YEAR 2011• 2011 has been a dynamic year for the Indian Media & Entertainment (M&E)industry - A year in which the transformation of the industry began to take hold.• It was also a year of mixed fortunes, with advertising growth being robust in thefirst half (January to June), and muted in the second (July to December).• The long promised digital ecosystem began to impact various segments.• Film saw benefits from digital distribution with wide releases and early captureof revenue• Cable digitization got underway• The music industry grew on the back of consumption of digital music.• Going forward as well, the outlook for the economy remains conservative, andthe muted growth rates seen in the latter part of the year may continue into thefirst 6 months of 2012.
CONTENTS• MEDIA & ENTERTAINMENT INDUSTRY IN 2011 - Television - Print - Films - Radio - Music - Out of home•THE EMERGING PICTURE•NEW MEDIA•DEAL ACTIVITY
MEDIA SCENERIO- INDIA• 146 million televisionhouseholds• Over 825 channels• 82,000 newspapers• 181.91 million readership• 132 million internet users• 44.21 million private DTHsubscribers• 903 million wirelesssubscribers• 245 Private FM channels
INDUSTRY SIZE & PROJECTIONS• The Indian M&E industry grew from INR 652 billion in 2010 to INR 728billion in 2011, registering an overall growth of 12 percent.• Strong consumption trends in Tier 2 and 3 cities• Continued growth of regional media and fast increasing new mediabusinesses.• The industry is estimated to achieve a growth of 13 percent in 2012 totouch INR 823 billion.• The sector is projected to grow at a healthy CAGR of 14.9 percent toreach INR 1,457 billion by 2016.• Television continues to be the dominant medium• Animation and VFX, digital advertising and gaming are fast increasingtheir share in the overall pie.• Radio is expected to display a healthy growth rate after theimplementation of Phase 3.• Print, while witnessing a decline in growth rate, will still continue to bethe second largest medium in the Indian M&E industry.
ADVERTISING TRENDS &•PROJECTIONS media accounted for INR 300 billion in Advertising spends across all2011, contributing to 41 percent of the overall M&E industryrevenues.• Advertising revenues witnessed a growth of 13 percent in 2011 asagainst 17 percent observed in 2010.• Print is the largest contributor accounting for INR 139 billion and 46percent of the advertising pie.• It is expected to continue being the most dominant medium fornext 5 years, despite the threat from new digital platforms.• Advertising spends are expected to grow at a CAGR of 14 percentto reach INR 586 billion in 2016.
CONTRIBUTION- PERCENTAGE-ad revenues of share of ad spendoverall industry size by media
KEY THEMES and TRENDS•GOING FORWARD Growth drivers for multiplex exhibitors Digital technology continues to revolutionize media distribution• Media on the go: Proliferation of New age user devices Media consumption more personal than ever (Smart phones, tablets, PCs, gaming devices, etc.)• Regional markets bucking the recessionary trends and continuinggrowth momentum• Increasingly savvy and ‘new age’ consumers•Integration and innovation across traditional and new media, changingmedia consumption habits and preferences for niche content, more touchpoints to engage with audiences.• M&E still an advertising revenue dependant industry• Awaited Regulatory shifts Digitization for cable, Radio licensing implementation of Phase 3, copyright clarification for Radio and the roll out of 4G.
INTRODUCTION• Television is the largest medium for media delivery in India in terms ofrevenue, representing around 45 percent of the total media industry.• Television penetration in India is still at approximately 60 percent of totalhouseholds.• India continues to be the third largest TV market after USA and China with 146million television households.• Cable and Satellite (C&S) penetration of television households is close to 80 percent.• The over-all television industry was estimated to be INR 329 billion in 2011, andis expected to grow at a CAGR of 17 percent over 2011-16, to reach INR 735 billionin 2016.• The share of subscription to the total industry revenue is expected to increasefrom 65 percent in 2011 to 69 percent in 2016.• Significant increase in advertisement inventory, advertisement rates havegenerally remained flat or declined in 2011.• However, with a large number of untapped advertisers who are currently usingonly the print platform, there is potential for further growth for TV.
KEY ADVERTISERS- Advertisement inventory levels increased by 14 percent in 2011, driven by ahigher number of channels and commercial time per hour of programming.
