Contextual Continuity

To provide continuity in terminology and context based previously in the Mapping of the CCI Ecosystem entrepreneurship and scalability roadmaps, following is a review of the main concepts, basic definitions and proposed principles.

Base Definitions:

Cultural and Creative Industries (CCI): Economic activities based on individual creativity, skill and talent to generate wealth and employment through the commercialization of intellectual property (Sanchez and Alonso, 2020). It includes activities to create, produce, and or distribute creative goods and services, as well as linking them to other economic sectors (European Cluster Observatory, 2013).

Creative Economy: The Interamerican Development Bank (IDB) defines the Creative Economy (or Orange Economy) as a set of interrelated economic activities that allow for ideas to be transformed to cultural goods and services, and that value is determined by the content of their intellectual property (Buitrago y Duque, 2013).

Audiovisual Media: Refers to the subsectors of the CCI related to mechanisms of mass communication and transmission of messages by electronic channels that involve sight and sound. It also refers to activities focused on promoting content that is distributed through a digital screen such as film, animation, audiovisual development, publicity, multimedia, electronic learning, and videogames.

Business Model: “A business model is the simplified representation of how an enterprise creates, delivers and captures value” (Osterwalder & Pigneur, 2014). It is the definition of strategies to generate value for customers and allies (Sánchez et al, 2022) including the use of technology for scaling and strategies for monetization

Value Proposition: Set of products and services that satisfy the requirements of a specific market segment.

The differentiation of products and services in respect to their competition, with unique and innovative attributes.

High Impact Entrepreneurship: It is an enterprise with the potential to multiply its income sustainably and increase their capitalization in an accelerated fashion, most commonly it will have disruptive innovation in established markets.

Scalability: Refers to the capability of an Enterprise to multiply its income exponentially sustaining a linear growth of their operational costs (Macedo et al, 2022). The capability of companies to overcome growth limitations, to leverage economies of scale and an accelerated acquisition of customers. They serve a universal need (global) and can be accessible by digital media

Economies of Scale: When average costs of production diminish in proportion to accelerated sales growth. It refers to the point where increments in sales do not require proportional increments in capital investment. (For example, a software platform once developed the incremental cost of adding new users is negligible)

Replicable business model: It refers to an enterprise with well defined processes that can be replicated with high levels of standardization and reliability over space and time. Although it achieves a certain level of economies of scale their profitability will be constant and linear, the increase of sales is not exponential, and costs increment in proportion to new sales.

Market Niche: A segment of a broader market with specific needs and preferences, a reduced subgroup of clients that share characteristics. A fragment of specialization determined by specific attributes such as price, value added, quality, convenience, or design.

Value Chain: A sequence of activities within an enterprise that accumulate value for customers. From design, logistics, production and delivery of goods and services. A method of analysis of the Value Chain by Michael Porter in 1985 helps identify sources of competitive advantages of companies. The same methodology can be applied to the analysis of an industry in general terms and to determine the competitive position of a company within the industry.

Core Competency: The central or basic capabilities of an enterprise, that differentiates it from its competition, it may include a unique skill, knowledge, or specialization. The accumulated collective knowledge of an organization, including processes, designs, market understanding, social networks, and communication channels.

Disruptive Innovation: Innovations that have a transformative impact on an industry or market. Mostly driven by new technology, or new business models that drastically change the competitive dynamics of a market displacing established products and services.

Blue Ocean Strategy: A competitiveness and differentiation strategic framework developed by W Chan Kim y Renée Mauborgne in 2005. Based on the observation of competing companies in a saturated market (Red Ocean), and the development of differentiated market segments not being served (Blue Ocean). The Blue Ocean refers to the creation of new markets, opportunities, and niches with little or nonexisting competition, through offering highly differentiated value

Business Acceleration: Refers to a strategy that provides enterprises with the needed resources to meet their business goals in a shorter period. A designed acceleration plan based on the identified strengths and competitive advantages of the company; a capability development program offers the resources needed for rapid expansion. The resources may include mentorship, networking, investment capital and access to new markets.

Business Internationalization: An acceleration and scalability strategy for enterprises. The process of a company to develop their activities in one or several countries different from the country of origin. Allows access to new markets, strategic alliances, and diverse resources such as capital, technology and/or more competitive production resources. It can start with exporting of products to nearby countries, to the full globalization of a company’s value chain

Key findings from CCI ecosystem mapping and scalability/entrepreneurship roadmaps.

• The city of Tuana is a strategic development hub due to its vicinity to the State of California and the United States.

• According to the Economic Census by INEGI in 2019 there are 9018 companies registered within the Cultural and Creative Industries (CCI) in the City of Tuana, which represent 17.9% of all business units.

• The audiovisual communications and radio transmission subsectors represent 7% of total CCI production.

