indian media & entertainment industry 2016 - trends & analysis!

The Indian Media & Entertainment Industry

2016Trends & Analysis - Past, Present & Future

Chaitanya ChinchlikarVice President – Whistling Woods International

Vice President – Mukta Arts [email protected]

Source: FICCI-KPMG Report 2016

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

400

800

1200

1600

2000

2400

652728

821918

10261156

1314

1503

1723

1980

2261

Indian M&E Industry

INR

Billi

ons

The Indian M&E Industry - High-volume, low-value.

The Indian Media & Entertainment Industry includesFilm, Television, Print, Radio, Music, Digital Media, Animation & VFX, Gaming,

Events & Live Media, Out-of-home, Sports, Entertainment Parks & other media.

• Valued at over US$ 17.4bn (1,15,600Cr INR) which is ~0.97% of the global M&E industry (estimated at US$ 1.8tn)

• Expected growth (14.3%) over the next 5 years is to be higher than the global M&E industry (at 5.1%)

• Dawn of Digital – 38.2% in 2015, 33.5% in 2016-2020.

12.8%

14.3%


Indian M&E Industry – SOTP

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

500

1000

1500

2000

297 329 370 417 475 542 617710

823957

1098

193 209224

243263

283305

330

356

384

413

8393

113125

126138

159

174

190

208

227

1011

13

15

17

20

23

28

33

38

43

99

11

10

10

11

12

14

16

18

21

1618

18

19

22

24

28

32

35

40

45

2431

35

40

45

51

58

67

78

91

108

1013

15

19

24

27

31

34

39

45

51

1015

2230

44

60

81

114

153

199

255

TV Print Film Radio Music OOH Animation & VFX Gaming Digital

INR

Billi

ons

All sections are growing. Some are growing faster than others


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

46% 45% 45% 45% 46% 47% 47% 47% 48% 48% 49%

30% 29% 27% 26% 26% 24% 23% 22% 21% 19% 18%

13% 13% 14% 14% 12% 12% 12% 12% 11% 11% 10%

2% 2% 2% 2% 2% 2% 2%2%

2% 2%2%

1%1% 1% 1%

1% 1% 1%1% 1% 1%

1%

2%2% 2% 2%

2% 2% 2%2%

2% 2%2%

4% 4% 4% 4%4% 4% 4%

4%5% 5%

5%

2% 2% 2% 2% 2% 2% 2%2%

2% 2% 2%

2% 2% 3% 3% 4% 5% 6% 8% 9% 10% 11%

TV Print Motion Picture Radio Music OOH Animation & VFX Gaming Digital

Indian M&E Industry – Market-share


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

50

100

150

200

250

8393

113125 126

138

159

174

190

208

227

INRB

illio

ns

The Indian Film Industry• Largest in the world by

films produced with over 1,400 films produced & over 3.25bn tickets sold (~50% theatrical releases)

• At US$ 2.1bn, it is less than the BO of Avatar

• 2015 was heavily polarised wrt film performance.

• % of online ticketing grew by 5x from 6% to 32%

• Regional & Hollywood are growing domestic theatrical

9.3%

10.5%

Studios have started getting into content production through own productions & strategic alliances

(Reliance – Phantom, Fox – Dharma)


The Indian Film Industry = ‘Bollywood’

While‘Bollywood’ is a generally used term to define the Indian Film industry, Hindi films accounted for only 16% of the 1,400+ films that were produced.

The South Indian Film industry accounts for almost 50% of the films

Language No of FilmsHindi 234 Tamil 210

Telugu 218 Kannada 157

Malayalam 108 Bengali 139 Marathi 122 Gujrati 67

Bhojpuri 84 Punjabi 9 Others 78Total 1,426


2011 2012 2013 2014 2015 2016 2017 2018 2019 20200%

20%

40%

60%

80%

100%

74% 76% 75% 74% 73% 73% 72% 72% 71% 70%

7% 7% 7% 7% 7% 7% 7% 7% 7% 7%

11% 11% 12% 12% 12% 11% 11% 11% 11% 11%

5% 5% 6% 7% 7% 8% 9% 10% 11% 11%

Film Revenues % Breakdown

Domestic Theatrical Overseas Theatrical Home Video Cable & Satellite Rights Ancillary Revenues

INR

Billi

ons

Film Revenues BreakdownDomestic Revenues have always had a 90%+ market-share & expected to continue.

