India Entertainment and Media Outlook 2011 2 Pwc Message
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India Entertainment and Media Outlook 2011 2 PwC Message Welcome to PwC’s India Entertainment and Media Outlook 2011, analysing nine entertainment and media (E&M) industry segments. We have detailed key trends and challenges in each of the segments besides providing their future prospects. In addition, we have provided our views on tax and regulatory issues as well as the technology that is influencing the distribution of content in the industry. The year 2010 saw the global economy begin to recover from a steep decline which in turn saw a rebound in consumer spend, advertising spend and most importantly E&M spend worldwide. Advertisement in particular staged a remarkable comeback in nearly all markets. The world in general continued its shift towards ‘digital’ though the magnitude of change was different in many markets. India recorded one of the highest growth rates in the world at 11.2% in 2010. Yet, this was lower than projected, largely due to the negative growth in the film segment, with all the other segments growing as projected. E&M revenues in India continue to be largely non-digital with TV, print and film constituting almost 90% of the sector. While consumer preference continues to change, the shift to digital is hindered by poor infrastructure as well as affordability of broadband and mobile. Our forecast period does not show a dramatic change. However, just because the change is not aggressive does not mean digital revenues will remain irrelevant. We continue to believe that this situation is temporary and once infrastructure is in place, change will be rapid. The industry needs to use this time to prepare for the digital world. In this edition, we also present our views on the elements of the digital enterprise of the future. At PwC, we continue to monitor trends and developments that may impact your business now as well as in future. We appreciate your feedback and request you to continue to tell us what can make the India E&M Outlook more useful to you. For additional clarification on matters included in the Outlook, please contact any of the PwC E&M professionals named in this publication. Finally, we thank you for your support and wish you an exciting and rewarding year ahead. Ambarish Dasgupta Timmy Kandhari Executive Director, Executive Director, Leader, TICE, Leader, Entertainment & Media, PwC India PwC India India Entertainment and Media Outlook 2011 3 Cont nts 4 PwC India Entertainment and Media Outlook 2011 06 Industry overview 90 Internet advertising and access 22 Television 104 Out-of-home advertising 44 Print media 110 Animation, gaming and visual effects (VFX) 58 Film 122 Sports entertainment 72 Radio advertising 126 Tax and regulatory issues 82 Music 144 Technology India Entertainment and Media Outlook 2011 5 Chapter 01 Introduction We are pleased to present the 2011 edition of PwC’s India 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. 6 PwC 2010: The economy on the mend Worldwide, 2010 saw the global economy begin to recover from a steep decline in 2009. Table 1.1: Growth of the industry in 2006-10 Improved economic conditions in 2010 played INR billion 2006 2007 2008 2009 2010 CAGR a major role in a rebound in consumer spend, advertising spend and most importantly in Television 191.2 223.9 244.7 265.5 306.5 12.5 the E&M spend. While India and China were % change 17.1 9.3 8.5 15.4 not critically impacted by the downturn in Film 84.5 96.0 107.0 95.0 87.5 0.9 2008 and 2009, they demonstrated one of the % change 13.6 11.5 -11.2 -7.9 highest growth rates this year and continued to outperform their global peers. Print 128.0 149.0 162.0 161.5 178.7 8.7 Advertising, the most cyclically sensitive of the % change 16.4 8.7 -0.3 10.7 three E&M spending streams recorded the largest Radio 5.0 6.9 8.3 9.0 10.8 21.2 year-on-year swing, growing by 5.8% in 2010 % change 38.0 20.3 8.4 20.0 from almost an 11% decline in 2009. Consumer Internet 1.6 2.7 5.0 6.0 7.7 48.1 spending grew 2.2% while E&M spending as a whole