Indian Media and Entertainment

Industry Overview

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Introduction
The Indian entertainment and media (E&M) industry has out-performed the Indian economy and is one of the fastest growing sectors in India. The E&M industry generally tends to grow faster when the economy is expanding. The Indian economy has been growing at a fast clip over the last few years, and the income levels too have been experiencing a high growth rate. Above that, consumer spending is also on the rise, due to a sustained increase in disposable incomes, brought about by reduction in personal income tax over the last decade. All these factors have given an impetus to the E&M industry and are likely to contribute to the growth of this industry in the future. Besides these economic and personal income-linked factors, there are a host of other factors that are attributing to this high growth rate.

Indian Media : Snapshot

Television: Television industry grew by 15.5 percent in 2010 Television households to surge to 156 million by 2015 Advertising revenues to touch $4.5 billion Subscription revenues to touch $9.25 billion Print: Overall print industry to see annual growth of 10 percent Revenues to touch $6.9 billion in five years Regional print expected to grow at a higher rate of 12 percent Radio: Scale of industry expected to increase multi-fold New regulation expected in regulation and royalty structure Industry expected to grow at 20 percent per annum and become profitable Films: 2010 has been quite challenging for Film sector Correction expected with multiplexes, research and cost rethink Industry expected to grow to $2.9 billion by 2015.

Key Highlights: M & E Industry

Advertising spends grew at CAGR of 10 per cent in the past three years, with almost flat growth in 2009, and is expected to exhibit a robust CAGR of 14 per cent over the next five years. The television industry, which is pegged at Rs 257 billion, has been growing at the rate of 6.8 per cent since 2008 Though the average time spent on watching television remained largely flat, the number of advertisers on TV increased from 8,500 in 2008 to 9,400 in 2009. The television industry is projected to grow at the rate of 15 per cent over 2010-14 and reach a size of Rupees 521 billion in 2014. The Indian print media has shown a moderate growth of 2 per cent in 2009 and reached around Rs 175 billion in size. Print advertising volumes grew only by 3 per cent in 2009. The election print advertisements saw an increase from 0.8 per cent in 2008 to 1.6 per cent in 2009.

Key Highlights: M & E Industry

The print industry is projected to grow at a CAGR of 9 per cent in the next five years and will reach Rs 269 billion by 2014. Radio industry was also affected by the slowdown, showing a decline of about 7 per cent during 2009. The radio industry is estimated to have grown at the rate of 9 per cent since 2006 and is pegged at Rs 7.8 billion by the end of 2009 The radio industry is expected to grow at the rate of 16 per cent for the next five years and reach a size of Rs 16.4 billion by the end of the five year term In 2009, the Indian OOH industry witnessed a 15 per cent drop. The share of OOH medium in the overall media pie reduced from 7 per cent in 2007 to 6 per cent in 2009. OOH media is estimated to have reached RS 13.7 billion in 2009, a negative growth of 15 per cent over 2008.

Get Ready for Another 100 TV Channels!

The Indian entertainment Industry is bubbling. With broadband making in-roads in Indian homes, the line between a Television Set and home computer is decreasing. With launching of various Indian channels on You tube and Hindi movies getting released purely on the internet, we are taking a leap forward in every way possible. And we have not yet even seen the power of IPTV. The recent announcements are adding more fun to all this. Most of the leading production houses and media houses are busy announcing and launching new niche channels for viewers viewing pleasure. As many as 100 new TV channels are slated to launch in next 12 months or so.

Indian Television : Key Highlights

First and foremost is, The Reliance Anil Dhirubhai Ambani group (ADAG), who are widening its foray into media and entertainment sector with announcement of more than a dozen channels in Entertainment and Non-Entertainment space. These channels will be launched as early as Jan 2008.
UTV Software Communications is planning to launch a news channel soon, having launched a youth channel last month. It has plans to launch multiple channels in different languages in India and Southeast Asia by next year end. INX Media will launch 12 channels in entertainment and news. In the first phase, INX plans to launch music, Hindi entertainment and a news channel each. In the second phase, it will launch three regional channels, three regional music channels and three city-specific news channels. TV18 and Viacoms joint venture Viacom18 will roll out a Hindi entertainment channel in addition to several niche channels. TV18 will launch a Marathi news channel (IBN Lokmat). BAG Films & Media is planning entertainment and lifestyle channels under BAG Glamour and news channels under BAG Newsline. NDTV has announced a few non-news channels, starting with Hindi General Entertainment and expanding into movies, regional, youth and kids programming.

