New Delhi: The Indian media and entertainment industry is projected to grow at close to 13% in 2015 over the previous year with television growing at a robust 14.46%, print at 8% and digital at 44%, taking forward the growth of these sectors in 2014.
The total media and entertainment industry, including print, television, radio, outdoor, digital, animation, gaming and music, is expected to touch Rs.1.16 trillion in 2015. The projections were made by the Ficci-KPMG Indian Media and Entertainment Industry Report, 2015, released at Ficci Frames in Mumbai on Wednesday. Ficci Frames is Asia’s annual global convention on the entertainment and media business.
According to the report, 2014 was a turning point for the media and entertainment sector as it saw the building blocks for future growth being laid including the new spectrum for mobile, ongoing digitization in the cable sector, consolidation in the film exhibition business and announcement of the phase III auctions for private FM radio.
“We hope that 2015 will ensure flawless and timely execution of these policies making it a landmark year for media and entertainment industry,” said Jehil Thakkar, head, media and entertainment at the consulting company KPMG.
The media sector is also taking a cue from the current government’s optimistic outlook and positive business sentiment strengthened by a number of growth promoting policy initiatives taken in the recent months, the report observed.
In 2014, digital media threw up a surprise with a significant 44.5% growth. Digital advertising, which was Rs.4,350 crore in 2014, is projected to touch Rs.6,250 crore. “Digital was the big story of the year. We expect the story to continue as digital will grow at a compounded annual growth rate of over 30% for the next five years,” said Thakkar.
India has becomes the world’s fastest growing smartphone market. By the end of 2014, the country had around 116 million Internet-enabled smartphones and the number is expected to reach 435 million by 2019, the report said. With eyeballs shifting from print and television to online media, the second screen phenomenon has become a reality that cannot be ignored. “This growth presents a good opportunity for digital content aggregators, advertisers, app developers and online streaming companies to engage users through relevant mobile-led strategies,” the report said.
Several factors have driven growth of the medium: smartphone prices have dropped and telecom operators have made 3G pricing more realistic and affordable, said Thakkar. However, Internet speeds and total Internet penetration remain a concern. Internet penetration stands at about 19%, which is still quite low compared with Internet penetration in other countries. Currently, the mobile phone subscriber base is almost nine times the installed base for PCs in India.
Rajesh Kamat, group chief operating officer of the media fund Chernin Asia Media, said: “A sunrise sector for the economy, the Indian M&E industry is on the cusp of a strong phase of growth driven by media convergence and rising discretionary spends. We have already seen rapid changes in the way content is produced and consumed over multiple screens and devices driven by digitization and growing Internet penetration. This is in line with what we have seen in other developed and emerging markets.”
He added that investors were encouraged by progressive regulatory reforms being taken to create attractive investment opportunities in Indian M&E. “So, it looks like a good time to take a long-term position in the sector,” he said.
In 2014, television industry grew at 13.8% driven by increased advertising by political parties during the general elections and on account of enhanced marketing budgets of e-commerce companies. Advertising revenue projections for 2015 are Rs.17,460 crore up from Rs.15,490 crore in 2014. Raj Nayak, CEO of Colors, the Hindi general entertainment channel of Viacom18, said 2014 was an extremely good year. “With a new government with absolute majority, the sentiments were high and the industry showed a healthy growth of 16% in ad spends. The sentiment is positive and one would expect similar growth except for the unseasonal rain that may affect rural consumption,” he said.
Digitization of the cable sector, although not yet complete, achieved critical mass. Changes in channel pricing like the introduction of a la carte also made a difference to the structure of the industry. “If these (the a la carte pricing) practices are followed, they could change the complexion of the industry for the better and raise average revenue per user (ARPU),” Thakkar said. The entertainment television industry also expanded with the launch of new channels such as Zindagi, Sony Pal and, more recently, &TV.
Yet, despite the rollout of digital set-top boxes as part of the digitization process, better addressability, increase in subscription revenues and its more equitable sharing continues to evade the industry. On top of that, the final deadline for phased digitization was extended to the end of 2015 and 2016.
According to Ashok Venkatramani, CEO, ABP News, the next fiscal year would be a challenge for news channels as it would follow a good election year in 2014-15. “A lot depends on the actions taken by the government in reviving the economy which would attract investments and make corporates spend money in the market. The fact that we have a stable government and after the budget all seems positive, the outlook is that it should be a year of low double-digit growth,” he said.
Print grew at 8.3% in 2014 and remained fragmented at the national and regional level. However, the year saw a 7.9% rise in circulation revenue on the back of rising cover prices and subscriptions. “Although the price rise was marginal, it is a big move for newspapers in India,” said Thakkar. According to the Ficci KPMG report, the share of advertising revenue for print remains bigger than that for television at a projected Rs.19,260 crore for 2015.
The growth in newspaper industry came largely from tier-II and tier-III cities with regional language editions outperforming the national editions and English dailies.
“There was a clear divergence of growth rate in English and regional newspapers. While English grew below 5%, regional grew in double digits,” said Thakkar. “While there still isn’t a US-style de-growth in English papers here, they need to get serious about their digital strategies,” he added.
In private FM radio, the government gave the go-ahead for phase III of partial auctions in 69 cities where 135 channel frequencies are up for grabs. However, even the auctions are marred by some key contentious issues such as high reserve prices for the auctions, the 15% limit on the total number of frequencies that an entity can hold and the dearth of new frequencies in the profitable A and A+ cities. Yet, the upcoming auctions are expected to drive growth and FM radio sector is projected to grow at 14% in 2015.
According to Thakkar, the film industry underperformed in 2014. “The sector remained flat. Content did not work and footfalls at theatres were low,” he said, adding that the industry needed to relook at its business models.
The year 2014 also marked increased deal activity in the media and entertainment sector. It recorded 61 transactions versus 26 transactions in 2013. Deal values increased from $224 million in 2013 to $2.38 billion in 2014. In the television sector, Reliance Industries Ltd, through Independent Media Trust, acquired control of Network18 Media & Investments Ltd and its subsidiary TV18 Broadcast Ltd.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.