Friday, May 29, 2009
Tuesday, May 05, 2009
Media Facts & Figures, March 2009
The Indian media and entertainment (M&E) industry is one of the fastest growing industries in the country. Its various segments—film, television, advertising, print media and music among others—have witnesses tremendous growth in the last few years.
With A.R. Rahman and Resul Pokutty having won Oscars for their commendable work in Slumdog Millionnaire, the spotlight has shifted on India and the immense talent and potential it offers. Another Indian who has been in the news recently is Raju Narisetty, a prominent journalist, who has been appointed as the managing director of the Washington Post, a leading US daily.
According to a report jointly published by the Federation of Indian Chambers of Commerce and Industry (FICCI) and KPMG, the media and entertainment industry in India is likely to grow 12.5 per cent per annum over the next five years and touch US$ 20.09 billion by 2013.
Television
The television industry in India is currently at its prime, contributing the largest share in the total media and entertainment industry. While India is the third largest cable television market in the world, the penetration level of pay TV is still low, which promises a huge untapped potential for growth.
According to the study by FICCI and KPMG, the television industry, which is currently valued at about US$ 4.63 billion will expand by 14.5 percent between 2009 and 2013.
Digital distribution platforms such as direct-to-home (DTH) are transforming the industry. Direct-to-Home segment is gearing up for a new phase of TV viewing with digital video recorders (DVRs) or personal video recorders that will free consumers from having to watch television at broadcaster-ordained timetables.
Mobile TV- where content will stream in on mobile phones – which is currently at a nascent stage is poised to grow big with the advent of 3G, according to experts. This can lead to the growth of many business opportunities in the media and entertainment sector. And according to ABI Research, the mobile TV market worldwide is expected to attract over 50 crore viewers in the next five years.
Considering that video is the most popular medium of entertainment, it will not be limited to mobile phones but will be expanded to in-car television and personal media players among others, according to experts.
Viewership across various segments is increasing and marketers are launching new channels to meet this growing demand. Turner and Warner Bros Entertainment, Hollywood's leading studio have launched WB, a new Warner-branded channel in India that will showcase blockbuster motion pictures and acclaimed television series. The channel will be distributed by Zee-Turner and will be available on both DTH platforms and cable and satellite homes. Hindi general entertainment channel (HGEC) Star Plus is launching four new shows in March this year.
Music
The Indian music industry, which until recently was overwhelmingly dominated by film music, is now being driven by non-film music. However, piracy and advent of radio channels which constantly play hit music leading to loss of sales of music, has affected the industry.
Industry experts estimate that the current size of the industry is about US$ 149 million, calculated on the basis of legitimate unit sales of compact discs (cds) and music cassettes of around 15 crores. And according to a PwC study, the music industry is likely to grow by 2 per cent over the next five years and will be a US$ 164.56 million industry by 2012.
While cassettes and cds have traditionally accounted for most of the sales, future growth will come from non-physical formats such as digital downloads and ringtones, among others.
According to a joint study by Soundbuzz, a digital music company, PwC and International Federation of Phonographic Industries, India was poised to become the second country in the world, after South Korea, where digital music sales will surpass the sales of music in traditional formats.Digital music sales are expected to account for 88 per cent of the total music industry revenue in India by 2009.
Radio
The cheapest and oldest form of entertainment, reaching 99 per cent of the population, this segment is likely to see many dynamic changes.
According to the PwC study, revenues from radio are likely to grow at a compound annual growth rate (CAGR) of 24 per cent over the next five years and the industry will grow from US$ 150.52 million in 2007 to US$ 370. 22 million in 2012.
Private FM radio has emerged as the fastest growing segment in the media, notching up an average 30 per cent growth in advertising revenues, compared to the industry's average of 18 per cent, according to ACNielsen's Radio Audience Measurement (RAM) service. Moreover, it is expected to increase to US$ 218.49 million over the next two years from US$ 133.52 million today.
FM radio broadcasting has expanded at a rapid pace and India today has over 300 FM radio stations.
Advertising
Advertising trends showed a healthy growth in the last five years as marketers sought to woo customers for a wide range of products. According to an Economic Times survey of 100 large private sector companies, the aggregate spending on advertising by these companies grew by a huge 22.4 per cent last year over the previous year. More than four-fifths of the sample companies have witnessed a rise in sales turnover in 2007-08 following higher advertising spend.
