While television continues to be in the drivers seat, representing around 45% of the entire M&E sector, growing to R32,900 crore in 2011 from R29,700 crore in 2010, the year saw important developments in terms of multiple films crossing the R100 crore-mark at the box office. The year 2011 also saw growing commitment from the cable industry to pursue digitisation as per the governments mandate, regional markets defied recessionary trends in terms of growth of television and print, the governments increased commitment towards phase 3 for radio and the growth of new media.
Excerpts from the FICCI-KPMG report on the top three sectorsTV, print and filmsand the fast growing new media sector:
Television: Digital route to growth
Television is the largest medium for media delivery in India in terms of revenue, representing around 45% of the total media industry. The TV industry continues to have headroom for further growth as television penetration in India is still at approximately 60% of total households. India continues to be the third largest TV market after the US and China, with 146 million television households. Cable and satellite (C&S) penetration of television households is close to 80%, with DTH driving a significant part of the growth in the past 12 months. With the impending digitisation of all analog cable subscribers imminent, penetration level of digital households is expected to increase significantly. The TV industry is expected to grow at a CAGR of 17% over 2011-16, to reach R73,500 crore in 2016. The total number of TV channels in India went up to 623 in 2011, and many more channels are awaiting approval for broadcast. There has been a significant increase in demand for satellite bandwidth, with the introduction of HD channels, DTH expansion and new channel launches.
While there has been a significant increase in advertisement inventory, advertisement rates generally remained flat or declined in 2011, with advertisers cutting ad budgets due to the economic slowdown. However, with a large number of untapped advertisers who are currently using only the print platform, there is potential for further growth for TV.
The cable television industry in India is poised for one of its most significant developments in the last decadea transformation to the Digital Addressable System (DAS) for television distribution. Cable operators in a DAS regime would be legally bound to transmit only digital signals. Subscribed channels can be received at the customers premises only through a set-top box equipped with a conditional access card, and a subscriber management system (SMS). In a nutshell, each user in the network would be uniquely identifiable to the service provider. Digital television is expected to provide the consumer access to a higher number of TV channels, customised tariffs, availability of broadband and other value-added-services, and enhanced user experience through better viewing quality and consumer service. While the transition towards digitisation is not expected to be entirely smooth, and there are bound to be implementation challenges, the overall indicators appear positive, and the industry believes that digitisation of cable networks across India is likely to be largely successful. In fact, there may be a delay of six to 12 months for complete digitisation across metros. As Ronnie Screwvala, MD, Walt Disney India puts it: There is likely to be delay in digitisation due to practical difficulties but the two big themes for 2012 and 2013 are digitisation of cable and broadband.
Print: Consolidation; new frontiers
In the calendar year 2011, the R20,900 crore print industry grew by 8.4% from R19,300 crore in 2010, slightly lower than expectations. Even though the longterm growth story of Indian print industry remains promising, the sector was impacted due to the overall macro environment being depressed. The macroeconomic environment remained challenging and dampened advertisement spends. The print players continued to adopt a cautious and pragmatic approach, with primary focus on consolidating their position in core markets. The growth in advertisement revenues has been at a CAGR of 8.7%, whereas circulation revenues have displayed a CAGR of 3.7% between 2007 and 2011. The advertisement revenues continued to be the main source of revenue for the print industry, contributing 67% to the industrys revenues.
The Indian print industry has to be looked at from two perspectivesthe urban centres and the emerging centres of consumption. Thus far the metros and tier-I cities were the hub of economic action; however, the focus is now shifting to the next 40 cities which are experiencing rapid urbanisation and greater economic growth. Powered by strong consumerism, these centres have been insulated to a large extent from the impact of global slowdown. The playing field in both these markets is quite different.
The urban centres observe high levels of media penetration, faster adoption of technology, deeper penetration of Internet and mobile and a rapid change in consumer behaviour and media consumption patterns.
