The Indian media and entertainment (M&E) industry is expected to grow at an 18 per cent compound annual growth rate (CAGR) to reach an overall value of Rs 1 trillion by 2011 from its present size of Rs 437 billion, according to a report published by PricewaterhouseCoopers (PWC) for the Federation of Indian Chambers of Commerce and Industry (FICCI).
The 2007 annual edition of the FICCI-PWC report, titled ‘Indian Entertainment and Media Industry: A Growth Story Unfolds’, will be released Monday next at the annual FICCI-FRAMES entertainment industry conference in Mumbai.
Growing demand coupled with technological advancements, policy initiatives taken by the Indian government to encourage the inflow of investment and initiative by private media companies, will be the key drivers for the industry. The industry has been forecast to outperform economic growth in each year till 2011, the report said.
The year 2006 witnessed a growth of 20 per cent over the previous year and was also the year that marked the start of convergence for the media industry. The government has already declared 2007 as the Year of Broadband.
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, the report said. With literate population on the rise, more people in rural and urban areas are reading newspapers and magazines today.
As per current estimates the reach of print media in India has increased to 222 million people. Print media is also the favourite segment for global investors with maximum foreign investment in this segment. The print media industry has potential to grow still larger as 369 million literate people in India are still not tapped by any publication.
The Internet advertising industry will post the highest CAGR of 43 per cent, rising from its current size of Rs 1.6 billion to Rs 9.5 billion in 2010. The television industry is projected to grow by 22 per cent from Rs 191 billion to Rs 519 billion by 2011; filmed entertainment by 16 per cent from Rs 85 billion to Rs 175 billion; print media by 13 per cent from Rs 128 billion to Rs 232 billion; radio by 28 per cent from Rs 5 billion to Rs 17 billion; music by 4 per cent from Rs 7.2 billion to Rs 8.7 billion; live entertainment by 16 per cent from Rs 9 billion to Rs 19 billion; and out-of-home advertising by 17 per cent from Rs 10 billion to Rs 21.5 billion.
FICCI Secretary-General Amit Mitra said Tuesday that the age of convergence was leading to a number of collaborations between value chain partners to drive new products and services to consumers and helping formation of media powerhouses. He said it was also encouraging diversification of several media companies both within segments such as television news channels diversifying to entertainment channels or film distribution companies entering film production, as well as across different segments of the media and entertainment industry, such as the entry of several print media and television companies in to the radio space.
Advertising spends showed an exponential growth in 2006 growing over 23 per cent over last year’s spends to Rs 163 billion as compared to a growth of 14 per cent. Advertising revenues are vital for the growth of this industry. “While today the low ad spends may seem like a challenge before the M&E industry, it also throws open immense potential for growth. This potential can be estimated by the fact that even if India was to reach the global average, advertising revenues would at least double from the current level of around Rs 163 billion,” the report said.
The year 2006 also saw the maximum flow of foreign investment in the M&E industry. Thirteen proposals for FDI in media were cleared by the information and broadcasting ministry in 2006 itself, and the ministry was examining another 22 proposals for clearance. Interestingly, news and current affairs and not entertainment dominated the field with eight proposals. Over the last three years, the industry has secured foreign investment of over Rs 4 billion.
In 2006, CAS was implemented in select areas in Delhi, Mumbai and Kolkata with varying results. The year also saw the entry of the second private DTH player Tata Sky and the launch of the first IPTV services in Delhi and Mumbai by MTNL. These new distribution platforms are expected to punch up subscriber base and subscription revenues. Hence, 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. The buoyancy of the Indian economy will drive homes, both in rural and urban (second TV set homes) areas to buy televisions and subscribe for the pay services.
An estimated 32 million Indians have been exposed to the Internet till 2006. A total of 59 million Indians are PC-literate and thus potential targets for Internet advertising. The number of regular Internet users is expected to increase to at least 35 million by 2008 and this will drive growth of internet advertising, which today stands at around Rs 1600 million. The increase in number of broadband connections gives users improved Internet speeds at cheaper rates encouraging further use of the medium. A study of the demographics of Internet users revealed that a large number of users fall in categories suitable for being targeted by Internet advertising.
Advancements in technology are helping the Indian film industry in all the spheres of film production, film exhibition and marketing. There is now greater corporatisation in the industry, highlighted by public issues of several film production, distribution and exhibition companies, long term contracts between film production companies and directors/actors and the fact that more than half the releases in 2006 were by corporates rather than individuals. 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.