• 40% of survey respondents are related to the Audiovisual Media subsector, making it the most representative subsector. This group is comprised by 14% audiovisual production, 8% for music production and promotion and same for marketing, followed by creative digital services, graphic design, digital and 3D applications with a corresponding 7% of participation.

• Results of the survey highlight activities related to audiovisual media. Within the subsectors of creative digital services, the main activities identified are multimedia design, digital marketing, interactive and virtual reality, and online distribution.

• In the subsector of audiovisual production, the main activities identified are sound design, location setup, casting and props. Within graphic, digital and 3D design the most relevant activities are photography and videography, as well as digital applications (apps development). Representing 12.3% of the total survey respondents.

• In relation to foreign investment or international linkages of the CCI, only 17.02% of respondents said they had foreign investment. The transborder dynamics of this companies is based in supply chain linkages, including training and consulting services, as well as specialized supplies and technology.

• The main services offered to transborder markets are production services, followed by design and ideation, and thirdly by commercialization and customer service.

• Regarding collaboration with other organizations or businesses, respondents said that 30% are local, 26% regional, 25% national and 16.7% foreign, and only 2% said they did not have any collaborations.

• From the youth focused survey, 10% said they had USA citizenship in addition to the Mexican nationality. Tuana being a border city it is common for cross border

Scalability Findings:

• CCI activities looking to link to foreign markets should consider value added strategies based on digital technology and intellectual property.

• An important element highly appreciated is the capacity to innovate creative products based on local cultural assets, with a global reach and significance, as differentiating elements and distinctive character.

• International funding sources such as UNESCO’s International Fund for Cultural Diversity (FIDC) should be sought out as an active financial resource. As well as funding from EU’s Europa Creativa and the Asia Cultural Board. The InterAmerican Development Bank has financing initiatives focused on cultural and creative sectors through entrepreneurship competitions and acquisition of art from regional creators.

• It is increasingly dicult to access public funding and relationships, more than 50% of the youth respondents said they had a visa to visit the USA and does so frequently at least once a month. to survive on donations, that is why private and selffunded investments are required and should be sought out. Private funding can be obtained with Foundations that promote culture such as museums, Angel Investors (Seed Funding) or by Crowdfunding platforms.

• Youth respondents mentioned as a priority for their activity Transborder Presence, international networks, transborder projects in San Diego and international projects.

• Strengths of CCI professionals in Tuana: Transborder dynamics, flow of customers, knowledge, talent, technology and culture. Access to digital platforms as an interaction media as well as a transcultural and cosmopolitan culture, diverse and creative. Being a community with solidarity that builds collaborative links organically. Also that they take advantage of the border location and the use of digital platforms.

• Opportunities: Existence of emerging sectors such as film, digital animation, music, visual arts, industrial design, furniture design, and fashion design. International events such as the World Design Capital 2024 (WDC), and ComiCon in San Diego. The geographic vicinity to California, making Tuana the portal to Latin America.

• For Scaling-up projects it is important to use technology and learn about diverse business models and monetization strategies.

• Online services with “freemium” business models that offer “pay what you want” options for audiences, as well as “gamification” schemes based on reward systems or collective barter/exchange platforms where users can exchange goods or for “shared use” models. Additionally, promoting mass collaboration digital platforms for collective content development or “crowdsourcing”.

• Facilitating access to intellectual property registration oces such as INAUTOR is very important. CCI need to take advantage of laws of authoring rights that provide creators a set of exclusive use rights over their work for a determined period.

• Strategic Alliances and collaborations are crucial for the development of CCI. Interactions with diverse actors of the orange economy ecosystem, such as government and civic organizations, are very important to access the resources and complementary capabilities needed to reach new markets.

• Creative agents should leverage their core competencies (innovation, creativity, artistic skills) by implementing digital technologies to create new sources of income, distribution channels and forms of communication with their clients to scale-up.

• CCI creators need to document their creative catalogue, identifying the different projects and activities they have developed. This can be used to measure and analyze progress, leveraging digital technologies to promote their cultural and creative offerings.

• CCI need to develop a creative and a business Pitch. The creative pitch to communicate your artistic and cultural message effectively, build on the unique style of the creators (personal branding), and a second pitch for business, to communicate the financial opportunities, commercialization model and cost structure.

• CCI need to evaluate their readiness level for Scalingup. Typically, an entrepreneurial project should have 4 to 6 years of consolidation before entering an accelerated scalability process. It is crucial to have an established leadership TEAM that is very strong in three basic functions: Sales, Production (Creative Capabilities) and Administration. They should have the appropriate mentors and necessary resources. The process of scaling-up is like starting a new entrepreneurial project, a new period of considerable investment, were returns will not materialize in the short term.

• Important to refine their Value Proposition. To start the scale-up process it is key to understand the unmet needs of the market that match their core competencies, clarifying their Value Proposition and Market Niche.

• Strengthen their business model replicability and scalability. They mut obtain the necessary, technology, processes, intellectual property, economies of scale and competitive advantages that will enable them to increase sales without requiring a proportional investment in capacity development. An exponential growth model should be clearly defined, and resources focused on sales efforts.

