industry & sector analysis of media sector

8/8/2019 Industry & Sector Analysis of Media Sector

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By:~ Abhijeet Mishra, Ankit Kesarwani,Mohit Khurana,Vishal Jaiswal,Shr uti Verma,Pu ja Srivastava, Mohd.Arish



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I

ntroduction Media And Entertainment is one of the most booming sectors

of the Indian economy.

The Indian Media And Entertainment industr y, with theprominent segments being films, television, and music hasear ned high revenues in the recent past.

The increasing rate of ur banisation, the penetration of television and radio industr y in the r ural areas with the help of the technology and the rising levels of incomes of the peoplein India has facilitated the growth rate of Media And

Entertainment industr y in India.



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I

ntroduction Contd« The Media And Entertainment industr y grows faster than the

gross domestic product growth (GDP) due to the elasticity of income.

The sector is rapidly evolving and has a tremendous untapped potential stored in it. The Indian Media And Entertainmentindustr y stood at Rs 43,700 crores in the year 2006 and isexpected to grow at an annual rate of 19% to reach Rs 83,740

crore by 2010.

We are providing here an overview on the Media And Entertainment sector in India, its scope as well as job opportunities in the sector for the aspirants.



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EMERGING TRENDS IN Media And

Enter tainment SECTOR

New distribution channels

Convergence



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Categorisation Of the Sector The Indian Entertainment & Media industr y can be categorised as follows:

F

ilm Enter tainment Television

Music

Radio

Print (Primarily Newspapers & Magazines)

Live Enter tainment



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SWOT Analysis of Media And

Enter tainment IndustrySTRENGTHS

1. Media And Entertainment is one of the most booming sectors in India due to its vast customer reach. The various segments of the Media And Entertainment industr y like television and filmindustr y have a lar ge customer base.

2. The growing middle class with higher disposable income has become the strength of the Media And Entertainment industr y.

3. Change in the lifestyle and spending patter ns of the Indian masses on entertainment.

4. Technological innovations like online distribution channels, web-stores, multi- and mega-plexesare complementing the ongoing revolution and the growth of the sector .

5. Indian film industr y is second lar gest in the world and the lar gest in terms of the films produced and tickets sold.

6. The low cost of production and high revenues ensure a good retur n on investment for Indian Media And Entertainment industr y.



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Enter tainment IndustryWEAKNESSES:

1. The Media And Entertainment sector in India is highly fragmented.

2. Lack of cohesive production & distribution infrastr ucture, especially in the case of music industr y.

3. The lack of efforts for media penetration in lower socio-economic classes, where the mediapenetration is low.



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Enter tainment IndustryOPPORTUNITIES:

1. The concept of crossover movies, such as Bend It Like Beckham has helped open up newdoors to the crossover audience and offers immense potential for development.

2. The increasing interest of the global investors in the sector .

3. The media penetration is poor among the poorer sections of the society, offering opportunitiesfor expansion in the area.

4. The nascent stage of the new distribution channels offers an opportunity for development.

5. Rapid de-regulation in theIndustr y.

6. Rise in the viewership and the advertising expenditure.

7. Technological innovations like animations, multiplexes, etc and new distribution channels likemobiles and Inter net have opened up the doors of new opportunities in the sector .



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Enter tainment IndustryTHREATS:

1. Piracy, violation of intellectual property rights pose a major treat to theMedia And Entertainment companies.

2. Lack of quality content has emer ged as a major concer n because of the'Quick- buck' route being followed in the industr y.

3. With technological innovations taking place so rapidly, the media sector isfacing considerable uncertainty about success in the mar ketplace.



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Economic AnalysisIncreasing investments by the private sector and foreign media and entertainment (M&E)

majors have enhanced India¶s entertainment infrastr ucture.



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Mar ket overview

The Indian entertainment mar ket continues to grow at a healthy pace.



