FICCI-PWC report: Indian E&M industry set to grow by 18 per cent

The 2007 annual edition of the FICCI - PricewaterhouseCoopers report estimates that the Indian Entertainment and Media (E&M) industry is poised to grow at 18 per cent compounded annual growth rate (CAGR) to reach Rs 1 trillion by 2011 from its current size of Rs 437 billion. The industry has been forecast to outperform the economic growth in each year till 2011.

Overall Current size Rs.437 billion Projected size by 2011 Rs.1 trillion CAGR 18% According to the report, the technological advancements and policy initiatives taken by the Indian Government that are encouraging the inflow of investment, and initiatives by private media companies will prove to be the key drivers for the E&M industry. The rising income levels and consumerism fuelled by the country’s strong economic growth are also aiding the growth of demand for entertainment.

Commenting on the future of the industry, Timmy Kandhari, Executive Director & Leader, Entertainment & Media Practice, PWC, said, “Convergence will continue to 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. With more favorable policy initiatives expected to be introduced by the government in the near future, a move towards a better intellectual property rights regime, growing investment from big Indian as well as foreign companies, and the deluge of technological advancements, there is only one direction for the Indian E&M industry to go - Up!”

The FICCI-PWC Report has defined 2006 as a year of start of convergence for the media industry. The services available through different network platforms promote consumers to the top of the value-creating hierarchy, allowing them to enjoy the all-new social media experience -- ‘Lifestyle Media’. The report believes that the importance of accurate audience measurement will be greater than ever before and media consumption models will gain significant importance.

Forming of Media Powerhouses

A number of collaborations between value chain partners are encouraging the diversification of several media companies across different segments of the industry. Companies such as Reliance’s Adlabs, Bennett, Coleman & Co. Ltd and Zee Group have presence across several segments of the E&M industry, ushering the dawn of ‘media conglomerates’ in India.

Advertising spends

Indian advertising spends in 2006 registered a growth of over 23 per cent to reach Rs 163 billion. “While today the low ad spends may seem like a challenge for 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 163 billion.”

Foreign investment

The year 2006 saw the maximum flow of foreign investment to the industry. Around 22 FDIs for media proposals are under the scrutiny of the Ministry of Information and Broadcasting, while as many as 13 proposals were cleared in 2006 itself. Overall, in the last three years, the industry has secured foreign investment of over Rs 4 billion.

Key Findings

Medium Current sizeRs. Projected size by 2011Rs. CAGR Television 191 billion 519 billion 22% Filmed entertainment 85 billion 175 billion 16% Print media 128 billion 232 billion 13% Music 7.2 billion 8.7 billion 4% Radio 5 billion 17 billion 28%

Television

The current size of the Television industry is estimated at Rs 191 billion, with a projected figure of Rs 519 billion by 2011 at a CAGR of 22 per cent. Last year, the major developments included the implementation of CAS in selected cities, launch of IPTV services and the entry of the second DTH player. These new distribution platforms are expected to increase the subscriber base and thereby making subscription revenues a key growth driver for the Indian television industry over the next five years.

Filmed entertainment

The filmed entertainment category, with a current size of Rs 85 billion, will be aided by the advancement of technologies like digital cinema halls to reach Rs 175 billion by 2011 with a CAGR of 16 per cent. The corporatisation of the industry and the Home Video section will play a major role in this growth.

Print media

Print media, with a projected size of Rs 232 billion by 2011 at a CAGR of 13 per cent, is now at Rs128 billion. The growing need for content and opening up of the sector to foreign investment are the key drivers of growth in the print media. Current estimates show that the reach of the medium in India has increased to 222 million people. This industry has potential to grow still larger as 369 million literate people in India are still not tapped by any publication.

Music

With a present size of Rs 7.2 billion, the Music industry is poised to grow at a CAGR of 4 per cent to reach Rs 8.7 billion by 2011. ‘Mobile music’ and ‘licensed digital distribution’ services are projected to fuel the recovery of the music industry, in spite of piracy plaguing the industry the world over. Ringtones currently constitute the dominant component of the mobile music market. Licensed digital distribution services are also contributing significantly to growth in all regions. The boom in the Radio industry is also expected to have a positive impact on the music industry.

Radio

With a projection of Rs 17 billion by 2011, the Radio industry is presently at Rs 5 billion. The CAGR is 28 per cent. The effects of the government policy changes in 2005 were evident in 2006 with 245 licences sold to private players and several new FM radio channels being launched across the country.

Medium Current sizeRs Projected size by 2010 Rs CAGR Live entertainment 9 billion 19 billion 16% Out-of-home advertising 10 billion 21.5 billion 17% Internet advertising 1.6 billion 9.5 billion 43%

Live entertainment

The Live entertainment industry, presently at Rs 9 billion, is estimated to grow to Rs 19 billion by 2010 at a CAGR of 16 per cent. The growing number of corporate awards, television and sports events is helping this sector. However, issues like high entertainment taxes in certain states, lack of world-class infrastructure and the unorganised nature of most event management companies continue to hinder growth of this industry.

Out-of-home advertising

OOH advertising, at a current size of Rs 10 billion, is expected to reach Rs 21.5 billion by 2010 with a CAGR of 17 per cent. With big players like Star Network and Bennett, Coleman & Co. Ltd entering the OOH advertising industry and the numerous innovations, this sector is poised for growth in the years ahead.

Internet advertising

Currently at Rs1.6 billion, the Internet advertising industry is poised to grow at a CAGR of 43 per cent to reach Rs 9.5 billion by 2010. With a 59 million PC literate individuals in the country, the options are only growing in the industry.

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