TOP 10 CATEGORIES ADVERTISINGON TV • FMCG continued to be the dominant sector, representing 43 percent of ad volumes. • The top 10 sectors accounted for around 60 percent of the overall TV advertising volume share during 2011. • Within services, DTH was the largest category, followed by real- estate. • Newer categories of advertisers such as internet / new media companies use the television medium, with advertisers such as Flipkart, Justdial, Quickr etc.
TOP VIEWERSHIPADVERTISERS SHARE BYON TELEVISION GENRES
INTRODUCTION• INR 209 billion print industry grew by 8.4 percent from INR 193 billion in2010.• The growth in advertisement revenues has been at a CAGR of 8.7percent, whereas circulation revenues have displayed a CAGR of 3.7percent between 2007 and 2011.• The advertisement revenues continued to be the main source of revenuefor the print industry, contributing 67 percent to industry’s revenues.• The big spending sectors such as education, BFSI and retail tightenedbudgets.• The newspaper advertisement volumes increased from 238 millioncolumn centimetre of ad space in 2010 to 280 million column centimetrein 2011.• The industry also saw a 22 percent increase in the number of advertisers.
LANGUAGE-WISE REVENUE &READERSHIP SPLIT• Together, the Hindi and Vernacular markets are expected to grow at aCAGR of 10.9 percent over the period 2011-16, outpacing the Englishlanguage market’s growth of 6.3 percent.• The pan India reach of regional newspapers is 173.80 million comparedto only 22.21 million in case of English newspapers.
TOP 5 PUBLICATIONS BYREADERSHIP-MAHARASHTRAGlobal trends•Audience shift from print to online•Content aggregators corner a larger slice of the advertising pie•Online channels of distribution continue to explode•Younger generation demands on-the-move accessibility
INDUSTRY PERFORMANCE &PROJECTIONS• The Indian film industry was estimated to be INR 93 Billion in 2011 indicating agrowth of 11.5 percent vis-à-vis 2010.• 26 percent growth in Cable and satellite rights.• Ancillary revenues such as licensing and merchandising, in-cinema advertising andpay per view also displayed strong growth in 2011.
SCREEN AVERAGEDENSITY- per REVENUE MIXmillion population of multiplex
CINEMA ADVERTISING• The cinema advertising market has grown at a robust 18 percent in2011 to reach INR 140 Crs.• Digital cinema providers such as UFO Moviez and Real Image havecornered the bulk (~ 70percent) of this advertising revenue while filmexhibitors take the rest of the pie.• Advertising revenue is expected to contribute to 30 percent of totaldigital cinema revenue this year as compared to 24 percent in the lastfinancial year.• Cinema advertising is projected to account for a sizeable share (~ 40percent) of revenue for digital cinema providers in next few years.
DIGITAL MEDIA• New media continued its growth trajectory in 2011, with estimatedgrowth in advertising revenues in excess of 40 percent over last year.Coming in at approximately INR 15.4 billion in revenue in 2011.• Digital ad spend reached approximately 5 percent of total media andentertainment industry advertising revenue.• This share is expected to continue to grow over the coming years,driven by significantly higher growth rates in online advertising spendcompared to traditional media.• Continued growth in internet penetration and mobile device accessis expected to drive consumption, and hence revenue growth.
INTERNET VS. ACTIVETV INTERNETPENETRATION ENABLED SMART PHONES
PENETERATION TIME SPENTOF ACTIVITIES- ON SMARTinternet users PHONE
INTRODUCTION•The industry grew at 15 percent in CY 2011 to reach INR 11.5 billioncompared to INR 10 billion in CY 2010.• The ad rates in metros increased by ~7-10 percent and the utilization wasalso slightly better.• Smaller cities the stations witnessed similar growth of 15 percent-18percent in ad revenues driven largely by increased utilization as ad ratesremained steady.• Utilization levels are now in the 70-85 percent range in the top eightmetros, and in the 50-65 percent range in key non metros, leaving room forvolume growth.• Players like Radio Mirchi and HT Media reporting growth rates above 35percent on a quarter on quarter basis.
