Indian Entertainment and Media Industry 2008

New Delhi, 15 MARCH, 2008 – The Indian Entertainment and Media (E&M) industry has been experiencing a steady growth supported by the robust performance of the country’s economy, according to the 2008 annual edition of the FICCI – PricewaterhouseCoopers’ Indian Entertainment and Media Industry - Sustaining Growth.
In 2007, the performance of the Indian E&M industry surpassed most other domestic industries. The industry achieved a 17% growth, higher than the projected 15% growth, according to the Report. Its size is estimated at Rs 513 billion in 2007, up from Rs 438 billion in 2006.
The sector also attracted record foreign investments at Rs 8.5 billion during the period.
The FICCI-PwC Report has projected an 18% cumulative growth for the industry over the next five years. It is expected to touch Rs 1.157 trillion by 2012. In the last four years, the industry recorded a cumulative growth of 19%.
The advertising industry spearheaded the overall performance of the E&M industry with a 38% share. It recorded a 22% growth over the previous year and contributed an estimated Rs 196 billion in 2007 as against Rs 161 billion in 2006. In the last four years, from 2004 to 2007, the advertising industry recorded a cumulative growth of 20% on an overall basis.
In 2007, the E&M industry saw the entry of new players and existing players expanding by diversifying into new segments, spreading their presence across value chains, broadening their horizons by increasing the geographic presence.
Globally, the migration to digital formats is gaining momentum, which will soon be a reality in India. Distribution of E&M content over digital and mobile platforms will gain popularity.
“Digitalization is the future for most segments and companies have to adopt this revolution with appropriate infrastructure, relevant business models, and technology upgrades along with associated costs. The pace of adoption will determine industry dynamics.” said Timmy Kandhari, Executive Director and Leader, TICE (Technology, Infocomm and Entertainment & Media) Practice, PricewaterhouseCoopers in India, while commenting on the future outlook for the industry.

Key findings of the report –

Overall
Current size in 2007 – Rs 513 billion; Rs 1,157 billion projected for 2012
Growth in 2007 over 2006 – 17%; 18% CAGR projected for 2008-12

• Continuing with the trend of the previous years, the emergence of media conglomerates further intensified in 2007. Several media groups expanded beyond their traditional domains to leverage on the synergies in advertising, thus, aiming to have a presence across all segments of the Indian E&M industry.
• In 2007, foreign investments in the E&M sector reached a record high of $211 million, approximately Rs 8.5 billion. This was a result of a clutch of investment deals announced in 2006 and before.
• The advertising industry is experiencing a paradigm shift with digitally interactive mediums gaining popularity among the consumers. Internet and mobile are the two keys enablers for the digitally interactive mediums. Internet advertising is estimated at Rs 4.2 billion in 2008, growing at 32% CAGR. It is expected to touch Rs 11 billion in 2012.
• The E&M industry saw several deals in 2007 across various segments. During the period, television segment generated the most interest among investors.
• In 2007, the trend continued towards increased convergence between E&M and telecom industries. The most notable of these trends were witnessed in the mobile music segment. Other initiatives included newspaper industry going online with ‘e-papers’ and mobile with ‘m-papers’. Digital cinema continued to make significant progress in the film industry. There was a sizeable increase in the sales of online and mobile tickets. Most television broadcasters today have forayed into online and mobile portals.

Television Industry
Current size in 2007 – Rs 226 billion; Rs 600 billion projected for 2012
Growth in 2007 over 2006 – 18%; 12.22% CAGR projected for 2008-12

• Television industry is undergoing a transformation with digital distribution networks. More and more, customers are lapping up the DTH network. The DTH subscription is projected to grow at 44% CAGR over the next five years.
• CAS was made mandatory from January 1, 2007. However, there was a lukewarm response to this from customers during the year.
• High growth in advertising revenues and emergence of alternate revenue streams, especially SMS, is driving the launch of several channels, especially in the ‘general entertainment’ genre.

Print Media
Current size in 2007 – Rs 149 billion; Rs 281 billion projected for 2012
Growth in 2007 over 2006 – 16%; 14% CAGR for 2008-12

• Launch of magazines dominated the print industry in 2007 due to favorable FDI policies and manifested growth potential, especially in the high-end niche genres.

Newspaper publishing was dominated with increased number of regional publications.

Filmed Entertainment
Current size in 2007 – Rs 96 billion; Rs. 176 billion projected for 2012
Growth in 2007 over 2006 – 14%; 13% CAGR for 2008-12

• Emergence of various revenue streams beyond the traditional box office is changing the face of the Indian filmed entertainment industry, such as television, mobile, Internet, home video, merchandise, music, re-make rights, and several branded entertainment opportunities.
• Advent of ‘Studio Model’ is further de-risking the business; Hollywood studios, such as, Sony Pictures, Viacom and Fox have evinced interests in India during 2007.
• Entry of players like Moser Baer is changing the Indian model for Home Video from rental to a sell-through.
• Talent is becoming ‘commoditized’. There was a huge rush in 2007 to lock-in talent for a long-term period.

Radio
Current size in 2007 – Rs 6.2 billion; Rs 18 billion projected for 2012
Growth in 2007 over 2006 – 24%; 24% CAGR for 2008-12

• Over 150 radio channels became operational in 2007; thus, increasing the spread of radio.
• Phase-III plans have been drawn up which recommended additional 560 radio stations in the next five years.
• The Telecom Regulatory Authority of India has recommended to the Government for allowing news on radio and increasing the FDI limit, among other provisions; these recommendations are expected to make radio more favorable with advertisers.

Key Data

Outlook for the next 5 years

In the next five years, there will be a significant rise in online digital streaming, digital movie/TV downloads, video-on-demand, music downloads from the Internet, music downloads to wireless phones, online advertising, online video games, and wireless video games.
Digitization will help reduce costs for content and delivery in the long run, and thereby, shift the emphasis to quality, said Mr Kandhari.

Notes to the Editor

About the Indian Entertainment and Media Industry – Sustaining Growth

This 2008 edition of the FICCI – PricewaterhouseCoopers’ Indian Entertainment and Media Industry- Sustaining Growth has in-depth forecasts and analysis of industry segments, including television, filmed entertainment, print media comprising newspaper and magazine publishing, radio, emerging segments like music, animation, gaming, Internet advertising, out-of-home advertising, and sports.

The report has been prepared on the basis of information obtained from key industry players, trade associations, government agencies, trade publications, and other industry sources. The performance trends in different segments of the industry were analyzed and an attempt was made to identify the underlying factors. Models were developed to quantify the impact of each of these factors, to create a forecast scenario. PwC’s professional expertise, institutional knowledge, and global resources of knowledge and excellence were applied to review and adjust those values wherever required. The entire process was then examined for internal consistency and transparency vis-à-vis prevailing industry wisdom. Feedback from key industry players was subjected to a rigorous validation process to ensure that it was consistent and conformed to the industry feel.

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