ENTERTAINMENT November 2010 ENTERTAINMENT November 2010 Contents Advantage India Market overview Industry Infrastructure Investments Policy and regulatory framework Opportunities Industry associations 2 ADVANTAGE INDIA Entertainment November 2010 Advantage India - capital Increasing investments by the private sector and foreign media and entertainment (M&E) majors have enhanced India‘s entertainment infrastructure such as new multiplexes and digitization of TV distribution and theatre infrastructure. • Digitisation and technological advancements Improving across the value chain are improving the quality • Producing more than 1,000 films entertainment of content and reach, and also leading to new annually, India is the largest infrastructure business models. For example rural DTH producer of films in the world. penetration is three times higher than in urban Digital High • There are more than 500 TV areas, with digital TV penetration rate of 34% in revolution production channels in the country, requiring rural areas as compared to 12% in urban areas volumes 30 hours of fresh programming per week. • A liberalised foreign investment regime Advantage and other regulatory initiatives are resulting in a conducive business India environment for Indian M&E. Large and under • FDI upto 100 per cent is allowed in film Liberal penetrated • In 2008, there were as many as 3.3 billion and advertising, TV broadcasting (except government consumer theatre admissions in India. news) and 26 per cent in newspaper policies base • With the TV segment reaching as many as publishing. Favourable 134 million households in the country, • Migration from fixed to revenue sharing demographics India is one of the largest TV markets in license fee regime in radio segment and the world. roll out of digital cable will provide further impetus to industry‘s growth. • India is among the world‘s youngest nations, as more than 52 per cent of its one billion-plus population is less than 25 years of age. • This age group, with increasing disposable income levels, has given impetus to the entertainment industry. Sources: ―Indian entertainment down South: from script to screen,‖ Ernst & Young, 2009; EY M&E NewsReel, Ernst & Young, 2009; ―India to have 100-mn cable homes this year,‖ Business Standard¸ 4 January 2010; ―Tune-in to India‘s entertainment economy: From emerging to surging,‖ Ernst & Young, 2008; ―Tune into emerging entertainment markets- spotlight on BRIC,‖ Ernst & Young, 2010; ―Rural India's swift digital TV embrace,‖ Business Standard, 4 December 2010. 3 ENTERTAINMENT November 2010 Contents Advantage India Market overview Industry Infrastructure Investments Policy and regulatory framework Opportunities Industry associations 4 MARKET OVERVIEW Entertainment November 2010 Market overview … (1/2) The Indian entertainment market continues to grow at a healthy pace. 14 Growth in the entertainment industry 18% 16% 16% 12 14% 0.29 15% 0.25 0.30 0.24 14% 10 0.22 0.25 13% 12% 0.19 2.70 12% Y 0.20 - 0.20 o 0.14 2.45 - 8 0.12 0.18 growth y % 0.17 0.16 10% 0.07 0.15 2.20 US$ billion US$ 0.14 0.04 0.16 1.92 6 0.11 2.20 8% 0.16 1.97 1.69 6% 4 8.04 7.10 6.21 4% 5.06 5.44 2 3.90 4.53 2% 2% 0 0% 2006 2007 2008 2009 2010 2011E 2012E Television Films Music Radio Online advertising Industry growth rate • The entertainment industry in India is estimated at about US$ 9.4 billion (INR 431.4 billion) in revenues in CY2010, which is expected to grow at a rate of 14.1 per cent to reach revenues of US$ 10.7 billion (INR 492.4 billion) in 2011. Sources: Ernst & Young analysis; ―Tune-in to India‘s entertainment economy: From emerging to surging,‖ Ernst & Young, 2008. 5 MARKET OVERVIEW Entertainment November 2010 Market overview … (2/2) Entertainment TV Radio Films Music New media • India is home to a • The FM radio • India is the • Film-based music • Increasing very diverse TV segment is one of largest dominates music sales broadband market, characterised the fastest- producers of in India. penetration is by multiple genres growing films in the • As in most global expected to attract and languages and entertainment world, with more markets, digital sales more content online. more than 500 segments in India. than 1,000 films of music are • As the second- channels vying for • Revenues in this released annually. becoming the norm in largest mobile viewer attention. segment have • In 2008, close to India. telephony market in • The country is home almost doubled 3.3 billion movie • Music on internet and the world, India has to 134 million TV since 2006. tickets were sold through mobile provided a new households. A lot of • There are close — the highest phones is the platform for content foreign investments to 248 FM radio number for any emerging business delivery. are flowing into it. stations in India. country. model for music companies Sources: Ernst & Young analysis; M&E NewsReel, Ernst & Young, 2009; ―India to have 100-mn cable homes this year,‖ Business Standard¸ 4 January 2010. 