Sector analysis


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Sector analysis

  1. 1. Sector Analysis: Media and Entertainment Industry Size The Indian Media and Entertainment industry, with a size of Rs. 820 billion and a Compounded Annual Growth Rate (CAGR) of 12.6% between 2011 and 2012, is one of the fastest growing sectors in the country. The main reasons for this explosive growth have been the demand for entertainment by the middle class, advent of new technologies for entertainment, increasing investments in the entertainment industry, regulatory initiatives, relaxation of FDI and advent of new players into the industry. The growth of this sector can be analyzed by the fact that the TV domain has expanded from just 5 channels to a staggering 550 channel within the last 20 years. The industry is expected to grow to a size of Rs. 917 billion with a growth rate of about 11.7% by end of 2013 looking at the strength of the film industry and expanding new media businesses. Table 1: Overall Industry Size and Projections (KPMG-FICCI Press Release) Television continues to be the major driver for this industry, however, new entrants like animation/ VFX has taken films and movies to a better position with the backing of better content and digitization. Radio is expected to yield a high CAGR in the coming 5 years. New segments such as gaming, animation, outdoor (Out of Home – OOH) and internet advertising are gaining importance.
  2. 2. Figure 1: Segment wise Industry breakup ―Going forward, the industry to grow at a compounded annual growth rate (CAGR) of 15.2% to Rs.1.66 trillion by 2017‖ – FICCI-FPMG, M&E 2013 Report Historical Background Arts and entertainment in India have a rich and ancient history. Right from ancient times there has been a synthesis of indigenous and foreign influences that have shaped the course of the arts of India, and consequently, the rest of Asia. - During the ancient times most of the arts flourished under the patronages of the kings. The Islam rule bought a new style of art, architecture, music and dance culture to India and finally the Britishers brought in their own Roman and Gothic style and got fused with the Indian industry. - Doordarshan was established in 1959 while satellite transmissions began in the 1980’s. The number of television sets increased from around 500,000 in 1976 to 9 million in early 1987 and to around 155 million in 2010.
  3. 3. Figure 2: Evolution of TV Channels in India - The Indian film industry, started in 1913, is the largest in the world (1200 movies released in the year 2002). Each of the larger languages supports its own film industry. Figure 3: Evolution of Film Industry in India - Radio broadcasting was established in 1936. From only six stations at the time of independence, All India Radio's network had expanded by the mid-1990s to 146 AM stations. Satellite Radio was introduced to the Indian market in 2000 by WorldSpace. - The first major newspaper in India, The Bengal Gazette, was started in 1780 under the British rule. Other newspapers such as The India Gazette, The Calcutta Gazette, The Madras Courier (1785), The Bombay Herald (1789) soon followed. The Times of India was founded in 1838 as The Bombay Times and Journal of Commerce by Bennett, Coleman and Company. The Times Group publishes The Economic Times, Navbharat Times, and the Maharashtra Times.
  4. 4. Latest Trends Television - More than 550 channels present at the moment - Television is the largest shareholder of this industry with about 47% stake - Overall the TV industry was estimated to be Rs. 370 billion and is expected to reach Rs.847 billion by 2017 - CAS penetration is about 75% - Recent changes have boosted the television segment like increase in the number of channels, better content, more focus on lifestyle and kid’s content, emergence of DTH and IPTV and increase in the middle class households owning a television. Figure 4: Latest trends and driving factors for television Film Industry
  5. 5. - Size of the film industry is expected to be about 122 billion in 2013 and is further expected to grow at a rate of 11.5% to a value of 193 billion by 2017 - Digitization has helped bring more profitable and more sustainable business to the film segment - The increase in the disposable income in the hands of the consumer has led to spending on recreational activities like films - Rise of multiple screens has further boosted the industry with the number of screens expected to go up to 2200 by 2016. Also, southern states account for 59% of these screens while serving only 22% of the population. - The YoY growth in the number of movies released every year is about 5% with more than 1400 films released every year and this includes hindi and other language movies - Players such as Yashraj, UTV, and Adlabs have taken the film industry abroad to a big extent. Their ability to invest heavily in marketing of movies in the international market, has led to higher overseas collections. - Market for English movies on a rise - Innovative media being used by the film industry for marketing movies Print Segment - More than 82000 newspapers with a readership of about 250 million - Comprises mainly of newspapers and magazines with newspapers accounting for 90% of the share - Rising literacy rate to about 75% has seen a drastic rise in the readership of these newspapers - India’s ad spend market increased from Rs. 16,300 crore in 2006 to Rs. 32,000 crore in 2011
