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 PriceWaterhouseCoopers’ 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 literate population 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.
About the radio industry, which has got rejuvenated after the new initiatives under FM Phase II, the report said that the industry would grow at CAGR of 32 per cent to reach Rs 1,200 crore by 2010 from its present size of Rs 300 crore. “The deluge of radio stations will result in rising need for content and professionals. New concepts like satellite, Internet and community radio have also begun to hit the market.”
The Internet advertising sector, according to the report, would grow at CAGR of 50 per cent to reach the size of Rs 750 crore from the present size of Rs 100 crore. The animation industry and gaming industry are also expected to grow by CAGR of 30 per cent and 50-60 per cent, respectively.
The out-of-home advertising industry would grow by CAGR of 14 per cent to reach Rs 1,750 crore by 2010 from present size of Rs 900 crore. “Growing billboard advertising is fuelled by technologies such as light-emitting diode (LED) video billboard. This is a segment that is seeing interesting technological innovations across the world and is likely to evolve in India, too, in the short-term,” the report pointed out.
Commenting on the future of the industry, PWC’s Deepak Kapoor said, “Convergence will play a crucial role in the development of the Indian entertainment and media industry, where consumers will increasingly be calling the shots in a converged media world. Broadband access and Internet Protocol will be the technology enablers that will evolve this new breed of consumers, as opportunities for them to access and manipulate content and services will be overflowing. Established approaches of pushing exclusive content through non-linear channels or networks to mass or segmented audiences will no longer guarantee competitive advantage.”