This is THE double-edged sword for the industry.

Proving the digital medium’s

dominance, Ancillary revenues as a % of total film

revenue will increase 1.5x over the next 5 years.

Home Video, like in the rest of the

world, is dying out fast.


Film – Revenue SplitWhen you pay Rs 100 for a movie ticket, what is the split?

• Gross – 100% (Rs 100)

• Entertainment Tax – 30% (Rs 30)

• Exhibitor – 50% of balance 70% (Rs 35)

• Distributor – 50% of balance 70% (Rs 35)

• Producer(s) – depends on what deal they have made with distributor –

Outright / MG / Commission / Distribution Fee

• Co-producer(s) – deal-specific

• P&A funding – deal specific, but usually is last-in-first-out.

• Talent – actors / director – sweat equity.


Exhibition needs to grow!• India has one of the lowest screen

densities among global film markets• Urgent & rapid infrastructure growth in

multiplex screens is needed• Since the Box office is not as robust as

other countries, government intervention is needed by way of SOPs.

US France Spain UK Germany Japan China India0

20

40

60

80

100

120

140 126

85 82

61 57

2613

6

Screens/Million

2011 2012 2013 2014 2015 -

5,000

10,000

15,000

20,000

25,000

30,000

9,200

13,118

18,195

22,000 25,000

1,250 1,470 1,650 1,750 1,950

10,000 8,700 7,600 6,500 6,000

Screens

Multiplex-China Multiplex-India SingleScreen-India

2011 2012 2013 2014 2015 -

1.0

2.0

3.0

4.0

5.0

6.0

2.0 2.7

3.5

4.7

5.7

1.0 1.3 1.4 1.4 1.5

Domestic Box Office Size

China India

Billi

on $


Industry = Value x Volume

No of screens that a film plays in has grown radically over the past decade, curbing piracy and augmenting theatrical revenues

Average ticket prices of multiplexes are 3-6 times that of single screen theatres.

1994

- Hum

Aap

ke H

ain K

oun

2009

- 3 Id

iots

2012

- Ek T

ha Tige

r

2013

- Dho

om 3

2015

- Bajr

angi

Bhaija

an0

1000

2000

3000

4000

5001000

30003500

4200No of Screens

High End Mul-tiplex

Multiplex Single Screen Low End Single Screen

0

50

100

150

200

250

300250

130

75

40

Ticket Rates (INR)


The Indian Film Industry - Key points

• Realisation of the value of Film education. Scale needed. Urgently.

• Digital gaining over C&S for release window.

• Regional shows its importance – Marathi, Gujarati, Punjabi

• Hollywood films account for less than 10% of the Indian Film industry.

• Share of Revenue from first week is highly critical (ranges from 55-75% of box office collections)

• Funding avenues grow significantly – Banks (IDBI, Exim, Kotak, YES), Film Funds, Crowd-funding.

• The industry lacks a globally merchandisable home-grown IP brand.


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

100

200

300

400

500

600

700

800

900

1000

1100

297329

370417

475542

617

710

823

957

1098TV

INRB

illio

ns

The Indian Television Industry

• The most consistently

performing sector of the

Indian M&E Industry.

• It is, presently, nearly 4

times the size of the Indian

Film industry and is the

largest employer in the M&E

space.

• India overtook the US in

2014 as the 2nd largest TV-

owning market in the world.The potential: The Indian average subscription rate is

US$4-5 per month per TV for Cable TV / DTH against

US$40-100 in evolved markets like US / UK / Europe.

