MUMBAI: Beating sluggish economic growth, a weakening rupee and an even weaker consumer demand, the Indian M&E industry registered an overall growth of 12.6 per cent from Rs 728 billion in 2011 to Rs 820 billion in 2012, says the FICCI-KPMG Media & Entertainment 2013 report.

The industry is estimated to grow at 11.8 per cent to touch Rs 917 billion in 2013, driven by the introduction of cable TV digitisation, continued growth of regional media, upcoming elections, continued strength in the film sector and fast increasing new media businesses.

In the long run, the sector is projected to grow at a healthy CAGR of 15.2 per cent to reach Rs 1661 billion by 2017.

Television, the report says, continues to be the dominant segment. However, the report records strong growth posted by new media sectors, animation/ VFX and a comeback in the Films and Music sectors on the back of strong content and the benefits of digitisation.
Radio is anticipated to see a spurt in growth at a CAGR of 16.6 per cent over the period 2012-2017, post the rollout of Phase 3 licensing.

Total advertising spend across media was Rs 327.4 billion in 2012. In light of continued economic slowdown, advertising revenues saw a growth of 9 per cent in 2012 as against 13 per cent in 2011 and 17 per cent in 2010.

Print continues to be the largest beneficiary, accounting for 46 per cent of the advertising pie at Rs 150 billion.

Speaking about the findings of the report, FICCI M&E committee chairman Uday Shankar said, ?2012 has been one of the toughest years in recent times. But it has also been a landmark year for the media and entertainment sector with significant progress in all verticals: the signs are already evident that digitalization will fundamentally change broadcasting, films have scaled-up their ambitions, and radio and print continue to defy global trends. If anything, 2013 promises to be even more disruptive. I am certain that the insights and findings from this report will provide a comprehensive and useful lens for all of us in the industry.?

KPMG India Head of Media and Entertainment Jehil Thakkar said, ?2012 though a challenging year for the M&E industry, was a year in which important foundations for future growth were laid. The advertising environment went through one of the toughest years in the last decade. However, the implementation of digitisation, the stellar performance of the film industry backed by excellent content and digital distribution, the continued growth in regional print, the momentum in new media and the announcement of Phase 3 radio implementation has all finally provided the much needed platform to boost the Indian Media & Entertainment industry.?

Greater sophistication of and segmentation in content

TV digitisation is likely to be a great catalyst for greater diversity and niche television programming. Digitisation is expected to improve broadcast economics significantly which in turn, could drive more investments in production quality, niche and targeted genres of content/packaging in the medium term.

Phase 3 licensing and anticipated provisions for permitting multiple frequencies in a city would encourage investments in differentiated content for the Radio sector. Internet and mobile platforms are a cost effective enabler to reach diverse audience segments with tailored content. The Indian audiences could look forward to more targeted and engaging content in the medium term.

Digitisation of film and TV distribution infrastructure

Digitisation of distribution has brought in the promise of more sustainable and profitable business models across media sectors. It has enabled the films sector to make a comeback this year. The industry has achieved 77 per cent digitisation of screens and expects to be close to 100 per cent digitised in the next 18 months to 2 years. These developments have resulted in increased ability to invest in differentiated content, marketing, and wider releases ? all contributing to greater audience engagement and unprecedented box office success across big and small budget movies alike. Overall, digital technology is expected to drive the M&E sector?s growth in a challenging macro environment, by spurring on end-user spending and transparency.

Growth in new media

The rapid increase in mobile and wireless connections continues to drive the growth of internet penetration in India. With better access through cheaper and smarter devices, audiences (especially the youth) are consuming more content and are getting increasingly engaged.
Key beneficiaries are emerging new media segments, which include internet advertising, online classifieds, and gaming, all of which are on a rapid growth path. Going forward, better uptake of 3G connections and the beginnings of the 4G rollout are expected to spur growth further.

Traditional media still going strong

India remains a growth market for ?traditional? media evidenced by the growth last year in TV audiences, radio listenership, and footfalls in theatres. India is an outlier country where print is still a growth market. There is growing overseas demand for quality Indian animation/VFX work at affordable pricing.

Traditional media is also increasingly offered on new media platforms. The need of the hour, of course, is the development of models for broader reach and monetisation of audiences for traditional media content on these new media platforms.

Regional markets remain key centers of growth
Advertisers continue to see higher growth in consumption from key regional markets. Hence regional media continues on a strong growth trajectory especially in the print and television sectors. Key media players are focusing on cherry picking acquisitions and expanding their presence in regional markets based on higher rates of advertising revenue growth, and better insulation from the slowdown than in metros, which may be close to saturation in many cases.