With the economic slowdown, ad spends are slowing down as well. According to the FICCI-KPMG report, ad spends could grow by 12.4 per cent a year now, compared to the 17 per cent growth registered over the past three years.
However, as consumer spending slowly inches upwards – aided partly by the fiscal measures undertaken by the government to boost the economy – some companies, such as Dabur, Coca Cola India, the Emami group and the Future Group, are planning to raise ad spends by almost 10 per cent in some cases to boost sales this year.
Radio, internet and cinema have been the traditional mediums of advertising and according to a survey by Adlabs Cinemas and research firm IMRB, in cinema, the 30-second in-theatre advertising accounts for 95 per cent of cinema advertising. The remaining 5 per cent comprises activities in the lobby area such as new car or bike displays, etc. Of the overall advertising spend, currently only around 0.4 per cent (around US$ 15.42 million) is spent on cinema. Print and TV account for the majority of the ad spend.
Going forward, digital media advertising (internet, mobile and digital signage) is expected to emerge as the medium of choice for advertisers. Of the available media, it was the fastest growing segment in 2008. Analysts feel that its better return on investment and the comparative ease with which its efficacy can be measured will ensure that the trend continues. In fact in 2009, video ads will the most popular form of online advertising, according to Viraj Malik, MD, Percept Knorigin (digital advertising arm of Percept). According to a FICCI-PwC report, online advertising it is expected to touch US$ 212.03 million in 2011 from the current US$ 57.83 million.
To cash in on the opportunity, Malaysia-based media conglomerate Astro Group has acquired a 50 per cent stake in Indian online firm Mogae Digital for US$ 5 million. The joint venture has lined up a number of launches, which include a social networking portal for mobile phones this year. Mogae Digital is promoted by Sandeep Goyal and Tanya Goyal, who are the Indian JV partners of Japanese giant Dentsu, the single largest ad agency in the world.
Cinema
The Indian film industry is the largest in the world in terms of number of films produced per year. The FICCI-KPMG study values the Indian film industry at US$ 2.11 billion and projects its growth at 9.1 percent till 2013.
Bucking the global slowdown – and in the aftermath of the Slumdog Millionnaire win – the box office collections in the first two months of this year have jumped 32 per cent over 2008. Box office collections from over eight movies, which accounted for the bulk of the revenues, hit US$ 36.62 million in January-February compared to US$ 27.95 million crore from over 12 movies in 2008 during the same months, according to data with trade analysts.
The opening of the film industry to foreign investment coupled with the granting of industry status to this segment has had a favourable impact, leading to many global production units entering the country. For example, Walt Disney has partnered with Yash Raj Films to make animated movies, the Warner Group is funding the Sippys' film projects, Viacom has a joint venture with the TV 18 group to form Viacom-18, and Sony Pictures Entertainment has co-produced Saawariya with SLB Films (Sanjay Leela Bansali Films).
Buoyed by the success of its maiden production in India—Chandni Chowk to China (which garnered US$ 8.67 million globally in the first three days of its release)—Warner Brothers Pictures India is set to invest US$ 38.6 million in film production this year.
Fox Star Studios, a joint venture between Twentieth Century Fox and Star, has entered into a multiple-film deal with producer Vipul Amrutlal Shah, marking its foray into the Indian film industry.
R-ADAG-owned Adlabs Films is betting on its integrated film service business and movie exhibitions to drive its growth. The company is spending US$ 41.13 million to expand the two businesses.
The cinema-viewing experience is also undergoing major changes. One perceptible change has been the rapid growth of multiplexes, which meets consumer demand for quality entertainment and has also helped boost production of niche films targeted at niche audiences.
Multiplexes
The nation's multiplex industry is all set for an unprecedented boom buoyed by positive regulatory changes and booming consumerism. According to an estimate, the number of multiplex screens in India is expected to touch 5,000 by 2012, constituting around 40 per cent of the total cinema screens.
In fact, currently the Indian market is highly underserved when compared to the West, India has less than 13 screens per million of the population, against 117 in the US, 52 in Italy and 30 in the UK.
