Indian Entertainment and Media Outlook 2010 2 Indian Entertainment and Media Outlook 2010 Message

Indian entertainment and media outlook 2010 2 Indian entertainment and media outlook 2010 Message To our clients and friends both in and beyond the entertainment and media industry : Welcome to the 2010 edition of PricewaterhouseCoopers’ Indian Entertainment and Media (E&M) Outlook, covering the forecast period of 2010–2014. Our forecasts and analysis for this edition focus on eight major E&M industry segments and one emerging segment. Each segment details out the key trends observed and challenges faced apart from providing the prospects for the segment. In the industry overview section, we have highlighted the key theme observed during 2009 and what we perceive as future trends in the coming years. We have a chapter on the tax and regulatory impact on the various E&M segments and for the very first time we have included a chapter on how technology can be leveraged in the E&M industry. In 2009, the economy severely impacted the world, translating into steep declines in advertisement as well as consumer spending. India though impacted, did manage to show growth with increased consumer spending as well as innovative action on the part of the industry. Against this backdrop, across the world, except certain markets, speed of digital spending increased due to changing consumer behavior as well as technology available to deliver the same. In India, while the spend on digital media is likely to grow, it is unlikely that it will dominate in the forecast period. This is largely due to the relative unavailability as well as unaffordability of the broadband and mobile infrastructure. Therefore, non digital revenues for the E&M industry are important and they need to be preserved as well as grown. This will make for more sustainable revenues for the E&M Industry in the foreseeable future. Monetising consumer experience would be a key challenge to the industry. While 3G, broadband and mobile infrastructure would help, the industry is taking other initiatives like regional content and distribution platforms (digital & non-digital, mobile) to enhance experience & monetize content. At PricewaterhouseCoopers, we continue to monitor trends and developments that may impact your business now and in the future, and we look forward to further sharing our thoughts with you. We appreciate your feedback and ask that you continue to tell us what we can do to make the Indian E&M Outlook more useful to you. If you wish additional clarification on any matters included in the Indian E&M Outlook, or you believe we can be of service to your business in any way, please contact one of the PricewaterhouseCoopers E&M professionals listed in the report. Finally, we thank you for your support and wish you an exciting and rewarding year ahead. Sincerely, Jairaj Purandare Timmy Kandhari Executive Director, Leader - Executive Director, Leader - Markets & Industries, PwC India Entertainment & Media, PwC India Industry Overview 05 Television 22 Print Media 42 Filmed Entertainment 54 Radio Advertising 68 Music 80 Internet Advertising 88 Out-of-Home Advertising 96 Animation, Gaming and VFX Industry 102 Sports Entertainment 118 Tax and Regulatory issues 124 impacting the Indian E&M Industry Technology and E&M industry 138 Glossary of terms and 144 abbreviation Glossary of tables and charts 145 PwC E&M Practice-contacts 148 and office addresses 4 Indian entertainment and media outlook 2010 Contents Introduction We are pleased to present the 2010 edition of PricewaterhouseCoopers’ Indian entertainment and media outlook. The information in this publication reflects the collective wisdom of our large team of professionals who work with entertainment and media (E&M) companies in India and overseas. It is a unique resource for the industry, offering a five-year outlook for global consumer spending and advertising revenues, as well as insights into the technology, government, political and business trends driving those forecasts. The purpose of this Industry Overview is to provide a synopsis of the data presented in the 2010–2014 Outlook and to present a thought piece on ideas generated by the data in the full report. New additions to the 2010–2014 Outlook For the first time this year, we have included a chapter on Technology and how it can be leveraged in E&M industry context in India. Categories Covered: • Television • Print Media • Filmed Entertainment • Radio Advertising • Music • Internet Advertising • Out-of-Home Advertising • Animation, Gaming & VFX Industry Apart from the above, this outlook also covers trends in Sports Entertainment as well as Direct and Indirect Tax issues impacting the Indian E&M industry. 