Showbiz industry to grow by 13%: FICCI-KPMG report

The Indian Media and Entertainment (M&E) industry stood at Rs 587 bn in 2009, a growth of 1.4% over the previous year. Over the next five years, the industry is projected to grow at a Compound Annual Growth Rate (CAGR) of 13 per cent to reach the size of Rs1091 bn by 2014, says a FICCI & KPMG report released at FRAMES 2010.

The report however, highlights that the industry went through a tough phase due to economic slowdown and cut down in advertising spends. However, the industry witnessed a recovery in the last quarter of the year and this is expected to continue going forward. 2010 is expected to see the industry coming out of the shackles of the slowdown and ad spends increasing. Incidentally, the subscription revenues of TV and print grew by 8.5% in 2009 to reach Rs 241 bn.

Some sectors were impacted more than the others like OOH, Films and Radio, which registered a negative growth during the year. In 2010, they are expected to recover somewhat with a moderate growth rate. Last year Print showed a very moderate growth, whereas TV industry showed a good growth rate. Music, Internet, Gaming and Animation, brought reasons to cheer for the industry with their growth rates touching double digits, albeit on a smaller base.

Advertising spends grew at CAGR of 10 per cent in the past three years with almost flat growth in 2009.

Commenting on the highlights of the report Dr. Amit Mitra, Secretary General, FICCI said, "The media & entertainment industry represents the face of consumers in India. It is a part of our daily life and touches the maximum number of people. Despite the challenging last year, I am excited by the potential of the industry to perhaps grow beyond 13 per cent per annum over the next few years.

Commenting on the highlights of the report, Rajesh Jain, Head Media & Entertainment, KPMG in India said, "The year 2009 saw M&E industry growing through a tough phase as advertising revenues were impacted in line with the challenging economic scenario. However, the subscription revenues continued to grow. Industry players looked at sustainable cost optimization and sought means to better connect with their customers The untapped potential for growth in media reach, impact of digitisation and convergence, better consumer understanding, sustained efforts in innovation, and enhanced penetration of regional markets all augur well for the industry"

Given the industry's changing landscape and emerging challenges, the focus of industry players too is changing; with a stronger focus on profitability. Factors like Digitisation, Regionalisation, Convergence of new media etc are some of the trends in the industry and are expected to drive growth going forward.

The television industry is projected to grow at the rate of 15 per cent over 2010-14 and reach a size of INR 521 billion in 2014. This growth will be driven by a rise in subscription and advertisement revenues for the industry.

Over the next 5 years, the industry is projected to grow at the CAGR of 9 percent and reach the size of INR 137 billion by 2014. Growth drivers for the sector would include expansion of multiplex screens resulting in better realizations, increase in number of digital screens facilitating wider releases, higher C&S revenues, improving collections from the overseas markets and ancillary revenue streams like DTH, digital downloads etc which are expected to emerge in future.

The industry is projected to grow at a CAGR of 9 per cent over the next five years and reach around INR 269 billion in size by 2014. Growth in the Print media industry is achievable through sustained growth in advertisement revenues due to increased advertising spends from emerging sectors such as Education, Organized Retail and Telecom, improving literacy levels in the country, optimization of cover prices leading to improved penetration and growth in sales volume, increasing importance of regional print etc.

It is expected to grow at a CAGR of 16 percent over 2010-14 and reach a size of INR 16.4 billion by 2014. Increase in the number of radio stations in Phase 3, expected regulatory reforms that are likely to improve profitability and stimulate foreign investments, enhancement of current measurement systems and growth in locally targeted advertising are some of the growth drivers for the sector.

The size of the Indian music industry was estimated at around Rs8.3 billion in 2009, up from INR 7.3 billion in 2008, implying a growth of 14% during the period. One of the primary reasons for this growth was the increased acceptability of different digital distribution models, acceptability of music genres other than the Indian film industry, and broadcast and public performance licensing revenues, all of which compensated for declining physical sales and are expected to drive growth going forward. Overall the music industry is expected to grow at a CAGR of 16% over 2010-14 to reach INR 17.2 billion.

OOH media has grown at a CAGR of 5 percent over the past 3 years, and is estimated to have reached INR 13.7 billion in size in 2009, a de growth of 15 percent over 2008. The sector's performance was affected owing to the overall economic slowdown. Till now, the growth has been centred largely in Tier 1 towns but a noticeable trend in 2009 was increased investments in Tier 2 and 3 cities. Currently, top 6 metros account for ~60% of OOH spends but only 30% of consumption presenting a tremendous latent potential for growth. It is projected to grow at a compounded rate of 12 percent over the next 5 years and reach a size of around INR 24.1 billion by 2014.

Animation:

Gaming is expected to be the fastest growing sector in the M&E industry. While the sector has shown a 22 per cent growth in 2009, it is expected to grow at a CAGR of 32 per cent in the next 5 years to reach INR 32 billion by 2014. Console gaming currently constitutes the largest share of the pie, but going forward mobile gaming platform is expected to eventually surpass levels of console games.