The year 2012 has been a mixed bag for the media and entertainment sector. There have been several changes that have led to the opening of opportunities for further growth. Digital technologies, growth in penetration of broadband and digital cinema, and increasingly sophisticated mobile devices are benefitting advertisers, media houses, and telcos immensely.
According to Jehil Thakkar, Leader, Entertainment & Media, KPMG, the Indian M&E industry grew from Rs 728 billion in 2011 to Rs 821 billion in 2012, registering an overall growth of 12.6 per cent. With some improvement also likely in the global economy in 2013, the prognosis for the Indian economy looks somewhat better. With the real GDP growth expected to be in the range of 6.1 per cent to 6.7 per cent in 2013, the outlook is optimistic.
Given the impetus introduced by digitisation, continued growth of regional media, upcoming Lok Sabha elections, strength of the film sector and fast increasing new media businesses, the media and entertainment industry is estimated to achieve a growth rate of 11.8 per cent in 2013 to touch Rs 917 billion. The sector is projected to grow at a healthy CAGR of 15.2 per cent to reach Rs 1,661 billion by 2017.
Thakkar remarked, “Interestingly, India remains a growth market for traditional media, and the language markets remain key centres of growth. Hence, the regional growth story continues to be in a range of 12 per cent to 15 per cent.”
According to the KPMG report, digitisation of cable television is expected to bring in transparency and increase subscription revenues for Multi System Operators (MSOs) and broadcasters. New media has observed a 40 per cent growth in advertising with 174 million internet viewers and 44 million smartphone installed base.
The radio industry had a muted growth of 10 per cent in 2012 and reached revenues of Rs 12.7 billion, as compared to Rs 11.5 billion in 2011. Digital tunes are now being played like never before, contributing 57 per cent to the Rs 10.6 billion music industry, which grew 18 per cent Y-o-Y. On the other hand, the Rs 224 billion Indian print industry grew by 7.3 per cent from Rs 209 billion in 2011, lower than KPMG’s expectation of 8.3 per cent growth last year.
The VFX industry, a rapidly evolving segment in India, is estimated at approximately Rs 7.7 billion and can be broadly classified into movies, TV shows and advertisements verticals.
According to Thakkar, after several years of muted growth, 2012 was an exciting year for the Indian film industry with the audience returning to the theaters. With the growth in number of screens via multiplexes, increased ticket prices and delivery of robust content, India’s domestic theatrical revenues grew by 23.8 per cent Y-o-Y; contributing 76 per cent to the Rs 112.4 billion film industry.
While 50-60 per cent of the outdoor budget was consumed by Mumbai and Delhi alone a few years ago, there appears to be a marked shift to the Tier II and III cities – the spends in the top 10-12 markets have reduced from 80 per cent to 60 per cent over the last few years. This trend is expected to continue.
The projected growth for television is 18 per cent, radio is 16.6 per cent, print is 8.7 per cent and films is 11.5 per cent. Television and print are expected to dominate as the number one and number two mediums. The other projected growth figures are 32.1 per cent for digital advertising, 15.8 per cent for animation and VFX, 22.4 per cent for gaming, and 16.2 per cent for music.
According to Thakkar, the potential risks that can derail growth are challenges for Phase I one cities from seeding to monetisation, further delay in the FM Phase III rollout plan, the unsuccessful implementation of 4G, the lack of necessary incentives and policy support by the Government, and the continual low rate of economic growth.
Thakkar concluded by saying that the industry still needs logistics and funding for successful digitisation, viable digital monetisation models and a robust measurement system.
Jehil Thakkar was expressing his views on day one of FICCI Frames 2013, being held in Mumbai from March 12 to 14, 2013.