Media & Entertainment sector to grow at 15%: KPMG

Backed by the strong consumption in Tier 2 and 3 cities, continued growth of regional media and fast increasing new media business, the Indian Media and Entertainment industry grew by 12% in 2011 to Rs 72,800 crore, according to a report by KPMG and FICCI.

The industry is estimated to achieve a growth rate of 13% in 2012.The report suggests that the rate of expansion will accelerate to 2016 by which time the business will be worth Rs 1,45,700 crore. That translates into a compounded average growth rate (CAGR) of 15% over the five years.

“The Media & Entertainment industry landscape is undergoing a significant shift. Cable digitization, the promise of wireless broadband, increasing DTH penetration, digitization of film distribution, growing internet use are all prompting strategic shifts in the way companies work. Traditional business models are evolving for the better as a host of new opportunities emerge,” said Jehil Thakkar, Head – Media and Entertainment, KPMG.

The M&E industry in 2011 reported a growth across all sectors. In 2011, ad spends grew 13% a year-on-year to Rs 30,000 crore and accounted for 41% of overall industry size.

While television continues to be the dominant medium, sectors such as animation and visual effects, digital advertising, and gaming will increase their share in the overall pie. Radio is expected to display a healthy growth rate after the advent of Phase 3 reforms.

Revenues from television advertising and subscription are expected to touch Rs 21,400 crore and Rs 41,600 crore respectively by 2016. Contrary to western markets, print media is expected to grow at CAGR of 9percent to Rs 32,340 crore mainly buoyed by growth in regional media.

Radio is expected to grow at 21% per annum while film industry is going to grow to Rs 15,030 crore by 2015 from Rs 9,290 crore in 2011.Music industry is expected to grow at CAGR of 4.7% to reach Rs 1,820 crore while animation and gaming industry will grow at 17% and 29% respectively.

Digital advertising will have the highest growth rate of 30%to reach Rs 5700 crore in 2016 from Rs 1540 crore in 2011,said the report.

Despite the growth, there could be various challenges posed by the industry which could see the emergence of new business models with media companies being under pressure to change, innovate and re-examine their existing business models to survive in the new environment.