14.2%

15.1%


TV Connectivity – A Digital blitz

With digitisation primarily

successful for Phase 1 & 2

(over 95%) and the rest of the

country underway on

the same path, digital STBs

and DTH connections are the way of the

future.2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

0

20

40

60

80

100

120

140

160

180

200

74 69 68 70 65

41

5 5 5 5

6 19 25 29 37

55

80 84 87 90

3134

3740

44 55 7476 78 79

8

99

1015

1920

2122 22

Subscribers

Analog Cable Digital Cable DTH Other Digital


TV Connectivity, Channels, ARPUs

• India has added, on an avg 4.5 channels/month for the last 15 yrs.• India has ~400 news channels.

Channel differentiation is weak.

2010 2015 20200%

10%20%30%40%50%60%70%80%90%

100%

0

50

100

150

200

250

138

175200

71%83% 87%

TV Households& Penetration

2015 2016 2017 2018 2019 2020150

200

250

300

350

400

248 258 266299

334367

214 219 230261

298

343

ARPUs

DTH Digital Cable

1990 1995 2000 2005 2010 20150

100200300400

500600700800900

555

130

263

550

800

Channels & Growth

TV households, C&S penetration & ARPUs are all

expected to grow over the next 5 years


GEC – GRP v/s Profitability

Low GRP High GRP

LowProfitability

HighProfitability

Long running soaps

Low-cost game / performance based reality shows

Mythological series

Recently released movies

Celebrity-based shows

Why do we see what we see on GECs?How does programming get divided between building a viewer base and profitability, thorough the application of the concept of ‘stick-ability’!


TV Revenues – Getting better, slowly!• High subscription revenue

growth expected to bring about innovative content / content for a niche audience.• In 2015, of INR 360 billion

paid by consumers, ONLY INR 86 billion reached the broadcasters, which is less than 25%. Underreporting of subscribers, carriage fees & lack of digitisation is the reason for this.

2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

100

200

300

400

500

600

700

800

0%

5%

10%

15%

20%

25%

30%

213 245 281 320 361 407 468548

637733

47 57 69 75 86 100 118 145 174 203

22% 23% 25% 23% 24% 25% 25% 26% 27% 28%

Subscription Revenue

Paid by Consumers Recd by Broadcasters %

INR

Billi

ons

2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

100

200

300

400

500

600

700

800

213 245 281 320361

407468

548637

733

116 125 136 155 181 210 242 276320

365

TV Revenues - Split & Growth

Subscription Revenue Advertising RevenueIN

R Bi

lions


Viewership & Ad-Revenue – Disparity!

View Ad RevRegional GEC 29.6% 15.9%Hindi GEC 28.4% 27.5%Hindi Movies 13.4% 6.7%Regional Movies 6.6% 2.8%Kids 5.6% 3.8%Regional News 3.5% 8.3%Hindi News 3.0% 8.4%Regional Music 2.7% 1.4%Music 2.6% 3.0%Sports 2.1% 4.3%Infotainment 1.1% 2.0%English Entertainment 0.5% 4.6%English News 0.0% 5.0%Others 0.9% 6.3%

100.0% 100.0%

• Regional GECs break the Hindi GEC glass ceiling in viewership.

• Regional / Kids channels highly under-indexed

• Hindi movies under-indexed on account of changed release window – TV vs digital.

• News, Sports, English enjoy severe over-indexing


Indian Animation picks up• Broadcasters are willing to pay over

double for good quality Indian Animated content as compared to daily soaps / Hindi general entertainment content, even though this segment gets only 5.6% of the viewership, as compared to 28.4% for Hindi GECs.

• Also the fact that this segment continues to be under-indexed, with only 3.8% ad-revenue share doesn’t bother broadcasters as this content has long-tail revenue

• It offers repeat viewing value, multi-language dubbing value and merchandising value.


Hindi GEC Fiction content changing. Slowly.

• GECs have finally embraced the tele-series format with season-based programming

• The value:volume ratio is reversed in such programming as compared to the daily / weekly soaps.

• For the past 20-odd years, the content has largely mirrored American programming of the 70s-80s, with our soaps comparable to content like the Bold & The Beautiful, Santa Barbara, Dallas, etc.


TV – Key Points

• Digitisation – increased revenue for the broadcaster, should lead to more investment in content (& hence better quality content)

• Global proliferation of Indian-origin content is increasing, albeit for the Indian diaspora only. This is THE BIG opportunity.

