The Indian media and entertainment industry will grow at 19 per cent compound annual growth rate (CAGR) to reach Rs 837.4 billion by 2010 from Rs 353 billion at present, a study has said. Low media penetration in lower socio-economic classes and low ad spends are factors that would drive growth for the industry.
The study � 'Indian Entertainment and Media Industry - Unraveling the potential' � was conducted by the Federation of Indian Chambers of Commerce and Industries (FICCI) and PricewaterhouseCoopers. The full study will be released during FRAMES, an annual media event, which will be held in Mumbai later this month.
This edition of the FICCI-PwC study has in-depth forecasts and analysis of six major industry segments, including television, filmed entertainment, print media, radio and music. Sectors like animation, gaming, internet advertising, out-of-home advertising and live entertainment have been clubbed together in the chapter on "emerging opportunities". A new addition in the report this year is print media.
Advertising spends, as a percentage of GDP - at 0.34 per cent - are low in comparison to other developed and developing countries, where the average is around 0.98 per cent. "Advertising revenues are vital for the growth of this industry. While today the low ad spends seems like a challenge before the media and entertainment industry, they also throw open immense potential for growth," the report said. If India is to reach the global average, ad revenues would at least double from the current level of Rs 132 billion.
The print media is projected to grow at 12 per cent CAGR to Rs 195 billion in 2010 from Rs 109 billion. "A booming Indian economy, growing need for content and government initiatives that have opened up the sector to foreign investment are driving growth in the print media. With the literate population on the rise, more people in rural and urban areas are reading newspapers and magazines today," the study said.
"Moreover, there is more interest in India amongst the global investor community. This leads to demand for more content from India. Foreign media too is evincing interest in investing in Indian publications. And the internet today offers a new avenue to generate more advertising revenue," the study maintained.
The television industry will grow at 24 per cent to Rs 427 billion from its current Rs 148 billion. "Subscription revenues are projected to be the key growth driver for the Indian television industry over the next five years. Subscription revenues will increase both from the number of pay TV homes as well as increased subscription rates," it said.
"The buoyancy of the Indian economy will drive the homes, both in rural and urban (second TV set homes) areas to buy televisions and subscribe for the pay services. New distribution platforms like DTH and IPTV will only increase the subscriber base and push up the subscription revenues," the study said.
The film industry is slated to grow at 18 per cent to Rs 153 billion in 2010 from the current Rs 68 billion. "Advancements in technology are helping the Indian film industry in all the spheres � film production, film exhibition and marketing. The industry is increasingly getting more corporatised," the study said.
"Several film production, distribution and exhibition companies are coming out with public issues. More theatres across the country are getting upgraded to multiplexes. And, initiatives to set up more digital cinema halls in the country are already under way. This will not only improve the quality of prints and thereby make film viewing a more pleasurable experience, but also reduce piracy of prints," it said.
Radio is poised for big growth with projected size for 2010 at Rs 1200 crore from the current level of Rs 300 crore. "The cheapest and oldest form of entertainment in the country, hitherto dominated by the All India Radio (AIR), is going to witness a sea-change very shortly. In 2005, the government announced three key policy initiatives which will drive growth - migration to a revenue share regime, allowing foreign investment in the segment and opening of licenses to private players," the study said.
"As many as 338 licenses are being given out by the Indian government for FM radio channels in 91 big and small towns and cities. This deluge of radio stations will result in rising need for content and professionals. New concepts like satellite, internet and community radio have also begun to hit the market. Increasingly, radio is making a comeback in the lifestyles of Indians," it said.
However, music industry is expected to show a flat growth of one per cent to Rs 7.4 billion in 2010 from Rs 7 billion. "The industry has been plagued by piracy and had been showing very sluggish growth in the physical format over the last few years, both in India and globally. However, 'mobile music' and 'licensed digital distribution' services are projected to fuel the recovery of the music industry the world over," the study said.
"The pace of growth in mobile music reflects the fact that consumers increasingly view their wireless device as an entertainment medium, using those devices to play games and listen to music, while carriers are actively promoting ancillary services such as ring tones to boost average revenue per user. Ringtones constitute the dominant component of the mobile music market. Licensed digital distribution services are also contributing significantly to growth in all regions," it said.
Live entertainment sector will grow at 18 per cent to Rs 18 billion by 2010 from Rs 8 billion. "This segment of the entertainment industry, also known as event management, is growing at a fast and steady rate. While this industry is still evolving, Indian event managers have clearly demonstrated their capabilities in successfully managing several mega national and international events over the past few years," the study said.
"In fact, event managers are also developing properties around events. The growing number of corporate awards, television and sports events is helping this sector. With rising incomes, people are also spending more on wedding, parties and other personal functions. However, issues like high entertainment taxes in certain states, lack of world-class infrastructure and the unorganised nature of most event management companies continue to hinder growth of this industry," it said.
Out-of-home advertising is also on an upward curve, growing at 14 per cent to Rs 17.5 billion by 2010 from Rs 9 billion. "Outdoor media sites in India are predominantly owned or operated by small, local players and are typically, directly marketed by them to advertisers and advertising agencies," the study said.
"However, this segment too is witnessing a sea-change with technological innovations. Growing billboard advertising is fuelled by technologies such as light-emitting diode video billboard. This is a segment that is seeing interesting technological innovations across the world and is likely to evolve in India too in the short-term," it said.
Internet advertising is projected to grow at 50 per cent to Rs 7.5 billion by 2010 from the current Rs 1 billion. " An estimated 28 million Indians are currently hooked on to the Internet. And this rising number is leading to the growth of internet advertising, which today stands at approximately Rs 1 billion," the study said.
"The Internet is being used for a variety of reasons, besides work, such as chatting, leisure, doing transactions and writing blogs. This offers a huge opportunity to marketers to sell their products. And, with broadband becoming increasingly popular, this segment is expected to grow by leaps and bounds," it said.
According to the study, convergence will play a crucial role in the development of the Indian entertainment and media industry where consumers will increasingly be calling the shots in a converged media world. "Broadband access and Internet Protocol (IP) will be the technology enablers that will evolve this new breed of consumers, as opportunities for them to access and manipulate content and services will be overflowing, while their time and attention will be limited," the study said.
