The Case for Investing in Hawaii-Owned Digital Media Production

by | Jun 25, 2021 | Blog

A new MIT study reveals why digital media content production is a key to Hawai‘i’s future. The study shows that while the computer revolution created more US jobs than it killed from WWII to 1987, that the result from 1987 onward has been a negative net for jobs and 3 decades of lackluster economic performance compared to previous industrial revolutions. The study recognizes an accelerating trend of “excessive” automation such as grocery store self-checkouts and call center software. While such automations reduce the need for employees they don’t increase net sales revenues. In light of this, the conclusion is that policy makers should legislate with an eye toward creating a net gain of new product productivity, i.e., create more products rather than simply reconfiguring the efficiency of existing products.

What Should Hawai‘i Invest In?

There’s been a lot of theorizing about a Hawai‘i “2.0” economy based on innovation. To some, this means creating a new technology industry. But perhaps it makes more sense to think of innovation as additive to existing industries rather than Hawaii become another entrant to the “Me Too” Silicon Valley race. Frankly, every Valley exec knows that tech has decentralized to every corner of the globe, so hanging your hat on being the next tech center is a tough play for any region. It’s what you do with technology that counts.

Taking a wider historical perspective, technology has been part of all economies throughout time. For example, fire is a technology. And the wheel was a technological innovation. This helps frame Hawaii’s baby and bathwater problem: namely, should we jettison tourism in favor of creating an innovation economy or do we encourage the application of information technology tools to extend and grow our current industries?

To help answer the question, it’s worth noting that all regions build global market share in the same manner that businesses find market footholds: they identify their unique differentiators and leverage them into competitive advantages. Vegas is gaming. LA is entertainment. San Francisco is finance. Oakland is shipping. Of course any city can have multiple industries, but the point is that whatever the regional specialty, success stems from God-given competitive advantage ~ economies aren’t invented out of thin air.

Innovation to Build Stronghold Industries

Another insightful MIT product, a book called “Innovating,” convincingly theorizes that innovation today increasingly occurs at the intersection of multiple disciplines. Connecting the dots between market-proven success yields a high chance for success than being at the esoteric end of a single industry. For Hawai‘i, an example is adding information technologies to grow legacy industries. The business community innately knows this with past examples include Hawai‘i being a hot bed for booking engine software, cyber security for military applications and sustainable energy.

To best leverage legacy success, it’s worth taking a step back in time to understand Hawai‘i’s economic foundation. While it’s widely known that Hawai‘i has leveled up with waves of economic growth (agriculture, military and tourism) the real point of insight requires digging a bit deeper to understand the competitive advantages that spawned these industries in the first place. For example, Hawai‘i is the only state in the US that is in a tropical climate zone which means a competitive advantage for tropical agriculture products like coffee, cane and pineapples. For the military, Hawai‘i is uniquely positioned as an off-shore location for strategic security activities. And of course our state’s uniquely beautiful environments and exotic cultures spawned the tourism industry. Hawai‘i’s tourism industry is a case in point of the multi-disciplinary approach noted above in that exponential growth didn’t occur until the 60’s when jet aircraft technology was added to a small, but unique exotic travel destination industry.

Applying the multi-disciplinary approach to all stronghold industries will yield more productive, faster-to-market and lower-risk outcomes than cooking up an entirely new industry. And there are a myriad ways to plus existing markets. For agriculture, technology can optimize crop production and distribution. For local maker products, digital marketing and e-commerce can open new direct-to-market sales channels. For military and security markets, military grade cyber security services, off-grid energy technologies and ecological sustainability products/services are relevant to an expanding military and energy sustainability market.

Growing Digital Media Exports

With respect to the next age of tourism and experience products (e.g., film, TV, music), technology is highly relevant to leveraging Hawaii’s environmental and cultural beauty. Digital media as a way of responsibly leveraging our state’s story assets represents a growth curve beyond a physical visitation model that has topped-off to the point of harming the base assets. Digital media viewed as experience export products, can share Hawaii’s beauty with an infinite number of people without requiring them to set foot on our islands.

And while technology has revolutionized the required time and cost of content production, it’s also revolutionized distribution. The world is now open to any artist wishing to express and distribute their own artistic products. All keiki know this as the current #1 career choice for students is to become a social media influencer. Is this a real career? Ask the kids that are making 8-9 figures a year. That’s about as real as it gets. For Hawai‘i as a global brand and region of cultural storytellers, investing in the best of digital media technology is an epic opportunity. In fact, if we don’t invest in state-of-the-art digital media tech, we will soon find ourselves behind other locations and our workforce irrelevant to a top global growth industry.

Supporting Locally-Owned Digital Media Products

Beyond scaling the digital media production industry, scaling locally-owned productions is key to a robust Hawai‘i economy. A recent UHero research paper explored the pros and cons of the hotly debated Hawai‘i Film Tax Credit. Whether or not you believe the film tax credit has created a net gain for the state’s economy (some believe that the credit gives funds to productions that would have come to Hawai‘i even if the credit wasn’t available), one concept that needs to be addressed in a more serious way is the notion that film, TV, music and other arts investments should be skewed to locally-owned productions over visiting productions. Funding local productions ensures that digital media content products build Hawaii’s economy first, not California’s or other states’. Monies that stay here build the tax base and provide resources to fuel future rounds of reinvestment that build local capacity and provide living-wage jobs.

Hawai‘i’s economic growth is all about creating new export products. This means exports like digital media that check all the boxes of high-value, fast-to-market and cheap-to-distribute. Thus the goal should be to invest in industries that have competitive advantages to create better products that grow our local economy.