The industry is expected to register a CAGR of 14.2% wherein digital advertising is expected to have the highest CAGR of 27.7% while all other sub-sectors are expected to grow at a CAGR in the range of 9-18% by 2018
The Indian M&E industry grew from INR 820 billion in 2012 to INR 918 billion in 2013, registering an overall growth of 11.8 per cent. The year 2013 was a tumultuous year for the media and entertainment industry. As the economic slowdown, the industry faced several challenges, both business and regulatory. However, 2013 was a year in which the foundation of the industry was strengthened to position for growth as the economy improves. Given the impetus introduced by digitisaion across sub-sectors of M&E industry, rate increases in TV channel packaging by MSOs, innovative strategies to monetise digital content, rapid growth of new media powered by increasing smartphone penetration, and campaign spending during the general elections, the industry is estimated to register a CAGR of 14.2% says FICCI-KPMG Media & Entertainment 2014 report.
The Indian M&E sector showed some resilience and began to grapple seriously with some structural issues it has long talked about but not engaged with. These include TV and Print industry measurement, advertising volumes, inventory and rates, actions to see digitisation through and reap its benefits, working out the MSO-LCO relationship, copyright laws and operational efficiency. Many of these remain alive and will take a few years to sort through. Others, like Phase III of Radio, are still pending regulatory action.
This year’s report also highlights opportunities that could come from tapping international markets with a special feature on opportunities in the Middle East and Africa region. The report also covers the live events market as well as the advertising market separately, along with an overview of the advertising services market in India.
Television continues to be dominant segment; however, the report records strong growth posted by new media sectors. Radio is accepted to growth at a CAGR of 18.1 per cent till 2018. Total advertising spend across media was INR 649 bn.
Key Trends and themes for growth
Digitisation – Taking the next step
The phased progress in digitisation has been the stepping stone for the industry’s growth and success, thereby bringing about a paradigm shift in key indicators, particularly within the domains of TV and film sectors. The Ministry of Information and Broadcasting (MIB) introduced several initiatives with a view to harness the power of technology and create a framework to drive growth in the existing broadcasting landscape in India. With phases one (top four cities in the country) and two (the next 38 cities) nearly complete, the industry is now committed to complete phase three (all remaining urban areas) of digitisation of TV signals’ transmission by the end of this year. Successful completion of the digitisation process will result in the complete closure of analogue transmission and could act as an enabler to add value and to increase profits at each level in the value chain. It is estimated to bring about a further drop in the carriage fees, and drive growth in ARPUs, thereby increasing profitability and allowing content producers to focus on better content. Continued growth in Regional Media
Regional media in India has demonstrated strong growth over last few years, and continues to have a positive outlook. Given the size and diversity of the Indian market, media owners and advertisers are increasingly adding a regional element to their strategies. As a result, regional markets have grown in size and importance. The key drivers of growth in the regional media space continue to be a better cultural fit for regional content, focus on socio political issues related to particular regions and stronger engagement with customers in contrast to national Hindi programming.
Necessity of regulatory support
To achieve its vast potential, the Indian M&E industry needs a well thought thorough, consistent and long term policy from the Government. In the past few years, Indian M&E players have amended their business models, business strategies and content strategies according to consumption habits of users, ever changing competitive landscape and rules and regulations of the Ministry of Information and Broadcasting (MIB), TRAI and other related bodies. In many cases, the regulatory agencies have had a positive impact on the industry – the biggest example being the digitisation of cable TV in the country which was mandated by the government to be rolled out in a phased manner. The media industry agrees that it couldn’t have achieved this nationwide change without the support of the government.
India goes more mobile
Globally, the number of mobile phone users is expected to reach 4.55 billion and mobile phone internet user base is estimated to reach 2.23 billion by the end of 2014. Smartphone adoption is also expected to continue its rapid growth and its user base is likely to reach 1.75 billion by the end of 2014. The growth is primarily being led by the developing regions of Asia Pacific, notably India and China. India, by the end of 2013, is estimated to have gained a mobile phone user base of more than 900 million. While the worldwide smartphone shipments would have surpassed 1 billion units in 2013, India became the third largest smartphone market in the world with shipments of 44 million units.
Growing contribution of live events in M&E industry
This year’s report also covered live events as a sector. As India builds larger venues to accommodate world class events and the appetite for live events grows, this sector will increasingly grow in size and impact. Still extremely fragmented, the sector has shown signs of maturity and scale has been achieved by a few players in the industry. Coming on the back of the slowing economy from 2008 to 2012, 2013 was sluggish in terms of live events and recorded a growth of less than 10 per cent over the previous year. Rupee depreciation, general economic stagnation, rising artist and talent costs, and a lack of high-quality infrastructure were the key reasons. Inspite of being a fairly unorganised and fragmented sub-sector within the M&E market, ‘live events’ is set to experience fresh initiatives in brand and community building through experimental creations works, and niche event management
Based on KPMG in India analysis, 2014 is expected be positive in terms of live events – especially intellectual property events (IP-Events) and outbound Meetings, Incentives, Conferences and Exhibitions (MICE). Companies operating in this space are positively investing in creating the necessary infrastructure and are spending significant amounts in ‘Below-the-Line’ (BTL) advertising. In 2014, the top 20 event firms are expected to see growth in profits from 13 per cent to 20 per cent
The need for youth to stay socially connected through media
Social media has become one of the most effective and influential mediums today, with an increase of over 37 per cent in the user base in 2013. Though India is lagging behind the global average of social media user penetration, it is expected to grow rapidly thanks to social media applications on smartphones. Facebook has emerged as the clear leader in terms of the number of unique visitors (close to 60 million) and minutes spent per visitor (217 minutes) in 2013. Other popular social media platforms in India include Twitter, LinkedIn, Pinterest, and Tumblr.To engage with its consumers, largely in the age group of 18 to 30 (‘Youth’), Facebook has acquired companies such as Instagram and Lightbox, with the latest being WhatsApp for a whopping USD 19 billion.