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Indian media: What lies ahead? - Views on News from Equitymaster
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  • Jul 10, 2010

    Indian media: What lies ahead?

    The Indian economy has been growing at a rapid pace for several years now. In the aftermath of the global financial meltdown, its prospects of becoming a global powerhouse have brightened considerably. At the core of this optimism is the emerging consuming class. Millions upon teeming millions want a better life. This surge in consumption is likely to propel growth in several industries. Among the most promising is the Indian media industry. In this article we will take look at the emerging trends in the sector.

    Key growth drivers

    Smaller centers, regional languages: Regionalisation is likely to be one of the significant factors driving growth with increasing literacy, consumption and disposable incomes in tier 2 and 3 cities. Advertisers are also increasing their focus on rural markets due to the saturation of urban markets. Demand for regional content and in local languages is also growing.

    A bigger pie in the making: The entry of newer players in the market has helped expand the overall market size. This is likely to continue in the future with new players emerging to capture new audiences. This will lead to innovations in products, marketing and distribution in the sector.

    Bigger, larger players: As mentioned, the media industry has already witnessed the entry of new players and consumer segments. This has led to the fragmentation of the industry. The growing trend of regionalisation also helped some regional players to become strong by capturing newer markets. Eventually though, these trends are expected to give way to consolidation within the sector. Mergers and acquisitions activity in the sector is expected to increase significantly in the days ahead.

    Going digital: In the past few years, India has witnessed the advent of digital TV distribution platforms such as digital cable, DTH and IPTV. Film prints and music libraries have been digitised. Sales of online and mobile music have gathered pace. Digitisation has improved the picture and sound quality for viewers. It has made distribution of revenues for stakeholders in the value chain more transparent. More bandwidth is now available to broadcasters, giving them the opportunity to provide value add services. This also makes distribution of niche content viable.

    Blurring of the lines: The Indian media industry is witnessing an increasing convergence between entertainment, information and telecommunication. The same content can be now accessed on a variety of media platforms. This has been fueled by the greater functionalities of consumer devices like televisions, computers, and mobile phones. Interestingly, this throws up new business models and revenue streams.

    Growth expectations

    Due to the demand drivers mentioned above, the media industry is expected to register strong growth rates in the future. In fact, it is projected to grow from its current (calendar year 2009) estimated size of Rs 587 bn to Rs 1,092 bn in 2014 at an average annual growth rate of 14% during the period.

    India's growing media industry
    Rs bn 2006 2007 2008 2009 CAGR 2010E 2011E 2012E 2013E 2014E CAGR
    Films 78 93 104 89 4% 96 105 115 125 137 9%
    TV 183 211 241 257 12% 289 337 382 448 521 16%
    Print 139 160 172 175 8% 190 206 225 246 269 9%
    Radio 6 7 8 8 10% 9 10 12 14 16 15%
    Music 8 7 7 8 0% 9 10 12 14 17 17%
    Animation 12 14 17 20 19% 23 28 33 39 47 20%
    Gaming 3 4 7 8 39% 10 14 20 26 32 34%
    Internet 2 4 6 8 59% 11 15 18 23 29 27%
    Outdoor 12 14 16 14 5% 15 17 19 21 24 12%
    Total size 443 514 578 587 10% 652 742 836 956 1092 14%
    Source: The Indian Media and Entertainment Industry, FICCI KPMG Report 2010



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