• Indian animation on TV is starting to matter.

• Hindi GECs are exploring new content programming & a changed value:volume mix in revenue models.

• Lack of quality viewership measurement systems is an issue. Hopefully, BARC should resolve this.

• Targeted advertising is the next step


Digital – Growth galore!

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

50

100

150

200

250

300

10 1522

3044

60

81

114

153

199

255

INRB

illio

ns

Digital is expected to quadruple its size in the next 5 yrs


Telecom Base – Volume galore!

Tele-Density: 81.83Urban: 148.73, Rural: 50.88

What’s coming?

As of March 2016

Telecom Service Providers

Subscribers

Bharti Airtel 25,12,37,263Vodafone 19,79,46,755

IDEA 17,50,74,042Reliance 10,24,08,072

Aircel 8,70,86,612BSNL 8,63,45,709Tata 6,00,97,988

Telenor 5,24,54,949Sistema 76,91,379

Videocon 65,63,762MTNL 35,60,856

Quadrant 31,63,438 TOTAL 1,03,36,30,825


Digital – global comparison!

• India has the lowest net penetration among all developing countries and much lower than the developed ones.• Despite that, India

has more internet users than the US.

India Brazil China Russia USA UK Japan0%

10%20%30%40%50%60%70%80%90%

100%

19%

53%46%

60%

87% 90% 86%

Internet Penetration

Avg Broadband speed % of connections > 4MBPS 2014 2015 2014 2015

South Korea 25.3 20.5 96% 96%Hong Kong 16.3 15.8 89% 92%

Japan 15.0 15.0 87% 90%Singapore 12.2 12.5 83% 87%

Taiwan 9.5 10.1 78% 88%New Zealand 7.0 8.7 77% 87%

Thailand 6.6 8.2 85% 93%Australia 6.9 7.8 66% 72%Malaysia 4.1 4.9 39% 53%

China 3.8 3.7 34% 33%Indonesia 3.7 3.0 35% 17%

Vietnam 2.5 3.4 14% 31%Philippines 2.5 2.8 9% 10%

India 2.0 2.5 7% 14%


The Digital Business – A BLITZ of growth!

2015 2016 2017 2018 2019 20200.0

50.0

100.0

150.0

200.0

250.0

300.0

51.1 64.9 85.2 107.3 129.5 153.19

16.228.4

46

69.8

102.1

Size of the Digital Business

Web Mobile

INR

Billi

ons

2014 2015 2016 2017 2018 20190

100200300400500600700800900

1000825 857 886 913 938 960

281348

420494

570640

TV Internet

Mill

ions

of U

sers 18%

2015 2016 2017 2018 2019 20200

50100150200250300350400450500

173

232

286

342

399

457

116

188

249299

369

435

Net on Mobile Smartphones

Mill

ions

of U

sers


Digital – Usage

WhatsApp FB Messenger Hike0%

10%20%30%40%50%60%70%80%90%

100% 96%

44%36%

97%

50%

38%

% of Smartphone users accessing AppsOct-Dec 2014 Oct-Dec 2015

PayTM Freecharge MobiKwik0%

5%

10%

15%

20%

25%

30%

35%

40%

22%19%

10%

37%

22%

17%

OlaCabs Uber TaxiForSure0%2%4%6%8%

10%12%14%16%18%20%

2%0%

1%

18%

10%

3%

Flipkart Amazon Snapdeal Myntra Shopclues0%

10%

20%

30%

40%

50%

60%

24%

10%13%

9%3%

49%

30%23%

14%

4%

YouTube Hotstar ErosNow0%

10%

20%

30%

40%

50%

60%

70%

42%

0% 0%

60%

12%4%

DailyH

unt

Times

of In

dia

Flipbo

ard

InSho

rts

Dainik

Bhask

ar

Econo

mic Tim

es

Viral S

hots

0%

4%

8%

12%

16%

20%15%

6%4%

0% 0% 1% 0%

15%

8%6%

3% 2% 2% 2%

59%28%8%

1%4%

Top 100 YouTube Channels, by viewership

Film / TV

Music

Education

Health

Others


Content - Global Digital Platforms


Indian Digital Platforms


Digital – Key Points• Digital platforms of web, mobile & smart TVs are the present & the future.• Content consumption modes & patterns are changing with a large

number of sub-18-yr-olds finding their ‘stars’ online.• YouTube is taking the Indian market seriously and has set up a ‘YouTube

