Indian media, entertainment sector to grow at 14 per cent CAGR till 2015
21 March 2011
The vibrant Indian media and entertainment (M&E) industry, which continued its buoyant growth in 2011, is expected to register a compound annual growth rate (CAGR) of 14 per cent to touch Rs.1,27,500 crore by 2015, according to an industry report.
The annual report on the Indian M&E sector, brought out by the Federation of Indian Chambers of Commerce & Industry (FICCI), together with international consultancy KPMG, on the eve of its FICCI Frames 2011 event, says the industry witnessed a 11 per cent growth in 2010, and saw total revenues of Rs65,200 crore.
Backed by positive industry sentiment and growing media consumption, the industry is estimated to grow by 13 per cent in 2011.
''Overall for the M&E industry, 2010 was a year of great dynamism with growth across all sectors other than film,'' notes the report, which also highlights the strong recovery in advertising spends as a key driver for growth. Advertising spends grew by 17 per cent to Rs.26,600 crore and accounted for 41 per cent of overall industry size.
While television and print continued to dominate the industry, sectors such as gaming, digital advertising, and animation VFX grew at a faster rate, showing tremendous potential in the coming years.
Contrary to trends elsewhere in the world that continue to witness an erosion of the print media, in India the sector witnessed a growth of 10 per cent in 2010 and is expected to continue to grow at a similar pace over the next five years. Rising literacy levels and low print media penetration offer significant headroom for growth.
Television saw a tremendous increase in the net DTH subscriber base adding up to 28 million at the end of 2010. Backed by growth in advertising and subscription revenues, the television industry grew by 15.5 per cent in 2010 and is expected to expand at a CAGR of 16 per cent to touch Rs.63,000 crore by 2015. Television is expected to account for almost half of the Indian M&E industry revenues, and more than twice the size of print, the second largest media sector.
''The key industry highlights are the growing potential of the regional markets, increasing media penetration and per capita consumption and increasing importance of new media driven by changing media consumption patterns,'' said Dr. Amit Mitra, secretary-general, FICCI.
According to Rajesh Jain, head of M&E, KPMG, ''the resurgence in advertising, growth in subscription revenues, thrust on digitisation, and emerging avenues for content monetisation were the key growth drivers for the Indian M&E industry in 2010. However, going forward, it will become imperative for media companies to reset their business models and build greater focus on profitability and changing consumer preferences,'' he adds.
In 2010 social media gained significant popularity as a marketing and gaming platform. ''Social media offers advertisers and content owners the ability to directly connect with their consumers/audiences,'' remarks Jehil Thakkar, executive director, M&E, KPMG. Businesses are now beginning to understand the power of this tool and integrating it into their core marketing plan to reach out to their target audience.''
Digitisation continues to be a key growth driver for the sector and this trend was even more pronounced in 2010. Film studios saw greater adoption of digital prints over physical and it was the first time in India that digital music sales surpassed those of physical units.
Backed by the increasing purchasing power across tier 2 and tier 3 cities, regional media consumption is expected to continue to rise. In the print sector, revenues from Hindi and vernacular segments are expected to catch up with English, which has to date enjoyed a majority share.
Realising the power of regional media, national and foreign players have ventured into regional markets and several others are likely to follow suit. Meanwhile, regional players have achieved scale and are now looking to go national and build a pan-India presence. Geographical expansion by existing players in television, print and radio is expected to intensify competition.
The past decade marked the convergence of media and technology; of user-generated content, social media and new publishing models that have changed the way of media consumption. These changes are being driven by factors such as content pull from telecom service providers due to 3G launch, emerging gaming platforms and innovation in technological devices such as tablets.
Convergence of media, m-commerce and of an app economy are the expected trends likely to emerge. Availability of infrastructure and appropriately pricing content across these new media platforms are expected to be critical success factors for the Indian market.
The government's thrust on digitisation and addressability for cable television, is expected to increase the pace of digitisation leading to tremendous growth in DTH and digital cable. The phase III auction of radio is expected to add more than 700 licenses across tier 3 and few tier 2 towns. TRAI has submitted recommendations to the government to increase the FDI limits across several broadcast and distribution platforms including radio, TV, DTH and cable.