The second day of the Annual South Asia Conference 2009 held by the International Newsmedia Marketing Association (INMA) at Le Meridien, New Delhi began with a detailed presentation by Timmy S Kandhari, leader, entertainment and media practice, PricewaterhouseCoopers India (PwC). The presentation focussed on innovative ways of cutting costs in media.
The presentation began with an overview of the global and Indian entertainment and media (E&M) industry, the industry structure and stakeholders involved, key insights from these stakeholders and key takeaways from global trends of the E&M industry.
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As per data available with PwC for the past five years, the global E&M industry registered a compound annual growth rate (CAGR) of 3 per cent, whereas India reported a CAGR of 10 per cent.
Annually, the E&M industry in India had been growing at 17 per cent till 2008. This growth was hit by the economic slowdown, but the survey revealed that unlike the global E&M industry, India will still continue to be a growth story, with return of moderate growth hovering around 10-11 per cent. The country will continue to witness growth from both traditional media including print, TV and films, and also from new media encompassing digital, animation and the Internet.
The statistics available with PwC reveal that globally, print, TV and the Internet account for 80-82 per cent share of the advertising pie. Print alone accounts for 32 per cent share in the total ad pie. As far as India is concerned, TV leads with 43 per cent advertising share; print contributes 29 per cent and by 2013, its share is expected to go down to 23 per cent. TV will continue to grow and so will radio and digital, because the bases for both these industries are still small.
The impact of the economic slowdown resulted in a worldwide decline of 2.5 per cent in newspaper growth. Globally, print advertising income has been falling and it is predicted that in the coming few years, print is set to de-grow at the rate of 5 per cent.
Kandhari added that the scenario in India is no different, with the growth of the E&M industry being hit by the fall in print advertising and the decrease in circulation numbers. Newspapers make up for 87 per cent of the print industry business, whereas magazines form 12-13 per cent. Growth for media in India lies in the regional languages and advertising income in print will continue to grow, unlike the West, where it is de-growing.
Kandhari shared that worldwide and for India as well, 60 per cent of the income comes from advertising and subscription income stands at 30 per cent. Thus, it is anybody's guess that important advertisers are for the media business. Hence, he said that it is important to study factors such as shifting demand, emergence of new media, shifting preferences and movement of advertising revenue to tap advertisers more effectively.
One has to analyse all these parameters to formulate better and efficient ways of adding value to the business by offering more to stakeholders, including advertisers, publishers and consumers, by understanding each one's perspective. For consumers, digital migration, transformation and acceleration are realities. It may not be true for a few markets, but sooner than later, it's going to be a reality for everyone. Twitter, blogs, the PC and the mobile, and thus, the advertising models, are being changed by globally connected consumers.
Kandhari added that the reader today wants more customised and reader friendly news. For them, TV and the Internet is the preferred media mix for gathering quick news and background information. Preference for old media carries on as the media provides in depth overview of news and it is user friendly. Mobile has not proved to be a user friendly medium for news consumption simply because of readability issues. It turns out that it is a more suitable platform for breaking news.
He also said that the threat from emerging media and the economic downturn call for publishers to look at different aspects of cost cutting and at the same time, device ways of adding value to their businesses. One needs to address key issues related to revenue models, niche audiences, operational excellence and ownership models.
He added that the core competence of newspapers is that they are believed to be a trusted source of information and content creation. There is a need to change media, from being channel driven to being content driven. The time has come to practice multi-platform journalism to engage in content sharing tie ups. One has to collaborate so as to rationalise costs. One can think of outsourcing a part of production or distribution.
Also, the sales team could be combined to sell different products.
Kandhari dwelt upon the effects of ownership models influencing the future of the media industry. For long, be it Europe, the United States or India, media has commonly been a private and family owned affair.
Today, the entry of private equity in the E&M industry calls for caution because it's not healthy for the industry to have a short term perspective when the industry sustains and flourishes on the back of long term players.
He said that another challenge stems from the fact that globally, digital brands have been built to cater to niche audiences but stakeholders have failed to monetise them. To set things rolling for the E&M industry, all markets need to look for specific answers because one solution fits all is surely not the answer to tackle emerging new trends in the industry.