Indian E&M industry to grow 10.5% in 2009-13; OOH advertising pie to drop: PwC

According to the 2009 edition on PricewaterhouseCoopers report for ‘Indian entertainment and media outlook 2009’ the total growth in Entertainment and Media industry in 2009 is projected to be 8.3 per cent and is projected to return to double digit growth in 2010. Infact, the report shows that the pace of growth in Indian entertainment and media industry in 2008 slowed to 10.3 per cent in 2008 as compared to 16.7 per cent in the year 2007 while the advertising spends slowed to 11.3 per cent in 2008 as compared to 20.7 per cent in 2007.

In other words from 2004 to 2008 the industry registered a growth of around 16.6 per cent compounded annually, the growth in the Indian entertainment and media industry is said to decelerate to 8 per cent in 2009. Growth rate is also said to increase in 2010 to 10.4 per cent as economic conditions are expected to gradually improve however in the remaining years of the forecast period, the industry is expected to continue to grow at increasing rates, resulting in the overall compound annual growth rate for the period 2009-13 of 10.5 per cent.

Bringing in the global highlights, Marcel Fenez, Global Leader- Entertainment and Media Practice PricewaterhouseCoopers explained, “Hopefully, India will learn from the mistakes made by the international market however it is the Asian and the Latin American markets that are still doing very well and will continue to do so in the near future. Infact, all those segments that are heavily dependent on advertising are adversely affected and the winners during an upturn will be anything and everything that is digital.”

“The generation today does multitasking seamlessly and what is happening right now is a structural change in the industry and not a recession. Ironically, even by 2013 global ad spend is still lower than what it was in 2007. The reasons I believe why the ad dollars have shifted are primarily because of the price effects and that consumers have moved or migrated online. India however is still seeing growth therefore the shift to digital is not happening in a dramatic way. What needs to be done is that the content offering needs to be innovative, you need to listen to your customer and one cannot relate to advertising alone but, will have to find other opportunities too” he added.

According to Timmy Kandhari, Leader India Entertainment and Media Practice, PricewaterhouseCoopers, “The story in India is different from other parts of the world, we are still a growth market with 10.5 per cent growth which for the many is still a significant number although not the kind of growth we saw in 2007. While there certainly is migration to digital but, not as dramatic as in the western countries infact, radio, digital are emerging mediums wherein their growth rates are doubling from what they were in 2007 and it is these emerging mediums that is giving us the incremental growth.”

He further said, “Digital migration may take place dramatically five years from now nevertheless what we can do is avoid making mistakes that the western countries have made or we can simply adapt to these changes taking place.”

The PwC outlook on various segments of the Indian E&M industry (2009-13):

Television

The television industry is projected to continue to be the major contributor to the overall industry revenue pie and is estimated to grow at a stable rate of 11.4 per cent cumulatively over the next five years from an estimated Rs. 244.7 billion in 2008. The overall television industry is projected to reach Rs. 420 billion by 2013. In the television pie, television distribution is projected to garner a share of 60 per cent in 2013. On the other hand, television advertising industry is projected to command a share of 41 per cent in 2013, having increased from a present share of 39 per cent in the total ad industry pie. The relative share of the television content industry is expected to remain constant at 4 per cent.

Film

The film industry is projected to grow at a CAGR of 11.6 per cent over the next five years thus reaching to Rs. 185 billion in 2013 from the present Rs. 107 billion in 2008. The relative shares of the film industry are expected to shift marginally from the traditional revenues to the new emerging revenues.

Print media

The print industry is projected to grow by 5.6 per cent over the period 2009-13 thus reaching to Rs.213 billion in 2013 from the present Rs.162 billion in 2008. The relative shares of newspaper publishing and magazine publishing are not expected to change significantly and are expected to remain the same at around 87 per cent in favour of newspaper publishing. Interestingly, magazine publishing are expected to grow at a higher rate of 6.5 per cent as compared with newspaper publishing which is expected to grow at 5.6 per cent for the next five years.

Radio advertising

The radio industry is projected to grow at a CAGR of 18 per cent over 2009-13 thus reaching to Rs.19 billion in 2013 from the present Rs. 8.3 billion in 2008 which is more than double its present size. In terms of share of ad pie, it is projected that the radio advertising industry will be able to increase its share from 3.8 per cent to 5.2 per cent in the next five years.

Emerging segments

The key growth driver for the music industry over the next five years will be digital music, and its share is expected to move from 16 per cent in 2008 to 60 per cent in 2013. Within digital music, mobile music will continue to increase its share and maintain its dominance. Given the trends of increased internet usage, internet advertising is projected to grow by 32 per cent over the next five years and reach an estimated Rs. 20 billion in 2013 from the present Rs. 5 billion in 2008. The share of the online advertising too is projected to grow from 2.3 per cent in 2008 to 5.5 per cent in 2013 of the overall advertising pie.

Out of Home

The estimated size of Out of home (OOH) advertising spend is Rs 15 billion in 2008, which is projected to become almost twice its current size in 2013- Rs 25 billion. Its share in the total ad pie is expected to go down marginally to 6.8 per cent in 2013 from a current level of 6.9 per cent in 2008.

Animation, gaming and VFX

This industry will continue to maintain its growth pace and is projected to grow at a CAGR of 22 per cent to Rs. 42.5 billion in 2013 from its current size of Rs. 15.6 billion. In the animation space, domestic demand will create the fillip in its growth, as well as contribution from international co-productions, in the film and television space.

PricewaterhouseCoopers Pvt. Ltd. provides industry - focused tax and advisory services to build public trust and enhance value for its clients and their stakeholders. PwC has offices in Ahmedabad, Bangalore, Bhubaneshwar, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, New Delhi and Pune.

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