• Focus on Sales and Marketing. CCI should fine tune their communication, their Pitch, their communications channels, strategic alliances, public relations, and positioning of competitive advantages.

Market Context:

The internationalization of CCI in Latin America

• The CCI in Latin America have increased their economic contribution to represent 6% of the region’s GDP (Rodríguez, 2018).

• Exports of creative industries from Mexico reached $4.7 US Billion in 2012. The great majority generated by exports of Cultural Products ($4.5 billion) and the rest in creative services. (UNCTAD, 2016: 100).

• The internationalization of culture is feasible due to the openness of transborder transmission of ideas and knowledge based on the appreciation of the diversity and originality or territories. (Redondo Méndez, A.C., 2020).

• The main internationalization strategy is through establishing Strategic Alliances (Redondo Méndez, A.C., 2020). Networking has become the most important strategy for the cultural sector, through multiple interactions of cooperation, joint work, and contact with strategic partners that allow expansion to foreign markets.

• Transborder Cooperation has been a key finding for strengthening internationalization processes. It enables creating new networks of support and entrepreneurial growth. The internationalization of cultural industries in the Latin American region depends on cross border collaboration. (Hernández-Acosta, 2020).

• The great majority of entrepreneurial efforts to reach foreign markets are privately financed and self-funded.

• In Mexico, according to the national census (INEGI) exports of CCI reached $24 US billion in 2019, a record number, more than double from 2013. Audiovisual Media represented close to 40% of the total output of CCI, reaching more than $12 US billion in 2020.

Producción cultural delos hogares

México:

De acuerdo a datos de INEGI, México exportó • aproximadamente 24 mil millones de dólares en el 2019, una cifra récord más del doble de lo alcanzado en 2013.

Músicay conciertos Libros impresiones yprensas Medios audio visuales Artesanías Diseñoy servicios creativos Patrimonio material ynatural Formación ydifusión culturalen istituciones educativas Creacción 86

Notas y llamadas: Cifras preliminares La suma de los parciales puede no coincidir con los totales debido al redondeo de las cifras.

Fuente:

Los Medios Audiovisuales representan cerca de un 40% • del PIB de las ICCs, alcanzando un monto de 242,353 millones de pesos en 2020.

The Cultural and Creative Industries in California, USA:

• Summary of findings from the Otis College of Art and Design Report on the Creative Economy 2021

• CCI represent 25% of the total California economy, considering direct and indirect impact.

• Total production value of CCI reaches $358 US Billion (11.8% of the total economy of CA). 86.9% of which comes from subsectors related to Digital Media and Entertainment.

• The sector employs over 1.4 million people, representing 7.8% of total employment in the State. The Entertainment and Digital Media (EDM) subsector employs over one million people, of which 31% are in the Los Angeles metro area.

• The EDM is comprised by activities related to digital media representing 74.5% of the sector GDP and 64.4% of the employment. Activities related to film and video represent 8.2% of the GDP and 13.9% of employment. Other activities with less contribution include audio recording, independent artists, writers, advertising, and public relations.

• The Audiovisual (Film and Video) subsector has had extraordinary growth driven by the new streaming platforms. Since 2007 the State has generated more than 320,000 jobs in this subsector. In 2021 growth reached 102% compared to the previous year that was impacted by the pandemic closures. 38% of employment is concentrated in the County of Los Angeles, an estimated 115,000 jobs. It is estimated that in 2022 streaming platforms will invest from $110 to $140 US billion dollars in new content production

• Average salaries in the CCI of California are estimated at $158,000 dollars annually. There are significant differences by subsector, where the highest levels are in digital media at $239,000 and lowest in the scenic and classical arts at an average of $58,000.

• In post-pandemic markets there is a clear technological convergence trend, where digital platforms of videogames allow interaction with intellectual assets, brands, and other users, blurring the borders among industries and stimulating electronic commerce. It is estimated that that this trend will accelerate in the coming years, opening new opportunities.

• Digitalization is transforming value chains in all the phases of the creative economy, from creation, production and distribution of goods, services, and content. With the accelerated changes in visual effects (VFX), content is produced in the subsector of Digital Media and Entertainment crossing to other subsectors.

• In San Diego and the Imperial Valley there is an estimated 89,600 jobs in the sector, that representing 2.3% of the total employment. The creative economy grew at 4% between 2007 and 2019. The subsector of Entertainment and Digital Media represents 57% of the CCI. Average salaries are estimated at $98,947 dollars annually in 2020.

Video Juegos – el Sector Dorado

El Estado de California es el indiscutible centro de la industria de los videojuegos, con una producción anual superior a los $52,000 millones de dólares. ($22 directos y $29 en el ecosistema del sector). Cuenta con 218,000 empleos (57,400 directos), y el resto en la cadena de valor.

