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Media: Television Vs the Rest

Nov 8, 2007

The Indian entertainment and media Industry is divided into different segments of television, print, filmed entertainment, radio, music, live entertainment and internet. In this article, we shall see how television stacks up against other media such as print, radio, internet, cinema in terms of reach, average time spent and projected revenue share. Reach of Different Media:

Urban areas:
The Market Research Society of India has done eight Socio-economic Classifications (“SEC”) in urban India based on the occupation and education of the chief wage earner of the household. The eight SEC in urban India are labeled A1, A2, B1, B2, C, D, E1 and E2. A1 denotes the uppermost socio-economic class and E2 denotes the lowest socio-economic class. Set forth below is a summary of media penetration in urban India across the various media categories (excluding the Internet) based on the SEC classification and the percentage of people in each SEC with access to such media.

  Print TV Radio Cinema
SEC Reach in millions of persons % of total in category Reach in millions of persons % of total in category Reach in millions of persons % of total in category Reach in millions of persons % of total in category
                 
A1 7.6 95.2 7.6 96.1 2.9 36.5 2.4 30.6
A2 13.9 90.5 14.5 94.5 4.6 29.8 3.9 25.1
B1,B2 32.0 81.1 35.7 90.6 9.7 24.7 7.5 19.1
C 33.8 69.5 41.7 85.8 11.2 23.1 8.8 18.1
D 29.3 52.6 43.2 77.5 11.4 20.5 9.5 17.1
E1,E2 21.0 30.1 45.3 65 11.0 15.8 11.0 15.7
Total 137.5   188.0   50.9   43.1  
Source: Jagran Prakashan IPO prospectus

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Rural areas:
The IRS has designated four SEC in rural India in terms of the type of house and the education of the chief wage earner of the household. The four SEC are labeled R1, R2, R3, and R4. R1 denotes the uppermost socio-economic class and R4 denotes the lowest such socio-economic class. Set forth below is a summary of media penetration in rural India across the various media categories (excluding the Internet) based on SEC and the percentage of people in each SEC with access to such media.

  Print TV Radio Cinema
SEC Reach in millions of persons % of total in category Reach in millions of persons % of total in category Reach in millions of persons % of total in category Reach in millions of persons % of total in category
                 
R1 14.1 67.7 15.2 72.8 7.2 34.6 2.7 12.9
R2 33.1 55.4 38.3 64.2 17.3 29.0 6.9 11.5
R3 78.4 36.9 109.6 51.6 49.5 23.3 18.9 8.9
R4 28.3 11.4 76.5 30.8 36.0 14.5 17.1 6.9
Total 154   240   110   46  

Among all the sub segments of the media and entertainment industry, television not only has the highest reach but is also on a high growth trajectory as households owning a television set have increased from 82 m in CY 02 to 112 m in CY 06. (Source: NRS 2006)

Source: Zee Entertainment Presentation August 07

The above table clearly shows that television is by far the most consumed media on a day-to-day basis. Television has become an indispensable part of the lives of the people. The fact that on an average a viewer spends so much time on television daily lends credence to the projection that people would be willing to pay higher subscription charges for CAS and DTH. At present, the Average Revenue per user (ARPU) is very low in India compared to developing and developed countries. Eg: At present under CAS, viewers are paying only Rs 5 per month for viewing the channel ‘Zee Cinema’ which telecasts many popular Hindi movies every month. Many people spend Rs 100 per head for watching a single movie in a multiplex theatre. Thus, we expect the ARPU to increase in the future as the regulator lifts the cap on subscription rates.

Revenue share:
Now let us have a look at the current revenue share of the different segments of the media and entertainment industry and their projected share in 2011 as per the FICCI PWC report on the Indian entertainment and media industry.

The television industry revenues are expected to grow from the present size of Rs 191 bn to Rs 519 bn by 2011, implying a 22% compounded annual growth rate. Subscription revenues are projected to be the key growth driver for the Indian television industry over the next five years. The number of paid subscribers as well as the average revenue per user is projected to increase.

India’s robust economic growth has an attractive proxy in its advertising industry. The ad spend is a mere 0.4% of the GDP compared to 1.4% in the U S. Advertising revenue of the television industry is projected to grow from Rs 66 bn in 2006 to Rs 123 bn by 2011, implying a CAGR of 13%. Thus it is expected that not only will the television industry continue to be the largest sub segment of the media and entertainment industry but its share would also increase.


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