6 Indian entertainment and media outlook 2010 Industry Overview 2009: The year after the storm With some notable exceptions, particularly in China and The E&M industry continues to be dominated by TV, India, severe recession in most countries led to steep print and filmed entertainment. Significant revenues decline in advertising—the category most sensitive to continue to be from non-digital segment though there the economy—and to reductions in consumer/end-user has been good growth in the digital spending. spending, globally. Global advertising fell by 11.8% and consumer/end-user spending decreased by 0.5%. As Chart 1.1 Segment-Wise Breakup of E&M Industry (2009) a whole, the global E&M market declined by 3.0% in 2009, a somewhat smaller decrease compared with the 3.9% drop we had projected. However, India was one of the few countries not severely impacted by recession. The E&M industry in 2009 stood at Rs. 580.8 billion registering a growth of 2.2% as compared to Rs. 568.5 billion in 2008. This was lower than our projected growth rate of 8.3% for last year. The reason for lower growth rate was largely because of lower than expected uptake in the advertisement dependent sectors like print, OOH and internet advertisement. Filmed entertainment also showed a negative growth due to the cash crunch faced by the industry. Many of the factors which caused the Source: PwC Analysis and Industry Estimates slowdown are not likely to persist and performance is likely to be better going forward. Further, the total In comparison to other Asian countries like China consumer spending grew, which helped the E&M and Japan, the E&M market in India is quite small. industry to show a small growth despite the storm. Advertisement as a percentage of the GDP in India is 0.53% as compared to 1.08% for developed country Table 1.1 Growth of Indian E&M Industry in 2005-09 like US and 0.90% for Japan. This indicates that there is still a lot of scope for growth of the E&M industry in Rs. billon 2005 2006 2007 2008 2009 CAGR India. Television 158.5 191.2 223.9 244.7 265.5 13.8% % change 20.6% 17.1% 9.3% 8.5% Table 1.2 Entertainment & Media Markets of Film 68.1 84.5 96.0 107.0 95.0 8.7% % change 24.1% 13.6% 11.5% -11.2% Key Countries (USD millions) Print 109.5 128.0 149.0 162.0 161.5 10.2% 2005 2006 2007 2008 2009 % change 16.9% 16.4% 8.7% -0.3% India 8,746 10,503 12,401 13,616 14,052 Radio Advertising 3.2 5.0 6.9 8.3 9.0 29.5% China 41,297 47,245 57,496 69,166 75,815 % change 56.3% 38.0% 20.3% 8.4% Japan 150,975 160,716 166,999 169,298 164,337 Internet Advertis- 1.0 1.6 2.7 5.0 6.0 56.5% ing US 433,842 454,572 469,096 460,997 428,140 % change 60.0% 68.8% 85.2% 20.0% Source: PwC Global E&M outlook 2010 OOH 9.0 10.0 12.5 15.0 12.5 8.6% % change 11.1% 25.0% 20.0% -16.7% Indian Advertising Industry Animation, Gam- - 12.6 15.7 19.6 23.8 - Due to the economic slowdown, the advertising ing & VFX % change - - 24.6% 24.6% 21.8% industry was flat showing almost no growth in 2009. Music 7.2 7.3 7.6 6.9 7.5 1.2% This came close on the heels of 2008, a year when the % change 1.4% 3.8% -8.2% 8.5% performance of this industry slowed down as compared Total 356.5 440.2 514.3 568.5 580.8 13.0% to the previous years. In 2009, the advertising industry % change 23.5% 16.8% 10.5% 2.2% remained at an estimated size of Rs. 216.5 billion as Source: PwC Analysis and Industry Estimates compared to Rs. 216 billion in 2008. In the last four years (2005- 2009), the industry recorded a cumulative growth of 13.5% on an overall basis. 8 Indian entertainment and media outlook 2010 Different segments in the industry were impacted Roadblock Strategy: Roadblock refers to buying all the differently. While OOH, print and filmed entertainment advertisement spaces in a media vehicle for a day, thus showed negative trends of (16.7%), (3.4%), and blocking all other advertisers. This was a popular form (11.2%), respectively, the most impressive growth of advertising in 2009 to gain visibility and getting value was from the smallest segment of the industry by size for money. – internet advertising. Though, this segment grew by • Times of India and Volkswagen (Print): Volkswagen 20.0% in 2009, it was well below the growth of 85% in tied up with Times of India to make a Volkswagen 2008 and our own projected growth of 50%. Print was edition on 11th November 2009.

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