Fuente: Video Game in the 21 st Century – 2020 economic impact report by ESA).

Transborder Internationalization Strategy in Cali-Baja:

Scale-up strategies for enterprises can generally be done in two fundamental paths, one by expanding the number of products and services to existing clients, and the other by offering their products and services to new markets. In any of the two paths the goal is to significantly increase their sales. For the purposes of this guide, we will focus on the second strategy of developing new markets, these could be within the national boundaries or in foreign markets through the process of internationalization

Internationalization of enterprises is one of the main scalability strategies in the world of business (Cateora 2011). It is a way of increasing the size of the potential market and diversifying forms of income or business models.

By focusing on the Transborder Internationalization in the Cali-Baja region, we propose a strategy that leverages the geographic proximity of Tuana to one of the larges CCI markets in the World, especially in the Audiovisual Media subsector as explained previously. This triad of factors enables us to propose a viable Scale-up Roadmap for this subsector in the city of Tuana.

The geographic proximity allows for the implementation of internationalization strategies at a LOWER cost and risk. As we saw in the ecosystem findings of the CCI in Tuana, currently some companies have transborder relationships, from access to supplies and knowledge to joint projects. This familiarity and the possibility for personal communications is a great advantage and opportunity, just the fact of being able to drive their personal vehicles to Los Angeles and return in the same day offers possibilities of lower costs. In a similar way professional and social networks of people in the CCI sector are more common everyday and facilitate the internationalization process.

To define a Transborder Internationalization Roadmap in the Cali-Baja region, we will use theoretical concepts from management theory, documentation of best practices in internationalization of enterprises, as well as interviews with experts in the region that have had successful internationalization experiences. In addition, the professional and academic experience of the author that has more than 30 years of experience in the promotion and management of transborder business expansion projects, as well as a PhD in Global Development Studies.

Internationalization is like starting a new venture and follows the logic of the steps of an entrepreneurship project, with an increased level of complexity. We need to add the challenges of cultural and language differences, the distance, added costs, and different regulatory environment (Laws, regulations, judicial processes, types of advisors)

We highly recommend CCI Audiovisual Media entrepreneurs to carefully review and use the entrepreneurship Roadmap developed by Macedo Cham Consultores previously to using this guide

10 Steps To Becoming An Entrepreneur

Experts Interviewed:

Beatriz Acevedo

An experienced entrepreneur and digital media producer for over 30 years. In the last 20 years she has lived in Los Angeles, California, and has produced content for Nickelodeon and Discovery Channel among many, obtaining three Emmy awards and one MTV Music Award. She has specialized in the intersection of content creation, media, digital technology, and social impact. In 2012 she founded the digital platform Mitú raising over $50 million dollars in capital. Currently she is Co-Founder and CEO of the Fintech platform, SUMA Wealth, that offers financial education and tools for the Latinx community. Additionally, she focuses on social impact programs, as President of the Acevedo Foundation and participates as a Board Member of 10 non-profit organizations such as LA Collab an initiative to duplicate by 2030 the participation of Latinos y Hollywood, in front and behind the camara

Ramón Toledo:

He is a Digital Media entrepreneur and real-estate developer in Baja California. In 2007 he founded Busca Corp specialized in the creation of digital platforms and content for the Latin American Market. On the best-known platforms is Level-Up that is focused on the Videogame industry, that has been recognized as the leading portal in Latin America in the subject. In 2008 it was named the best of Web 2.0 by the AMIPIC. Through his diverse digital platforms, he has formed international alliances with companies such as Microsoft, Yahoo, Playboy, MVS and others. He has oces in San Diego, Tuana, and Santiago Chile

Joe Unger:

Has over 25 years of experience as a producer and project manager in Digital Media, Videogames, Film and Special Effects. Most of his experience has been in California, currently he leads an experimental program in the creation of virtual environments for the Metaverse, for educational and socialization applications. He has worked as creative advisor for diverse platforms and video game producers such as Spycraft RPG, Lord of the Rings y City of Villians, as well as a producer and writer for companies like Pinnacle Entertainment, Games y Cheyenne Mountain Entertainment. Currently he is CEO of Pigeonhole Productions focused on World Building, New Media & Creative Infrastructure, collaborating in transborder production of digital media between Baja California and the United States.

STEP 1: Am I ready? Conduct a self-evaluation to determine if the enterprise is ready to initiate an internationalization and scale-up process (Craig 2003). These processes require a firm commitment and resource allocation for a period of 2 to 3 years before expecting returns. Typically, businesses that are ready for this process have at least 4 to 6 years of track record and consolidated local market. They have a consolidated leadership team prepared to focus on the internationalization process, minimally in functions of sales, administration, and production (Core Team). In the case of Audiovisual Media, production refers to the creative skills and capacities, process of production and quality control.

The self-evaluation may begin by the following questions: a) Is internationalization a clearly defined strategic objective of the enterprise? b) Does the enterprise have stable income sources in the local market that will enable them to invest in the internationalization process?

