The Indian media and entertainment (M&E) industry grew 12 per cent in 2011 to Rs 72,800 crore, says a report by KPMG, the global consultancy, and the Federation of Indian Chambers of Commerce and Industry.
This was backed by the strong consumption in Tier-2 and Tier-3 cities, continued growth of regional media and fast-increasing new media business.
The industry is estimated to achieve a growth rate of 13 per cent in 2012. The report suggests the rate of expansion will accelerate till 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 per cent over the five years.
“The industry landscape is undergoing a significant shift. Cable digitisation, the promise of wireless broadband, increasing DTH (direct-to-home television) penetration, digitisation of film distribution and 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 of M&E at KPMG.
The signs of overall economic slowdown seemed to have affected the industry with projections being 1.5 percent lower (Rs 1,000 crore) than the overall outlook for the industry projected by the last year’s report of Ficci-KPMG on the M&E sector. Even the advertising industry witnessed a two percentage point drop in 2011, clocking Rs 30,000 crore as opposed to the projected Rs 30,600 crore. However, in 2011, ad spends grew 13 per cent year-on-year to Rs 30,000 crore and accounted for 41 per cent 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.
Print, while witnessing a decline in growth rate, will continue to be the second largest medium in the Indian M&E industry. Also, the film industry had reason to cheer with multiple movies crossing the Rs 100-crore mark in domestic theatrical collections and Rs 30-crore mark in C&S rights, the report said.
Revenue from TV advertising and subscription are expected to touch Rs 21,400 crore and Rs 41,600 crore, respectively, by 2016. Contrary to Western markets, the print media here is is expected to show a CAGR of nine per cent, to Rs 32,340 crore, mainly buoyed by growth in regional media.
Radio is expected to grow at 21 per cent yearly and the film industry to reach Rs 15,030 crore by 2015 from Rs 9,290 crore in 2011.
The music industry is expected to grow at a CAGR of 4.7 per cent, to reach Rs 1,820 crore, while the animation and gaming industry will grow at 17 per cent and 29 per cent, respectively.
Digital advertising will have the highest growth rate of 30 per cent, to reach Rs 5,700 crore in 2016 from Rs 1,540 crore in 2011, said the report.
Despite the growth, there could be various challenges which could see the emergence of new business models, with media companies being under pressure to change, innovate and re-examine their existing models to survive in the new environment, says the report.
