Media and entertainment industry to grow

A report by KPMG and FICCI, which was released at the annual FICCI Frames conference in Mumbai gave a glowing outlook for the growth of the media and entertainment industry in India. According to the report, the industry’s rate of expansion will accelerate over the next five years to 2013 by which time the business will be worth slightly more than Rs 1 trillion (US$0.019 trillion). The report’s definition of media and entertainment encompasses television, print media, OOH, radio, films, music, animation and gaming.

“India is one of the few countries where economic growth will be led by domestic consumption. With a low advertising spend to-GDP (gross domestic product) ratio of 0.47 per cent, a growing consumer class and middle class, young population, low media penetration and increasing discretionary spending, India continues to be an attractive market for media and entertainment,” said Amit Mitra, secretary general, FICCI.

“Media companies are under pressure to change, innovate and re-examine their existing business models. Players need to draw upon new capabilities to survive in this environment,” said Rajesh Jain, head, information, communication and entertainment, KPMG India. “Newspaper and television companies will work towards increase revenues from subscription by moving from an advertising-led business model to a subscription-led business,” says Farokh Balsara, partner and head, media and entertainment, Ernst and Young India.

The economic slowdown has also necessitated media companies in India to innovate to succeed in troubled times. “They are under pressure to change, innovate and re-examine their existing business models. Players need to draw upon new capabilities to survive in this environment,” said Jain.

The report cites the Indian Premiere League (IPL) as an example of innovation and suggests that sports marketing is expected to grow rapidly as broadcasters, encouraged by the success of IPL, will start looking at selling cricket and other sports entertainment packages very aggressively.

Television

The television industry is estimated to have reached a size of Rs 241 billion, a growth of 14.2 per cent over 2007. The industry is projected to grow at the rate of 14.5 per cent over 2009-13 and reach a size of Rs 473 billion.

To increase addressability and reduce leakages, the report recommends pushing for government regulations for mandatory digitisation of all TV distribution; development of alternate audience/viewership measurement systems; and rationalisation of content production costs through discussions with stakeholders at all levels -- actors/technical staff, production houses and broadcasters.

Out of Home (OOH)

OOH media has grown at a CAGR of 17.3 per cent over the past the years, and is estimated to have reached Rs 16 billion in size in 2008, a growth of 14 per cent over 2007. The sector’s performance was affected in the second half of the year, owing to the overall economic slowdown. It is projected to grow at a compounded rate of 12.8 per cent over the next five years and reach a size of around Rs 29.3 billion by 2013.

Filmed Entertainment

The filmed entertainment sector is estimated to have grown at a CAGR of 17.7 per cent in the past three years. The industry has clocked revenues of around Rs 109.3 billion in 2008, a growth of 13.4 per cent over 2007. Over the next five years, the industry is projected to grow at a CAGR of 9.1 per cent and reach Rs 168.6 billion by 2013.

Growth drivers for the sector will include expansion of multiplex screens, resulting in better realizations; increase in the number of digital screens, facilitating wider film prints releases; enhanced penetration of home video segment, primarily in the sell through segment; increase in the number of TV channels fueling the demand for film content, and hence, resulting in higher C&S acquisition costs; and improving collections from the overseas markets.

Going forward, the sector should focus on improving consumer connect by investing in new formats and content; more widespread distribution of home video - for instance, at grocery stores, to facilitate easy access; coordinated and proactive action to tackle piracy; promotion of and experimentation with new talent; and improvements in organisational ability to attract and retain talent.

Animation

At an estimated size of Rs 17.4 billion in 2008, the Indian animation industry is miniscule, as compared to the global animation industry, which is estimated to have revenues in excess of Rs 1,530 billion by 2010.

However, the Indian animation industry has been growing rapidly, at an estimated CAGR of 20.1 per cent in 2006-08. It is estimated to reach a size of about Rs 39 billion by 2013. Among the different segments of the animation industry, the animation production services segment is estimated to grow the fastest, with a CAGR of 17.8 per cent in 2009-13.

Gaming

Console gaming is the largest money churner in the global market and is gaining prominence in India too. In 2008, the Indian console gaming segment registered total revenues of Rs 4.1 billion, which is expected to go up to Rs 9.4 billion in 2013.

Plagued by a number of issues, such as content discovery and revenue leakages, the Indian mobile gaming segment has not lived up to the potential. It is estimated at Rs 1.4 billion in 2008 in terms of end user revenues.

The PC gaming market has, however, grown to Rs 978.6 million and is expected to grow at a CAGR of over 36 per cent through 2013. The primary growth drivers for PC games in India are the growing broadband subscriber base; multifunctional nature of PCs; and the availability and price points of PC game titles. Overall, the gaming industry is expected to grow at a CAGR of 33 per cent over 2009-13 to reach Rs 27.4 billion. ASIAIMAGE