  6. 6. - Print Media has a high penetration rate of about 85% in Sec a and B cities and about 35% in rest of the cities - Hindi continues to be the key language market with five out of top 10dailies published in Hindi. Radio - Radio is expected to see a CAGR growth of 16% post the phase III auction from 2013-17 - Improvement in margins is expected with favourable legislation. - Innovation will drive the industry as the competition is set to increase. - Increasing FM-enabled mobile phones and cars are driving radio growth in India. - Radio’s share in the advertising pie has grown from 3.8 in 2010 to 4 percent in 2011 Internet Advertising - Social Media promises to be the anthem for internet advertising - 3G is yet to make a mark in India and hence any impact on internet usage and mobile marketing - Travel sites, online retail stores push e-commerce - Online ad sales have started to be outsourced to specialized agencies Latest News - Foreign Direct Investment upto 100 percent is allowed in most of the sectors, more specifically, o For Film Industry: Upto 100% o For Radio Industry: Upto 20%
  7. 7. o For Print Media: Upto 74% publishing scientific/technical and specialty magazines/periodicals/journals. Upto 26% publishing newspapers and periodicals dealing in news. - The second phase of digitization was carried out in 38 other cities including Bangalore, Hyderabad, Pune, Ahmedabad, Chandigarh, Agra, Kanpur, Ludhiana, Patna, Navi Mumbai, and Coimbatore. - Permitting setting up of up linking hubs for satellite up linking by private TV broadcasters from Indian soil. - Indian film industry completed 100 years in May 2013 - Go ahead given for policy guidelines for FM radio phase III that will open up 294 cities to private radio services. The government will adopt ascending e-auction for the 839 licenses that are up for grabs in Indian cities. - 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 utilized to set up a centre for excellence in animation, gaming and visual effects among others. - The information and broadcasting (I&B) ministry plans to expand the ambit of the Electronic Media Monitoring Committee (EMMC) from 300 to 800 TV channels and include private radio services also Critical Growth Factors - Emergence of new media and convergence of media: Emerging new media segments include online advertising, gaming, animation, and online classifieds are on a rapid growth phase. Going forward with 3G and 4G having a better market capture, these segments will be at a high profit. - Traditional media such as television, radio, films see a yearly increase in the viewership. Traditional media is now being offered through alternate segments like OOH television. Demand for Indian animation/ VFX effects at Indian pricing
  8. 8. - Entry of established brands like UTV and Bennett, Colemann and Company entering new spheres - Growing network of niche channels of varying genres like music, films, kids and lifestyle Growth Drivers Figure 5: Growth driving factors for the M&E industry Regulatory Framework - The Entertainment and Media industry comes under the purview of Information and Broadcasting Ministry of the GOI. - The sector has to abide by the provisions laid down under the Copyright Act,1957, Cinema Exhibitions Rules and Entertainment Tax Regulations, etc.
  9. 9. - The film industry is monitored by the Indian Motion Picture Producers’ Association (IMPPA), Film Television Producers' Guild of India, The Association of Motion Pictures and Television Programme Producers (AMPTPP) and The Film Writers Association (FWA) Mergers and Acquisitions - Viacom set to acquire Eenadu TVs regional general entertainment - Bennett, Coleman and Company to buy 12% equity in Dalmia Continental Pvt Ltd (DCPL) - Network18 Media and Investments Ltd has entered into an agreement with GETIT Infoservices to divest stake in local search businesses — Yellow Pages and AskMe - Aditya Birla Group is looking to acquire 26 per cent stake in Living Media which owns 57.1 per cent stake in TV Today References Media & Entertainment in India Digital Road Ahead by Deloitte Consulting FICCI-KPMG Indian Media and Entertainment Industry Report 2013 PWC’s India Entertainment and Media Outlook 2011 NSDC: A report on the Human Resource and skill requirement in the Media and Entertainment Industry Sector