6 MARKET OVERVIEW Entertainment November 2010 Domestic demand … (1/3) • In 2010, the industry is estimated to generate revenues worth US$ 6.2 billion (INR 298 billion), of which around 65 per cent was contributed by subscription, while the rest came from advertising. • India is home to 134 million TV households, of which 90 million are served by cable and satellite TV and is expected to reach 100 million in 2010. • As of March 2010, as many as 503 TV channels were registered with the Ministry of Information and TV Broadcasting (MIB) and more channels are being added across genres. • The adoption of digital distribution platforms — direct-to-home (DTH) and digital cable — is helping TV distribution become more organised. From about two million digital TV households in 2006, the platform currently caters to about 15 to 17 million digital subscribers. • Regional TV is becoming prominent and several regional-language TV networks have emerged to leverage the potential of regional markets, across key genres. • In 2010, the industry is estimated to generate revenues of US$ 2.2 billion (INR 105.5 billion). • The industry remains dependent on domestic theatrical collections, which generate 70 to 80 per cent of a film‘s revenue. • More than 1,000 films are produced annually in more than 20 languages. • Regional-language cinema is an integral part of the Indian film industry. The four South Indian Films languages of Telugu, Tamil, Kannada and Malayalam cumulatively account for 60 per cent of all movies produced in India. • There are presently around 850 multiplex screens in India, and this is estimated to grow to 1,600 screens by 2013. • Digital cinema is helping film producers reduce cost, release more prints and combat piracy. A digital print cost around one tenth of the physical print. Corporatisation and globalisation of Indian film companies is driving the growth. Sources: Ernst & Young analysis, ―Tune-in to India‘s entertainment economy: From emerging to surging,‖ Ernst & Young, 2008; ―India to have 100-mn cable homes this year,‖ Business Standard¸ 4 January 2010; ―Tune into emerging entertainment markets- spotlight on BRIC,‖ Ernst & Young, 2010; TP report on Media and Entertainment, Ernst & Young, September 2010; 7 MARKET OVERVIEW Entertainment November 2010 Domestic demand … (2/3) • In 2010, the industry has been estimated at US$ 0.20 billion (INR 9.4 billion), GoI-controlled All India Radio (AIR) and 37 private FM radio companies that operate close to 248 FM radio stations in India cater to this segment. • The yet-to-be-launched Phase-III FM radio licensing policy is likely to give further impetus to the FM Radio radio industry and open up licences for close to 700 stations and raise the FDI limit from current 20 per cent to 26 per cent. • There is a growing advertiser interest in radio amongst the country level and the local advertisers. • International radio players such as Radio Netherlands Worldwide (RNW) and BBC have made content-syndication deals with FM radio stations in India. • The music industry is estimated to generate revenues of US$ 0.20 billion (INR 9.4 billion) in 2010. • Distribution via digital formats on the Internet and through mobile phones is the emerging business model for music companies. • Music sold via mobiles as ringtones, caller-back ringtones (CBRTs) and downloads of complete songs contribute 25 to 35 per cent of music companies‘ revenues. • Business models built around mobile music such as track downloads and on-demand streaming are Music expected to emerge in the near future and gain further impetus with the rollout of 3G services. • Music sales in physical formats are affected and music companies are repositioning their products to counter this decline by introducing low-cost, MP3-based compact discs (CDs) for low-end customers and premium packaged CDs for high-end customers. It is also being sold on memory cards and pen drives. • By December 2011, the industry is expected to generate revenues of US$ 0.26 billion (INR 12.1 billion), exhibiting growth of 26.8 per cent over 2010. Sources: Ernst & Young analysis; ―Tune-in to India‘s entertainment economy: From emerging to surging,‖ Ernst & Young, 2008. ―FM-III 1st phase to auction 160 stations,‖ The Financial Express website, http://www.financialexpress.com/news/fmiii-1st-phase-to-auction-160- stations/674181/, accessed 11 November 2010; ―Tune into emerging entertainment markets- spotlight on BRIC,‖ Ernst & Young, 2010; 8 MARKET OVERVIEW Entertainment November 2010 Domestic demand … (3/3) • In India, the trend to access videos through the Internet and mobile phones is fast gathering momentum. • Almost every major M&E player now has a strategy to host its content on new media platforms.