TRENDS: A report by Ficci and KPMG-India states the industry needs to think out of the box to sustain growth momentum

Advertising spends across the media and entertainment spectrum are likely to dip by about 4.6 per cent over the next five years, states a a joint study on the sector by Federation of Indian Chambers of Commerce and Industry (Ficci) and KPMG-India. The report was released at the three-day Ficci Frames 2009.

The report also highlights some challenges in the market environment for the sector due to the slowdown in revenues, which have been substantial in the last quarter of 2008. Television, print and radio were among those substantially affected and this is estimated to continue into the current year.

Industry leaders who had gathered at the convention noted the need to draw upon new capabilities to survive and grow in this environment. “Media companies are likely, in the immediate future, to focus more on operating margins, and assess opportunities for consolidation, while building on core strengths,” said Rajesh Jain, head-information, communication & entertainment at KPMG.

“We all need to think out of the box to cut costs,” said Yash Chopra, veteran film producer, who is chairman of Ficci’s entertainment committee.

There are opportunities: As Ficci secretary-general Amit Mitra notes, India is one of the few countries where economic growth will still be led by domestic consumption. “With a low advertising spend to GDP ratio of 0.47 per cent, a growing consumer class and middle class, a young population, low media penetration and increasing discretionary spending, India continues to be an attractive market for M&E,” he says.

Growing acceptance of digital TV distribution technology, entry of direct-to-home (DTH) players, the success of many small-budget movies, and rising competition in the regional market were, the report states, some of the previous year’s highlights. And IPL showed the run-away success possible with innovation in traditional formats.

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