Introduction
The Media and Entertainment (M&E) industry in India recorded revenues of US$ 16.3 billion in 2010 and is expected to be in excess of US$ 25 billion in the next four years, according to an Ernst & Young report ‘Spotlight on India's Entertainment Economy.' Growing digitisation, media consumption and improving demographics are the most important drivers responsible for the growth of this industry.
Factors such as economic liberalisation, near double-digit annual growth, fast-growing middle class and a huge volume of demand for leisure and entertainment, have enticed global media companies to scale up investments in India. The Indian media and entertainment industry now finds itself at a new turning point—digital media. A rise in mass broadband adoption is expected, led by the launch of 3G and 4G services. By 2015, 90 per cent of India's projected 187 million broadband subscribers will access the net through wireless devices.
"The M&E industry in India has been, and will continue to be, one of the biggest beneficiaries of India's favourable demographics," as per Farokh Balsara, Ernst & Young's media and entertainment leader for Europe, West Asia, India and Africa.
Some of the important findings in the report indicate that media and entertainment industry is a lucrative option for making investments. India's increasing per capita income, growing middle class and working population are generating huge domestic demand for leisure and entertainment. India has more than 600 television channels, 100 million pay-television households, 70,000 newspapers and produces more than 1,000 films annually.
India has diverse regional markets with different cultures, languages and content preferences. These markets provide global media and entertainment companies' ample amount of opportunities to deliver localised content. India's favourable regulations and reforms are creating investment opportunities for global media and entertainment companies.
"The growth strategies in most companies in the US and Western Europe are linked to India and other emerging markets," as per John Nendick, Global Media and Entertainment Leader at Ernst & Young. "However, to succeed in India, global media and entertainment companies need to navigate unique challenges in the areas of content localisation, distribution and pricing, regulations and piracy." he added.
Television
According to a report by KPMG and a leading industrial body, India is the world's third largest Television (TV) market with almost 138 million TV Households (HHs) next to China and USA. Cable and Satellite (C&S) penetration has reached around 80 per cent with high growth shown by the direct-to-home (DTH) service. New technologies like high definition (HD), Set Top Boxes (STBs) with inbuilt recorders and delivery platforms like mobiles are evolving rapidly, creating ample opportunities for innovation and growth. By 2015, television is expected to account for almost half of the Indian M&E industry revenues, and more than twice the size of print, the second largest media sector.
Radio
The radio sector in India has taken approximately 50 years to grow from infancy to adolescence. Regulatory reforms, including opening up of the sector to private players and replacement of the fixed license fee regime with a revenue-sharing license regime has led to a resurgence of this sector.
Digitisation
Digital platforms include digital cable, DTH and IPTV platforms as opposed to the traditional analog cable which still dominates the Indian market. The number of analog cable subscribers is witnessing a flat or de-growth with increasing penetration of digital distribution systems. The digital subscribers are expected to surpass the analog subscribers by 2013. The Government is attempting to steadily shift towards digital by making it compulsory to convert to digital addressable infrastructure. March 31, 2015 has been set as the revised deadline by Telecom Regulatory Authority of India (TRAI) for digitisation of the entire industry in a phased manner. Delhi, Mumbai, Kolkata and Chennai are required to shift to digital addressability by March 31, 2012. The next phase will include 35 cities with population greater than one million to make the transition by March 31, 2013. All urban areas are expected to convert by November 30, 2014 and the remaining areas by March 31, 2015.
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