Key Trends and Drivers for Growth

Focus on Profitable Growth: Indian M&E companies implemented cost reduction strategies to weather the economic slowdown of 2008-09. In order to sustain profitable growth, several cost control initiatives implemented during the slowdown have continued to prevail despite the industry resuming its double digit growth rate. Incorporation of technology across key business performance areas such as planning, budgeting, CRM, strategic outsourcing, etc. could enable more consistent and profitable growth given the technological advancement in these areas.
Increasing Media Penetration and Per Capita Consumption: Low media penetration particularly across SEC B, C and D segments offers significant headroom for growth. With increase in per capita consumption, discretionary spends are expected to grow and entertainment and leisure platforms are likely to beneficiaries of this trend. Moreover, as metros and tier 1 markets get saturated, media companies are looking to penetrate the tier 2 - tier 3 towns and rural markets. For e.g. multiplexes have expanded across tier 2 towns, while DTH players have helped achieve greater C&S penetration across rural India.

Key Trends and Drivers for Growth Contd..

Power of Digitisation: Digitisation continues to be a key growth driver for the Indian M&E Industry and this trend was even more pronounced in 2010. Film studios saw greater adoption of digital prints over physical and it was the first time in India that digital music sales surpassed that of physical units' sales.
Consumer Understanding: With increasing fragmentation and increase in competition, a deeper understanding of cultural and social references through focused study groups would enable players to target their consumers specifically and build loyalty.

Other factors: Regional media channels gaining popularity, different tastes of the audience and thereby different content, growth of the importance of the media are also few factors due to which the Media and Entertainment Sector is growing.

Policy Initiatives
DTH Service: Direct To Home (DTH) service is a comparatively recent entrant as compared to cable transmission. DTH is an addressable system and covers the entire country. The programmes transmitted through DTH can be directly be received at homes by installing small dish antennas at convenient locations in the building .DTH transmission does not require any intermediary, since an individual user is directly served by the DTH operator.
Policy on IPTV : The government has put in place the policy on IPTV enabling another mode of distribution of close to 550 permitted satellite TV channels til date through the Telecom and Cable Networks. This is bound to give not only a new digital visual experience to the Indian viewer with various value added and interactive services to cater to the persisting demand of the subscriber for new and interactive services but also for the platform service providers. The policy on IPTV now offers greater clsrity on the issues involved and both the telecom operators as well as the cable operators will be able to provide IPTV services and will be regulated as per their respective licensing conditions.

Policy Initiatives Contd..

Head-end In The Sky (HITS) : To speed up the process of digitalization of cable services located in non-CAS areas of the country, the Government is in the process of taking a view on the recommendations of TRAI on the issue of the proposed policy framework on the Head-end In The Sky (HITS) mode of delivery of content to the cable operators. This system will enable the packaging of content in digital form at the level of HITS operator who will uplink it to a satellite to be received by the cable operators and thereafter distributed in digital mode through cable network.
Mobile TV : Mobile TV is another mode of distribution of TV channels. A joint group of Ministry of Information & Broadcasting (MIB) and Department of Telecommunications (DoT) has considered the regulatory and licensing issues of mobile TV and held that if mobile TV services are to be provided in the broadcasting mode using transmission of terrestrial or satellite broadcast signals, they will come under the domain of MIB and will be governed by the applicable laws. If they are provided by using the infrastructure of telecom service provider, they will fall in the domain of Ministry of Communication and Information Technology (MCIT).

Future Outlook
It is expected to reach a size of US$ 13.9 billion in next five years i.e. by 2015 at a CAGR of 17 percent. The growth estimates till 2015 are due to a rapid growth in the subscriber base for DTH. Indian Film Industry is one of the world's largest with more than 1000 movie releases and over 3 million movie goers annually. In 2009, the print media industry stood at US$ 3.8 billion and showed a moderate growth of 2 per cent. The industry is projected to grow at a CAGR of 9 per cent and reach around US$ 5.9 billion by 2014.

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