Examples in print include the launch of Ei Shomoy ? a Bengali paper by Bennett Coleman and the acquisition of Nai Duniya by the Jagran Group.

Many film studios are building a regional film pipeline. Reliance Big Pictures, Disney UTV Motion Pictures and Eros International are increasingly investing in the regional space. Hollywood films are expanding revenue potential by dubbing across regional languages such as Tamil and Telugu.

Coming LIVE to you?

With changing lifestyles, there is an increase in media consumed out of home. Brands are also increasingly keen to connect with consumers via ?experiences? to ensure greater recall and amplification of brand values. Activations/events are now increasingly a key facet of Radio and Print media solutions.

Live music events/festivals have been successful in attracting widespread audiences and engaging youth across key cities. Increased consumption of music/radio/video on-the-go via mobile and in cars provides opportunity for real time mobile geo-location advertising. The Out of Home (OOH) advertising sector has also seen higher rates of growth in transit advertising.

There is hence an increased need to provide 360 degree solutions to advertisers and provide multiple platforms to reach out to consumers, wherever they are.

Revenue models still advertising dependent ? But subscription grows for TV

M&E is still an advertising dependent industry in India. Hence, it remains sensitive to the impact of the economic slowdown.

While the print sector saw some increases in circulation revenues, and increases in cover price in some areas, cover prices are still significantly lower than global counterparts In the TV sector, digitisation has potential to increase ARPUs and improve the share of subscription revenues to the broadcasters. Increasing subscription revenues is key to the long term stability of the broadcasting sector.

Regulatory and policy support

Regulatory interventions have been a key enabler of growth for the sector. Anticipated events in 2013 such as continued cable DAS rollout, Phase 3 licensing for Radio and 4G rollout will spur growth from the medium term.

There is a need for measures to aid curtailment of piracy and encourage investments to support further growth. Co-production treaties, rationalisation of entertainment tax, government support to encourage formal skill development and training and incentives for animation/VFX and gaming are important areas of policy and regulation that need attention.

Gaps in availability of skilled media and entertainment professionals

The media and entertainment sector could be a noteworthy employer across creative, technical and business areas. With potential mushrooming of TV and Radio broadcast channels and growth in skill intensive sectors of film, animation, gaming, VFX, this is only set to escalate. In the talent driven media sector, companies could potentially differentiate based on ability to attract and retain the right people.

The vision set out for the sector of engaging communities entails reaching out and understanding multiple segments, creating greater connect, and leveraging this connect to influence for the greater social good. At the same time, it remains sensitive to the economic situation and a lot will depend on its ability to manage the risks of continued shortage of skilled manpower and the ability to spur end-user pricing across segments. It is a time for introspection and a time for innovation to see how companies can harness the powers of new technologies and convergence to realise its vision, the report says.

MUMBAI: Global entertainment and media spending is expected to rise from $1.6 trillion in 2011 to $2.1 trillion by 2016, growing at a compound annual growth rate (CAGR) of 5.7 per cent, according to PwC?s annual Global Entertainment and Media Outlook 2012-2016.

The U.S. E&M market experienced the largest increase since 2007 with faster growth expected, growing at 5.2 per cent CAGR reaching $597 billion in 2016, from $464 billion in 2011.

Record global sales of tablets and smart devices are underlining the rising revenue opportunities from digital delivery of entertainment and media (E&M) content and advertising to increasingly connected and mobile consumers, the report noted.

The M&E industry, the report states, is approaching the ?end of the digital beginning? with digital now embedded in business-as-usual and moving to the heart of many E&M companies.

The report finds that growth in digital E&M spending will continue to significantly outpace growth in non-digital spending during the next five years. Digital spending is expected to account for 67 per cent of all growth in spending during the next five years, globally. Digital spending in the U.S. is expected to account for 31.5 pe rcent of all E&M spending in 2016, up from 21.7 per cent in 2011.

?Change in consumer behavior is pervasive and accelerating and the E&M industry is in the front line of this change. The past uncertainty triggered by the digital migration has given way to a sharper focus of E&M companies on executing their digital strategies. While experimentation will continue, the way forward is becoming clearer as companies focus on identifying, choosing and executing the right business models, organizational structures and developing the skill sets to understand consumer behaviors and motivations in their connected, multi-screen environments,? said PwC US practice leader entertainment, media & communications Ken Sharkey.

