820 10,549 12,768 12,182 14,742
financial intermediation

GVA in financial
158,102 189,663 163,598 172,724 177,189 208,901 183,860 193,720 215,834 236,267 211,283 220,293
intermediation

GVA in financial intermediation

Q1 2011 to Q4 2013 (constant prices)
Unit: P million
2011 2012 2013
Industry/industry group Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Banking Institutions 46,872 45,035 43,514 42,798 51,155 47,904 45,837 45,225 58,710 50,985 53,779 49,780

Non-bank financial
25,130 42,452 28,454 32,865 27,519 46,296 31,220 36,164 33,714 50,834 33,177 39,064
intermediation

Insurance 15,680 15,653 16,729 17,059 16,817 16,547 19,182 18,769 20,517 20,045 20,862 21,167

Activities auxiliary to
4,915 6,046 5,316 5,854 5,150 6,074 5,816 7,113 5,803 6,946 6,616 7,906
financial intermediation

GVA in financial
92,597 109,185 94,012 98,575 100,641 116,821 102,054 107,271 118,743 128,810 114,434 117,918
intermediation

GVA in financial intermediation

Q1 2011 to Q4 2013
Implicit price index
2011 2012 2013
Industry/industry group Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Banking Institutions 169.3 175.0 174.6 175.1 174.6 180.2 180.8 180.3 180.1 184.9 185.2 186.5

Non-bank financial
171.3 173.2 173.4 175.6 176.7 178.4 179.6 180.8 182.5 183.0 184.0 187.0
intermediation

Insurance 174.1 171.0 173.7 174.9 179.5 176.0 179.8 181.0 185.2 180.6 184.2 187.3

Activities auxiliary to
170.9 174.0 173.6 175.1 176.2 179.2 179.7 180.2 181.8 183.8 184.1 186.5
financial intermediation

GVA in financial
170.7 173.7 174.0 175.2 176.1 178.8 180.2 180.6 181.8 183.4 184.6 186.8
intermediation

Source: Philippine Statistics Authority