Oferta de Valor

Segmento de Mercado Modelo de Negocio Estrategias de Entrada

Intellectual Property Registration

• World Organization of Intellectual Property (WIPO). Part of the United Nations, focused on the education of protection of human intellectual works.

(https://www.wipo.int/portal/en/) (QR1)

• Mexican Institute of Industrial Property (IMPI). Part of the Ministry of Economy of the federal government of Mexico. In charge of supervising and coordinating the implementation of the Federal Law of Industrial Property (LFPI).

( ) www gob.mx/impi (QR2)

• National Institute of Author Rights (INDAUTOR). Part of the Ministry of Education for the Federal Government of Mexico. In charge of the protection of property rights of authors based on the Federal Law of Authors Rights (LFDA). ( )www.indautor.gob.mx (QR3)

STEP 2: Rearm your Value Proposition

Autoevaluación c) Does the Enterprise have a level of organization and operational systems that will enable to distract their Core Team from their regular functions and focus on the internationalization process?

Asignación de Recursos

d) Does the Enterprise have financial reserves to invest in the internationalization process for a minimum of one year of the implementation budget?

e) Has the enterprise secured their Intellectual Property? Are the authoring rights registered in Mexico and are they valid in the United States?

f) Has the enterprise documented their capabilities, track record, portfolio of product and services and competitive advantages?

g) Has the Enterprise defined and secured the Team (key people) that will lead the internationalization process?

Answers to these questions should be a clear yes. If the enterprise is not in a situation to comply with the requirements, it should consider focusing on achieving these benchmarks before initiating the internationalization and scale-up process. It may be helpful to review the Entrepreneurship Roadmap proposed by Macedo Cham Consultores.

In the internationalization process enterprises need to clearly understand that the needs and preferences of the external markets will not be the same as their local experience. Cultural differences, scale of the market and regulatory frameworks will have an impact that they need to understand to rearm their Value Proposition. It is necessary to evaluate the Value Chain of the selected market segment and asses their core competencies in detail to ensure market fit and design their product and services accordingly.

Value Chain Analysis: In the case of the Audiovisual Media subsector (Digital Media) the California market has a very different scale than that of Tuana or Mexico in general. Enterprises need to understand the entire ecosystem of the industry, who are the key players, what level of specialization they have, how do they interact and generate value together. From this process they should determine the level of integration of their products and services and identify if there is a hyperspecialized value network where their core competencies can be complementary to the existing value model.

Example: https://www accenture com/usen/insights/software-platforms/media-platforms-valuemap (QR4)

Understanding our Core Competencies (fundamental skills): By discovering a Value Chain of a broader scale and the level of specialization of each element (link), we need to explore if our value proposition has elements of integration that are not necessary, and we can focus in our most fundamental skills (Core Competencies). What are we exceptionally good at? What unique capabilities, experiences, processes, or market knowledge differentiate us.

With a better understanding of the value chain and their core competencies enterprises can reevaluate and clarify their Value Proposition, this is the starting point to developing new markets.

STEP 3: Market Selection

In the internationalization process, enterprises need to evaluate what are the most attractive and operationally viable markets (Countries/regions). This Guide focuses on the internationalization within the region of California and in particular Southern California. Even with this narrow geographic region, the market is extremely large, in the hundreds of billions of dollars. It is necessary to identify the market segment of the CCI that enterprises pretend to serve, what is the NICHE that we will prioritize?

Market Research: Before implementing any promotional activities of their products and services it is important that enterprises know closely how the market works. They should assess the potential demand for their products and services, the preferred attributes (evaluate competitiveness), and prices. This research can be by observation, survey or acquiring specialized industry reports.

Immersion and market observation: The geographic proximity of Tuana to the Southern California market enables enterprises to spend time exploring it systematically. Entrepreneurs of audiovisual media should take advantage of networking events, conferences, and expositions in the area, to start building their networks. Many of them are open to the public or through business associations. For example, https://www.eventbrite.com/d/calos-angeles/digitalmedia/ (QR5)

Define your Niche Market: Identifying the specific market segment is apriority to enter the market. Based on the intelligence obtained in the market research, enterprises need to define the market segment where their core competencies and value

TIP #1 by Joe Unger: proposition will be most compatible. This will enable enterprises to focus and prioritize the use of resources. Without a doubt entrepreneurs will identify many markets they could serve, eventually. Hyper specialization can be the way to enter the market, keeping flexibility to adapt to the responses of the market.

You must take into consideration that to obtain results it will require a minimum of 18 months; businesses must be prepared financially for this level of investment. The first 6 months to learn how to correctly communicate your value proposition, your skills and production capacity. Next 6 months to NETWORK, knock on doors and follow-up. The last 6 months to produce. It is an iterative process of adjusting your portfolio of capabilities (“Product Suite”), based on the responses of clients, and adjusting to the accelerated rate of technological change and the immediate demands of consumers (“Market Fit”).

