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Media and Entertainment Industry

March, 2013

Indian Media & Entertainment Industry: Brief Introduction

Indian media and entertainment (M&E) industry is one of the fastest growing industries in the world. It is standing at an inflexion point with 'digital' being the buzzword. Every segment across the industry (television, radio, advertisement, films, print) is getting digitised in its own way and thereby leading to development of new media. Evolution of sophisticated digital production and post-production techniques, along with the factors such as entry of international corporate houses across the film value chain, growth of digital distribution and exhibition, primarily through increasing penetration of multiplexes are majorly influencing the film segment in India.

Moreover, the Government's drive towards digitalisation and addressability for cable television by 2014 is expected to provide a boost to direct-to-home (DTH) and digital cable growth.

In a nutshell, alignment of entertainment, information and telecommunication is increasingly affecting India's overall M&E industry. Launch of more advanced media devices over the last decade has facilitated access of the same content on a variety of media platforms. This is helping in emergence of new business models and revenue streams, not only for content providers, but for a variety of new players becoming a part of the new media ecosystem. With all these factors well-in-place, the M&E sector certainly is marching towards new horizons of growth.

Market Dynamics

Television (TV) dominated the M&E landscape in India, growing 12.5 per cent in 2012 and accounting for Rs 370 billion (US$ 6.81 billion) of the total revenue, followed by the print segment. The Indian film industry, the largest in the world, grew by 21 per cent accounting for Rs 112 billion (US$ 2.06 billion) of the revenues.

Increasing penetration of mobiles and wireless connections drove the growth of internet in the country. As a result, digital advertising showed impressive growth of nearly 41 per cent, with earnings surging from Rs. 15.5 billion (US$ 947.55 million) in 2011 to Rs. 21.7 billion (US$ 399.26 million) in 2012.

Meanwhile, Indian radio industry clocked revenue of Rs 1,530 crore (US$ 281.51 million) in 2012, growing at 5 per cent while it is anticipated to grow at 7 per cent in 2013.

Advertising expenditure across media expanded by 9 per cent to Rs. 327.4 billion (US$ 6.02 billion) in 2012; wherein print continued to be the largest beneficiary, accounting for 46 per cent of the advertising pie at Rs.150 billion (US$ 2.76 billion).

Indian animation industry is also undergoing great transformation currently. While the industry is poised to grab greater outsourcing pie from global players, it is also prepared to move up the value chain and play a better role in the overall animation and gaming ecosystem. While earlier only post-production work used to be outsourced from Hollywood studios, Indian studios are now getting more advanced and looking to create their own intellectual properties (IP) through innovative business models.

Online and Mobile Entertainment

Over the last couple of years, India has seen a paradigm shift in the usage of technology such as tablet PCs and Fablets (an intermediate between a smart-phone and a tablet) among youth, with a compounded annual growth rate (CAGR) of 59 per cent. During the first half of calendar year 2012, total shipment of mobile handsets in the country was 102.43 million, while total India shipments of smart phones were 5.5 million units, according to Cyber Media Research.

Moreover, India is emerging as the third largest internet market and its e-commerce business is likely to touch Rs 4,000 crore (US$ 735.96 million) in 2015 against Rs 1,200 crore (US$ 220.8 million) at present.

Also, with mobiles becoming a major medium for advertising and content delivery, every three out of four users in the country are expected to access the net through a mobile phone by 2015. During 2012-22, cumulatively around US$ 500 billion of ad spend is expected to happen on mobile phones, according to industry estimates.