PVR, Inox Leisure, Big Cinemas and other multiplexes plan to maintain their investment tempo in the year ahead betting on big Bollywood releases, lower rentals, a cut in entertainment tax and the drop in equipment prices. Multiplexes including Fun Multiplex, Cinemax and others plan to invest more than US$ 2.89 billion in 2009 almost the similar amount as last year, according to industry experts.
Fame India (formerly Shringar Cinemas), the company that owns and runs the Fame Cinemas chain of multiplexes, is expanding its footprint in North India. The company owns about 73 screens across India, including the three screens it added to its portfolio at the Fame multiplex in the Panchkula district of Haryana. Another multiplex with five screens in Chandigarh (at the City Emporio mall) is in the pipeline.
Multiplexes /megaplexes have been instrumental in contributing 28 per cent of the total theatrical sales for the film industry according to a report by Systematix Institutional Research.
• Entertainment conglomerate Adlabs Cinemas has drawn up a plan to build 12 megaplexes in cities like Mohali, Lucknow, Hyderabad and Delhi.
• Multiplex chain PVR Cinemas, is also planning to add over 250 screens across India, staggered over a period of three years from 2008-2010, with a total investment outlay of around US$ 82. 27 million.
• Cinemax India, the multiplex chain which currently has 55 screens over 17 properties across the country is planning to scale up its presence to 299 screens across about 100 properties by fiscal 2010.
• Inox, which has 26 multiplexes and 90 screens in 18 cities across India, will open nine multiplexes in Bangalore, Mangalore, Hubli and Belgaum by the end of 2010.
• Leading global multiplex player, Cinepolis, has earmarked US$ 350 million for its Indian operations. The company plans to have 500 screens across 40 cities in the next 5 to 7 years.
Others
Segments like print media, animation and gaming are also likely to see interesting growth rates. The country's growing literacy and new technologies have resulted in India emerging as the second largest newspaper market in the world, according to latest research by the World Association of Newspapers (WAN). Indian newspaper sales increased 11.2 per cent in 2007 and 35.51 per cent in the five year period. Newspaper advertising revenues in India were up 64.8 per cent over the previous 5 years.
According to the FICCI- KPMG study, the gaming segment, which is currently estimated at US$ 125.29 million, is expected to grow at 33.30 percent till 2013, while the US$ 119.51 million Internet is seen growing at 27.9 percent.
The Indian animation industry, currently estimated at US$ 460 million, is expected to grow at a CAGR of 27 per cent to touch US$ 1,163 million by 2012 according to a report titled ‘Indian Animation and Gaming 2008', jointly prepared by NASSCOM and Ernst & young.
Government Initiatives
The Government has initiated major reform measures, which have had a cascading effect on the growth of the industry.
• Permitting 100 per cent foreign direct investment (FDI) through the automatic route for film industry and advertising.
• Allowing 49 per cent foreign holding in cable TV and DTH.
• Allowing 100 per cent FDI in non-news publications and 26 per cent FDI in news publications.
• The government has allowed 100 per cent FDI in fax editions of magazines and newspapers.
• Recently, the government has allowed companies with core business in news segment but hived off non-news business, to raise funds from overseas beyond the stipulated FDI limit of 26 per cent. Such companies can raise and route funds from overseas through its non-news arm, which will not be calculated as foreign investment.
• The FM radio sector was opened for FDI with a 20 per cent cap.
• Permitting setting up of uplinking hubs for satellite uplinking by private TV broadcasters from Indian soil.
• Giving industry status to the films segment.
• Opening FM Radio operations to the private sector.
• The government has allotted US$ 50.13 million in the current Five-Year-Plan for various development projects of the film industry. The funds will be utilised to set up a centre for excellence in animation, gaming and visual effects among others.
Going Global
With the growing popularity of Indian content in the world market in general and South Asia in particular, the Indian entertainment industry players are venturing abroad to tap this booming segment.
In fact, according to a report by CII-AT Kearney, the share of international markets in total box office collections is estimated to increase from 8 per cent in 2006 to 15 per cent in 2010.
Consequently, many domestic players like Yash Raj Films, Reliance-Adlabs and UTV, among others, have set up distribution arms overseas. Not only films, other entertainment content areas like music and television also have a huge potential international market. One recent estimate puts the total value of Indian content sold overseas at over US$ 200 million. Further, this number is expected to grow over 20 per cent every year.
