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Media and Entertainment Industry

September, 2014

Introduction

As per a FICCI-KPMG report, India’s media and entertainment (M&E) industry reaches 161 million TV households, 94,067 newspapers (12,511 dailies), about 2000 multiplexes, and 214 million internet users of which 130 million are mobile internet users.

The year 2013 saw growth in the digitisation of media products and services, as well as development of regional media. Gaming and digital advertising were two sub-sectors which recorded strong growth compared to 2012.

Today, the industry continues to grow, playing an important role in bringing about awareness on many issues that impact the populace. India’s massive consumer base also gives the M&E industry a tremendous opportunity for progress and the sector has the tools to exploit this potential. The current industry is armed with digital technologies, state-of-the-art mobile devices, penetration of broadband internet and digital cinema, not to mention backing from the country’s government.

Market size

In calendar year 2013, India’s M&E industry registered a growth of 11.8 per cent over 2012 and touched Rs 918 billon (US$ 14.93 billion), as per a report by FICCI-KPMG. The industry has the potential to grow at 14.2 per cent to more than Rs 1.78 trillion (US$ 28.95 billion) in the next four years.

The television industry in India is anticipated to increase at a compound annual growth rate (CAGR) of 16.2 per cent over 2013-18, to reach Rs 88,500 crore (US$ 14.39 billion). Digital advertising is projected to have the highest CAGR of 27.7 per cent with other sub-sectors projected to grow at a CAGR in the range of 9-18 per cent, till 2018.

The foreign direct investment (FDI) inflows in the information and broadcasting (I&B) sector (including print media) in the period April 2000 - July 2014 stood at US$ 3,735.77 million, as per data released by Department of Industrial Policy and Promotion (DIPP).

Investments

State broadcaster Prasar Bharati has signed a Memorandum of Understanding (MoU) with German public service broadcaster Deutsche Welle, in an effort to expand the reach of Doordarshan India (DD India) into Central Asia, Europe, and the Middle East. The agreement enables the availability of DD India’s programmes on a free-to-air basic package mode, on Hotbird 13B, which is a popular direct-to-home (DTH) platform in Europe. This deal expands Doordarshan India’s reach to Europe, Asia, North Africa and Australia.

Discovery Communications India has broken into the Hindi entertainment space, following the launch of its Investigation Discovery (ID) channel, which will air stories of crime and suspense. After the launch of the high definition (HD) variants of its channels Animal Planet HD World and TLC HD World, Discovery’s channel portfolio in India now stands at 11.

Multiplex chain INOX Leisure Ltd (INOX) has bought 100 per cent share equity capital in Satyam Cineplexes Ltd (Satyam). The deal, valued at Rs 182 crore (US$ 29.59 million), raises Inox’s screen count in India to 358, across 91 multiplexes and 50 cities. The acquisition will give the multiplex chain entry into Delhi and enhance the company’s position in north India.

As a part of its expansion drive, Carnival Group has acquired HDIL's multiplex chain Broadway Cinema for about Rs 110 crore (US$ 17.89 million). Carnival Cinemas, a division of Carnival Group, said that its Mumbai acquisition is in keeping with ‘Vision 300’ under which the Group will launch 300 screens across the country by the end of FY15.

Infosys has entered into an agreement with telecom company Orange to offer Internet TV to its customers. The company plans to create a portfolio of interactive TV apps on the Orange Livebox Play. The apps will be powered by Infosys DigitizeEdge, an integrated digital content monetisation platform. Additionally, Infosys will use this cloud-based platform to facilitate Orange to offer a range of lifestyle-centric video and contextual over-the-top (OTT) services through its TV apps to improve viewer experience.

Vodafone India is collaborating with Disney India’s Interactive business to bring about games and applications for smart and feature phones. “Our association with Vodafone is a step forward in our strategic relationship with them and creates an additional destination for exciting games and apps for their users,” said Mr Sameer Ganapathy, Vice President and Head, Interactive, Disney India.

Government Initiatives

The Indian and Canadian governments signed an audio-visual co-production deal in early 2014 that would help producers from both countries to harness their technical, creative, artistic, financial and marketing resources for co-productions and, subsequently, lead to exchange of culture and art amongst them.

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

Digitisation will drive India’s M&E industry forward. The internet user base which is already over 200 million will likely generate vast revenue. Some time back, telecom companies began to focus on data as a means to create revenue. Additionally, advertising agencies began competition with each other to acquire in the digital and social media domains. These developments suggest growth for the M&E industry in India. Opportunities outside the country also beckon. Africa and the Middle East are two burgeoning M&E markets, and Indian M&E companies will do well to tap the regions’ potential.

Exchange Rate Used: INR 1 = US$ 0.0162 as on September 26, 2014

References:  Media Reports, Press Releases, FICCI-KPMG report, Press Information Bureau