Space’ & ‘YouTube Educator Lab’ in India, in partnership with Whistling Woods International.• Content creation needs to adapt. Content creators are yet to commence

utilising the unique characteristics of the digital platforms & of ‘India’ & are still treating it as a 3rd screen with no censorship. Changes needed are:

o Multi-formatting the content being created to include Digital platformso Specialised writing / content creation structures for Indian digital platforms

keeping in mind the unique characteristics of digital & that of Indian content.o Utilising the entire spectrum of the platform – clickable / interactive video,

AR/VR (360 deg video, etc), gamification of content, etc…


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

10

20

30

40

50

60

70

80

90

100

2431

3540

4551

58

67

78

91

108

INRB

illio

ns

Animation, VFX & Post-Production• The industry has shown growth on

the back of strong VFX / post-prodn growth, but Animation has not grown as much.• Lack of original IP creation is a

major reason of the low growth of the Animation industry.

16.1%

13.8%

2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

1

2

3

4

5

6

7

1

2 2

4

6

1

4

1

5

3 3

0

Animated Films Released Theatrically

2014

2015


2011 2012 2013 2014 2015 2016 2017 2018 2019 20200%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

23% 22% 20% 18% 16% 15% 14% 13% 12% 12%

14% 13% 12% 11% 11% 10% 10% 9% 8% 8%

20% 22% 23% 25% 28% 31% 34% 36% 39% 42%

44% 44% 45% 45% 45% 44% 43% 41% 40% 39%

Animation Services Animation Product CreationVFX Post-Prodn

Animation, VFX & Post-Production• Even though all areas of the industry are growing, the growth is disparate between Animation & VFX / post-prodn.

• From a 65:35 ratio in 2011, the sub-segments reach a 80:20 ratio in 2020.

-

20.0

40.0

60.0

80.0

100.0

120.0

7.1 7.6 8.0 8.1 8.3 8.8 9.5 10.4 11.4 12.5 4.2 4.5 4.7 5.1 5.6 6.0 6.5 7.0 7.6 8.4 6.2 7.7 9.3 11.3 14.4 18.0 22.5 28.4

35.8 45.1

13.5 15.5 17.7 20.4

22.8 25.5

28.6 32.3

36.5

42.0

INR

Billi

ons


Animation on Indian ScreensWhile, only 3 out of the top 10 characters on Indian TV are of Indian origin, 7 out of the top 10 episodes are for Indian

shows


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202005

10152025303540455055

1013 15

1924

2731

3439

45

51

Gaming

INRB

illio

ns

Gaming• Grew over 20%, on the back of

mobile gaming.• With 1bn+ users, increasing travel

time & a young population, India is one of the faster-growing low-end mobile gaming markets in the world

13.9%

2014 2015 2016 2017 2018 20190%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

46% 49% 51% 52% 55% 57%

39% 35% 32% 30% 28% 26%

15% 16% 17% 18% 18% 17%

Mobile Console PC & Online

12.8%


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

2

4

6

8

10

12

14

16

18

20

22

9 9

1110 10

1112

14

16

18

21

INRB

illio

ns

Music• The Music industry shows

growth for the first time in 3 years.

• Over 50% of Indian web users access unlicensed content.

• Music-on-cloud is expected to gather steam as it rides the 3G/4G wave to deliver streamed music, ad supported, free of cost as well as ‘freemium’ music, hopefully denting piracy.

13.8%

10.2%


Music - Consumption• The consumption % reversed

from 2010 to 2015 between physical & digital.

• Films fuel over 80% of the Music industry (Not good!)

