The Indian media and entertainment industry stood at Rs 584 billion in 2008, a growth of 12.4 per cent over the previous year, according to the latest FICCI-KPMG report released at the 10th FICCI Frames convention in Mumbai.
Over the next five years, the industry is projected to grow at a compounded annual growth rate (CAGR) of 12.5 per cent, to reach the size of Rs 1,052 billion by 2013.
The & #BANNER1 & # report highlights that the market environment has become increasingly challenging for the sector, on the back of economic slowdown and the consequent slowdown in advertising revenues, especially in the last quarter of 2008. Sectors like TV, print, radio and outdoor, which depend on advertising revenues, were largely affected; this scenario is estimated to continue into the current year too.
Advertising spends grew at CAGR of 17.1 per cent in the past three years. Going forward, it is expected to exhibit a CAGR of 12.4 per cent over the next five years.
The key highlights of last year included the growing acceptance of the
Amit Mitra, secretary general, FICCI, says in an official communiqué, "With a low advertising spend to GDP ratio of 0.47 per cent, a growing consumer class and middle class, young population, low media penetration and increasing discretionary spending, India continues to be an attractive market for media and entertainment."
The television industry is estimated to have reached a size of Rs 241 billion, a growth of 14.2 per cent over 2007. The industry is projected to grow at the rate of 14.5 per cent over 2009-13 and reach a size of Rs 473 billion.
To increase addressability and reduce leakages, the report recommends pushing for government regulations for mandatory digitisation of all TV distribution; development of alternate audience/viewership measurement systems; and rationalisation of content production costs through discussions with stakeholders at all levels -- actors/technical staff, production houses and broadcasters.
There is also need to create content for audiences in the Tier 2 and Tier 3 towns, from where the next wave of growth is likely to come.
The Indian print media industry is estimated to have grown by 7.6 per cent in 2008, reaching around Rs 172.6 billion in size. The industry is projected to grow at a CAGR of 9 per cent over the next five years and reach around Rs 266 billion in size by 2013.
The report recommends that the industry needs to invest in quality improvements, especially in regional media, to attract advertisers; consider collective negotiations and bulk purchase of newsprint; constitute forums to encourage and promote regular reading habits among youth; adopt innovative practices, such as trading media space in publication platforms in return for equity; and improve the ability to attract and retain talent.
Out of Home (OOH)
OOH media has grown at a CAGR of 17.3 per cent over the past the years, and is estimated to have reached Rs 16 billion in size in 2008, a growth of 14 per cent over 2007.
The sector's performance was affected in the second half of the year, owing to the overall economic slowdown. It is projected to grow at a compounded rate of 12.8 per cent over the next five years and reach a size of around Rs 29.3 billion by 2013.
Currently, the growth is centred largely in Tier 1 towns, with metros accounting for more than half of the total OOH market. Sectors spending the most on this medium include telecom, media and entertainment and financial services companies.
One of the biggest challenges for the sector is the lack of a central regulator governing OOH media. Rules and regulations vary from state to state, which inhibits standardisation across locations and leads to unregulated growth. Further, the ongoing liquidity crunch has forced many real estate developers to go slow on construction activities, thus affecting the supply of retail space. This is likely to affect the spread of ambient media.
Radio ad spends account for about 4 per cent of the total advertising spends in India, having grown from 2 per cent in 2004. Consequently, the radio industry is estimated to have grown at an impressive CAGR of 19.7 per cent over 2006-08. It is estimated to have reached a size of Rs 8.4 billion by the end of 2008, a growth rate of 13.5 per cent over the previous year.
It is expected to grow at a CAGR of 14.2 per cent over the next five years and reach a size of Rs 16.3 billion by 2013.
Increase in the number of radio stations - around 700 new licenses are expected to be issued to private FM stations in Phase 3; expected regulatory reforms that are likely to improve profitability and stimulate foreign investments; the emergence of robust audience measurement tools that could further catalyse growth in radio ad spends; and growth in locally targeted advertising on radio are some of the growth drivers for the industry.
The filmed entertainment sector is estimated to have grown at a CAGR of 17.7 per cent in the past three years. The industry has clocked revenues of around Rs 109.3 billion in 2008, a growth of 13.4 per cent over 2007.
Over the next five years, the industry is projected to grow at a CAGR of 9.1 per cent and reach Rs 168.6 billion by 2013.
Growth drivers for the sector will include expansion of multiplex screens, resulting in better realizations; increase in the number of digital screens, facilitating wider film prints releases; enhanced penetration of home video segment, primarily in the sell through segment; increase in the number of TV channels fuelling the demand for film content, and hence, resulting in higher C&S acquisition costs; and improving collections from the overseas markets.
Going forward, the sector should focus on improving consumer connect by investing in new formats and content; more widespread distribution of home video - for instance, at grocery stores, to facilitate easy access; coordinated and proactive action to tackle piracy; promotion of and experimentation with new talent; and improvements in organisational ability to attract and retain talent.
The size of the Indian music industry was estimated at around Rs 7.3 billion in 2008, down from Rs 8.3 billion in 2005, implying a reverse growth of 4.8 per cent during the period.
One of the primary reasons for this has been the erosion of sales of physical formats, a trend which is expected to continue well into the future. Physical formats, such as audio cassettes and compact discs, which accounted for approximately 87 per cent of industry revenues in 2005, accounted for less than 60 per cent in 2008.
Going forward, physical revenues are expected to decline at a CAGR of 9 per cent between 2008 and 2013. While the actual de-growth of formats such as audio cassettes is expected to be much higher, this is likely to be partially offset by initiatives taken by some leading music companies, such as Sony BMG, T-Series and SaReGaMa, to release MP3 music on compact discs at price points similar to that of the ubiquitous audio cassette.
Overall, the music industry is expected to grow at a CAGR of 8 per cent over 2009-13 to reach Rs 10.7 billion.
At an estimated size of Rs 17.4 billion in 2008, the Indian animation industry is miniscule, as compared to the global animation industry, which is estimated to have revenues in excess of Rs 1,530 billion by 2010.
However, the Indian animation industry has been growing rapidly, at an estimated CAGR of 20.1 per cent in 2006-08. It is estimated to reach a size of about Rs 39 billion by 2013. Among the different segments of the animation industry, the animation production services segment is estimated to grow the fastest, with a CAGR of 17.8 per cent in 2009-13.
Console gaming is the largest money churner in the global market and is gaining prominence in India too. In 2008, the Indian console gaming segment registered total revenues of Rs 4.1 billion, which is expected to go up to Rs 9.4 billion in 2013.
Plagued by a number of issues, such as content discovery and revenue leakages, the Indian mobile gaming segment has not lived up to the potential. It is estimated at Rs 1.4 billion in 2008 in terms of end user revenues.
The PC gaming market has, however, grown to Rs 978.6 million and is expected to grow at a CAGR of over 36 per cent through 2013. The primary growth drivers for PC games in India are the growing broadband subscriber base; multifunctional nature of PCs; and the availability and price points of PC game titles.
Overall, the gaming industry is expected to grow at a CAGR of 33 per cent over 2009-13 to reach Rs 27.4 billion.