Indian Entertainment Industry
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LAL BAHADUR SHASTRI INSTITUTE OF MANAGEMENT MM Project Report Indian Entertainment Industry Submitted to: Submitted by: Prof Joyeeta Chaterjee Sec-B, Group-1 Misha Rawal (106) Ujjwal Gupta (107) Anurag Anwariya (108) Suveer Malhotra (109) Vipul Jain (110) Gaurav Singh (111) INDEX 1. Introduction 2. Indian Entertainment Industry 3. Kingdom Of Dreams 4. Buddh International Circuit 5. Indian Premiere League 6. Challenges 7. Opportunities 8. Conclusion Indian Entertainment Industry Television Films Radio Entertainment Industry Sports Live Entertainment Entertainment Digital Media India’s entertainment economy is growing rapidly, and the world is taking note. The country is among the world’s youngest nations, with more than half a billion people under the age of 25. With favorable demographics and a rise in disposable incomes, the propensity to spend on leisure and entertainment is growing faster than the economy itself. Enticed by economic liberalization and the huge volume of demand for leisure and entertainment, many of the global media giants have been present in the Indian market for more than two decades. However, in recent years, with near double-digit annual growth and a fast-growing middle class, there has been a renewed surge in investment in the country by global companies. Companies in the US and Western Europe see their growth increasingly linked to emerging giants like India, which is why they are now focused on the best way to enter, grow and brand their business in this market. The Indian media and entertainment (M&E) industry now finds itself at a new inflection point — digital media. A surge in mass broadband adoption is expected, led by the launch of 3G and 4G services. In conjunction with the country’s mobile phone user base, more than 750 million subscribers, the scale and impact of potential digital content consumption is enormous. This presents M&E companies, foreign and domestic, with an exciting opportunity to develop digital businesses that cater to a new generation of Indian digital consumers. To succeed in this market, there are several success factors that global companies need to take into account. While there are many opportunities to tap, there are also unique challenges in the areas of content localization, distribution and pricing, regulations and piracy. In this report, we examine India’s M&E landscape and provide an overview of the key opportunities, challenges and critical success factors in doing business there. Key highlights – Print: The print industry grew by 8.3 percent from INR 193 billion in 2010 to INR 209 billion in 2011. The growth was slightly lower than our expectation of 9.5 percent last year due to the challenging macroeconomic environment and reduced advertising spends. Television: The over-all television industry is estimated to be INR 329 billion in 2011, and is expected to grow at a CAGR of 17 percent over 2011-16, to reach INR 735 billion in 2016. The share of subscription to the total industry revenue is expected to increase from 65 percent in 2011 to 69 percent in 2016. The TV industry continues to have headroom for further growth as television penetration in India is still at approximately 60 percent of total households. Films: With several high budget Hindi releases lined up across the year, 2012 is expected to sustain the growth momentum witnessed in 2011. The Indian film industry is projected to grow at a CAGR of 10.1 percent to touch INR 150 Billion in 2016. The industry is estimated to be INR 93 billion in 2011 indicating a growth of 11.5 percent vis-à-vis 2010. Music: While 2010 was the year of structural shift from physical formats to digital ones, 2011 provided users’ viable options of music consumption through different digital platforms. The Indian music industry achieved revenues of INR 9 billion in 2011, registering a growth of 5 percent over 2010. listenership in both metros and non-metros, overall the industry grew at 15 percent in CY 2011 to reach INR 11.5 billion compared to INR 10 billion in CY 2010. New Media: Growth in advertising revenues is expected 40percent over last year; online adspend reached approximately 4percent of total M&E industry advertising revenue. Growth is largely driven by increase in internet penetration and proliferation of new age devices. Animation & VFX : Animation, VFX and Post Production industry achieved estimated revenues of INR 31 billion in 2011, a robust growth of 31 percent over 2010. Growth was achieved on the back of increased contract work, higher VFX content in movies, 2D/3D conversion projects. Out of Home: The OOH sector was hit relatively harder by the global economic slowdown than other sectors of the Advertising Radio: Overall, the industry grew 15 percent in CY 2011 to reach INR 11.5 billion, compared to INR 10 billion in CY 2010. Volume increases in certain markets and rate increases for