Technology has influenced the entertainment industry in a big way, and transformed content delivery as well as viewership experience. Experts feel that in 2009-10, the media and entertainment sector will see many new applications and ways of building the business.
With A.R. Rahman and Resul Pokutty having won Oscars for their commendable work in Slumdog Millionnaire, the spotlight has shifted on India and the immense talent and potential it offers. Another Indian who has been in the news recently is Raju Narisetty, a prominent journalist, who has been appointed as the managing director of the Washington Post, a leading US daily.
According to a report jointly published by the Federation of Indian Chambers of Commerce and Industry (FICCI) and KPMG, the media and entertainment industry in India is likely to grow 12.5 per cent per annum over the next five years and touch US$ 20.09 billion by 2013.
Television
The television industry in India is currently at its prime, contributing the largest share in the total media and entertainment industry. While India is the third largest cable television market in the world, the penetration level of pay TV is still low, which promises a huge untapped potential for growth.
According to the study by FICCI and KPMG, the television industry, which is currently valued at about US$ 4.63 billion will expand by 14.5 percent between 2009 and 2013.
Digital distribution platforms such as direct-to-home (DTH) are transforming the industry. Direct-to-Home segment is gearing up for a new phase of TV viewing with digital video recorders (DVRs) or personal video recorders that will free consumers from having to watch television at broadcaster-ordained timetables.
Mobile TV- where content will stream in on mobile phones – which is currently at a nascent stage is poised to grow big with the advent of 3G, according to experts. This can lead to the growth of many business opportunities in the media and entertainment sector. And according to ABI Research, the mobile TV market worldwide is expected to attract over 50 crore viewers in the next five years.
Considering that video is the most popular medium of entertainment, it will not be limited to mobile phones but will be expanded to in-car television and personal media players among others, according to experts.
Viewership across various segments is increasing and marketers are launching new channels to meet this growing demand. Turner and Warner Bros Entertainment, Hollywood's leading studio have launched WB, a new Warner-branded channel in India that will showcase blockbuster motion pictures and acclaimed television series. The channel will be distributed by Zee-Turner and will be available on both DTH platforms and cable and satellite homes. Hindi general entertainment channel (HGEC) Star Plus is launching four new shows in March this year.
Music
The Indian music industry, which until recently was overwhelmingly dominated by film music, is now being driven by non-film music. However, piracy and advent of radio channels which constantly play hit music leading to loss of sales of music, has affected the industry.
Industry experts estimate that the current size of the industry is about US$ 149 million, calculated on the basis of legitimate unit sales of compact discs (cds) and music cassettes of around 15 crores. And according to a PwC study, the music industry is likely to grow by 2 per cent over the next five years and will be a US$ 164.56 million industry by 2012.
While cassettes and cds have traditionally accounted for most of the sales, future growth will come from non-physical formats such as digital downloads and ringtones, among others.
According to a joint study by Soundbuzz, a digital music company, PwC and International Federation of Phonographic Industries, India was poised to become the second country in the world, after South Korea, where digital music sales will surpass the sales of music in traditional formats.Digital music sales are expected to account for 88 per cent of the total music industry revenue in India by 2009.
Radio
The cheapest and oldest form of entertainment, reaching 99 per cent of the population, this segment is likely to see many dynamic changes.
According to the PwC study, revenues from radio are likely to grow at a compound annual growth rate (CAGR) of 24 per cent over the next five years and the industry will grow from US$ 150.52 million in 2007 to US$ 370. 22 million in 2012.
Private FM radio has emerged as the fastest growing segment in the media, notching up an average 30 per cent growth in advertising revenues, compared to the industry's average of 18 per cent, according to ACNielsen's Radio Audience Measurement (RAM) service. Moreover, it is expected to increase to US$ 218.49 million over the next two years from US$ 133.52 million today.
FM radio broadcasting has expanded at a rapid pace and India today has over 300 FM radio stations.
Advertising
Advertising trends showed a healthy growth in the last five years as marketers sought to woo customers for a wide range of products. According to an Economic Times survey of 100 large private sector companies, the aggregate spending on advertising by these companies grew by a huge 22.4 per cent last year over the previous year. More than four-fifths of the sample companies have witnessed a rise in sales turnover in 2007-08 following higher advertising spend.