grew at 4.6% in 2010. % change 68.8 85.2 20.0 28.3 India recorded one of the highest growths in the OOH 10.0 12.5 15.0 12.5 14.0 8.8 world growing at 11.2% in 2010. % change 25.0 20.0 -16.7 12.0 The E&M industry in 2010 stood at INR 646.0 Animation, gaming & VFX 12.6 15.7 19.6 23.8 31.3 25.6 billion as compared to INR 580.8 billion in 2009. % change 24.6 24.6 21.8 31.4 This was lower than our projected growth rate Music 7.3 7.6 6.9 7.5 9.5 6.8 of 15.1% for last year. The reason for lower growth rate was the decline witnessed in the film % change 3.8 -8.2 8.5 25.7 segment. The other two key industry segments-- Total 440.2 514.3 568.5 580.8 646.0 10.1 television (15.4% growth as compared to 15.6% % change 16.8 10.5 2.2 11.2 projected) and print (10.7% as compared to Source: PwC Analysis and Industry Estimates 8.5% projected)--showed good growth. The negative growth in the film segment for a second year in a row was largely due to the lack of quality content and the closing-down of single-screen theatres. The E&M industry continues to be dominated by TV, print and film. Significant revenues continue to be from the non-digital segment though there continues to be good growth in digital spending too. Infrastructure is the biggest challenge in the growth of digital spends. New additions to the 2011–2015 Outlook For the first time, this year, we have compared • Music India’s place with other countries for each of the • Internet industry segments. • Out-of-home Categories • Animation, gaming and VFX • Television Apart from the above, this outlook also covers trends • Print in sports entertainment, entertainment technology as well as the direct and indirect tax issues that impact the • Film Indian E&M industry. • Radio India Entertainment and Media Outlook 2011 7 Chart 1.1: Segment-wise break-up of the industry (2010) All industry segments showed healthy growth in advertisement with print and OOH recovering well from the dip in 2009 to register a growth of 13.5% and 12% respectively. Internet advertising, with 28% growth, remained the fastest-growing segment as an increasing number of advertisers are looking to use the online platform to connect with the youth. Radio also showed a healthy growth of 20% and is fast catching up with OOH. Print advertising remained the largest segment in the advertising industry at 46% followed by television at 41%. Table 1.3: Growth of the Indian advertising industry in 2006-10 INR billion 2006 2007 2008 2009 2010 CAGR% Television 66.2 78.0 84.2 89.0 101.5 11.3 Source: PwC Analysis and Industry Estimates advertising % change 17.8 7.9 5.7 14.0 Print 78.0 94.0 103.5 100.0 113.5 9.8 India remains a smallish contributor to the Asia-Pacific E&M advertising industry. Japan at USD 174 billion is by far the dominant % change 20.5 10.1 -3.4 13.5 country, accounting for 44% of the total spending in Asia Radio 5.0 6.9 8.3 9.0 10.8 21.2 Pacific in 2010 and the second largest country in the world advertising behind the US. While advertising is growing at a rate higher than GDP growth, it is estimated that advertisement as a % change 38.0 20.3 8.4 20.0 percentage of the GDP will remain low as compared to other Internet 1.6 2.7 5.0 6.0 7.7 48.1 developed countries like the US and Japan. advertising % change 68.8 85.2 20.0 28.3 OOH 10.0 12.5 15 12.5 14 8.8 Table 1.2: E&M markets of key countries (USD millions) % change 25.0 20.0 -16.7 12.0 2006 2007 2008 2009 2010p Total 160.8 194.1 216.0 216.5 247.5 11.4 India 9,782 11,429 12,633 12,907 14,355 % change 20.7 11.3 0.2 14.3 China 47,583 58,020 68,992 75,085 85,543 Source: PwC Analysis and Industry Estimates Germany 81,733 85,129 86,131 85,106 87,296 Japan 164,687 174,732 178,279 172,768 174,036 US 455,520 469,713 461,737 429,912 443,144 Source: PwC Global E&M Outlook 2011 -2015, PwC India E&M Outlook 2011 The Indian advertising industry In 2010, the advertisement industry rebounded well on account of improved economic conditions and showed a healthy growth. After showing almost flat growth in 2009, these were positive signs for the E&M industry which depends heavily on this revenue stream.