• Indian non-film music (Indie / pop / rock / regional) is struggling, with only Religious & Indian Classical music managing to survive.

• Very little structured music education & training

81.0%

10.0%4.0%2.2%2.8%

Music Consumptionby Genre

Bollywood

International

South Indian

Punjabi

Others

0%

20%

40%

60% 58%

33%

6% 3%

20%

55%

15% 10%

Music Consumptionby Source

20102015


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20200

5

10

15

20

25

30

35

40

45

10 11 13 15 1720

2328

3338

43

Radio

INRB

illio

ns

Radio• The growth in 2015 has been built

around increased ad revenue from politics, entertainment, real estate & e-commerce.• The shift to radio is as it is a cost-

effective advertising vehicle, as compared to TV.

16.9%

15.3%


Sports• With the ‘private’ sports

leagues being taxed on lines similar to live entertainment, the line between sports and entertainment has blurred.

• Sports is one of the largest content providers to the broadcast, live events & digital industries.

• In 2015:o Female viewership was at

an unprecedented 38%o Rural viewership at 45%.

Inve

stm

ent

IPL

Rea

ch

Investment

ISL

PKL

IPTLPWL

IBL

UBA

HIL

Star SportsINR 200 billion

Sony SixINR 192 billion

Ten SportsINR 6 million

Neo SportsINR 120 million


Live Events

• Yet to be ‘organised’

• Growth of ~20%

• Margin growth flat

• Government spending (elections / events) still the largest contributor

• Licensing issues

• Taxation issues

• Live IP-based entertainment on the rise:

o Stand up Comedy

o Theatre


Theme Parks• Emerging area• Destination

entertainment (non-natural-tourism based) yet to consolidate in India

• Evolution:o 1980 – Appu Gharo 1990 – Esselworldo 2010 – Imagica &

Wonderlao 2015 – INR 300 bn+

investment committedo Over next 5 yrs, 19%

CAGR.


Jobs in M&E• As per the NSDC, by 2022, the

Media & Entertainment industry would be requiring 12.5 lakh professionals, ~85% of these in the Film, TV & digtial verticals.

• The media industry as a whole still lacks sufficient world-class training facilities to enable professionalism and best practices.

• Significant government-intervention and private investments will be needed to correct this imbalance

2014 2017 2022 -

1.00

2.00

3.00

4.00

5.00

6.00

7.00

1.60 2.40

4.40

1.40

2.80

6.40

0.60 0.70

1.30

0.20 0.30 0.40 0.20 0.30 0.40

EmploymentGrowth

Film

TV

Print

Radio

Animation, VFX, Gaming


Key Disruptions in 2015 / Trends for 2016

• ANALYTICS – Audience Analytics, Operations Analytics, Event Driven

Analytics, Predictive Analytics, Campaign Analytics

• Film – 4k, Digital Rights, Immersive, VR / AR

• TV – 2nd/3rd screen, Targeted Advertising, Interactivity

• Animation & VFX – 3D printing, non-photorealistic rendering, VR / AR

• Advertising – Cross platform, Targeted, Programmatic buying

• Music – Predictive analytics

• Radio – Online platforms

• OOH – Watcher Analytics, Interactivity


What are the pain-points of the Indian M&E Industry?

• Lack of original Intellectual Property creation leading to lack of a globally merchandisable brand.

• M&E Education & Trainingo Of the 4 lakh people employed, nearly 75% involved in content creation have

no formal training.o Very few world-class Film & Media institutes with a combined output of

approx 500 graduates a year, with 200 of them being from a single institute.

• Innovation – we are followers, not leaders when it comes to formats or technical / narrative innovation.

• Piracy - Affects every sector of the industry & causes nearly 35% revenue reduction


The Great Opportunities in M&E

In the M&E industry, building volume is hard. India already has the

volume. We now need to build value to each unit of the already

existing volume. This is done by enhancing quality. The best way to

build quality is be educating & training the industry.

The big opportunities in M&E are:

• Screens for Film

• IP creation

• Digital platforms

• Education in M&E

Thank You!Chaitanya Chinchlikar

Vice President – Business [email protected]