With the economic slowdown, ad spends are slowing down as well. According to the FICCI-KPMG report, ad spends could grow by 12.4 per cent a year now, compared to the 17 per cent growth registered over the past three years.
However, as consumer spending slowly inches upwards – aided partly by the fiscal measures undertaken by the government to boost the economy – some companies, such as Dabur, Coca Cola India, the Emami group and the Future Group, are planning to raise ad spends by almost 10 per cent in some cases to boost sales this year.
Radio, internet and cinema have been the traditional mediums of advertising and according to a survey by Adlabs Cinemas and research firm IMRB, in cinema, the 30-second in-theatre advertising accounts for 95 per cent of cinema advertising. The remaining 5 per cent comprises activities in the lobby area such as new car or bike displays, etc. Of the overall advertising spend, currently only around 0.4 per cent (around US$ 15.42 million) is spent on cinema. Print and TV account for the majority of the ad spend.
Going forward, digital media advertising (internet, mobile and digital signage) is expected to emerge as the medium of choice for advertisers. Of the available media, it was the fastest growing segment in 2008. Analysts feel that its better return on investment and the comparative ease with which its efficacy can be measured will ensure that the trend continues. In fact in 2009, video ads will the most popular form of online advertising, according to Viraj Malik, MD, Percept Knorigin (digital advertising arm of Percept). According to a FICCI-PwC report, online advertising it is expected to touch US$ 212.03 million in 2011 from the current US$ 57.83 million.
To cash in on the opportunity, Malaysia-based media conglomerate Astro Group has acquired a 50 per cent stake in Indian online firm Mogae Digital for US$ 5 million. The joint venture has lined up a number of launches, which include a social networking portal for mobile phones this year. Mogae Digital is promoted by Sandeep Goyal and Tanya Goyal, who are the Indian JV partners of Japanese giant Dentsu, the single largest ad agency in the world.
Cinema
The Indian film industry is the largest in the world in terms of number of films produced per year. The FICCI-KPMG study values the Indian film industry at US$ 2.11 billion and projects its growth at 9.1 percent till 2013.
Bucking the global slowdown – and in the aftermath of the Slumdog Millionnaire win – the box office collections in the first two months of this year have jumped 32 per cent over 2008. Box office collections from over eight movies, which accounted for the bulk of the revenues, hit US$ 36.62 million in January-February compared to US$ 27.95 million crore from over 12 movies in 2008 during the same months, according to data with trade analysts.
The opening of the film industry to foreign investment coupled with the granting of industry status to this segment has had a favourable impact, leading to many global production units entering the country. For example, Walt Disney has partnered with Yash Raj Films to make animated movies, the Warner Group is funding the Sippys' film projects, Viacom has a joint venture with the TV 18 group to form Viacom-18, and Sony Pictures Entertainment has co-produced Saawariya with SLB Films (Sanjay Leela Bansali Films).
Buoyed by the success of its maiden production in India—Chandni Chowk to China (which garnered US$ 8.67 million globally in the first three days of its release)—Warner Brothers Pictures India is set to invest US$ 38.6 million in film production this year.
Fox Star Studios, a joint venture between Twentieth Century Fox and Star, has entered into a multiple-film deal with producer Vipul Amrutlal Shah, marking its foray into the Indian film industry.
R-ADAG-owned Adlabs Films is betting on its integrated film service business and movie exhibitions to drive its growth. The company is spending US$ 41.13 million to expand the two businesses.
The cinema-viewing experience is also undergoing major changes. One perceptible change has been the rapid growth of multiplexes, which meets consumer demand for quality entertainment and has also helped boost production of niche films targeted at niche audiences.
Multiplexes
The nation's multiplex industry is all set for an unprecedented boom buoyed by positive regulatory changes and booming consumerism. According to an estimate, the number of multiplex screens in India is expected to touch 5,000 by 2012, constituting around 40 per cent of the total cinema screens.
In fact, currently the Indian market is highly underserved when compared to the West, India has less than 13 screens per million of the population, against 117 in the US, 52 in Italy and 30 in the UK.
PVR, Inox Leisure, Big Cinemas and other multiplexes plan to maintain their investment tempo in the year ahead betting on big Bollywood releases, lower rentals, a cut in entertainment tax and the drop in equipment prices. Multiplexes including Fun Multiplex, Cinemax and others plan to invest more than US$ 2.89 billion in 2009 almost the similar amount as last year, according to industry experts.
