Light touch regulation critical for streaming businesses: K Madhavan

Confederation of Indian Industry (CII) today opened its 11^th Edition of CII BIG PICTURE SUMMIT 2022 in Delhi. K Madhavan, Chairman, CII National Committee on Media & Entertainment and Country Manager & President, Disney Star, opened the summit with the welcome address focussed on ‘Scaling new heights of Content, Creativity, Innovation’.

 Following is the full text of K Madhavan’s address -

TRAI Chairman Dr. Vaghela, my colleagues, dignitaries on the panel, and respected guests…

 Good morning.

Welcome to the 11th CII-Big Picture Summit, a landmark edition, as this notable event enters its second decade, after launching in 2012. After two years of meeting virtually, I could not be more excited to see all of you in person.

The Big Picture Summit has established itself as a “must-attend media event” bringing key policymakers, regulators and industry stakeholders together. It is the biggest forum to discuss the potential of the media industry, which holds infinite power to influence and shape society. 

The last few years have been nothing short of a roller-coaster for all of us. A few quarters of struggle – with difficulties in producing content, closure of cinema halls and a cut-back in advertising spends during the pandemic… was followed by a cycle of a strong revival. That our industry is today performing better than pre-pandemic levels, is reflective of its agility and its readiness to embrace challenges 

While the global macroeconomic situation is getting more challenged, with the Ukraine war, high oil prices, tech meltdown, inflation, recession, etc. we are fortunate that India remains insulated, with a GDP growth rate of close to 7%.

• We have a booming digital ecosystem supported by low data costs, 800 million wireless broadband connections and a smartphone base that is expected to touch 1 billion shortly
• We have a robust payment infrastructure. It is a matter of pride, that the usage of our home-grown UPI, has recently exceeded 150 billion dollars worth of transactions in a month, and is being used in every nook and corner of the country. And various countries now want to replicate our model of success
• Favourable government policies and a thrust to boost local manufacturing can surely help us become suppliers to the world, especially at a time when the world is looking at diversifying its sourcing destinations
• It is also an opportune time that our country is rolling out 5G, which can provide an impetus to emerging opportunities like streaming, Metaverse and gaming businesses.

With such a strong foundation, the next decade will indeed belong to India. 

But we, in the media industry need to constantly keep pace with the changing environment. Or, we will stagnate and risk being irrelevant. Disruptive innovation is happening at a staggering rate. Consumers are changing, technology is changing, and consumption behaviour is changing. We have to challenge the status quo and question our own, old successful formulas.

We need to recognize and address what young audiences are looking for. Digital is a way of life for them. They spend more hours in the virtual world, totally consumed by digital products like streaming and gaming.

 They are also getting involved with the physical and virtual world of Metaverse which has immense potential to be innovative with unique experiences. Imagine, the Metaverse allowing users to walk around the arena during LIVE sports; or sitting next to the participants or the host during reality shows – the innovations are limitless, bound only by one’s imagination…..

 As a country, we should be ready to address all future challenges, and seize the opportunities that our sector offers, to make India the creative hub of the world. I truly believe we have that potential, and there could not have been a better time, to be part of the India growth story.

 Now let us take a critical look at the Media and entertainment industry in India. 

The reality is that our sector remains under-penetrated. The media & entertainment industry accounts for less than 0.9% of GDP, compared to 3 to 4% for many of the developed countries. Also, both subscription and ad revenues in India are much below global levels.

 If we look at some of our sub-segments – In a country with 300 million households, 100 million households are still without a television set, which provides enough headroom for growth. The broadcasting industry being a powerful medium to educate, inspire and empower viewers – it is pertinent, that the government and industry join together to provide television access to all households in India.

Streaming is a fast-growing sector in India. Low data prices, wireless broadband, and smartphone penetration have been catalysts to this phenomenal growth. This segment is expected to continue witnessing strong double-digit growth. It is also important to mention here that the rollout of 5G services will provide it a further boost. Light touch regulation is critical, for continued innovation and investment in streaming businesses.

The movie segment is passing through a challenging time. While regional movies have done relatively better, overall, it is time for the industry to think boldly and redefine its approach. It is time for Bollywood to take a serious look at the recent box office failures and redefine its strategy to attract both local and global audiences. Some of the recent regional movies have been very successful both in India and on global streaming platforms and it is validation that we have the potential to take our movies to global audiences. And it is time for us to work towards this goal. 

AVGC is an 800-billion-dollar industry globally. Yet, even with the huge talent force available in the country, we do not even have a one percent share. This can be another IT like sector, and we can definitely target a 5% market share in 5 years time. That is close to 40 billion dollars and with a potential to create 160,000 jobs.

Gaming is another high-growth segment, with skill-based gaming an important contributor. However, there is a lot of ambiguity around it without a lack of clarity on gaming and gambling, with some states disallowing genuine gaming operations. Globally, gaming is estimated to be a 230-billion-dollar industry and here too, our market share is less than one percent. Bringing regulatory clarity at the national level, therefore, is important for the growth of this segment.

Sports in India is still at a nascent level. We have recently seen billions of dollars being committed to sports rights. The policymakers and regulators should provide a robust environment for continuous investments that can transform India into a sporting nation. The regulator should leave price discovery for distribution to the market mechanism. Investments in indigenous sports like Kabaddi will definitely encourage the adoption of sports all over India including in villages. 

I see a big opportunity taking our content to global audiences. South Korea has set a great example in demonstrating repeatedly that good content travels beyond boundaries and beyond language barriers. Despite having a strong ecosystem of talent, production efficiencies and creative capabilities, we have not been able to make a mark at the global stage. This is an area where the industry needs to put its head together and put in all its efforts to create travelable content and become storytellers to the world.

Of course, news, print, music and radio continue to be important contributors to our industry and are undergoing massive changes. It is time for these sectors to understand the changing consumer habits and re-invent themselves with a digital approach.

With the right support from policymakers and regulators I am confident that with the opportunities ahead of us, our industry can achieve its 100 Billion Dollar ambition in the shortest possible time.

We continue to engage with the government and regulators on various topics and I want to take the opportunity to thank the government and regulators for the support extended to the industry all through.

In the most challenging environment, timely support from policymakers and regulators is of utmost importance, to address some of the most critical issues for the industry.

• Rampant piracy is a serious issue, and we as an industry suffer. Intellectual Property is core to our business, and we need stricter and more supportive IP protection and anti-piracy measures
• Television broadcasting has been severely impacted, pending a resolution on NTO. A quick resolution is important for consumers, broadcasters as well as distributors. Ideally, we should adopt a principle of forbearance, in line with practices in most of the developed markets. We are closely working with Dr. Vaghela and TRAI on this matter and are hopeful of a positive resolution soon.
• The industry would like to see a light touch regulation. It will encourage especially in the newer and growing areas like OTT, innovation and investment
• Considering the potential of the gaming industry, the govt. should bring regulatory clarity at a National level for the growth of the segment.
• We are also looking to the ministry of I&B for support on a comprehensive National Broadcast Policy covering Cable Television Network Act and in retaining a light tough policy framework, especially in areas related to content. 

We have a packed two days ahead where we have sessions on many of these important topics and emerging trends. We also have a BCG report on the industry as well as a KPMG report on sports that will be released during the summit. I hope all of you find the sessions interesting and fruitful.

Thank you all and welcome once again. I am sure, together, we will make the mission of Entertainment for every household, and every Indian- a reality and take our industry to greater heights.