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Mar ket Overview Contd«



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Domestic demand

T VIn 2009, the industr y generated estimated revenues of US$ 5.68 billion (INR 272.7 billion).

India is home to 134 million TV households, of which 90 million are served by cable and satelliteTV.

As many as 500 TV channels were operational in 2009.

The adoption of digital distribution platforms ²direct-to-home (DTH) and digital cable ²is helping TV distribution become more or ganised. From about two million digital TV households in 2006, theplatform currently caters to about 15 to 17 million digital subscribers.

FILMS

In 2009, the industr y generated estimated revenues of US$ 2.73 billion (INR 131.1 billion).

The industr y 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. In 2008, 3.3 billion tickets were sold for films screened across 10,000 theatre screens.

There are presently more than 800 multiplex screens in India, and this is estimated to growto 1,500 screens in the next two to three years.



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Domestic demand Contd«

Radio

Music

Newmedia

In 2009, the industr y was estimated at US$ 201 million (INR 9.7 billion).

GoI-controlled All India Radio ( AIR) and 37 private FM radio companies thatoperate close to 280 FM radio stations in India cater to this segment.

The music industr y generated revenues of US$ 369 million (INR 17.7billion) in 2009.

Distribution via digital formats on the Inter net and through mobile phones isthe emer ging business model for music companies.

In India, the trend to access videos through the Inter net and mobile phones is fastgathering momentum.

Almost ever y major M&E player now has a strategy to host its content on new mediaplatforms. Consumers can now access entertainment content online or on their mobiledevices in the form of audio and video files and text-based content.



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Inter national demand

Indian films are increasingly gaining popularity among inter national audiences. Indian producers are releasing

more prints to reach wider inter national audiences. As aresult, collection from the overseas mar ket is improving. The recent Hindi blockbuster, 3 Idiots was released with

an unprecedented 344 prints.

Many Indian TV channels are available overseas on major TV distribution platforms.



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Growth drivers Favourable demographics

Apar t f rom being home to the second-largest population in the world,

India is among the world¶s youngest nations, with more than 52 per cent

of its population below 25 years of age.

Increase in disposable income

With consumers¶ disposable income rising, spending on leisure and

enter tainment has increased.

Changing consumer landscape

Growth in consumer spending is expected to accelerate growth in

adver tising expenditure.

Urbanisation

The prolif eration of organised retail outlets and malls is f acilitating the

rapid expansion of multiplexes across the country.

Suppor tive regulatory f ramework

FDI is per mitted in almost all segments of the industry, with 100 per cent

FDI per mitted in up-linking TV channels (except news) and the f ilm and

music segments.



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Key trends

Decoupling of content

fromplatforms

Business

modelredefinition

Content is becoming independent of platforms. For instance, a filmtypically made for theatrical releases is now cashing in on revenuesfrom multiple platforms such as satellite, home video, mobile and theInter net. Digitisation enables decoupling. The digitisation of content makes it

possible to distribute it across many platforms, while the digitisation of platforms enables interactivity and the aggregation of many types of content.

Lar ge Indian media conglomerates are increasingly shifting from a one-platform business model to a multi-

platform one. Companies are becoming integrated media playerswith interests across various M&E segments such asTV, film and new media.



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Key playersTV Films Radio Music

Sony PicturesTelevision Inter national

Yash Raj Films Entertainment Networ k (India) Limited (ENIL)

T-Series

New Delhi Television Limited (NDTV)

Reliance Media Wor ksLtd

Big FM Venus

United Television (UTV)SoftwareCommunications Ltd

UTV Motion Pictures South Asia FM Ltd (S AFL)

Saregama

Viacom 18 PVR Ltd Tips

Star BIG Cinemas

Zee EntertainmentEnterprise Ltd (ZEEL)

INOX Leisure Ltd



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Industr y infrastr uctureInvestments from the private sector and foreign M&E majors primarily f und India¶s entertainment

infrastr ucture. Gover nment-owned enterprises, too, have developed extensive infrastr ucture to provideentertainment services to the majority of India¶s population.



