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Indian TV ad spend to grow @ 14%: PwC

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MUMBAI: Television advertising in India is expected to grow by 14 per cent by 2007, while over the next one year the increase is likely to be over 12 per cent. The scope for growth is there as at present India spends less than 0.5 per cent of its GDP on advertising.

The television software sector too has been projected to grow at the rate of 16 per cent annually to touch Rs 300 billion by 2009, according to a Ficci-PwC report titled `Indian Entertainment Industry: An unfolding Opportunity,' which was released this morning at the Frames Convention.

Over the next four years, advertising on Indian television will be driven by niche content as the ad community goes about targeting specific consumers. Simultaneously, this trend will give content producers a chance to expand the pie.

The report, part of which was released to the media earlier and reported by Indiantelevision.com, indicates that the Indian entertainment industry will grow yearly at the rate of 18 per cent to reach Rs 450 billion in by 2009.

In the short term, growth in television is expected at The rate of 14 per cent, while the number of C&S homes is expected to grow at the rate of eight per cent. The report has estimated the current base of cable homes at 50 millions.

Dwelling on the inadequacies in the cable industry, the report says that the loss to broadcasters is immense as they only collect a third of the revenue due to them. Assuming the monthly cable rate is Rs 125 per subscriber, broadcasters should get Rs 75,000 million, but in reality only Rs 25,000 million flows into the kitty.

The report notes that in the future, corrections in the regulatory mechanism will result in increased subscription revenue for broadcasters and growth in digital distribution formats.

Pointing towards some trends in the broadcast industry, the report says that crossing over is the buzzword in the Indian television segment. Music channels are launching soaps, news channels are foraying into lifestyle shows and soap reviews, regional channels are taking away viewership from mainstream channels and the mainstream broadcasters like Star and Zee are looking towards South India. If this was not enough, Sun is reported to have signed up a deal with Malaysia's Astro All Asia Network to originate and distribute content for a global audience and the ABP- Star alliance is planning a Bengali channel.

In the future, the focus of channels will shift towards content localization as audience fragmentation is increasing. On the regulatory front, the report says that a new era will be ushered in with the passing of sector regulator's interconnect order, which, however, is being resisted by some players in the broadcast industry.

On the sports front, the report is optimistic that games like hockey would get a tremendous fillip with experimentation being done to make the game TV friendly. As an example, ESPN Star Sports association with the Indian Hockey Federation to create the Premier Hockey league has been cited.

Another trend cited by the report is that of increasing dubbing happening in the films segment. Three of the top 10 films on TV were dubbed in Hindi and other Indian languages and have proved to be successful. For example, The Lost World on Star Plus got a TRP of 8.52.

As far as the films segment is concerned, growth of 18 per cent is projected. But slowing down this positive trend is rampant piracy that has been calculated to be as high as 40 per cent.

The growth of multiplexes and digital cinemas will fuel activity in this sector, the report states, pointing out that one of the growth drivers is international cinema being dubbed in Indian languages, including Hindi. Though the hype surrounds Hindi cinema, but the PwC report makes it clear that regional cinema is growing in as Hindi fare accounts for only 40 per cent of the market. The trend of confinement of regional films in local areas is changing.

Another revenue source for films that will grow is in-cinema advertising. As movie viewing becomes more organized, advertisers can reach this hard-to-get demographic profile. The report says that advertisers are choosing films that overlap with their own target audience.

Fuelling the boom in multiplexes business is the growth being witnessed in retail sector. Making it clear that quality of service is an important ingredient for multiplexes in drawing patrons, the report states that alternate sources for revenue --- like live sports events --- are also being explored by multiplex owners. Interestingly, Andhra Pradesh has the largest number of theatres in the country.

On the radio front, the report notes that survival of private FM radio stations will depend on the level and structure of license fee decided by the government. Positive and timely regulatory framework is what players are looking for, the report says, adding this segment offers maximum growth potential, which is evidenced by players that are not in the entertainment sector flirting with FM radio business.

The report also goes to state that radio's low ad sales rates ,compared to television, will make it attractive for local and small advertisers. Almost 3/4th of radio's ad revenue comes from local and retail advertisers. The Size of the radio ad market is estimated to be at Rs. 2,400 million. This could go up to Rs. 6,500 million by 2009. This will happen if the regulatory framework is rationalized, the report points out.

On the music front, there has been a reduction on dependence on film music. Music on mobile phones grew in popularity last year when emergence of another trend was seen --- a more participative model of risk sharing between film producers and music companies.

A growth driver for the music segment is talent nurturing through reality and music shows. An example: Indian Idol.

The distribution segment of the music industry has become more corporatised, the report said, adding this has given rise to innovations too coming in like tie-ups with coffee chains to promote sale of music.

The size of the music industry has been estimated to be around Rs. 6,700 million. A three per cent yearly growth is expected, which will help the industry be worth approximately Rs. 7,770 million by 2009. Anti-piracy measures have helped the music industry.

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