PROJECTED REVENUE GROWTH• Increased listenership of radio on mobiles• Content differentiation• Targeting newer segments and geographies• Activations / events business
INDUSTRY OVERVIEW• The Indian music industry achieved revenues of INR 9 billion in2011, registering a growth of 5 percent over 2010.• The industry witnessed a 19 percent Y-o-Y decline in sales ofphysical music, which was compensated by a significant jump of 24percent Y-o-Y in digital music consumed.• New trends- Different digital platforms such as pay per download,unlimited music streaming and subscription based music services.• Film music (both Bollywood and regional film music) continues toapproximately 70 percent to the industry’s revenues.• The younger generation is now being exposed to newer genres,leading to a growing demand for non-film music.• This trend was reflected in greater investments by the musicindustry to identify and promote independent artists, and also inincreased traction in live performances.
PHYSICAL VS. DIGITAL SALES• The digital music industry stood at INR 5.2 billion in 2011 making up 58 percent ofthe revenues of the music industry. The industry grew at 24 percent Y-o-Y comparedto 2010 and is expected to touch INR 14.3 billion by 2016.• Mobile contributes roughly 90 percent to the total sales
KEY TRENDS & DEVELOPMENT• App-economy enhances music consumption• Emerging Business Models• Power of Social Media• Rise of independent music (Live From the Console, Folktronicand Zomba)• Viral Marketing• Labels embrace band management• Reviving the era of LPs• Regional music – the next frontier of growth• Music publishing to take off in India
LIVE MUSIC• The number of live events in the country has increased by nearly15-20 times between 2004 and 2011.• India had approximately 300-400 live events IN 2004, the numberincreased to 6000-7000 in 2011 with ticket prices also increasingsubstantially.• The daily audience count of the three-day long NH7 Weekendermusic festival in Pune soared to nearly 10,000 in 2011 from 3,500 in2010.•Many international artists made their India debut, including popartist Lady Gaga, rapper and singer, Pit bull etc.• Industry discussions reveal that ticket prices have been growingsteadily, with the average ticket price for a live concert now being inthe range of INR 2000-2,500.• The concert tickets of Indian artists such as Shankar and A.R.Rahman were sold for INR 1000-2000 per ticket.
HURDLES FOR GROWTH OF LIVEMUSIC• Lack of infrastructure and venues: (the cities in Europe and America have at least50 standing venues where a performer just needs to plug in and play, there isnot a single such venue in India).• Licenses: The organizers require a host of permissions for hosting a live event.Getting these clearances and licenses is a cumbersome task for the organisers.• Entertainment tax: High rate of entertainment tax on the live shows is anotherfactor stunting the growth of live concerts.• Security Concerns: Most international artists are reluctant to perform in Indiaowing to security concerns (Bryan Adams and Metallica in Gurgaon had to becancelled at the last moment due to lack of security arrangements).• Dependence on sponsors: Most events in India are sponsorship driven rather thanticket sales driven. As per industry estimates, 60 percent of the revenue isgenerated from sponsorship and only 25 percent from the ticket sales. Hencemany events suffer from the fickleness of the sponsors.
FUTURE THEMES• Music on cloud• Technology transforming music• Music discovery to become easier• Video Consumption to rise
OUTLOOK FOR THE YEAR•Industry spent approximately INR 17.75 billion in 2011 on Out-of-Home (OOH) advertising which amounts to approximately 5 percentof total advertisement spends.• The OOH sector was hit relatively harder than other sectors of theAdvertising industry and the sector registered a Y-o-Y growth of 7.6Percent.
CONTRIBUTION OF VARIOUSSECTORS• The Industry saw a reduction in spends by telecom players, whowere the leaders in the last five years.• This was offset by increased spend by auto companies, Entry of webbased E-commerce companies, thrust in the entertainment spacedriven by release of large budget movies, TV channels and DTH, andincreased real estate spends.
OVERVIEW• The year saw mergers and acquisitionsand private equity funding clocking over1000 deals and contributing over USD 50billion.• Deal activity in the M&E sectorwitnessed a significant uptrend in 2011with 42 transactions valued at USD 940million as compared to 27 transactionsvalued at USD 693 million in 2010 and27 transactions valued at USD 722million in 2009.• Television was the largestcontributor, accounting for USD 320million of the total deal value.