8/2/2019 Media Id d Buzzword

1/3

SECTOR FOCUS: MEDIA IS THE NEW BUZZWORD Indian Media to Grow to More Than double in 5 Years; $18.82 bln in 2010 vs $7.93 in 2005 Internet Advert ising, Radio and Television t o Outpace rest of t he Indust ry, wi th growth

rates of 50%, 32% and 24% respet ively Global Investors evincing keen int erest in invest ing in Indian Publicat ions Corporat e majors such as Anil Dhirubhai Ambani Ent erpri ses ent ering the Sector DTH and IPTV to increase Subscriber Base and accelerate growth of Subscription Revenues

Ever since t he Government of India eased the regulatory regime and allowed Foreign Direct Investments (FDI) in theIndian Media, it is attracting much attention and serious efforts from all stakeholders, domestic and foreigninvestors. The Indian media industry including entertainment is poised to grow at 19%compound annual growth rate(CAGR) to reach $18.82 billion (Rs 83,740 crore) by the year 2010 from its present size of $7.93 billion (Rs 35,300crore). Television is projected to grow at a rate of 24%whereas radio will lead the pack wit h 32%CAGR. These arethe outcome of a recent report j oint ly prepared by the Federation of Indian Chambers of Commerce and Indust ry(FICCI), t he apex industry body t hat r epresents over 1,500 corporat es and over 500 chambers of commerce andbusiness associat ions, and the internat ional consult ing firm Pri cewaterhouseCoopers.

The FICCIPricewaterhouseCoopers report on media industry cited economic growth, ri sing income levels,consumerism coupled with technological advancements and policy initiatives taken by the Indian government as thekey drivers of growth in the sector.

As a result of new entrants in all segments of the Indian media, i t has been forecast that t he indust ry wi ll

outperform the economic growth in each year till 2010.

Ad-spend is bound to increase significantlyConsider t he Indian advert ising spends in t erms of percentage of GDPit is j ust 0.34%compared to 0.98%in other developed and developing countries. While the low ad-spend isno doubt a challenge before the Entertainment & Media (E&M) industry, it also throws openimmense potential for growth. The report says that If India has to reach the global average;the advertising revenues will have to be at least doubled from the current level of around$2.97 billion (Rs. 132 billion).

New Players in the GameThe most encouraging aspect for Indian media is that the growth potential of this sector has

grabbed the attention of many big Corporates .The FICCIPricewaterhouseCoopers report highlights t he fact t hat the year 2005 was markedby the entry of new players across all segments of the industry. The most prominent entrywas that of the Reli ance Anil Dhirubhai Ambani Enterpr ises (ADAE) Group, one of India slargest diversified business conglomerates, in both the film entertainment and radiosegments.

Segment Market Size in 2005 Estimated Size by 2010 CAGR

($ bln) (Rs. Cror e) ($ bln) (Rs. Cror e)

Television 3.33 14,800 9.59 42,700 24%

Print 2.45 10,900 4.38 19,500 12%

Film 1.53 6,800 3.44 15,300 18%

LiveEntertainment

0.18 800 0.40 1,800 18%

Out of HomeAdvertising

0.20 900 0.39 1,750 14%

Music 0.16 700 0.17 740 1%

Radio 0.07 300 0.27 1,200 32%

InternetAdvertising

0.02 100 0.17 750 50%

8/2/2019 Media Id d Buzzword

2/3

Total 7.94 35,300 18.81 83,740 19%

Television: $3.33 bil lion in 2005, $9.59 bi ll ion by 2010, CAGR 24%Subscript ion revenue is proj ected to be the main driving force for t he Indian televisionindustry over the next five years. The report forecasts that subscription revenues will go upmanifold for two reasons: increased subscription rates and the growth in the number of pay-TV homes. Rapidly growing economy and increase in disposable income will drive the ruraland urban areas to buy more television sets and subscribe for the pay services. In urban areas

people will tend to buy another set for their homes. New distribution systems like DTH andIPTV wil l also increase t he subscriber base and accelerate t he growth of subscript ionrevenues. The report proj ects that t he size of t he Indian television indust ry will be $9.59billion (Rs. 42,700 crore) by 2010 compared to $3.33 billion (Rs. 14,800 crore) in 2005.

