The 2008 annual edition of the FICCI-PricewaterhouseCoopers indicates that the Indian Entertainment and Media (E&M) industry is now in a phase of steady growth, ably supported by the stable economic growth in the country. Not only that, the industry’s performance has surpassed the performance of most of the other Indian industries in 2007.
The E&M industry, which is poised to grow by 18 per cent over the next five years, is estimated to be worth Rs 1.157 trillion by the end of 2012. Taking a look at the year’s round performance, the FICCI-PWC report indicates a 17 per cent jump for the E&M industry, from Rs 438 billion in 2006 to Rs 513 billion in 2007.
Taking a look at the industry’s performance in the past four years, from 2004-07, the FICCI-PWC report shows a steady increase in revenues by 19 per cent on an overall basis.
In 2007, the industry saw the entry of new players, while existing players expanded their businesses into new segments and strengthened their geographic presence. Several deals were cracked in 2007, with television, like the previous year, attracting more interest among investors than any other medium.
Given the convergence of the E&M industry and the telecom industry, mobile music gained in popularity. In the print domain, newspapers adopted another platform to reach out to readers after e-papers with the launch of m-papers. Digital cinema continued to make significant progress with the rise in online and mobile ticketing sales. Most television broadcasters, too, have forayed into online and mobile portals.
Key findings of the report
Continuing with the trend of the previous years, the emergence of media conglomerates further intensified in 2007. Several media groups expanded beyond their traditional domains to leverage on the synergies of advertising, thus aiming to have a presence across all segments of the Indian E&M industry. In 2007, foreign investments in the E&M sector reached a record high of $211 million (approximately Rs 8.5 billion). This was seen as result of the extremely high number of investment deals announced in 2006 and the years before.
The advertising industry is experiencing a paradigm shift with digital platforms enabling to reach critical mass. This has resulted in consumers shifting from passive mediums to spending more time on digitally interactive mediums. Internet and mobile are two key enablers for the same. The year 2007 saw the advertising industry contribute 38 per cent of the overall industry revenues of 2007, recording a growth of 22 per cent over the previous year, and augmenting the size of the industry from Rs 161 billion in 2006 to Rs 196 billion in 2007. In the last four years, 2004-07, the advertising industry recorded a cumulative growth of 20 per cent. Internet advertising is expected to reach at Rs 4.2 billion in 2008, and Rs 11 billion by 2012, with a compound annual growth rate (CAGR) of 32 per cent.
The current size of the television industry is estimated at Rs 226 billion, with a projected figure of Rs 600 billion by 2012. The growth rate in 2007 over last year is 18 per cent, while the CAGR is estimated at 22 per cent from 2008-12. With digitalisation of distribution networks through increase in DTH subscribers, the television industry is changing shape. According to the FICCI-PWC report, CAS, which was made mandatory from January 1, 2007, saw a lukewarm response during the year. With the increase in advertising revenues and emergence of alternate revenue streams, the industry is seeing the launch of several new channels, especially in the general entertainment genre.
Print media is currently estimated to be a Rs 149 billion industry, which is projected to grow to Rs 281 billion by 2012 with a CAGR of 14 per cent. In 2007, print media grew by 16 per cent over the previous year. The segment has seen the launch of several new magazines in 2007 as a result of favorable FDI policies and growth potential in the high-end niche genres. Newspapers saw an increase in the number of regional publications.
Film entertainment has seen the emergence of various revenue streams beyond traditional box office. Different platforms like television, mobile, Internet, home video, merchandise, music, re-make rights and several branded entertainment opportunities have changed the face of film entertainment industry. The industry, which grew by 14 per cent in 2007, is currently poised at Rs 96 billion, is projected to reach Rs 176 billion by 2012 with a CAGR of 13 per cent for four years from 2008-12.
Advent of the ‘Studio Model’ is further de-risking the business. The year 2007 saw Hollywood studios such as Sony Pictures, Viacom and Fox show a keen interest in India, while the entry of players like Moser Baer is changing the Indian model for home videos from rental to sell-throughs. Talent is becoming ‘commoditised’, and there was a huge rush in 2007 to lock-in talent for a long-term period.
According to the FICCI-PWC report, radio industry’s current size is Rs 6.2 billion, which grew by 24 per cent in 2007 as compared to 2006. It is projected that by 2012, the segment will become worth Rs 18 billion with a CAGR of 24 per cent. The reach of this medium has increased with over 150 radio channels becoming operational in 2007, and this is only expected to increase with the Phase-III plans having recommended additional 560 radio stations in the next five years. Moreover, TRAI has recommended the Government to allow news on radio and increasing the FDI limit, among other provisions. These recommendations are expected to make radio more favourable with advertisers.
Outlook for the next five years
Globally, the migration to digital formats is accelerating and this trend is likely to emerge in India too. Distribution of entertainment and media content over digital and mobile platforms like online digital streaming, digital movie/TV downloads, video-on-demand, music downloaded from the Internet, music downloaded to wireless phones, online advertising, online video games, wireless video games, and online gaming, is likely to rise significantly in the next five years.
Commenting on the future outlook of the industry, Timmy Kandhari, Executive Director and Leader, TICE (Technology, Infocomm and Entertainment & Media) Practice, PWC in India, said, “Digitalisation is the future for most segments, and companies have to adopt this revolution with appropriate infrastructure, relevant business models, and technology upgradation along with associated costs. The pace of adoption will determine industry dynamics.”
“As digitisation sets in, it will lead to reduction in costs for content and delivery in the long run, shifting the emphasis on quality content,” he added.
The 2008 edition of the FICCI-PWC report has been prepared on the basis of information obtained from key industry players, trade associations, government agencies, trade publications, and other industry sources. The report augurs a bright future for the E&M industry.