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Media: Crystal gazing... - Views on News from Equitymaster
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  • Mar 22, 2007

    Media: Crystal gazing...

    The media and entertainment industry has achieved a phenomenal growth of 20% YoY in CY06. The growth numbers projected by the FICCI - PriceWaterhouse Coopers report on the Indian entertainment and media industry, unfolds the bright prospects that this sector has to offer going forward.

    Key Findings
    (Rs bn) FY06 FY11E CAGR
    M&E Industry 437 1,000 23.0%
    Television 191 519 28.4%
    Filmed entertainment 85 175 19.8%
    Print media 128 232 16.0%
    Radio 5 17 35.8%
    Music 7 9 6.5%
    Live entertainment 9 19 20.5%
    Out-of-home advertising 10 22 21.8%
    Internet advertising 2 10 49.5%

    Source: FICCI PriceWaterhouse report

    The year 2006 marked the start of convergence for the media industry. With technological advancements and policy initiatives taken by the Indian government to encourage the inflow of investment and initiatives by private media companies the ball has been set rolling for the industry. Since television and filmed entertainment constitute major areas in media sector, we shall give special attention to them.

    Television Industry

    In the television industry, currently advertising revenues are half the global average. Increased advertising spends coming from pharmaceutical, telecom, FMCG and financial services companies have the potential to double its spends due to increasing consumerism and favorable demographic factors. The new distribution platforms such as DTH, digital cable and IPTV (internet protocol television) are expected to push up subscriber base and subscription revenues. Although the initial roll out of the CAS regime has been slow, subscription revenues are expected to be the key growth driver for the broadcasters over the next five years. Increased rates and growing demand in pay TV homes will lead to increase in subscription revenues. As far as the pricing is concerned, instead of the regulatory body governing the same, it will be determined by the competitive pricing mechanism in the market.

    Filmed entertainment

    The Indian film industry is said to be one of the largest in the world with close to 1,000 films made every year. In recent years, the Indian film industry has been driven by growth in multiplexes. Technology is helping the Indian film industry in all the spheres of film production, film exhibition and marketing. The budgets financed for film producing, the way they are made and the kind of audiences they are made for has changed the entire face of film industry. Profitability of players in the multiplex cinemas space is expected to improve; but increasing bargaining power of producers, high real estate prices, stiff competition and the eventual loss of entertainment tax benefits are potential downsides.

    There is an ample opportunity for growth in the home video segment. Moser Baer, Nimbus and ADAG group are the key players foraying into this business. Regional cinema and dubbed international films are gaining much importance. DVDs and the Internet have changed the trend of viewers hip of regional films since it is no longer confined to specific areas. Merchandise products' sale with a film is a new trend picking up in India.


    Convergence will continue to play a crucial role in the development of the Indian entertainment and media industry with increasing consumerism in a converged media world. There is great potential for the media industry to grow since larger number of people are still untapped by any form of media. Over the last three years, the media and entertainment industry has secured foreign investment of over Rs 4 bn. Favorable policy initiatives will move the industry towards a better intellectual property rights regime. Parallely, growing investment and surge in technological advancements offers ample growth scope to the industry.

    We shall follow up this article with our perspective on the other emerging and high growth areas in the media sector in the near future.



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