Singapore is establishing itself as a regional hub in the global interactive digital media (IDM) space due to its unique brand, according to a study.

Deloitte's report, Interactive Digital Media: Shaping the Digital Future, said that investors tend to view Singaporean companies in a more favourable light in comparison with their peers in the region.

This is due to Singapore's stringent intellectual property rights, conducive business climate, efficient tax structure, world-class infrastructure and industry linkages across the region which set Singapore apart from the rest of South-east Asia.

IDM is defined as digital media which enables users to interact with other users or with the media itself for the purposes of entertainment, information, commerce and education.

It can be segmented into rich media and publishing, games and simulation, mobile media, and enablers.

The study covered approximately 80 per cent of the IDM sector.

The report said that Singapore's IDM sector has grown substantially in the past few years, contributing $2.06 billion of value- add to the economy in 2012.

The sector added $301 million to the national economy over the last year, and sector employment grew by 7 per cent from 2011 to 2012, despite an overall slowing in the Singapore economy.

The study revealed that rising costs and a shortage of talent were the two key concerns of the various stakeholders in the sector.

According to Deloitte, many companies recounted setting up outsourcing centres in other countries in the region to alleviate the strain caused by the high costs of infrastructure and labour.

These circumstances suggest that Singapore is becoming more of a regional hub than a site for content creation and generation, said the report.

Talent shortage remains a key challenge for the sector, which lacks both technical and creative skills. This has led to a poaching culture in the industry, while increasingly stringent foreign labour laws have exacerbated this situation.

This talent shortage, combined with overall inflation in the economy, has resulted in upward pressure on operating expenses and wages, further diminishing Singapore's competitive advantage in the region.

Other fundamental drivers of talent shortage include a poor perception of the creative industries and the desire for job security, resulting in workers gravitating towards traditional jobs in the well-established industries.

However, the government is taking steps to address these concerns and ensure that Singapore continues to maintain its competitive edge over other locations in South-east Asia. For example, several government-led initiatives such as the enhancement of IDM-related training in local universities and funding schemes to promote IDM start-ups, in conjunction with the existing tax advantages, have been introduced.

The report also found that sub-sectors like big data analytics, interactive learning and mobile or social commerce appear to be the most promising in the near future, and significant growth is expected from such companies.

The long-term sector outlook continues to be strong and meaningful contributions to the economy can be expected from the sector in the near future, concluded the study.