Bertelsmann AG, the European media conglomerate has made a foray into the Indian market with its RTL Group, one of Europe's largest television broadcasters. Just like Viacom entered the country in 2007 in a joint venture with the Network18 Group, RTL Group has found its partner in Reliance Broadcast Network to launch thematic television channels in India through a 50:50 joint venture company.
RTL Group joins the league along with the other large American media conglomerates such as Rupert Murdoch's Star TV, Sony Entertainment Television, Time Warner, Turner International, Walt Disney, Viacom, CBS and Liberty Media whose businessess are spread into the country across television, films, internet, home and mobile entertainment, publishing and consumer products.
Like every other international player in the Indian market, RTL Group's perspective is no different. It's the young Indian population that's triggered their entry into India.
Bertlesmann AG is actually not new to the Indian market. It already has a presence in India with its publishing company -Random House. It also set up its own BPO in India in the mid 2000 for outsourcing some aspects of the media business. Since then the European Media major has been scouting for opportunities in the broadcasting and entertainment space in India. Considering the fact that, RTL Group is fairly late into this market, it only makes sense that they do it with a local partner who understands the market and its mechanisms well.
Today, the Indian television sector is dominated by foreign players who have grabbed larger share of the market. While it is still difficult to get a large toehold in the news business -- both print and television -- due to foreign direct investment (FDI) restrictions and caps, it has been relatively smooth sailing for Western players to establish a solid presence in the entertainment space.
Apart from the fact that currently, India's media and entertainment industry is expected to grow at a compounded annual growth rate of 14 per cent per annum through 2015 to reach Rs 1.3 trillion (1,30,000 crore), according to FICCI-KPMG report, John Nendick, the global head of media and entertainment practice at Ernst& Young opines that as the M&E industry in developed markets cope with the digital revolution and an economic downturn and stagnating growth rates, emerging markets offer an attractive alternative, driven by their fast-growing middle class and relative youth.
Others note that while media companies recognised similar potential in China's entertainment sector, they have retreated from that market and have begun to focus instead on India. Media officials still believe that Chinese audiences are more receptive to Western cultures-Sponge Bob square Pants was a big hit in China-but the problem in China is the issues with censorship, strict restrictions on foreign investment and the glacial pace of its bureaucracy. But, India is a fairly easy market in that sense. Also currently India is lucrative because of its growing importance in the global scenario.
Media observers say that for players in this space, while India is one of the largest media consuming markets in the world; the size and scale of the industry is limited when compared to the global media and entertainment industry. But, India has many growth drivers in place in the years to come. Like for instance India is the only country in the world with 88 million non-TV households thereby indicating potential for growth. Average time spent on TV is still low in India with two hours in a non-metro market and 3 hours in big metro market because in smaller towns capability and willingness to watch TV exist but the supply of power is an issue. But interestingly, in small towns there is a trend catching up where media is being consumed on handhelds therefore companies also see a potential on mobile in India. With the Indian television industry expected to reach a size of Rs 63,000 crore by 2015, there is certainly more room for many more players to join the fray.