Malaysia’s Infrastructure and Censorship Present Challenges
for Film Industry

Over the last 60 years, Malaysia has moved from being an agricultural and commodity-based economy to a vital player in the manufacturing and service sectors. According to the World Bank, since 2010 the Malaysian economy has averaged yearly growth of 5.4%, reducing the percentage of its 31.7 million people living in extreme poverty to less than 1%. By 2020 it is predicted that Malaysia will become a World Bank defined “high income country,” boasting a gross national income (GNI) in excess of $12,236 per capita.  While this bodes well for the entertainment sector, the country still must grapple with insufficient infrastructure and censorship that presents a significant challenge for sellers.

Malaysia is known for censorship laws that are some of the toughest in the world, with all films being vetted by the Film Censorship Board.  While restrictions have loosened slightly, allowing movies with violence and profanity to be screened, nudity and sex remain banned. The rating system permits some films to pass the censorship board without edits or with minor edits. Inconsistent standards make passing censorship challenging, while an element may be allowed in one film, it does not guarantee it will be allowed in another. As local buyers find it difficult to get permission from the producer to edit a film for censorship, they often find it easier to acquire titles that likely won’t require changes.

For theatrical distribution, English language titles have the highest market share at 75% (the majority of which are U.S. major studio films).  In 2017, local films only accounted for 5.9% of the box office revenue. Regional Asian films account for the remaining market share including Chinese, Hong Kong, Thai, Japanese, and Indian titles.  Action/adventure films are the most popular, especially when locally produced and starring recognizable talent. Action films are also imported, generally from India and the U.S. Animated films are high earners, along with horror and thrillers, whereas films based on true events often perform poorly.

U.S. major studio films open on approximately 250 screens with 900 screens for blockbuster titles. Local films open on 25-50 screens but can have a release as high as 130 screens. Imported independent title releases range greatly -- from 50-100 (mostly horror/thriller films) to as low as 5-10 screens (dramas or arthouse fare). The number of screens can drop as much as 50% by the second week of exhibition. Titles are pulled quickly if not performing well. However, exhibitors typically wait an entire week instead of just a day or weekend. Alternatively, if a title is outperforming estimates, it can expand to more screens.

The most common languages for TV programming in Malaysia are Malay, Chinese, Tamil, and Hindi because the population of Malaysia is so diverse. This makes it difficult to please the entire television audience, which has given rise to niche channels serving specific ethnicities and languages.

Free TV networks produce a large portion of their own programming. These in-house productions are usually TV format programs, reality shows, and soap operas. Pay TV has a greater amount of foreign produced programming than Free TV. The majority of Pay TV channels available in Malaysia are multinational networks that broadcast to and acquire programming for the entire region. Malaysian broadcast and pay TV service provider, Astro, however, will buy Malaysia Pay TV rights separately. For independent films, local Pay TV prices depend largely on a film’s U.S. box office performance. SVOD rights are often included in a Malaysian Pay TV deal.

As of January 2018, internet penetration had reached 78% in Malaysia with mobile phone penetration hitting 98%. Although more people are accessing the internet, both fixed and mobile, a major challenge in the developing VOD market is the lack of bandwidth available from local ISPs.  Currently mobile tends to support higher streaming speeds than is currently available for smart TVs in the country, so smartphone use is driving VOD market development. Local fixed services are adjusting to the market’s needs through allowing downloads for offline streaming and experimenting with video compression to lessen the bandwidth requirements. Overall, there is strong concentration on international programming across most digital platforms in Malaysia.  For local television, a supportive infrastructure and consistent censorship laws need to be deployed in order to encourage greater sales.