Media, the fourth estate, when entwined with the entertainment component represents an effective facet of consumers in India. Technology has played a key role in influencing the entertainment industry, by redefining its products, cost structure and distribution.
The Indian Media and Entertainment (M&E) industry stood at US$ 12.9 billion in 2009 registering a 1.4 per cent growth over last year, according to a joint report by KPMG and an industry chamber. Over the next five years, the industry is projected to grow at a compound annual growth rate (CAGR) of 13 per cent to reach the size of US$ 24.04 billion by 2014, the report stated. Additionally, the gaming segment is expected to be the fastest growing sector in the M&E industry. The sector showed a 22 per cent growth in 2009 and is expected to grow at a CAGR of 32 per cent to reach US$ 705.2 million by 2014, while the animation segment is expected to record a CAGR of 18.7 per cent in the next five years as per the joint report.
Television
According to the figures released by an industry chamber in March 2010, the Broadcast and Television (TV) sector comprised over 43 per cent of the overall M&E sector wherein the total size of the television sector accounted for US$ 5.7 billion. The broadcast sector is on a strong growth path and the outlook for advertisement expenditure is on a rise for the television sector.
A report by research firm Media Partners Asia (MPA) stated that India is poised to become the world's largest direct-to-home (DTH) satellite pay TV market with 36.1 million subscribers by 2012, overtaking the US. Furthermore, in its report titled 'Asia Pacific Pay-TV and Broadband Markets 2010', MPA said India's DTH subscriber base will increase from 17 million in 2009 to 45 million by 2014 and 58 million by 2020.
Anil Dhirubhai Ambani Group's company, Reliance MediaWorks (RMW) has signed a memorandum of understanding (MoU) with IMAGICA Corp of Japan for film processing services. Under this alliance, RMW, on behalf of IMAGICA, would provide film restoration, image processing and enhancement and high definition (HD) conversion services to the Japanese clients. IMAGICA Corp would work with RMW's Los Angeles-based subsidiary Lowry Digital, which has handled projects for leading studios like Walt Disney, Paramount Pictures, MGM and 20th Century Fox. RMW would be doing the processing job for IMAGICA either in India or in California in the US.
Music
The music industry is a vast entity and over the years it has witnessed change significantly. The potential of the Indian music industry can be better understood from its size estimated at around US$ 182.9 million in 2010, up from US$ 160.9 million in 2008, portraying a growth of 14 per cent during the reporting period. It is expected to grow at a CAGR of 16 per cent over 2010-14 to reach US$ 379.1 million.
Radio
Radio is considered a mass medium. It ideally suits the Indian environment - leveraging its twin advantages of wide coverage and cost effectiveness. Currently, the sector generates annual revenues worth US$ 49.5 million and is growing at around 20 percent annually, according to the joint report by KPMG and an industry chamber.
To exploit the true potential of this sector, frequency modulation (FM) radio needs to step up its penetration to at least 300 stations in 100 cities, which would further attract an investment of US$ 899,160 per radio station frequency, the total additional investment required has been estimated at US$ 247.3 million, according to industry sources.
Radio is expected to grow at a CAGR of 16 per cent over 2010-14 and reach to a size of US$ 361.4 million by 2014.
Globally, radio is enjoying a revival, based on the support of the youth, with players like Radio Mirchi emerging out as one of the clear leaders with over 41.2 million listeners, as per the recently published Indian Readership Survey (IRS) quarter 1 (Q1), 2010.
VedantiNET, the Broadband and application service provider of Guwahati promoted by SM Computer Consultants Pvt Ltd, has launched the service of first Internet Radio of Assam, ‘Radio Assam', in the city.
Advertising
A report by consultancy firm KPMG stated that the US$ 5.2 billion advertising industry is set to grow at a compounded annual growth rate (CAGR) of 14 per cent in 2010, in comparison to the last year. KPMG observed that online advertising will grow about 30 per cent per annum, establishing itself as the fastest growing advertising medium. While elaborating further it stated that the growth in regional advertising is partly driven by new sectors such as education, hospitality, jewellery and real estate which often have local brands and therefore prefer to advertise through local channels.
Emphasising on the Internet advertising industry, KPMG said the US$ 185 million industry would encourage both multinational companies and local brands to focus on their marketing strategies.
Cinema
Films Division has been motivating the broadest spectrum of the Indian public with a view to enlisting their active participation in nation building activities.
According to the joint report by KPMG and an industry chamber, the film industry contracted 14 per cent growth in 2009 wherein the industry is projected to grow at a CAGR of 9 per cent to touch an estimated amount of US$ 3.02 billion over the next five years. Growth drivers for the sector would include expansion of factors like an increase in the number of multiplex screens, digital screens facilitating wider releases, higher cable and satellite revenues, improving collections from the overseas markets and supplementary revenue streams like DTH, digital downloads, etc, which are expected to emerge in future.
Reliance MediaWorks Ltd has signed a deal with UFO Moviez to establish a gateway for digital film releases on Indian screens. The pact will enable the firm to combine UFO Moviez' digitisation technology with its programming expertise and digital cinema experience as stated by Reliance Mediaworks.
Print/Publishing
The print media industry is projected to grow at a CAGR of 9 per cent and targets to reach around US$ 5.93 billion by 2014, according to the joint report by KPMG and an industry chamber.