the leaders in metros drove growth. New Media: Digital advertising is expected to grow at a CAGR of 30 percent from 2011-16; digital ads spend reached approximately 5 percent of total M&E industry advertising revenue in 2011. Growth is largely driven by increase in internet penetration and proliferation of new devices. Animation & VFX: Animation, VFX and Post Production industry achieved estimated revenues of INR 31 billion in 2011, a robust growth of 31 percent over 2010. Growth was achieved on the back of increased contract work, higher VFX content in movies, 2D/3D conversion projects. Out of Home: The OOH sector was hit relatively harder by the global economic slowdown than Key trends and industry drivers: • Growth in digital content consumption across media Digital technology continues to revolutionize media distribution – be it the rapid growth of DTH and the promise of digital cable, or increased digitization of film exhibition - and has enabled wider and cost effective reach across diverse and regional markets, and the development of targeted media content. There has been increased proliferation and consumption of digital media content – be it newspapers and magazines, digital film prints, and online video and music or entirely new categories such as social media. Accordingly, online advertising spends have seen a spurt in growth viz-a-viz spends on traditional media. • Rise of new age user devices Smart phones, tablets, PCs, gaming devices, etc. all form the foundation of a new wave in media usage.This is gradually impacting the way content is being created and distributed as well. Multiple media including TV, films, news, radio, music etc are being impacted with this change. • New age consumers adapting themselves to the newer technologies As Indian consumers evolve, there is a heightened need to engage them across platforms and experiences. There is a greater need for integration and innovation across traditional and new media, with changing media consumption habits and preferences for niche content. Media companies today have no choice but to provide more touch points to engage with audiences. Regionalization Regional television and print continued its strong growth trajectory owing to growth in incomes and consumption in the regional markets. National advertisers are looking at these markets as the next consumption hubs and the local advertisers are learning the benefits of marketing their products aggressively. • An advertising revenue dependant industry The ARPU (Average Revenue Per User) for television, average newspaper cost for print and average ticket price for films continue to be low on account of hyper competition in these industries. Segments like radio and a significant portion of online content are available free of cost to consumers. Owing to this, the Indian consumer is still not used to paying for content and hence the industry players are sensitive to the impact of the slowdown which affects the budgets of advertisers. • Awaited regulatory shifts Lastly, apart from the shifts in consumer preferences, company strategies and business models, one big change awaited for the next growth wave is the implementation of recently enacted and regulations on digitisation for cable, implementation of Phase 3 and copyright for Radio and the roll out of 4G. These shifts are expected to be game changers in terms of how business is being done currently and what could be the path going forward. The Indian entertainment and media (E&M) industry has out-performed the Indian economy and is one of the fastest growing sectors in India. The E&M industry generally tends to grow faster when the economy is expanding. The Indian economy has been growing at a fast clip over the last few years, and the income levels too have been experiencing a high growth rate. Above that, consumer spending is also on the rise, due to a sustained increase in disposable incomes, brought about by reduction in personal income tax over the last decade. All these factors have given an impetus to the E&M industry and are likely to contribute to the growth of this industry in the future. Besides these economic and personal income-linked factors, there are a host of other factors that are contributing to this high growth rate. Some of these are enumerated below: A. Low media penetration in lower socio-economic classes (SEC) Media penetration varies across socio- economic classes. Though media penetration is poor in lower socio-economic classes, the absolute numbers are much higher for these classes. Hence, efforts to increase the penetration even slightly in these lower socio- economic classes are likely to deliver much higher results, simply due to the higher base. B. Low ad spends Indian advertising spends as a percentage of gross domestic product (GDP) – at 0.34 percent – is abysmally low, as opposed to other developed and developing countries. Advertising revenues are vital for the growth of this industry.