On the other hand, the tier-II and tier-III markets continue to be attractive due to increased affluence and a consumerist outlook. The industry is beginning to treat the urban consumer on a par with the global citizen and developing content and delivery platforms which are in tune with the changing times. On the other hand, the industry will have to connect with the consumer in emerging consumption centres by establishing strong relationships through local language content, quality service, innovative business models and bringing comfort of familiarity. The rate of ad-spend growth in smaller cities has accelerated and overtaken the traditional markets.
Films: Scripting a turnaround
The Indian film industry has recovered from a two-year slowdown in 2011, and was estimated to be of a size of R9,300 crore in 2011, indicating a growth of 11.5% over 2010. With the cricket World Cup and IPL taking away four months in the first half of 2011, there were only about 40 available weekends for film releases. Bodyguard, Singham, Ready, Ra.One and Don 2 breached the R100-crore mark in domestic theatrical collections. The industry took just one year to more than double the count of films in this elite club of high revenue generating Hindi cinema. A steady increase in average ticket price on account of the growing multiplex culture, increasing content with mass connect, star power and digitisationfacilitated countrywide releases, all contributed their part in this turnaround. In the year gone by, not only did A-list star cast films do well, but niche/focused content from independent film makers also gained widespread acceptance. Ragini MMS, Murder 2 and Tanu weds Manu performed well at the box office in 2011. Entertaining stories were appreciated across genres. Themes that were women oriented, such as No One Killed Jessica and The Dirty Picture, horror-based Haunted, urbane life-based Zindagi Na Milegi Dobara, Delhi Belly and romance-based Ladies v/s Ricky Bahl were all box office hits.
Cable and satellite revenues continue to account for a sizeable pre-release recovery of high budget Hindi films. C&S rates for Ra.One and Don 2 went past the record set by Three Idiots in 2009. Continuing the trend, Agneepath and under production Taalash garnered over R40 crore each in C&S revenue by end of 2011. Albeit on a much lower base, C&S revenues for regional cinema also strengthened during the year. Aggressive marketing and promotion tactics became commonplace in 2011.
While Ra.One had the longest and most elaborate marketing campaigns in the history of Indian cinema, even medium budget films spent increasingly higher amounts to get strong pre-launch visibility. Some of the other key themes of 2011 were increasing digitisation of theatres, widening acceptance of 3D exhibition, increasing multiplex footprint, rising trend of cinema advertising, imposition of service tax on film exhibition and a growing presence of Hollywood. Although film budgets have increased sharply over the years, the commercial success ratio of films has remained roughly the same at 15-17%. Spending more did not necessarily increase the likelihood of commercial success. Patiala House, Mausam and Game did not do as well as anticipated despite having star casts, supporting budgets and wide marketing.
New media: On the fast track
New media continued its growth trajectory in 2011, with estimated growth in advertising revenues in excess of 40% over last year. Coming in at approximately R1,540 crore revenue in 2011, digital adspend reached approximately 5% of total media and entertainment industry advertising revenue. This share is expected to continue to grow over the coming years, driven by significantly higher growth rates in online advertising spend compared to traditional media.
This is good news for the industry as it comes to terms with the impact of the Internet on its traditional business models and begins to evolve them for monetising its content in the digital world. The digital media ecosystem in India is evolving rapidly. Continued growth in Internet penetration and mobile device access is expected to drive consumption. This will further drive adoption by advertisers and developments in the payment ecosystem to facilitate better monetisation.
The overall M&E market in India is expected to grow at a compounded annual growth rate of 15 % per annum over the next five years, to reach R1,40,000 crore in 2016. The potential for increase in media penetration, growing importance of regional markets, increasing consumption in tier-II and III cities, impact of regulatory changes, more focused consumer research, innovation in content, marketing and delivery platforms to serve different niches, increasing device penetration like mobiles, tablets, PCs, etc, all point towards a very positive future for the industry, the report said.