As the Media and Entertainment Industry continues to evolve due to shifting consumer preferences, evolving technology and convergence of traditional and new media, finding a concrete definition of the industry is challenging task. The entertainment industry is now at an inflection point as it is ready to enter a second stage of growth powered by the twin engines of technology and regulatory environment. Lets understand what is happening in the growing industry and how building blocks of media and entertainment industry are reacting:
Films: Film entertainment industry is projected to grow size at a CAGR of 18% and by 2010 is expected to emerge as $3.4 billion. The film industry earns 85% of its revenue from box office collections. The Hindi film industry popularly known as Bollywood, shares 40% of the Indian film market and rest is distributed among the regional film industry. The industry seems to have come full circle after more than 35 years and the corporatisation of the industry, that has just begun, is set to lead it back to the studio culture that it avoided till recently. The Indian Film Industry is now moving towards corporatisation and has lead to the emergence of organized production houses like: Adlabs, Yashraj, Mukta Arts. The other big change is advancements in technology. It is helping the Indian film industry in all the spheres – film production, film exhibition and marketing. More theatres across the country are getting upgraded to multiplexes. There is an increase in the number of multiplexes in the metro cities, and it has changed the entire scenario of Indian films.
Animation: Backed by India’s strong foothold in the global IT arena, the Indian media and entertainment industry has the opportunity to emerge as a global hub for digital entertainment. The prowess in IT is helping the industry to offer a whole range of services for the world in digital entertainment – from content and animation to distribution. Hollywood has already begun sourcing creativity from India in a big way. One of the boosting developments in the sector has been the $40 million deal between Italy’s Mondo TV (Europe’s No.1 cartoon producer and distributor) and India’s Padmalaya Telefilms, which is a subsidiary of Zee Network. Many global media players are ready to enter India in a big way and some of the animation companies have already established their base in India. According to NASSCOM, the animation industry is growing with a CAGR of 25% and is expected to reach $869 million by 2010.
Music: In India, the pattern of music consumption and distribution has shifted radically in recent times. Music buying has reduced and, despite the popularity of the new Hindi films, which make up for 40 percent of total music sales, the number of units being sold is falling. On the other hand, piracy has ensured that the average retail price of music cassettes remains stagnant over the years, while that of CDs fall. Music industry is projected to grow at CAGR of 1% and emerge as $164 million industry by 2010. The saving grace is mobile music. India has emerged as the largest market for mobile music. It is growing at a pace of 50% and this segment is expected to exceed the sales of physical music CDs and cassettes. Mobile music is projected to fuel the growth of the music industry.
Television: Television in India has undergone a major transformation from being a single public service sector broadcaster market, to more than 350 channels. With the launch of new channels, this segment is expected to grow at a CAGR of 24% and will achieve $9.5 billion by 2010. Advertisement spending in Indian television has been growing at the rate of 21% per year and has a significant influence on the growth of this segment. Moreover, the new distribution platforms such as DTH and IPTV will increase the subscriber base and the revenue of the industry. In fact, the television industry is posing a threat to the country’s film industry.
Radio: The radio has always been the monopoly of the state broadcaster ‘All India Radio’ and was regulated by the ‘Prasar Bharti’. But with the de-regulation of the industry, the fortunes of radio have significantly improved. It has made a tremendous comeback with its Frequency Modulation (FM). Nowadays, the FM Radio craze has spread like wildfire throughout the country. In 2005, the government announced three key policy initiatives which will drive growth in this sector - migration to a revenue share regime, allowing foreign investment into the segment and opening of licenses to private players. As many as 338 licenses are being given out by the Indian government for FM radio channels in 91 big and small towns and cities. Moreover, the introduction of satellite radio has also increased the revenue and popularity of this segment. Radio is projected to grow at 32% CAGR and emerge as $267 million industry by 2010.
Live entertainment industry: Live entertainment industry is expected to grow at CAGR of 18% and estimated to increase the market size to $400 million by 2010. While this industry is evolving, Indian event managers have clearly demonstrated their capabilities in successfully managing several mega national and international events over the past few years. However, issues like high entertainment taxes in certain states, lack of world-class infrastructure and the unorganised nature of most event management companies continue to hinder growth of this industry.
Print: Print media is projected to grow size at CAGR of 12% and by 2010 is expected to emerge as $4.3 billion industry. A booming Indian economy, growing need for content and government initiatives that have opened up the sector to foreign investment are driving growth in the print media. With the literate population on the rise, more people in rural and urban areas are reading newspapers and magazines today.
Out-of-home advertising: Out-of-home advertising is expected to grow at CAGR of 14% and estimated to increase the market size to $389 million by 2010. Outdoor media sites in India are predominantly owned or operated by small, local players and are typically, directly marketed by them to advertisers and advertising agencies. However, this segment too is witnessing a sea-change with technological innovations. Growing billboard advertising is fuelled by technologies such as light-emitting diode (LED) video billboard. This is a segment that is seeing interesting technological innovations across the world and is likely to evolve in India too in the short-term.
Internet: Internet advertising is projected to grow at CAGR of 50% and estimated to emerge as $167 million by 2010. An estimated 28 million Indians are currently hooked on to the Internet. And this rising number is leading to the growth of Internet advertising. The Internet is being used for a variety of reasons, besides work, such as chatting, leisure, doing transactions, writing blogs etc. This offers a huge opportunity to marketers to sell their products. And with broadband becoming increasingly popular, this segment is expected to grow by leaps and bounds.
Conclusion
The Indian entertainment and media industry industry has been a lucrative industry of the Indian economy that has been contributing its share of Gross Domestic Product (GDP), in a major way. With a host of factors contributing to the double-digit growth of the media and entertainment industry and an added easing of the foreign investment norms, the Industry in India is a definitely a sunrise opportunity for investment. No wonder, the entertainment and media industry has out-performed the Indian economy and has emerged as one of the fastest growing sectors. This is evident from the fact that large number of television channels and private radio stations has come up to start their operation, Indian films like ‘Devdas’ and ‘Laggan’ have come up for Oscar nominee. The Indian entertainment and media industry of India is now at the threshold of new developments with lot of growth and opportunity waiting to embrace all its segments.
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