Print Media: $2.45 billion in 2005, $4.38 billion by 2010, CAGR 12% Along with television, print media is also marching ahead. The growth rate here is, however,slower compared to other segments. By 2010, the size of the industry will be $4.38 billion(Rs. 19,500 crore) against i t s present size of $2.45 bil lion (Rs. 10,900 crore). Opening up theprint media for foreign investments by the government of India recently is expected to be amajor growth driver for the segment. It is also expected to benefit from the booming Indianeconomy and growing need for content. The report says that with the literacy on the rise,more people in rural and urban areas are reading newspapers and magazines now. Besidesthat , the global investor community too is keenly int erested in India. All these factors lead todemand for more content from India. Foreign media too is evincing interest in investing inIndian publi cations.

Filmed Entertainment: $1.53 billion in 2005, $3.44 billion by 2010, CAGR 18% Indian film industry is benefiting from the recent transformations brought about bytechnology in all spheres of t he indust ryfil m production, exhibit ion and market ing. Theindustry is increasingly getting more corporatised. Several film production, distribution andexhibition companies are entering the capital market with initial public offerings (IPOs). Moretheatres across the country are getting upgraded to multiplexes. Initiatives to set up moredigital cinema halls in the country are already underway. This will not only improve thequality of prints and thereby make film viewing a more pleasurable experience, but alsoreduce piracy of prints. The FICCI-PwC report est imates t hat t he segment would grow at aCAGR of 18% to reach at $3.44 bill ion (Rs. 15,300 crore) from the current l evel of $1.53billion (Rs. 6,800 crore).

Live Entertainment: $180 million in 2005, $404 million by 2010, CAGR 18% This segment of the entertainment industry, also known as event management, is benefitingfrom the growing number of corporate awards, television and sports events. The reportestimates the segment will grow to $404 million (Rs. 1,800 crore) by 2010 from the currentlevel of $180 mil lion (Rs. 800 crore), registering a CAGR of 18%.

Out of Home Advertising: $202 million in 2005, $393 million by 2010, CAGR 14% The market of outdoor media sites in India is rather unorganized. The sites are predominantlyowned or operated by small, local players who directly market them to advertisers andadvertising agencies. However, this segment too is witnessing a sea change withtechnological i nnovations. The segment is expected to grow at a CAGR of 14%to reach $393million (Rs. 1,750 crore) mark from the current level of $202 million (Rs. 900 crore), says thereport.

Music: $157 million in 2005, $166 million by 2010, CAGR 1% The trends in the Indian music industry are no different from the global music industry.Plagued by piracy, music industry has been showing very sluggish growt h in t he physicalformat over the last few years, bot h in India and globally. However, mobile music and licensed digital distribution services are projected to fuel t he recovery of t he music

8/2/2019 Media Id d Buzzword

3/3

industry the world over. Despite this single positive factor, the segment is expected toremain stagnant, registering only 1%CAGR to reach $166 million (Rs. 740 crore) by 2010 from$157 million (Rs. 700 crore) in 2005.

Radio: $67.4 million in 2005, $269.7 million by 2010, CAGR 32% Radio is soon catching-up albeit in new f orm and this segment leads t he media pack in t ermsof growth potent ial . The market of FM Radio has seen some major changes recent ly. Lastyear the government of India announced three key policy initiatives, which are driving growthin t his sectormigration to a revenue share regime from the fixed license fee, allowingforeign investment into the segment and opening of new licenses to private players. Thegovernment put 338 licenses on the block in 91 big and small cit ies. Of these, 280 bids weresuccessful f or a t otal sum of $205 mil li on (Rs. 907 crore) of one time entry fee (OTEF). Thereport says that this deluge of radio stations will result in rising need for content andprofessionals. The total market of radio in India is est imated to grow at a CAGR of 32%toreach 269.7 million (Rs. 1,200 crore) by 2010 compared to $67.4 million (Rs. 300 crore) in2005.

Internet Advertising: $22.5 million in 2005, $168.5 million by 2010, CAGR 50% An estimated 28 million Indians are currently hooked on to the Internet. This rising number isleading to the growth of Internet advertising, which today stands at approximately $22.5million (Rs 100 crore). With broadband becoming increasingly popular, this segment is

expected to grow by leaps and bounds to reach $168.5 million (Rs. 750 crore) by 2010.