PwC: Indian E&M industry will grow by 13.2 per cent by 2015

The findings of PricewaterhouseCoopers' India Entertainment and Media Outlook 2011 study have been released. The overall forecast is that the Indian entertainment and media (E&M) industry is expected to grow by 13.2 per cent, cumulatively, over the period 2011-15, to reach INR 1199 billion (Rs 1,19,900 crore). The industry in 2010 stood at INR 646.0 billion (Rs 64,600 crore) as compared to INR 580.8 billion (Rs 58,080 crore) in 2009. The Indian E&M industry grew by 11.2 per cent last year, on the back of improved economic conditions and rebound in advertising spends.

The findings show that with sustained growth in advertising as well as consumer spends, the Indian E&M industry is likely to achieve double-digit growth in the forecast period. Specifically, television, print and film continue to dominate the E&M industry in the foreseeable future. Though there is good growth in digital spends, significant revenues in the Indian E&M industry continue to be non-digital.

Explaining the findings, Timmy S Kandhari, leader, entertainment and media practice, PwC India, says, "The buoyant advertisement spend will have to be supplemented with subscription growth for sustainable profitable growth in E&M revenues. Addressable digitisation in the broadcast space and focus on good content across sectors will go a long way in achieving this objective."

Projections for key segments of the Indian E&M industry in 2011-15

PwC has released a segment by segment forecast for the period 2011-15. Over the next five years, the TV sector is estimated to grow at 14.5 per cent cumulatively; this industry was estimated to be INR 306.5 billion (Rs 30,650 crore) in 2010. The film sector is projected to grow at a CAGR (compound annual growth rate) of 9.3 per cent; this industry was estimated to be INR 87.5 billion (Rs 8,750 crore) in 2010. The print media sector is projected to grow by 9.6 per cent; this industry was estimated to be INR 178.7 billion (Rs 17,870 crore) in 2010. The radio sector is projected to grow at a CAGR of 19.2 per cent; this industry was estimated to be INR 10.8 billion (Rs 1,080 crore) in 2010. The music sector is projected to grow at a CAGR of 17.6 per cent; this industry was estimated to be INR 9.5 billion (Rs 950 crore) in 2010. Internet advertising is projected to grow by 25.5 per cent; this industry was estimated to be INR 7.7 billion (Rs 770 crore) in 2010.

The animation, gaming and VFX industry is projected to grow at a CAGR of 21.4 per cent, this industry was estimated to be INR 31.3 billion (Rs 3,130 crore) in 2010.

The findings suggest that the next five years will see digital technologies increase their influence across the industry. However, the pace of change will continue to be slower in India as compared to other territories. According to Kandhari, "India is digitally informed, but not digitally empowered, yet!"

Marcel Fenez, global leader, entertainment and media practice, PwC, on the migration to digital consumption, says, "The Indian consumer is yet to reap the benefits of the enhanced digital experience seen in other markets where smart devices and enhanced bandwidth speed prevail. This is an issue highlighting the need for future infrastructure investment and the overall affordability of devices."

Finer industry-specific predictions shed more light on what may be expected from some of these segments. While TV is expected to be largely advertising-dependent, radio and OOH media are expected to yield phenomenal growth due to increase in ad spends and advertising growth, respectively. While social media is expected to become an important part of online advertising, this industry is expected to continue facing challenges around measurement tools.

A look at 2010

Notably, in 2010, the advertising industry registered a growth of 14.3 per cent and stood at INR 247.5 billion as compared to INR 216.5 billion in 2009. Internet advertising, with 28 per cent growth (from INR 6.0 in 2009 to INR 7.7 billion in 2010), remained the fastest growing segment as an increasing number of advertisers are using the online platform to connect with the youth.

As far as the growth in revenue for key segments in the industry is concerned, it may be noted that in 2010, the TV industry grew by 15.4 per cent, that is, from INR 265.5 billion (Rs 26,550 crore) to INR 306.5 billion (Rs 30,650 crore); the print industry grew by 10.7 per cent, that is, from INR 161.5 billion (Rs 16,150 crore) to INR 178.7 billion (Rs 17,870 crore); the OOH industry grew by 12 per cent, that is, from INR 12.5 billion (Rs 1,250) to INR 14.0 billion (Rs 1,400 crore); the radio industry grew by 20 per cent, that is, from INR 9.0 billion (Rs 900 crore) to INR 10.8 billion (Rs 1,080 crore); the internet industry grew by 28.3 per cent, that is, from INR 6.0 billion (Rs 600 crore) to INR 7.7 billion (Rs 770 crore); and the animation, gaming and VFX industry grew by 31.4 per cent, that is, from INR 23.8 billion (Rs 2,380 crore) to INR 31.3 billion (Rs 3,130 crore). Also, the music industry grew by 25.7 per cent, that is, from INR 7.5 billion (Rs 750 crore) to INR 9.5 billion (Rs 950 crore).

The only industry that didn't grow was the film industry; in fact, it fell by 7.9 per cent, that is, from INR 95.0 billion (Rs 9,500 crore) to INR 87.5 billion (Rs 8,750 crore), in 2010.

Global Findings

This year, PwC studied 48 countries in all, and overall findings indicate that the global E&M industry has emerged from the recession. While the UK, USA, France, Germany and Japan have been deemed the 'mature markets', Fenez labels Pakistan, Mexico, Columbia, Indonesia, Vietnam, Turkey, South Africa and the MENA (Middle East and North Africa) region as the 'Golden 8' nations because they are all expected to yield high growth in the years ahead.

Also, a great deal of consistency in the growth rate of the BRIC nations (Brazil, Russia, India and China) is expected.

In general, broadband penetration, mobile internet penetration and smartphone penetration are expected to be the key drivers of growth in the E&M industry, globally.