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Indian Media industry: An overview...

Aug 29, 2007

Changing consumption patterns, rising aspiration levels and increase in the number of middle- and upper-income households has led to growth in non-discretionary sectors like retail, telecom, hotels among other sectors. Media sector is no exception to the trend. In this article, we give an overview of the media sector. India is one of the largest media consuming markets with 3.7 bn film tickets sold annually. It is also one of the largest content creating market with 1,000 movies and 10,000 sound tracks released annually. Though Indian Entertainment and Media (IEM) is one of the fastest growing sectors in the economy, it is just 0.7% of the global US$ 1.4 trillion media industry. The IEM sector grew at a CAGR of 20% over the last 2 years. Going forward, IEM is poised to enter a golden era. As per PWC, India will be one of the key drivers in pushing the global entertainment and media industry to US$ 2 trillion by 2011. It is expected to grow at a CAGR of 18.5% till 2011 to touch Rs 1 trillion from Rs 436 m in 2006.

The growth in IEM is being fueled by a number of factors like strong economic growth, rising income and literacy levels, higher aspiration levels, widening base of the middle class income group, corporatisation of the film industry and technological changes amongst others.

The IEM is divided into different segment like Television, print, films, radio, music and internet. Out of home advertising (OOH) and live entertainment are too gaining importance. Given below is the breakup of the revenues among the various segments and the expected growth rate till 2011. Television and print would continue to remain the largest segments. Internet, radio and OOH would also witness high growth rates. However, Internet penetration would take time to mature.

Rs bn20062011% CAGR
Television191.251922.1%
% share in total IEM43.8%51.8% 
Print127.923212.6%
% share in total IEM29.3%23.2% 
Films84.517515.7%
% share in total IEM19.4%17.5% 
Radio51727.7%
% share in total IEM1.1%1.7% 
Music7.28.73.9%
% share in total IEM1.6%0.9% 
OOH advertising1021.516.5%
% share in total IEM2.3%2.1% 
Live entertainment91916.1%
% share in total IEM2.1%1.9% 
Internet advertising1.69.542.8%
% share in total IEM0.4%0.9% 
Total436.41001.718.1%

The IEM has moved from the growth phase to the inflection phase. This growth is led by better technologies, higher quality content, higher penetration and suitable regulations. The change is already being witnessed from AM radio to FM radio, single screen theatres to multiplexes, and basic cable analog to broadband internet. Going forward, DTH, IP-TV, interactive television is going to hit the markets thereby changing the media scenario.

Also, IEM is highly fragmented. Different players provide the content, while others deliver it. However, with better technology, there has been a convergence in the sector. Content players are catering to various delivery channels. For e.g. - ZEE Telefilms is into production, distribution and exhibition, while Jagran Prakashan apart from being the leader in Hindi newspaper had ventured into internet and OOH advertising.

Going forward...
India is interestingly poised to enter this phase of high growth for the sector. Apart from the macro growth drivers like growing income, changing lifestyle and demographic impetus, each segment in the media sector would be driven by other micro factors. Besides increasing penetration of cable and satellite services in rural and semi urban areas, better content quality and niche channels would provide further impetus. DTH and IPTV platforms would also fuel the growth. Higher literacy, government initiatives to allow foreign equity participation in news publications will be a boon for the print industry. The growth of multiplexes and digital distribution formats aided by better realisations in box office collections and growth in collections from the overseas markets will drive the growth of the filmed entertainment going forward. Piracy control, new delivery formats and availability of more frequencies would be sought to aid the growth.


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