The media and entertainment industry has been surrounded by positive sentiment and a renewed spirit that has set the tone for a promising double digit growth in 2010. While the industry is estimated to grow at a CAGR of 13% over the next five years, there is a lot that it has learnt from 2009 that will lead to better business strategies. As media firms gear up to accelerate their growth path, there are a few key themes that are likely to dominate the industry. The industry report of KPMG-Ficci is aptly titled ?Back in the Spotlight?.

Digitisation: Technology innovation has helped growth in the sector. Digitalisation will have a positive impact. Better quality of signal, availability of pay per view services and its ability to lower the risk of revenue leakages on subscription, all augur well for the growth of digital TV.

The music industry is expected to see over 60% of its revenues come from digital. The film industry will focus on ?cash entrapment? through effective use of multiplexes and digital single screens to get wider coverage.

Regionalisation: The growth of all major advertisers is expected to be beyond metros to semi-urban and rural markets. Regional advertising is expected to grow at a higher rate. There is a category of local advertisers who are increasingly using regional media in various markets.

Convergence: Devices, products and services and the internet are increasingly becoming convergent and people want content to move seamlessly across devices. Internet and broadband have yet to take off in a meaningful way. While the mobile phone and its related services continue to evolve, there is an impatient generation that awaits the takeoff of 3G services to unlock the true potential of this convergence tool. Mobile Internet could be the next wave .

Subscription revenue: In 2009, TV and print saw a 7% and 13% growth in subscription revenue, respectively. While print saw a 5% decline in ad revenues, its impact was offset by the double digit growth in subscription that led to an overall growth of 2% for the sector. While subscription revenues on television continue to be under pressure due to the highly competitive market that have kept the ARPUs low, the increase in subscribers will reflect in a corresponding increase in subscription revenues. Broadcasters are expected to increase their share of the subscriptions pie at 24% per annum and, consequently, the impact on profits.

Cost-optimisation: As a consequence of the economic slowdown of 2008-09, media companies implemented cost-rationalisation techniques and renewed their business strategies on more sustainable revenue models. Some of this cost consciousness on discretionary spends will prevail and eventually lead to better margins for these firms.

Consumer understanding: There needs to be focus on consumption patterns other than income levels to effectively target the audience.b One of the most recent successes of creating a property that was driven by the strong understanding of the consumer is the IPL. The format has managed to cater to a wide range of audiences that cuts across age groups, geographies and socio-economic profiles.

Innovation: Some of the stakeholders in Indian media and entertainment have truly recognised the power of innovation. These innovations have seen an expression in the form of new products/services, delivery channels, process innovations, marketing and packaging of content.

Consolidation: The need to grow in new geographies, unlocking of synergy and increased scale, several players are looking to consolidate. They will also raise money for both organic and inorganic growth. Overall deal activity, both for M&As and fund raising, is expected to be $600 million to $1 billion over the next two years. After a slump, the industry is ?back in the spotlight? and ready to surge forward.

?(The author is head, media & entertainment, KPMG in India )