Fame India (formerly Shringar Cinemas), the company that owns and runs the Fame Cinemas chain of multiplexes, is expanding its footprint in North India. The company owns about 73 screens across India, including the three screens it added to its portfolio at the Fame multiplex in the Panchkula district of Haryana. Another multiplex with five screens in Chandigarh (at the City Emporio mall) is in the pipeline.
Multiplexes /megaplexes have been instrumental in contributing 28 per cent of the total theatrical sales for the film industry according to a report by Systematix Institutional Research.
• Entertainment conglomerate Adlabs Cinemas has drawn up a plan to build 12 megaplexes in cities like Mohali, Lucknow, Hyderabad and Delhi.
• Multiplex chain PVR Cinemas, is also planning to add over 250 screens across India, staggered over a period of three years from 2008-2010, with a total investment outlay of around US$ 82. 27 million.
• Cinemax India, the multiplex chain which currently has 55 screens over 17 properties across the country is planning to scale up its presence to 299 screens across about 100 properties by fiscal 2010.
• Inox, which has 26 multiplexes and 90 screens in 18 cities across India, will open nine multiplexes in Bangalore, Mangalore, Hubli and Belgaum by the end of 2010.
• Leading global multiplex player, Cinepolis, has earmarked US$ 350 million for its Indian operations. The company plans to have 500 screens across 40 cities in the next 5 to 7 years.
Others
Segments like print media, animation and gaming are also likely to see interesting growth rates. The country's growing literacy and new technologies have resulted in India emerging as the second largest newspaper market in the world, according to latest research by the World Association of Newspapers (WAN). Indian newspaper sales increased 11.2 per cent in 2007 and 35.51 per cent in the five year period. Newspaper advertising revenues in India were up 64.8 per cent over the previous 5 years.
According to the FICCI- KPMG study, the gaming segment, which is currently estimated at US$ 125.29 million, is expected to grow at 33.30 percent till 2013, while the US$ 119.51 million Internet is seen growing at 27.9 percent.
The Indian animation industry, currently estimated at US$ 460 million, is expected to grow at a CAGR of 27 per cent to touch US$ 1,163 million by 2012 according to a report titled ‘Indian Animation and Gaming 2008', jointly prepared by NASSCOM and Ernst & young.
Government Initiatives
The Government has initiated major reform measures, which have had a cascading effect on the growth of the industry.
• Permitting 100 per cent foreign direct investment (FDI) through the automatic route for film industry and advertising.
• Allowing 49 per cent foreign holding in cable TV and DTH.
• Allowing 100 per cent FDI in non-news publications and 26 per cent FDI in news publications.
• The government has allowed 100 per cent FDI in fax editions of magazines and newspapers.
• Recently, the government has allowed companies with core business in news segment but hived off non-news business, to raise funds from overseas beyond the stipulated FDI limit of 26 per cent. Such companies can raise and route funds from overseas through its non-news arm, which will not be calculated as foreign investment.
• The FM radio sector was opened for FDI with a 20 per cent cap.
• Permitting setting up of uplinking hubs for satellite uplinking by private TV broadcasters from Indian soil.
• Giving industry status to the films segment.
• Opening FM Radio operations to the private sector.
• The government has allotted US$ 50.13 million in the current Five-Year-Plan for various development projects of the film industry. The funds will be utilised to set up a centre for excellence in animation, gaming and visual effects among others.
Going Global
With the growing popularity of Indian content in the world market in general and South Asia in particular, the Indian entertainment industry players are venturing abroad to tap this booming segment.
In fact, according to a report by CII-AT Kearney, the share of international markets in total box office collections is estimated to increase from 8 per cent in 2006 to 15 per cent in 2010.
Consequently, many domestic players like Yash Raj Films, Reliance-Adlabs and UTV, among others, have set up distribution arms overseas. Not only films, other entertainment content areas like music and television also have a huge potential international market. One recent estimate puts the total value of Indian content sold overseas at over US$ 200 million. Further, this number is expected to grow over 20 per cent every year.
Technology has influenced the entertainment industry in a big way, and transformed content delivery as well as viewership experience. Experts feel that in 2009-10, the media and entertainment sector will see many new applications and ways of building the business.
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