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Investments

The lar gest inbound deal was valued at US$ 126.5 million, wherein Time War ner acquired a 92 per cent stake in NDTV Imagine through its subsidiar y, Tur ner Inter national.

The lar gest outbound deal was UTV Software and CommunicationsLtd increasing its stake in its Alter native Investment Mar ket of London Stock Exchange ( AIM)-listed company, UMP Plc, at a dealvalue of US$ 46.3 million.

The lar gest domestic deal was Viacom18 Media Pvt Ltdµsdivestment in IBN18 Broadcast Ltd at a deal value of US$ 62.5 million.



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Policy and regulator y framewor k

TV ± In 2004, the Telecom Regulator y Authority of India (TR AI) was appointed as a regulator for

the TV industr y.

± Up to100 per cent FDI is permitted in TV channels.

±

The rollout of DTH TV licences and GoI

-mandated digital conditional access systems (C AS)initiated the digitisation process. The recently announced Headend-in-the-Sky (HITS) policy and a concessional customs duty of 5 per cent on importing digital headend equipment isexpected to give f urther impetus to the digitisation process.

Films ± In 2000, the GoI granted industr y status to the Indian film industr y and permitted FDI of up to

100 per cent in film-related activities.

±Various state gover nments have also provided entertainment tax exemptions to multiplexes.

Radio ± Following the opening of FM radio broadcasting to private players in Mar ch 2000, the rollout

of the second phase of the FM radio licensing policy in 2005 provided a thr ust to the sector .

± In radio companies, FDI is limited to 20 per cent of the company¶s paid-up equity capital.



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OpportunitiesInvestment in regional markets

± Rising affluence levels have directly led to increasing levels of consumption across semi-ur ban and r ural towns. Accor ding to a study by Er nst & Young, non-

metro and semi-ur ban towns constituted more than 70 per cent of the totalconsumption mar ket of 100 cities mapped. In addition, the growth rate of consumer expenditure in these regional mar kets was higher than the metros.

±Entertainment companies are expected to focus on penetrating these regionalmar kets, which hold the possibility of high retur ns.

Investment in new media

± New formats for entertainment such as computers, mobiles and other handheld devices are likely to be the most significant channels, as digital media has thehighest visible retur n on investment.

±Entertainment companies will have to develop a focussed new media strategy tomonetise their content better . Traditional entertainment companies could alsoconsider diversif ying their risk by entering the new media segment. For instance,broadcasters could venture into mobile and Inter net services. Traditional filmproduction houses could increase revenues from their content libraries by going online.



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Opportunities Contd«

Development of content f or a specif ic target

audience ± Entertainment companies will have to generate content that appeals to

specific tar get audiences. More content is expected to be generated for youth and emer ging niche audiences.

± Companies will have to understand consumer preferences to developcontent and subscription models that can help them acquire and retain the right consumers.

Alliances and par tnerships

±Entertainment companies are expected to form partnerships or alliancesacross content creation, distribution or sales to de-risk their businessesand optimise resour ces.

± The number of content-sharing alliances with domestic as well asforeign players has been increasing.



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Opportunities Contd«IP protection and monetisation

± Entertainment companies will tr y to protect and monetise their intellectual property (IP). For instance, content producers and broadcasters can jointly own content and explore ways to tap revenuesfrom different streams.

±Alter natively, broadcasters whose content reaches vast audiences in various countries would ensure effective monetisation of these rights.

Digitisation

± The industr y is adopting digital technologies to over come distribution inefficiencies, reduce the cost of distribution and cur b piracy.

± With local cable operators (LCOs) and multi-system operators (MSOs)

going digital and the advent of DTH and Inter net Protocol Television (IPTV), companies are likely to be presented with vast opportunities in the long r un through value-added services provided on these digitalmedia. Companies will have to digitise their content and becomedigitally enabled to f ully leverage such opportunities.



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THANKYOU



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