Jagran Prakashan of Jagran Group, which publishes one of India's largest read language dailies, stated that it will acquire all the publications of Mid-Day Multimedia in a stock deal valued nearly at US$ 40 million.
Foreign investment, including foreign direct investments (FDI) and investment by non-resident Indians (NRIs)/person of Indian origin (PIO)/foreign institutional investor (FII), up to 26 per cent, is permitted for publishing of newspapers and periodicals dealing with news and current affairs under the Government route.
FDI policy for publication of Indian editions of foreign magazines dealing with news and current affairs is:
Foreign investment, including FDI and investment by NRIs/PIOs/FII, up to 26 per cent, is permitted under the Government route.
'Magazine', for the purpose of these guidelines, will be defined as a periodical publication, brought out on non-daily basis, containing public news or comments on public news.
Foreign investment would also be subject to the Guidelines for Publication of Indian editions of foreign magazines dealing with news and current affairs issued by the Ministry of Information and Broadcasting (I&B) on Publishing/printing of Scientific and Technical Magazines/specialty journals/ periodicals 100per cent FDI is permitted under the Government route.
Theatre
Mexico-based multiplex operator Cinepolis plans to set up 40 screens over the next 12months in India, which could entail an investment of US$ 28 million.
Milan Saini, Head and Managing Director, Cinepolis India Country stated that "India is a huge opportunity for us as the market is under-penetrated. We plan to set up 40 screens over the next 12 months across seven properties in cities like Mumbai, Bangalore, Chennai and Hyderabad."
Digital Media
The digital technologies and their innovative applications have changed the entertainment sector considerably, especially the content production and its quality. Internet has also emerged as the latest revenue stream and has become one of the fastest growing advertising medium and has made a significant impression on the entertainment industry.
Officials in the Information and Broadcasting Ministry have planned a roadmap for making broadcasting operations completely digital. The Telecom Regulatory Authority of India (TRAI) has suggested a three-stage process for digitisation, wherein tier one cities would be covered by 2013, tier two cities by 2014 and tier three cities by 2017. They further stated that the digital transmission helps in enhancing the audio and picture quality.
Madison Media bagged the media buying account of US carmaker General Motors (GM), estimated at more than US$ 22.1 million. GM, the third biggest ad spender among auto companies in the country after Maruti Suzuki and Hyundai Motor, has given the account to Madison for a period of three years.
Government Initiatives
The Government has initiated the following measures:
- The government has allotted US$ 50.13 million in the current Five-Year Plan (2007-2012) for various development projects for the film industry. The funds will be utilised to set up a centre for excellence in animation, gaming and visual effects
- To offer better audio quality and sharper picture to millions of its viewers, public broadcaster Doordarshan plans to go completely digital by 2017
According to the Consolidated Foreign Direct Investment (FDI) Policy document released by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India, foreign investment, including foreign direct investments (FDI) and investment by non-resident Indians (NRIs)/person of Indian origin (PIO)/foreign institutional investor (FII), up to 26 per cent, is permitted for publishing of newspapers and periodicals dealing with news and current affairs under the Government route.
The Consolidated FDI Policy document brings forth the following guidelines for the M&E industry:
Terrestrial Broadcasting FM (FM Radio): Foreign investment, including FDI, NRI and PIO investments and portfolio investments are permitted up to 20 per cent equity for FM Radio's Broadcasting Services with prior approval of the Government subject to such terms and conditions as specified from time to time by Ministry of Information and Broadcasting for grant of permission for setting up of FM radio stations
Cable Network: Foreign investment, including FDI, NRI and PIO investments and portfolio investments are permitted up to 49 per cent for cable networks under Government route subject to Cable Television Network Rules, 1994 and other conditions as specified from time to time by Ministry of Information and Broadcasting (I&B)
Direct–to-Home: Foreign investment, including FDI, NRI and PIO investments and portfolio investments are permitted up to 49 per cent for Direct to Home under Government route. Within the limit of 49 per cent, FDI will not exceed 20 per cent. This will be subject to such guidelines/terms and conditions as specified from time to time by Ministry of Information and Broadcasting (I&B)
The total direct and indirect foreign investment including portfolio and foreign direct investment in Headend-In-The-Sky (HITS) Broadcasting Service shall not exceed 74 per cent. FDI upto 49 per cent would be on automatic route and beyond that under government route. This will be subject to such guidelines/terms and conditions as specified from time to time by Ministry of Information and Broadcasting (I&B)
FDI policy in the Up-linking of TV Channels is as under:
Foreign investment of FDI and FII up to 49 per cent would be permitted under the Government route for setting up Up-linking HUB/ Teleports;
FDI up to 100 per cent would be allowed under the Government route for Up linking a Non-News & Current Affairs TV Channel;
Foreign investment of FDI and FII up to 26 per cent would be permitted under the Government route for Up-linking a News & Current Affairs TV Channel subject to the condition that 48 the portfolio investment from FII/ NRI shall not be "persons acting in concert" with FDI investors, as defined in the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations, 1997
Going Global
Reliance Big Entertainment, owned by Anil Ambani, has bought half of UK's games and publishing company, Codemasters. The investment is expected to open up the fast-growing Indian market for Codemasters, in order to assist Reliance tap the potential of games which is vividly catching the fantasy of the growing local interest. Rod Cousens, CEO of Codemasters stated that the deal will help the company realise the full potential of their game coding and online excellence across various platforms, especially in the world's fastest-growing markets.
