Dream run seen for India\’s media, entertainment industry

India\’s $13-billion media and entertainment industry - a vibrant reflection of its growing soft power, fiercely-free press and globally-acclaimed cinema - is set to grow 13 percent per annum to log revenues of $24.25 billion by 2014, says a new study.

Conducted jointly by leading industry lobby Federation of Indian Chambers of Commerce and Industry (FICCI) and global consultancy KPMG, the study says the recovery staged by this industry during the last quarter of 2009, after a year of major slowdown, will now continue in the future.

And this growth, the study adds, will be driven by a host of factors such as favourable demographics, high economic growth, strong fundamentals, expected rise in advertising revenue and increasing penetration.

\”The media and entertainment industry represents the face of consumers in India,\” says FICCI secretary general Amit Mitra, who released the study recently at India\’s commercial and entertainment hub of Mumbai.

\”Media and entertainment is a part of our daily life and touches maximum number of people. So despite the challenge of last year, I\’m excited by the potential of the industry to even grow beyond 13 percent per annum over the next few years.\”

The findings are not surprising for a country that has been producing some 1,000 movies a year, allowed 512 domestic and overseas TV channels to broadcast programmes, licensed six direct-to-home operators, approved 423 FM radio channels and registered 69,323 newspapers.

\”We are at the threshold of a huge burst on the entertainment arena in India,\” says Shah Rukh Khan, a movie superstar with fan following not only in India, but in many countries that have a concentration of Indian diaspora who number 25 million in 130 countries.

He says with India\’s fast paced economic growth fulfilling the basic three needs of Indians, namely food, clothing and shelter, the desire is go for the next level of satisfaction.

\”There is now a fourth desire and that is entertainment. Movies are a popular source of this fourth requirement. Another concept popularly emerging and posing to have a great future is sports entertainment,\” says Khan.

Last year also saw Indian cinema reach glory when \”Slumdog Millionaire\”, a rags-to-riches story of a young shantytown dweller in Mumbai, went on to win eight of the 10 Academy Awards it was nominated for.

Then, Big Pictures, a part of the Reliance Anil Dhirubhai Ambai Group that has a market capitalisation of $81 billion, forayed into Hollywood to make films with celebrated director Steven Spielberg with initial funding of $825 million.

This apart, Hollywood\’s Warner Brothers continued its tryst with Bollywood by producing another blockbuster film \”Chandni Chowk to China\”, starring leading actor Akshay Kumar, with plans for more such films this year.

\”The time has come for having a symbiotic relationship where Bollywood and Hollywood can both feed off their knowledge instead of just movies. The economics will follow. Then, together we can have a global audience watching our movies,\” says Khan.

\”The big investment we look for from Hollywood is for training to run machines for visual effects. We need to develop people who can make us our own cheaper, better and faster software for filmmaking and have a special branch of trained visual effects teams and talent.\”

Given the potential for Indian cinema, distributors are now increasingly aiming for a wider reach for their films. For instance, \”Three Idiots\” was simultaneously released overseas with nearly 400 prints worldwide — 210 in the US alone.

Looking forward, the FICCI-KPMG study says several factors augur well for this industry, notably the growing reach of media, digitisation, convergence, better consumer understanding, innovation and enhanced penetration of regional markets.

\”The media industry is experiential. Companies need to enhance overall customer experience. This includes engaging content and better infrastructure to attract and retain customers,\” says Amit Khanna, chairman of Reliance Entertainment.

Given these factors, the study projects the growth for other segments as well and projects revenues for TV companies to jump from $5.71 billion to $11.58 billion, for films from $1.98 billion to $3.09 billion, for print media from $3.88 billion to $5.97 billion and for radio from $173 million to $364 million.

Gaming, it says, will be the fastest growing segment, given the country\’s base of 600 million telecom subscribers. This segment grew 22 percent in 2009 and is expected to expand by 32 percent per annum to reach $711 million by 2014.

It has also identified to 10 key drivers of growth:

* Digitization will help in spreading the reach and impact

* Regionalisation will aid in inclusion of untapped markets

* Convergence and Impact of new media will benefit media players

* Consolidation is leading to emergence of players with superior capabilities

* Competition is expanding the operating market

* Talent development and management are becoming key to business success

* Innovation is sweeping across products, process, marketing and business models

* Growing importance of pay markets in media business models

* Consumer research will ensure consumer oriented media products and delivery

* Players are using multiple modes of connecting with consumers

\”Media spend in India as a percent of gross domestic product is 0.41 percent now. This ratio is almost half of the world\’s average of 0.80 percent and is much lower compared to developed countries like US and Japan,\” says the study.

\”This indicates the potential for growth in spends as the industry in India matures. As we move towards a more brand- conscious society, this is likely to get reflected in the future growth rates.\”