M&E industry to grow at 13% over 5 years to Rs 1091 bn: KPMG

MUMBAI: The media and entertainment industry will post a strong rebound and grow at a CAGR of 13 per cent to touch Rs 1091 billion in 2014, according to a Ficci-KPMG report released today at Frames 2010.

The sector is already showing signs of recovery and is expected to grow at 11.2 per cent in 2010, accelerating from a measly 1.4 per cent growth in 2009. The industry grew at a snail’s pace from Rs. 579 billion in 2008 to Rs 587 billion, bruised by a slump in advertising as corporates curtailed their spends in the wake of a global downturn.

Growing faster than the M&E sector, television will post a 15.2 per cent CAGR over the next five years to touch Rs 521 billion in 2014. It will continue to account for 48 per cent of the sector’s total revenues.

Filmed Entertainment:
Hit by a two-month strike and impact of IPL, the filmed entertainment sector degrew by 14 per cent to clock Rs 89 billion in 2009.

KPMG, however, forecasts a nine per cent CAGR growth for the filmed entertainment sector over the next five years, sizing up to Rs 137 billion by 2014.

“The growth drivers for the sector would include expansion of multiplex screens resulting in better realisations, 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 and digital downloads which are expected to emerge in future,” the report says.

Print Media:
The Indian Print Media industry grew at a modest rate of 2 per cent to end the year at Rs 175 billion. “There was a decline in advertisement revenues being offset by growth in circulation revenues. In the second half of the year, the sector took some steps towards recovery supported by a general perception of improvement in the overall economy. Regional markets for print showed growth, whilst the national players (particularly English) were affected,” KPMG says.

The industry is projected to grow at a CAGR of nine per cent over the next five years to touch Rs 269 billion by 2014.

Radio industry fell 0.3 per cent to Rs 7.8 billion in 2009, due to a drop in ad volumes and rates.

Radio is expected to grow at a CAGR of 16 per cent over 2010-14 and reach a size of Rs 16.4 billion by 2014. “Increase in the number of radio stations in Phase III, 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,” says KPMG.

The Indian music industry saw a 14 per cent jump to close 2009 at Rs 8.3 billion. Increased acceptability of different digital distribution models, acceptability of music genres other than the Indian film industry, and broadcast and public performance licensing revenues, fuelled this growth.

The sector is expected to grow at a CAGR of 16 per cent over the next five years to touch Rs 17.2 billion.

Out of Home (OOH):
OOH media suffered a 15 per cent drop in 2009 to end the year at Rs 13.7 billion. “Till now, the growth has been centred largely in Tier I towns but a noticeable trend in 2009 was increased investments in Tier II and III towns,” KPMG says.

KPMG projects a 12 per cent CAGR over the next five years for the sector to reach a size of Rs 24.1 billion.

The Animation & VFX segment, at Rs 3.2 billion, posted a 13.6 per cent growth in 2009.

The industry is expected to grow at a CAGR of 18.7 per cent in the next five years to reach Rs 46.6 billion by 2014. This growth is going to be triggered by the increased consumption of animated content, focus on IP creation and growth of 3D formats.

Gaming has shown a 22 per cent growth in 2009, and is expected to grow at a CAGR of 32 per cent in the next five years to reach Rs 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. The growth in this sector will be backed by the increase in number of casual and active games, arrival of 3G, availability of localised content, growth in ad funded gaming platforms and greater awareness of products and services,” says the report.

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