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Indian M&E industry crawls at 1.3% to touch Rs 591.6 bn in 2009: KPMG

MUMBAI: The Indian media and entertainment industry, which went through a tough phase in the last two years due to a slowdown in the economy, has registered a measly 1.3 per cent growth in 2009 to touch Rs 591.59 billion.


The M&E sector is hurt by a slump in advertising budgets that account for almost 40 per cent of its revenues, according to the Ficci-KPMG report that is to be released tomorrow at Frames 2010.


The TV industry, however, displayed an almost double digit growth, mainly on account of subscription revenues. Advertising revenues also showed positive growth, the study said.


Internet, gaming and animation also showed signs of double digit growth, albeit on a smaller base.


Some sectors were impacted more than the others like OOH and films, both of which registered a negative growth during the year. Even in 2010, they are expected to recover with an almost flat or moderate growth rate. Sectors like print, radio and music either remained flat or showed a very moderate growth.


For 2008, KPMG had assessed the industry at Rs 584 billion, a 12 per cent increase over the year-ago period.


Interestingly, in its report last year, KPMG had projected a 12.5 per cent CAGR over five years - from Rs 584 billion in 2008 to Rs 1052 billion by 2013.


KPMG forecasts a stronger recovery in 2010 as the economy improves. Growth in the M&E industry is expected to be driven, amongst other factors, by subscription revenues through enhanced penetration and expansion of digital delivery infrastructure.


The report says that rising disposable incomes of the working population and increased spend on discretionary items, not only in Tier I but also Tier II and III cities, is expected to continue impacting the M&E industry favourably.


It also suggests that growth of newer delivery platforms with superior technology and functionality is likely to expand horizons for the M&E business. Aspirations of Indian players to go global and foreign players entering the industry will also help the sector post a double digit growth in the next five years.


The report also states that the role of new media is becoming increasingly important in the distribution portfolio of advertisers. Focus on talent development, consumer research and innovation will help the players in differentiating themselves amidst growing competition.


It observes that 2009 was a year marked with innovations and cost efficiencies which came about in all the sectors, more as a necessity to combat the pressures on bottom line. Newer content formats and strategies adopted by the players in the industry ensured that customers had more choices. Cost efficiencies, which came about last year, proved to be a silver lining in a bad year.


The FICCI-KPMG report has identified 10 key drivers for the growth of the M&E industry.


1.Digitisation: Availability and penetration of newer distribution platforms will benefit the M&E industry in years to come.


2.Regionalisation: Regionalisation across Print, TV, Music, Films and Radio increased in 2009. It will be one of the significant factors driving growth with growing increase in literacy, consumption and disposable incomes in Tier II and III cities.


3.Convergence: Advertisers are looking at multiple delivery platforms for content to break through the clutter in existing platforms. The new media is merging the functionalities of customer end terminal devices like TV, PCs, Mobile phones.


4.Consolidation: With entry of newer players the industry is increasingly becoming fragmented. Increasing competition is expected to give way to consolidation of operations.


5.Competition: The entry of newer players has had a positive impact on the overall market as it has helped in expanding the market size. This will continue in future with new players emerging to capture newer set of audiences with advancements in their product, marketing and distribution to tap these customer segments.


6.Talent development: Investment in educational institutions providing specialised courses for skilled technicians is a step in the right direction to develop talent and meet the demand of the industry.


7.Innovation: Innovation across product, process, marketing, distribution and business model is essential for players to adapt to the changing market scenario, technology and consumer behaviour.


8.Growing importance of pay markets: Subscription revenues are becoming important with consumers paying for media services. The growth in ticket prices of movies at multiplexes, increasing number of Pay TV subscribers, increasing penetration of DTH and introduction of VAS by media players are some examples of pay markets gaining importance.


9.Consumer research: With increasing fragmentation of audiences and competition within and from outside media sectors, it is becoming difficult for players in the M&E industry to rely purely on past experience and creative expression.


10.Focus on 360 degree connect: The players are taking the help of multiple touch points at the same time to communicate to the consumer across platforms like TV, Print, Radio, OOH, Films, Internet, Mobile and Retail.


Meanwhile, the report quotes that the amount of media spends in India is 0.41 per cent of the GDP, which is half of the world’s average of 0.80 per cent and is much less compared to developed countries like USA and Japan.


Also, the current media spend per capita for India is very low at $4 compared to the other countries. Even though it is difficult to reach the levels of countries like US, Japan and UK, due to a very large population base and lower spending power per capita, there is scope to follow China and enhance this ratio.
 

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