Analyze the competition: Once they have selected their market segment, it is very important to understand who is our competition, and what differentiates them. Understanding their competitive attributes will enable them to differentiate their value proposition focusing on adding value. Among those competitive attributes can be price, but it is not enough. What other competitive advantages can hey find?

A recommendation would be to consider a Blue Ocean strategy, finding markets where there is low levels of competition, where they can have a clear differentiation. A useful tool would be to take a course on the Blue Ocean model: https://learn.blueoceanstrategy com/blueocean-strategy-online-course (QR6)

Tip 2 by Joe Unger:

Today there is an accelerated rate of consolidation in the digital distribution channels, large platforms such as Disney, Amazon and Microsoft lead the value chain. This makes it crucial to establish alliances with the chain of subcontractors and App developers. At the same time there is an explosion of content producers, just in Spotify thousands of songs are published every day

Tip 3 by Joe Unger:

A fundamental capability that needs to be demonstrated is Collaboration. Creative projects are highly collaborative, those who lead efforts are looking for partners that can demonstrate their ability to integrate with others, contribute and collaborate towards results. Also learning capacity and for constant reinvention are key skills for demonstrating ability to take on new projects.

Tip 1 by Ramón Toledo:

Selecting a niche market is fundamental. The Hispanic market in the United States has great potential and its particularities. For younger Latinx’s content should be in English (even Spanglish). It is important to incorporate in your development team people from this community, ant take advantage of the geographic proximity spending time there, learn the business practices and negotiating models; you must be present.

STEP 4: Defining the Business Model

The internationalization process starts by defining the level of international exposure, from exporting directly to selected regional markets, to having operational capabilities in multiple countries levering the competitiveness of each. The higher the level of internationalization, the higher the complexity and the risks, as well as the potential long-term rewards. In the internationalization process it should be very clear how the enterprises intend to earn income

Tip 4 de Joe Unger: En la selección de nichos de mercado pensar en aplicaciones alternas al entretenimiento, como la educación y la capacitación empresarial. Hay una gran demanda por el uso de nuevas plataformas como la Gamificación, Realidad Virtual, Realidad Aumentada y el Metaverso. Sectores como los servicios médicos, bienes raíces, parques de diversión o manufactura avanzada. Una idea de negocio podría ser ofrecer servicios de VFX y musicalización para Blogueros.

Business models in digital media should not only consider income from advertising, as every day there is more competition and consolidation by large platforms such as Google. They should integrate e-commerce and contextual marketing of products and services. For me, one of the most productive revenue sources is as an aliate of Amazon and other e-retailers. Always focus on monetization

Low Exporting a finished product directly to consumers.

Exporting finished products through commercial partnerships, distributors, and platforms.

Supply chain integration in production processes, strategic alliances, and services supply.

Joint ventures and investment in production capacity and distribution in the target market.

In general terms for the Audiovisual Media subsector in California, enterprises should consider the following basic business models:

Services: This business model focuses on integration with the value chain of the sector, offering production services and logistics to existing participants. This model is highly viable as an entry strategy to the new market, although less scalable in the long term as the increase in sales has a proportionate effect on investment to increase production capacity. Enterprises may achieve certain level of economies of scale based on their processes, tools, and Artificial Intelligence (Automation).

Product: This business model is related to the distribution and sale of finished creative products, that is the sale of intellectual property or licensing of content. It may be as products for distributors, or directly to consumers via digital platforms. This model implies higher risk and investment in the beginning; however, it has the potential for scalability and higher returns based on market fit and consumer responses at a global level.

NOTE: The internationalization of digital products does not require necessarily a process through the Southern California market, it can be achieved directly through digital platforms, such as Youtube com

TIP 1 by Beatriz Acevedo

As an entry strategy I recommend via production services, the talent in Baja California is first class and very competitive (Quality and Price). Enterprises should invest in a good “product demo”, make clear their production skills and abilities, their track record of projects and collaborations, especially with any well-known production companies. It is very dicult to enter the market with finished product, consumer preferences change to quickly and fluid. Today there is a great demand for technical skills, not just the creative abilities of telling a story technical skill such as 3D animation, photography, set design and wardrove are very much in demand. As well as user interface development for platforms, UX/UI, Data Analytics and AI.

STEP 5: Define the market entry strategy.

Once enterprises have defined their business model and value proposition, as well as their market segment (niche), then they must define their “plan of attack” to enter the market. At this stage of the internationalization process the focus needs to be on sales and marketing, in positioning the company. Here is where the key team member in charge of sales and marketing has the lead and should establish the channels and strategy of communication. It is not recommended to spend resources in advertising or publicity at this stage a) Documenting the Product Suite (value proposition). Develop communication tools (Website, videos, social media), that will clearly position the competitive advantages of the product-service offering. Include the portfolio of capabilities, projects track-record, awards, testimonials of customers. Being the Audiovisual Media sector, take this opportunity to show-off your creative skills. b) The Pitch: It will be very useful to develop a very short and concise presentation of your value proposition. I less than 5 minutes you should be able to what problem you are trying to solve and how you can solve it better than others. Your Pitch should have a 30 second “elevator pitch” to attract the interest of potential customers, partners or investors and you can use in your networking efforts.