?By embracing digital as the engine of their business and using it to integrate and automate processes from content production to rights management, E&M companies are well positioned to meet the fast changing consumer demands through any channel and format more effectively and drive greater revenue growth than before,? added Sharkey.

According to the Outlook, the rise of unpaid or earned media reflects an innovative new mix of advertising, content and analytics, bringing sweeping change to the roles and business models in advertising. The rise of socialisation is feeding into the widely-accepted concept of bought, owned and earned advertising among agencies and advertisers.

A fourth category is emerging ? ?managed? advertising, which involves the orchestrated use of social media, such as engagement with bloggers. Everything that agencies do for their clients now has an embedded digital component with the attention on measurement shifted towards earned, unpaid media reach and purchasing intentions.

Overall, U.S. advertising is expected to increase at a 5.9 per cent CAGR from $172 billion in 2011 to $229 billion in 2016, enhanced by Olympic and political advertising in 2016. Internet advertising is expected to average 16 per cent CAGR followed by video games, one of the smallest segments, at 11.4 per cent CAGR.

Television advertising, the largest segment, is expected to grow at 6.7 per cent CAGR. Out-of-home advertising and cinema advertising are expected to grow by 4.9 per cent and 4.5 per cent CAGR, respectively. Newspaper advertising (-0.2 per cent) is expected to be the only category to decline.

Recorded music rebounds in the U.S.

In the US, Internet advertising is expected to continue to outperform all other E&M segments, with double-digit gains of 16 per cent CAGR. Recorded music will rebound with steady expansion projected rising at a 5.5 percent CAGR to $19.8 billion in 2016 from $15.2 billion in 2011. Digital distribution of recorded music is expected to overtake physical distribution in 2012 and will rise at an 11.7 per cent CAGR to $5.5 billion in 2016 from $3.1 billion in 2011.

Internet access (9.3% CAGR), TV advertising (6.7% CAGR) and TV subscriptions (5.4% CAGR) are set to grow more than 5 per cent compounded annually. Out-of-home advertising (4.9% CAGR), video games (4.1% CAGR), radio (4.1% CAGR), business-to-business publishing (4% CAGR), consumer magazine publishing (1.6% CAGR), consumer and educational book publishing (1.1% CAGR) and filmed entertainment (0.6% CAGR) are expected to generate modest growth. Spending on newspaper publishing (-1.4% CAGR) is expected to decline moderately before it begins to expand in 2016. Overall, U.S. consumer/end-user spending is expected to grow by 3.7 per cent CAGR.

CHENNAI: The third edition of the Federation of the Indian Chamber of Commerce and Industry‘s (Ficci) two day Media and Entertainment Business Conclave (MEBC 2011) with the theme ‘Embracing the Digital World‘ began here today.

Opening the inaugural session with the welcome address, Ficci Secretary General Rajiv Kumar said, "Though the Indian media and entertainment (M&E) industry has demonstrated global competitiveness, but its share in the global market it is still in terms of single digits and needs to be a bigger player in the global market place."

Chalking out Ficci‘s plans for the M&E industry, Kumar that Ficci has formed the Sector Skills Council in association with the National Skills Development Council which will help make available skills which are in short supply across industries and more so the media and entertainment industry. 

Ficci plans to promote digitalisation in the future and is inclusive across all the players. He said that at present India‘s share of location shooting is just one per cent and that Ficci would address the policy makers to have a single window clearance so that more dollars can be attracted for the country.

During his theme address, MEBC chairman Kamal Hasan said he has always been a promoter of digitisation and that digitising would help monetisation for entertainment industry as well as the government.

Digitisation has the potential for monetisation across the myriad platforms available and that in the case of digital, monetization begins with the box-office. He sent a strong message to the promoters of analogue saying that this is not a chest thumping exercise; it is to understand that these people would be gently eased into the digital world.

There were special addresses by the Tamil Film Producers Council SA Chandrasekaran, The South Indian Film Chamber President C Kalyan both of whom requested big production houses such as Reliance and UTV to help the small films by buying them and promoting them. "95 per cent of the films made in the country are small budget films. There are many good small budget films that suffer at the box office because of lack of marketing resources" said Chandrasekharan.

The inaugural session culminated with the release of Ficci-Deloitte Report by Tamil Nadu Governor K Rosaiah who suggested during his inaugural address that small producers should look at co-branding and sponsorships for promoting of their films.