A FICCI-KPMG report is optimistic about the growth of the Indian media & entertainment (M&E) sector in general. According to the yet to be released report, the M&E industry has registered a growth of 12 per cent over 2010 to reach Rs 72,800 crore.. The growth trajectory is backed by strong consumption in tier 2 and tier 3 cities, continued growth of regional media, and fast increasing new media business. Overall, the industry is expected to register a CAGR of 15 percent to touch Rs 1,45,700 crore by 2016. The report will be formally released at the inaugural session of FICCI FRAMES 2012 on March 14, 2012.
The report - which acts as an important resource book for policy framers, planners, funding agencies, and the rest of the industry - indicates that the television sector as usual leads the pack and is estimated to be Rs 32,900 crore in 2011. The sector is expected to grow at a CAGR of 17 per cent over the next five years to reach Rs 73,500 crore in 2016. The share of subscription revenues is expected to increase from 65 per cent in 2011 to 69 per cent in 2016. The TV industry still has lot of room for growth says the report as the TV penetration in India is still at approximately 60 per cent of the total households.
Advertising spends across all media accounted for Rs 30,000 crore in 2011, contributing to 41 per cent of the overall M&E industry's revenues. Advertising revenues witnessed a growth of 13 percent in 2011, as against 17 per cent observed in 2010.
In terms of performance, 2011 proved to be a year with mixed results in terms of growth across different sub sectors. The traditional media businesses experienced a slowdown compared to last year, especially in the second half of the year. However, the new media segments like animation and VFX, online and gaming businesses witnessed phenomenal growth rates.
"The media & entertainment landscape is beginning to change with national cross media conglomerates emerging and consolidation and deal making finally picking up the pace," says Rajesh Jain, Head of Markets, KPMG.
The animation, VFX and post production industry achieved estimated revenues of Rs 3,100 crore in 2011, a growth of 31 per cent over 2010. This growth was achieved on the back of contract work, higher usage of VFX in films and 2D/3D conversion projects. Also, the film industry has a 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.
According to Jehil Thakkar, head of media and entertainment, KPMG, "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."
While one cannot ignore the fact that the Indian media and entertainment sector is indeed a sunshine industry and that the shifts in consumer preferences are clearly evident, the one big change awaited for the next growth wave is the implementation of recently enacted and regulations on digitisation for cable, implementation of Phase 3 and copyright for radio and the roll out of 4G. These shifts are expected to be game changers in terms of how business is being done currently and what could be the path going forward.