Indian M&E industry projected to grow at CAGR of 14 percent over next five years

Key trends and industry drivers include: digitization, regionalization, growing importance of new media, regulation to drive growth, niche formats, consumer understanding, innovation, and consolidation.

Contrary to most other markets in the world that continue to witness an erosion of the print media industry, in India, the sector witnessed a growth of 10 percent in 2010 and is expected to continue to grow at a similar pace over the next five years. Rising literacy levels and low print media penetration offer significant headroom for growth, says a FICCI-KPMG report, recently released at FICCI FRAMES 2011 event in Mumbai. In the year 2010, the Indian Media & Entertainment (M&E) industry registered a growth of 11 percent over 2009 and touched Rs 652 billion, says a FICCI-KPMG report. Backed by positive industry sentiment and growing media consumption, the industry is estimated to achieve a growth rate of 13 percent in 2011. Overall the industry is expected to register a CAGR of 14 percent to touch Rs 1275 billion by 2015. Overall for the M&E industry, the year 2010 was a year of great dynamism with growth across all sectors other than film. The report highlights a strong recovery in advertising spends as a key driver for growth. Advertising spends grew by 17 percent to Rs 266 billion and accounted for 41 per cent of overall industry size. While television and print continued to dominate the Indian M&E industry, sectors such as gaming, digital advertising, and animation VFX grew at a faster rate and show tremendous potential in the coming years.

“The key industry highlights are the growing potential of the regional markets, increasing media penetration and per capita consumption and increasing importance of New Media driven by changing media consumption patterns,” said Dr Amit Mitra, secretary general, FICCI. According to Rajesh Jain, head of media and entertainment, KPMG, “The resurgence in advertising, growth in subscription revenues, thrust on digitization, and emerging avenues for content monetization were the key growth drivers for the Indian media & entertainment industry in 2010. However going forward, it will become imperative for media companies to reset their business models and build greater focus on profitability and changing consumer preferences.”

In the year 2010 social media gained significant popularity as a marketing and gaming platform. Commenting on the power of social media, Jehil Thakkar, executive director, media & entertainment, said “Social media offers advertisers and content owners the ability to directly connect with their consumers/audiences. Businesses are now beginning to understand the power of this tool and integrating it into their core marketing plan to reach out to their target audience.”

As per the report, key trends and industry drivers include: digitization, regionalization, growing importance of new media, regulation to drive growth, niche formats, consumer understanding, innovation, and consolidation.

Digitization continues to be a key growth driver for the Indian M&E industry and this trend was even more pronounced in 2010. Film studios saw greater adoption of digital prints over physical and it was the first time in India that digital music sales surpassed that of physical unit sales. DTH achieved robust growth of 75 percent in net subscriber base by adding 12 million subscribers in 2010. With the regulatory push on digitization, ongoing 3G rollouts, increasing mobile and broadband penetration, the market for digital distribution platforms is only expected to grow.

Regionalization! Backed by the increasing purchasing power across tier 2 and tier 3 cities, regional media consumption is expected to continue to rise. In the print sector, revenues from Hindi and Vernacular segments are expected to catch up with English which has to date enjoyed a majority share. Realizing the power of regional media, national and foreign players have ventured into regional markets and several others are likely to follow suit. Meanwhile regional players have achieved scale and are now looking to go national and build a pan India presence. Geographical expansion by existing players in television, print and radio is expected to intensify competition and leading to interesting times for these industries.

Growing importance of New Media! Convergence of media, m-commerce and emergence of an app economy are the expected trends likely to emerge. Availability of infrastructure and appropriately pricing content across the new media platforms are expected to be critical success factors for the Indian market.

Niche formats! Increasing audience segmentation is driving content and delivery. Television showed signs of this growing trend through the launch of several new niche channel genres such as food, action movies etc. It has now become a business prerequisite to assess trends for continually changing customer preferences, lifestyles and media buying habits and incorporate the understanding in focused content, marketing and delivery strategies for each target audience segment.

Consumer understanding! With increasing fragmentation and intensity of competition, a deeper understanding of cultural and social references through focused study groups will enable players to target their consumers specifically and build loyalty.

Innovation is becoming increasingly important for industry players to continuously innovate new formats and strategies in order to enable brand loyalty help expand the market.

Consolidation! Mature players are increasingly looking to build scale across the media value chain and explore cross media synergies. In addition, existing foreign players are looking to expand their Indian portfolio and several other are expected to make and entry into India. Inorganic growth is likely to be a preferred route for many of these players. With increased digitization and accountability, Indian media companies are also expected to generate greater interest from private equity players.

Key Highlights
Print: Overall print industry to see a CAGR of 10 percent to touch INR 310 billion in five years. Regional print expected to grow at a higher rate of 12 percent.

Television: TV households to surge to ~ 156 million by 2015; digitization and addressability to go main stream. Advertising and subscription revenues to touch INR 214 billion and INR 416 billion respectively.

OOH: With economic resurgence, advertising on this medium bounced back with a growth of 21 percent in 2010 and is expected to reach a size of INR 29.6 billion in 2015.

New Media: Digital advertising and gaming are expected to witness the maximum growth and account for approximately INR 73.8 billion by 2015. This growth is expected to be driven by the 3 C’s of Consumer, Connectivity and Convergence.

Films: 2010 was a challenging year for the industry. However with better content, increase in multiplexes, investment in research and continued cost corrections, the industry is estimated to grow from INR 83 billion to INR 132 billion by 2015.

Radio: With increase in scale, expected changes in regulation from phase III and music royalty structure, the industry is expected to grow at 20 percent per annum and become profitable.

Music: Digital is here to stay! Spurred by environmental factors such as growth in radio, huge telecom subscriber base, live events and performances, device innovations in smart phones, tablets etc. and despite the controversy around royalty the industry is expected to register a healthy growth of 17 percent per annum to cross INR 19 billion by 2015.

Animation and VFX: Growing demand for content, increasing investments in training talent, growing comfort of Indian production houses for VFX, continued growth in outsourced work, conversion of 2D to 3D formats and emerging digital platforms are expected to help the industry grow at 18.5 percent per annum.

Innovations in Magazines 2011 World Report
A new age of exciting innovations in magazines

FIPP recently launched the second Innovations in Magazines 2011 World Report which identifies, monitors and dissects brilliant innovations in magazines, delivering new readers, revenues and relevance to magazines around the world. Launched at the FIPP/VDZ/emediaSF Digital Innovators’ Summit in Berlin, Germany, the report showcases a new age of exciting innovations.

The survey highlights a series of magazine case studies and interviews showing initiatives that have a proven track record of being successful, focusing on identifying innovation in content-driven solutions. The study is co-published by Innovation International Media Consulting Group and FIPP – the worldwide magazine media association. Case studies include: the tablet revolution; exploiting social media; augmented reality and 2D tags; mobile, video, reality TV and gaming; digital newsstands; Paywall experiments . . . and much more.

“Our first edition was a huge success and I’m sure the new edition will prove just as stimulating and thought provoking. E-publishing and iPad initiatives feature strongly of course, and all the early excitement was about what the technology could do, and what it meant for content deployment and the user experience. Whilst this focus of attention will never go away, there is no doubt that just at the moment the debate has shifted firmly on to business model considerations,” commented Chris Llewellyn, FIPP president and CEO.

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