The Indian entertainment industry continued to outperform the economy in year 2003. The industry saw 15 per cent growth to reach an estimated Rs 19,200 crore (US$ 4,267 mn) during the year. This growth has been driven primarily by an increase in television viewership and improved realisations from television subscriptions and film exhibition. A peek into the film and television industry, the two most important segments of the Indian entertainment industry, shows that in 2003, the total revenues of the film industry are estimated at Rs 4,500 crore (US$1,000 mn) and are expected to grow at a compounded annual growth rate of 18 per cent to gross Rs 10,100 crore (US$ 2,244 mn) by 2008.
These are some of the findings of the Ernst & Young report on the ‘Indian Entertainment Industry: Emerging Trends & Opportunities’.
The Indian television industry, one of the leading mediums of entertainment with approximately 8.5 crore-television households, is the third largest television market in the world, only behind China and the US. The report highlighted the fact that the Indian television industry’s subscription revenues from distribution, television and cable advertising and software exports accounted for 63 per cent, 33 per cent and 4 per cent respectively of the total television revenues, which aggregated Rs 12,900 crore (US$ 2,867 mn) in 2003.
Revenues from television are expected to grow at a compounded annual growth rate of 17% over the next 5 years to gross Rs 28,852 crore (US$ 6,411 mn) by 2008, and a significant portion of this growth is expected from the subscription stream.
Presenting the key findings at the inaugural session, Farokh T Balsara, Head of Media and Entertainment practice at Ernst & Young said, “Changing distribution landscape, a key industry fundamental, is also propelling growth–whether it is steps taken towards addressibility in a highly fragmented cable television market, introduction of Direct-to-home (DTH) services for television distribution, experimentation with digital technology as a means to expedite film exhibition in semi-urban and rural markets to combat piracy or development of FM radio as a medium after its privatization”.
“As different segments within the industry are at varying stages of maturity and corporatisation, growth rates for each of them vary. In order to exploit opportunities for growth that arise out of the various stages in the life cycle of segments, industry players are straddling within and across various segments of the industry,” he added.
There is also a trend towards consolidation between the various segments of the entertainment industry, opined Balsara. “Industry players are to straddle different segments of the industry as well as different aspects of the value chain within each segment--to build scale, increase revenue streams, to mitigate risks, leverage on opportunities and skill-sets and escape cyclical downturns that may impact any one segment”.
Another key highlight of the report is that the regulatory environment is also enabling change within the entertainment industry. Progressive policy changes to attract new players in DTH and FM Radio, rationalization of entertainment tax in certain states, infrastructure sops offered to spur exhibition infrastructure, are all contributing towards an environment conducive to growth. “These developments are all expected to provide a fillip to the industry going forward,” Balsara added.
The report on the whole provides an analysis of the developments of the various segments of the entertainment sector such as the changing distribution scenario, consolidation, changing regulatory environment, films, television, broadcasting, radio, music and the like.