NOTE: It is important to have the support of a qualified English translator and ensure the correct grammar and syntax. You want to avoid mistakes of literal translations and losing the true meaning of the message.

Tip 2 by Beatriz Acevedo

Personal contact networks are a good way to promote your capabilities. If you have relationships with the Hispanic or Latino business and creative community, it is important to consider that their priority is to provide opportunities for those already in California. You should be sensitive to not promote a model of exporting jobs to Mexico.

c) Networking: A fundamental entry strategy to the California market is by using your network of contacts and building upon them. The geographic proximity of Tuana to Southern California allows entrepreneurs to gradually develop a presence and build new relationships, without a significant financial investment. This network will not materialize by chance, you need to have a plan, and focused efforts on our selected market segment, leveraging existing binational relationships, and systematically asking for references to other contacts.

d) Alternative routes: There are many economic sectors in Tuana that have extensive cross border relations that can be leveraged as well. For example: The export manufacturing sector requires digital design for training manuals, videos or for customer services, through that market you may get references to other subsidiaries, suppliers, or customers in California

Tip 3 by Beatriz Acevedo:

A better strategy is to promote the capabilities in Baja California as a whole. This could be an opportunity for scalability by itself. Develop a promotional web-portal, with a catalogue of capabilities, products, and services. Make it a “pull” and not a “push” process for the production companies in California. Possibly with the support of government agencies of Mexico. This way producers in California can search and find the capabilities they require

Tip 3 by Ramon Toledo: Take advantage of regional experiences and local markets by offering digital media services to sectors such as Medical Tourism, coastline Real Estate development, and Wineries. Think about potential customers in Latin America and other parts of Mexico, levering the bicultural capabilities and knowledge of U.S. business practices, as well as the local experience and production capacity. The same capabilities can be offered to California businesses interested in entering the Mexican and Latin American market.

STEP 6: Planning and resource allocation

Once enterprises have clearly identified their market segment, value proposition, business model and entry strategy, then they are in a position for the allocation and commitment of resources. Only if they have secured and aligned the needed resources then it is feasible to execute the internationalization plan.

The Team: Enterprises should have identified and secured the team that will execute the internationalization process. The most fundamental members are the sales team, production (creative team) and administration. The sales team should be who leads the internationalization process. Enterprises should have people with experience and with the correct skills to focus on promotion and sales. The team members should speak English professionally and should know best practices in business protocol (understand cultural differences). Professional courtesy, ethics and assertiveness should always be observed. Establishing appropriate expectations and timely follow-up to any commitments are key Always keep open communications, even if you don’t have the answer, keep the dialogue going with transparency

Technical Resources: Enterprises should secure the necessary technical resources to deliver on their value proposition. Secure the tools, equipment, and infrastructure necessary. As well as the legal resources for the protection of intellectual property and legal counsel that specializes in contract negotiations in the Entertainment and Digital Media sector.

Financial Resources: As the human and technical resources, enterprises must secure sucient financial resources to fund the internationalization process. This is a new business development phase the same as the start-up of the Enterprise, it requires time to build-up opportunities, at a minimum Enterprises should expect a 12 to 18 moths to start generating revenue. Enterprises should develop a budget and financial model considering all costs of the promotional efforts, from travel expenses and production of promotional material to initial production costs of new projects, salaries, and other public relation expenses.

Tip 4 by Ramón Toledo

From the operations perspective, you need a strong production team to internationalize, you need to be careful with talent retention offering participation in the business to your key team members. In my case I have awarded stock options in the U.S. based company. It is very important to have a good legal advisor, with experience in the entertainment and digital media sector in the U.S., for contract negotiations and enforcement, intellectual capital protection, including trademarks for your brands.

5 by Joe Unger

The technology is fundamental, today digital media production is mostly driven by new development tools. It is important to be flexible and adapt, and at the same time focus on 2 or 3 specific skill sets. The use of development platforms such as AltSpace, Unity Technologies, Adobe After Effects, and others, is key

STEP 7: Executing the internationalization plan.

In the implementation of the trans-border internationalization plan the focus should be on business development, promotion, and sales. Enterprises should prioritize efforts to develop relationships, networking and establish a system of timely follow-up and documentation. Establish specific goals, at a monthly or weekly for new contacts, presentations, conversion rates to proposals and deal negotiations. Every networking or promotional effort should have a goal, minimum to obtain new contacts, referrals, invitations to events, meet-ups, or group sessions.

