Indian Sports Media Sector

Coming to age; entering new trajectory

An Introduction
May 11

Occasional Papers

Table of Contents
Indian Sports Media Sector
Indian Economy: Oasis of Growth

Indian Market: Bird of Gold

Indian Media Market: Rising Star Sports Market: Next Wave? Growth of Non Cricket Sports

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Indian Sports Media

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Indian Economy: Oasis of Growth

India is now the second fastest growing economy in the world with average GDP growth expected at 8% plus, which is nearly thrice average global GDP growth. Indian economy was least affected in the recent global financial meltdown and crisis and bounced back much faster than its peers, except China. India being second largest populated country with 1.2 bn population has educated and upwardly mobile middle class youth of more than 300 mn. Increasing penetration of higher education in lower strata of society and improving employment opportunities is further enabling growth. More than 70% of the economy is dependent upon domestic consumption of Indian consumer demand and market, instead of exports, which insulates Indian economy from any global economic and financial problems.

With very high Gross Domestic Savings and majority being invested in real estate and gold, against financial instruments, the impact of market and economic volatility is greatly restricted.
Access to natural resources, strong manufacturing, specialization in manufacturing and booming services greatly diversifies economic risk. India remains an oasis of growth in global economy.

Indian Sports Media

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Indian Market: Bird of Gold

McKinsey Global Institute estimates a CAGR GDP Growth of 7.3% to US$ 1.8 trln in 2025. Services which is a higher end of the value chain, would be the key growth driver. Growing services business and resultant higher education and income levels would drive increasing consumer spends.
Illustration 1: GDP Growth Forecast

Average Household Income would triple in next 15 years from INR 115,000 to INR 320,000 in 2025.
Urbanisation rate is estimated to increase from current 29% to 37% by 2025. Average Urban Household Income is expected to grow by 5.8% for 2005 2025 from 4.6% for 1985 2004
Source: McKinsey Global Institute

Illustration 2: Household Income Growth

Source: McKinsey Global Institute

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Indian Market: Bird of Gold

Household Consumption would quadruple from INR 17 Trln to INR 70 Trln in 2025. Urban India which would be housing 1/3rd of the country would account for 2/3rd of growth in consumption of INR 36 Trln in 2025. Increase in dispensable income by INR 42 Trln would contribute to 80% of increase in consumption in 2025. India is today 12th largest consumer market in the world (equivalent to Brazil), despite having 6 times the population of Brazil. India would become 5th largest consumer market in the world with annual consumer spend of US$ 1.5 Trln. Thus Indian consumer market offers attractive opportunities for entrepreneurs and investors.
Source: McKinsey Global Institute

Illustration 3: Household Consumption

Illustration 4: India 5th Largest Consumer Market

Source: McKinsey Global Institute

Indian Sports Media

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Indian Media Market: Rising Star

Increasing internet penetration and fast growing television market with global broadcasters entering Indian markets, would further provide access to Indian consumers with global brands, sports and sporting events. CBS Television is now a fresh entrant in Indian market in partnership with Reliance Anil Dhirubhai Groups BIG Entertainment. Global players like STAR and Sony Entertainment have been active in India for more than a decade Successful launch and penetration of TimesNow and ETNow by Bennett, Coleman and Co Ltd (Publishers of Times of India and The Economic Times) indicates availability of space for stronger and quality players in this space
Illustration 5: Global Internet Penetration
No 1 2 3 4 5 China United States Japan India Brazil Country Penetratio n (%) 22.40% 74.70% 73.80% 7.10% 34.40% 28.60% 15.30% 23.80% Growth (%) 1244.40% 138.30% 99.70% 1520.00% 1250.20% 342.70% 324.70% 342.20% Population Share (%) 19.80% 4.50% 1.90% 17.10% 2.90% 63.90% 36.10% 100.00% Users Share (%) 18.70% 14.20% 5.90% 5.10% 4.20% 76.80% 23.20% 100.00%

Top 20 Countries Rest of the World Total Worldwide

Source: Internet Stats

Illustration 6: Internet Penetration in India

Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Users 1,400,000 2,800,000 5,500,000 7,000,000 16,500,000 22,500,000 39,200,000 50,600,000 40,000,000 42,000,000 Population 1,094,870,677 1,094,870,677 1,094,870,677 1,094,870,677 1,094,870,677 1,094,870,677 1,094,870,677 1,112,225,812 1,112,225,812 1,129,667,528 Penetration (%) 0.1% 0.3% 0.5% 0.6% 1.5% 2.1% 3.6% 4.5% 3.6% 3.7%

Source: Internet Stats

Indian Sports Media

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Sports Market: Next Wave?

Cricket which is also the national sport has been the biggest sport in the country, and dominates sports marketing industry in the country, as per AC Nielsen study. However, other sports are picking up very fast, especially due to availability of many channels to broadcast the same. Rising marketing, advertising and branding spends is also facilitating commercialization of other sports. According to the Pitch-GroupM Survey, the size of the sports marketing industry is around INR 19 Bln and is growing at 25% annually. Nevertheless this industry in India is still at a nascent stage. Sports marketing is fast becoming a critical media to connect consumers with brands and increase brand visibility and recognition. Newer sports are also fast getting increasing acceptance and proving room for newer sports to get respected space in a fast growing market
Source: TAM

Illustration 7: Top Sports

Sport Cricket Wrestling Football Tennis Golf Car/Bike Racing Mn Viewers 122 96 83 70 65 59

Hockey
Basketball Baseball Billiards

35
26 26 19

Source: TAM Urban Class I, AC Neilsen

Illustration 8: Football audience increase by 60%

Indian Sports Media

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Growth of Non Cricket Sports

Attraction of Non Cricket sports is fast increasing in the country, with large share attributed to football and tennis and then F1. Advertising spends and brand association with the same is also rising. Demand for localized content is in demand, and this offers room for more local sporting events to be organized and televised . With more sports channels and growing competition within this space, and only one channel getting cricket rights, every channel would need more attractive and innovative local content sporting event to atleast retain market shares. Advertising spends of all brands on sports channels is at INR 4.5 bln, out of total TV sponsorship of INR 85 bln, which is a mere 5.3% compared to 16% in USA. Increasing share of non cricket sports would help in expanding sports media and sports marketing industry in the country
Illustration 9: Increasing volumes in Non-Cricket Sports

Source: TAM

Illustration 10: Viewership v/s Content Distribution

Source: TAM

Indian Sports Media

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Paradigm Advisors is a boutique corporate finance and strategy advisory firm, based out of Mumbai, Indias financial capital, providing services in capital raising, M&A, corporate strategy, India Entry Strategy, research and investment advisory to Small and Medium Enterprises (SMEs) and mid-market corporates. Backed by a young and equally experienced team of investment research, market research, investment banking, investment management, strategy advisory, commercial banking professionals with more than 45 man years of experience in aforementioned lines of services, Paradigm Advisors is well poised to advise its clients.

Indian Sports Media Sector

About Paradigm Advisors

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Sumeet Mehta, Managing Director
Email: Sumeet.Mehta@paradigmgroup.in Mobile: +91 98704 38983

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