The 2015 edition of FICCI-KPMG Indian Media and Entertainment Industry Report 2015 is out and it predicts the Media and Entertainment Industry in India is poised to grow at a CAGR of 13.9 per cent, to grow from INR1026 billion in 2014 to reach INR1964 billion by 2019. The report says this reflects the macro economic growth rate, advertising witnessed a healthy year largely on the back of heavy spending during the national and state elections, and a significant surge in spends by e‐commerce companies.
The television industry in India is estimated at INR475 billion in 2014, and is expected to grow at a CAGR of 15.5 per cent to reach INR975 billion in 2019. Subscription revenue growth at an annualised growth rate of 16 per cent is expected to outpace the advertising revenue annualised revenue growth of 14 per cent, on account of improving monetisation due to digitisation. Going forward, television advertising in India is expected to grow at a CAGR of 14 per cent over 2014 to 19, to reach INR299 billion. Going forward, subscription revenue is expected to grow at a CAGR of 22 per cent from 2014 to 2019 to INR201 billion, according to the report. Increase in the declared subscriber base and increase in revenue share of broadcasters in the subscription pie is expected to drive up the share of subscription to total broadcaster revenue from 33 per cent in 2014 to 40 per cent in 2019
Overall, the sector saw a healthy advertising growth on the back of the boost from general elections spend and the emergence of e‐commerce as a significant spender across media in 2014.
‘Advertising will continue to show robust growth over the next five years as economic growth comes back and categories like e‐commerce and telecom increase spending. However, the real pot of gold at the end of the rainbow is subscription revenue – if new pricing structures take hold within the industry, then Average Revenue per User will rise, benefiting the entire TV value chain,” says Jehil Thakkar, Head of Media and Entertainment at KPMG in India.
The Indian print industry is still growing at a high single digit rate and is expected to grow at a CAGR of 8 per cent during 2014- 19.13 Most of the growth in the sector is expected to come from Tier II, Tier III cities and rural markets, said the report.
The structure of the Indian print industry continues to be highly fragmented at a national and regional level. While advertisement revenue held a significant part in the total revenue pie and continues to be the growth driver for the industry, circulation revenue growth was higher than that of advertising revenue for Hindi and English markets last year. In 2014, the Indian print industry experienced a growth of 8.3 per cent from INR243 billion in 2013 to INR263 billion in 2014.
‘Print still commands the largest share of advertising in India. While the English market may see some challenges from digital in the years ahead, regional print continues to grow in low double digits – a rate that is the envy of most of the print world’, added Jehil Thakkar.
It is projected that the share of digital ad spends is going to be around 20 per cent of the total media ad spending in India by 2019 and mobile ad spends will contribute around 3 per cent of the total media spend.
The report observes that the digital advertising industry grew from INR 30.1 billion in 2013 to INR 43.5 billion in 2014, a growth of 44.5 per cent, driven by a steady growth in ad spends across most digital platforms.
In the music sector alone, the revenue from distribution of music through digital channels or digital music, as it is generally understood, today accounts for nearly 50 to 60 per cent of the overall size of the music industry.
Thakkar said, “Digital media surpassed our earlier projections. With internet on mobile finding broader adoption than previously anticipated, driven by cheaper smartphones and data plans, this sector will continue to power ahead. Mobile will be the defining medium for digital media with 435 million smartphones expected to be in use by 2019.”
Advertisers increasingly view the medium less as an add‐on but more as an integral part of their media plans. At the same time, challenges continued to hound the industry with smaller and standalone stations feeling the pressure of rising cost structures, measurement and royalty fee issues and the rising threat of the digital medium eating into the radio pie, observes the report.
“The much anticipated Phase III of radio is finally upon us. In addition to additional radio licenses that will give the industry the ability to offer wide reach to match other media, Phase III will also introduce a host of regulations to enable a better business environment for the industry. The ability to own more than one
station in a market and to be able to network nationally will be key to radio companies becoming more competitive,” says Thakkar.
The Indian Outdoor advertising (‘OOH’) industry saw robust growth in 2014. Exceeding expectations, the industry grew by 14% primarily on the back of election spending, and growth of e‐commerce and transit media.
With positive sentiment in the market we expect the OOH industry to grow at a CAGR of 9.8 per cent in the coming years to reach 35.1 billion in 2019 .
Metros continue to dominate and enjoy more than 50 per cent of the OOH market share. Inventory utilization has improved but prices have not seen any significant changes. Tier II and III cities continue to grow, largely on account of development of better infrastructure such as malls, airports, roads, etc. in these cities.
As per Thakkar, “Measurability continues to be the bete noire for the industry. As such, the industry’s effort to address this gap by creating a methodology through a third party is a welcome move. In terms of growth, Transit media will continue to expand, with the government making large investments in transport infrastructure.”