Once there is interest in your services and new project opportunities come up, it is fundamental to comply with any commitments or promises made, before making any additional commitments. Every project will bring other opportunities closer if we have satisfied customers. The digital media and entertainment community is relatively small and can easily communicate for references of the quality of work and fulfillment of commitments. In the same way successful outcomes should be promoted, updating the portfolio of capabilities and experiences, as well as boosting media coverage of achievements and recognition of all that participated.

Look for mentors that can provide advise and feedback. The networking process should include goals for identifying and recruiting people with experience that can advise and provide objective and candid feedback and can provide references to key resources. A good goal would be within the first 12 months to have 3 to 5 mentors from diverse technical and business backgrounds (promotion, technology, negotiation, production, finance).

Tip 4 by Beatriz Acevedo

For younger generations of Tuana creatives that have the dual citizenship, they should take advantage and establish production companies in California, and become part of the Latino community, even if they continue having their production in Baja California. They should focus their efforts on integration and management of projects. Focus on public relations with established production companies and distribution platforms.

STEP 8: Monitoring and Control.

The internationalization process is iterative, trial and error, it is fundamental to establish a system for monitoring and evaluating the achievement of goals, as well as monitoring of setbacks and challenges to learn from. Flexibility and adaptation are central abilities that should be developed, starting by closely listening to clients and project partners. It is recommended to use a customer relationship management tool (CRM) to keep track of all new relationships and their interactions with the Enterprise. (Such as )https://www.salesforce.com (QR7)

At this stage it is important the participation of the administrative team. They should be prepared to process contracts, invoicing, trans border payment systems for collectibles and supplier commitments. Establish the legal and fiscal resources in California, be ready to establish a corporation in the US, such as a C Corp or LLC, depending on the advice of local experts.

A valuable resource for support on setting up a new company in the U.S. is the Small Business Administration or SBA (https://www.sba.gov/guia-de-negocios/lancesu-empresa/ela-una-estructura-comercial) (QR8). Another resource is the State Government of California oce for business services (https://www.sos.ca.gov/business-programs/businessentities/starting-business) (QR9).

STEP 9: Accelerate the Model

After a reasonable period of 12 to 24 months, the internationalization strategy should be evaluated. Asses the business model and determine if the goals of the plan have been met and identify what has worked well that can be replicated with additional financial resources. With a clear successful track record and refined value proposition, it is feasible to look for qualified investors in the sector.

Depending on the scale of the business opportunity that has been identified, the level of investment can be defined. If the required funds are less than $2 Million dollars, it will still be considered seed funding, but if the opportunity for scalability is very clear and requires larger amounts of funds up to $10 Million than a professional growth investment fund should be approached.

In the case of seed funding the recommendation is to contact Angel Investor networks, such as the LA Angel Investor Network (https://www.angelinvestmentnetwork.us/angelinvestors-los-angeles) . For larger funding (QR10) opportunities, the recommendation is to contact Venture Capital groups through investor networks such as the LA Founder Institute (https://fi.co/insight/losangeles-startup-funding-options-for-every-stage-ofyour-company) .(QR11)

STEP 10: Document and replicate.

Leverage local experiences and established networks. Tuana has a successful track record in the Entertainment and Digital Media sector. Search for those who have made progress, collaborate with them, and expand your network. Leverage the unique culture and identity of the region.

Cali-Baja es cómo aprender a andar en bicicleta con llantitas, ya que lo has dominado estarás listo para un proceso de internacionalización con un enfoque Global. Documenta lo aprendido, afina tu propuesta de valor y vuelve a iniciar el proceso en nuevos horizontes. Comparte lo aprendido con otros y contribuye a

La internacionalización transfronteriza en la región que se replique el éxito.

The fluid change of consumer preferences, the accelerated evolution of new technologies and development capabilities requires that Enterprises have the ability and the practice of successful collaboration. Networking and strategic alliances are fundamental.

3. Integrate technology

Audiovisual Media (Digital Media) is tightly linked to technology tools of production and management of information, including process for programing and data storage, as well as data transfer, artificial intelligence, analytics, and Big Data. It is fundamental to have partnerships, or the technical resources integrated. The most promising segments are Videogames, VFX, US/UI, VT, AR and the Metaverse

4. Focus

The Digital Media value chain is very broad and diverse, it demands high levels of specialization and proficiency of processes. Enterprises should focus on their core competencies and differentiators, not try to do everything.

The internationalization process is a marathon not a 100m dash. It is a permanent learning and iterative adjustment process. The team and allocated resources should be prepared for a minimum effort of 18 moths.

About the Author:

A specialist in Economic Development, with over 30 years of practical experience in the promotion and management of trans-border business and economic development projects in the binational region of San Diego, California and Tuana, Baja California. Entrepreneur and promoter of clustering initiatives in areas such as Information Technology, Medical Tourism and Manufacturing. He is certified by the International Economic Development Corporation (IEDC) and has a PhD in Global Development Studies from the State University of Baja California

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