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Media and Entertainment Industry

December, 2014

Indian Media & Entertainment Industry: Brief Introduction

The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making high growth strides. Proving its resilience to the world, the Indian M&E sector is on the cusp of a strong phase of growth, backed by rising consumer payments and advertising revenues across all sectors.

The industry has been largely driven by increasing digitisation and higher internet usage over the last decade. Internet has almost become a mainstream media for entertainment for most of the people. Recent statistics and developments pertaining to the sector are discussed hereafter.

Market Dynamics

The Indian M&E industry grew by 11.8 per cent in 2013, as against 2012, and touched Rs 918 billion (US$ 14.43 billion), stated a FICCI-KPMG report. By the end of 2014, the industry is expected to stand at Rs 1,039 billion (US$ 16.33 billion). Simultaneously, digital advertising has shown strong growth in 2013 by enhancing at a rate of 38.7 per cent, followed by gaming which grew by 25.5 per cent.

Additionally, industry estimates reveal that video games industry grew at a record 16 per cent in 2013 over 2012; wherein its net worth rose to US$ 277 million.

Another report by Research and Markets stated that the Indian animation industry was valued at US$ 247 million in 2013 and is forecasted to grow at 15-20 per cent per annum.

The foreign direct investment (FDI) inflows in the information and broadcasting (I&B) sector (including print media) in the period April 2000 - August 2014 stood at US$ 3,762.42 million, as per data released by Department of Industrial Policy and Promotion (DIPP).

Investments

Sistema Shyam TeleServices Ltd (SSTL), which provides telecom services under MTS brand, has partnered with Nodwin Gaming to launch an online, multiplayer, video gaming platform -- Gamegod.

eCommerce company Flipkart will look after the distribution of Gamegod across India.

Owing to burgeoning mobile internet users in India, Chinese online gaming, advertising and commerce companies are increasingly attracted to the Indian avenues for investments. China’s online gaming company Changyou.com Ltd is expected to soon launch some of its products in India. The company commenced ChangYou.com India Pvt. Ltd in 2012 and launched its first Indian product mobogenie in mid-2013. Mobogenie is an application that helps people manage their Android smartphones through personal computers and laptops.

Times Internet, India's largest digital network, has recently bought a majority stake in Cricbuzz, a leading cricket news and information destination on the internet and mobile.

Cricbuzz and GoCricket will be aligned together to create the largest cricket news destination, which could be accessed by over 50 million monthly users on digital platforms. The deal has been undertaken to capitalise on the growing interest in India's favorite sport across mobile devices.

Digital media and entertainment company, KSS Ltd is venturing into 4K technology for which it has joined hands with Hong Kong-based Sony Corporation. The collaboration will be bringing the 4K cinema technology in India. Also KSS will be installing around 3,000 4K cinema screens over next 2-3 years in the country.

In India, majority of multiplexes still projects 2K content which provides an image container roughly 2000 pixels across (2048 x 1080 or 2.2 million pixels) while, 4K digital cinema can doubles those dimensions to 4096 x 2160.

Government Initiatives

The Government of India has supported this sector's growth by taking various initiatives such as digitising the cable distribution sector to attract greater institutional funding, increasing FDI limit from 74 per cent to 100 per cent in cable and DTH satellite platforms, and granting industry status to the film industry for easy access to institutional finance.

Recently, the Indian and Canadian governments have signed an audio-visual co-production deal that would help producers from both countries to explore their technical, creative, artistic, financial and marketing resources for co-productions and, subsequently, lead to exchange of culture and art amongst them.

Furthermore, the Centre has given the go-ahead for licences to 45 new news and entertainment channels in India. Among those who have secured the licenses include established names such as Star, Sony, Viacom and Zee. Presently, there are 350 broadcasters which cater to 780 channels. “We want more competition and we wanted to open it up for the public. So far, we have approved the licences of 45 new channels. It’s a mix of both news and non-news channels,” said Mr Bimal Julka, Secretary, Ministry of I&B, Government of India.

Road Ahead

The FICCI-KPMG report highlights that the Indian M&E industry is expected to touch Rs 1,785.8 billion (US$ 28.07 billion) by 2018, with a compounded annual growth rate (CAGR) of 14.2 per cent.

Digital advertising is expected to lead the CAGR with 27.7 per cent, followed by radio with 18.1 per cent. Gaming and television are expected to register a CAGR of 16.2 per cent each, followed by growth rates of animation and VFX (15.9 per cent), music (13.2 per cent), films (11.9 per cent) and OOH with 9.2 per cent expected CAGR.

Print stands last as far as the expected growth is concerned with 9 per cent CAGR.

Within TV, subscription revenues are expected to be three times more than advertising revenues, by 2018.

Exchange Rate Used: INR 1 = US$ 0.0157 as on December 26, 2014

References:Media Reports, Press Releases