In conversation with
In conversation with Mr. Matthew Kichodhan
Chairman and CEO | Wave Entertainment Ltd.
FDI Spotlight: What have been the most significant milestones for you since you became CEO of the Wave group 2 years ago?
Mr. Matthew Kichodhan: The huge transformation of our market value over such a short period. We went from a company worth 300 million baht to now 2 billion, and that is in spite of the coup and protests and all of this happening.
Wave Entertainment was a public company from 1993/94 and at the time was called CVD and was in the business of selling CDs and DVDs which, back then, was a huge business. So we were in the right industry at the right time, but of course this industry disappeared just like that, as everyone moved online. It then transformed itself to become an entertainment company, Wave Entertainment, which produced soap operas but that has also had its limitations. When I think it really changed is when it touched the lifestyle market.
What you’re tapping into now is the massive amount of people who are on the lower income level. They want to move up to become the new middle class, but they have no bridge because it jumps straight to the premium luxury lifestyle market. There’s a huge need for business sectors who can market to the new aspirational middle class. Two of the sectors that interest us are food and education.
There’s a lot of street food in the Thai market today, so when you open Thai restaurants people don’t want to pay as much as they can already eat very efficiently from the streets. So we tapped into a different model with a company called ‘Jeffer.’ This a Thai owned, Thai developed brand that was serving western food, like steaks, french fries, with an average ticket price of 130 baht. The prices are comparable to fast food brands but it is different as this is a sit down restaurant, not take away fast food.
We are attracting a whole bunch of first jobbers, staff who work in offices, who have children and want to take them out but there is no venue as the prices are prohibitive. This also applies to students and recent graduates who want to go somewhere that they can sit down that is not just fast food. Even when the economy became depressed, we saw a 6% rise in this sector while fast food companies have declined. This shows the resilience of this price point that the middle class want to be at. This is the power of the middle class and not enough people are seeing it yet.
What we can do is transform brands. There’s no reason to open franchises from the USA who have no equity in terms of brand awareness here. It could be anyone opening these businesses, so let’s open Thai businesses and keep the creative hub here in Thailand.
We call Thailand the kitchen for the AEC. All the industries like the shrimping industry etc. are here, but we haven’t prepared that central kitchen beyond sending out frozen food, only touching the beginning of this opportunity. We have to move from the freezer, to the fridge, to the stove. That way we can become the central kitchen of Asia, but we can never say we’re the kitchen of the world while we’re just freezing shrimp and fish and exporting them.
Would you say your ability to adapt to the changing needs of the consumer and understanding of the middle class are key to your success here?
Mr. Matthew Kichodhan: Absolutely. Let me talk now about education. Thailand is in the lower literacy group for English comprehension and speaking which is a big worry for the whole country. If the AEC common language is to be English, we need greater skills here. The Siam Cement group have announced that they will operate completely in English in the next 3 years. That’s shocking if you are an employee who cannot understand, read or write English and suddenly, all emails will now be in a language you do not comprehend. This is necessary, once the AEC really opens up you will have people from the Philippines or Malaysia coming to Thailand to work in hospitality. This is the bread and butter of Thailand and the common language will be English. It’s not just Thai anymore, education is important. I don’t say this because I just want to open an English school. What I’m trying to do here is buy operating companies that are in lifestyle and transfer them into content.
For example, looking at the US model of the Food Channel you have real chefs from real restaurants providing that content, not just a chef on TV but a real chef with a real restaurant. They can then feed back into the brand equity and awareness of their industry via the entertainment industry. We need to think ahead for a model like this in the AEC. We should be providing our own entertainment content from our own lifestyle companies to strengthen the creative hub here in Thailand.
Previously we’ve been buying content from abroad, but with the opening up of the AEC this is untenable. Since deregulation of the digital channels, even channel 3 will now no longer bid on things like the world cup or English premiership league as it is so expensive. When we create our own content from our own lifestyle brands we feed brand awareness and equity into both sectors. Once you leverage on media you can bring that return to the operating business. That’s what we’re looking at right now.
So we realised Wave Entertainment was in the position to buy lifestyle companies but we didn’t have the vehicle to translate it into content. To fix this we recently acquired Index Creative Village, a production company which produces soap operas, TV shows, musicals, large performances, markets large national events to small Coca Cola events, creates advertising, and organises events. So you can see they really are a huge creative hub who touch on all aspects of production whilst also being based in Thailand. They are a perfect way for us to translate the lifestyle brands into production content and become the creative production hub of the AEC.
How do you see the Wave Group’s role within the AEC?
Mr. Matthew Kichodhan: We feel that Thailand could be the Hollywood or Bollywood of the AEC; we should be the entertainment capital and we should also be the digital hub. Thailand has the highest penetration of Facebook and twitter users in the world today – that has great potential.
If you want to be ‘Hollywood’ you need the ability to produce, and that’s Index. Most of the advertising that’s done for fast moving consumer goods, within the AEC, is mainly done by Thai production houses. There are many Hollywood movies, like The Beach and several James Bond films, that are filmed in Thailand so we have the capacity to expand on that right here.
To be the Hollywood of the AEC can you internationalise the Thaiculture and identity to gain the respect of your neighbouring countries in the manner of Hollywood or Bollywood?
Mr. Matthew Kichodhan: If we take Korea as an example and the huge success of k-pop internationally, we can’t aim for success that large as we still have the mindset of a developing country. So the question right now is, “can we just export this culture out into the AEC?” The answer is yes, and people don’t realise that we already are. The programmes produced by channel 3 and other Thai channels are well watched in Laos, Vietnam, and Myanmar because they can pick it up with satellite transmission. Many of these countries around us don’t have the creative industry to produce this content themselves, that’s why we are the production hub.
The first step for Thailand is to be the production hub for content as well as creativity. We accomplish this by consolidating it and ensuring we get a real Hollywood stamp on our name like Bollywood has for India. It’s more than just exporting a very specific genre like K-pop music. One of the number one soap operas in China is Thai right now so we’re looking at a reversal of cultural migration from Thailand back to China.
Since the emergence of the AEC the member countries have been searching for an identifiable headline to represent their nation. For example Singapore is the finance gateway, Malaysia is the value addition economy and so on. What titles do you feel Thailand can claim?
Mr. Matthew Kichodhan: Thailand can only be the capital of the AEC, we should not position ourselves to be anything else, any one sector. With our GDP, population, entertainment industry, manufacturing potential, export capabilities, automobile industry and being the transportation hub of the area, we really can lay claim to being the capital of the region.
In terms of the creative industry what message would you send to potential international investors?
Mr. Matthew Kichodhan: Thailand stands in a beautiful location, having always been independent and free from colonial rule, the creative industry, from textiles to entertainment, is under selfcontrol. We also have a perfect location, be it indoor or outdoor, with the perfect combination of setting, affordability and capability, we present a big opportunity for international production companies. The AEC has forced us to become more competitive and forced all the Asean countries to take the incentive to move forward. It can’t just be ambition, it must also be action. The only thing we are missing is a stable government. Most investors want stability and predictability so that the path forward is relatively consistent.
People are looking for consistent government policy. This needs to happen to support the entertainment industry like we are beginning to see in the tourism industry with the reduction of import tax on luxury items in order to secure high end tourism. We need the same thing to apply to the entertainment industry and we need to address the tariff barriers on equipment and technology in order to make us more competitive.