Indian entertainment and media industry is poised to grow at 19 per cent compound annual growth rate (CAGR) to reach Rs 83,740 crore by 2010 from its present size of Rs 35,300 crore, according to the 2005 annual edition of the FICCI-PiceWaterhouseCoopers report, ‘Indian Entertainment and Media Industry – Unraveling the potential’. The industry has been forecast to outperform the economic growth in each year till 2010. “Economic growth, rising income levels, consumerism coupled with technological advancements and policy initiatives taken by the Indian government that are encouraging the inflow of investment, will prove to be the key drivers for the entertainment and media industry,” the report said.
“Two factors that will contribute to the growth of the industry are low media penetration in lower socio-economic classes and low ad spends,” said Deepak Kapoor, Executive Director and Leader for PwC’s Entertainment & Media Practice in India. “Today, media penetration is poor in lower socio-economic classes, but efforts to increase it even slightly are likely to deliver much higher results, simply due to the absolute numbers being large,” he added.
Strong economic growth, rising consumer spending and regulatory corrections are drawing foreign investments in most segments of the entertainment and media industry, especially the print media. “The sector needs a consistent and uniform media policy for increase in investments in all sectors, needs efforts not just by the industry bodies, but by the government, with empowered officers enforcing anti-piracy laws,” said Dr Amit Mitra, Secretary General, FICCI.
The report said that Indian advertisement spends as a percentage of GDP, at 0.34 per cent, was abysmally low, as opposed to other developed and developing countries, where the average was around 0.98 per cent. “While today the low ad spends may seem like a challenge before the entertainment and media industry, it also throws open immense potential for growth,” points out the report. This potential can be estimated by the fact that even if India was to reach the global average, the advertising revenues would at least double from the current level of around Rs 132 billion, the report stated.
For the television industry, the report forecast that it would grow at an CAGR of 24 per cent and would be of the size Rs 42,700 crore from its present size of Rs 14,800 crore. 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 the homes - both in rural and urban (second TV set homes) areas - to buy televisions and subscribe for the pay services. New distribution platforms like DTH and IPTV would only increase the subscriber base and push up the subscription revenues, the report said.
The forecast for the print media has been included for the first time in the report. The print media is expected to grow at a CAGR of 12 per cent and will reach Rs 19,500 crore by 2010 from the current size of Rs 10,900 crore. “With the literacy on the rise, more people in rural and urban areas are reading newspapers and magazines today. Also, there is more interest in India amongst the global investor community. This leads to demand for more content from India. Foreign media, too, is evincing interest in investing in Indian publications,” the report observed.
conversation with Deepak Kapoor, Executive Director and Leader of PwC’s
Entertainment & Media Practice
Which sector you think in the entertainment industry will receive
maximum investment in one year’s time?
All sectors are doing well and have tremendous potentialhence all are
likely to receive investment both in the shortterm and long-term. However,
sectors where one needs immediate investments are radio due to the large
number of frequencies that are privatised, television distribution due
to digitalisation and addressability, theatrical film industry such
as investments in digital cinemas and multiplexes and many others.
Do you think there should be a uniform foreign investment limit
for all the sectors of E&M industry?
We do not believe there should be a single limit- what should be there
is a consistent and a uniform foreign investment policy for all sectors
of the E&M industry.
Do you think the current chaos in the addressability system
in the television sector is detrimental for the television industry?
What is the way out?
We believe an addressable system is extremely important for the growth
of the television industry. Unfortunately, there is no one single-solution
to this issue as it has wider implications for all stakeholders. Conditional
Access System (CAS) is a technology that makes the present cable system
addressable. An addressable cable system and DTH can surely co-exist.
A new introduction in this year’s report on Entertainment
and media industry is the print media. How ready is this sector to face
the onslaught from other media in India?
Print media is one of the most mature segments and also one of the
oldest segments of the E&M industry. Inspite of this, there still
exist several growth drivers for this segment - such as rising readership
levels, rising literacy levels and many others. Hence, there should
be no doubt on the potential for this segment.