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MUMBAI:
The Indian media and entertainment industry
is poised to grow from Rs 584 billion to
Rs 1052 billion by 2013, a Ficci-KPMG report
says.
Forecasting a CAGR of 12.5 per cent over
the next five years, the report, released
at the inaugural session of Ficci Frames
2009, contradicts a more pessimistic view
of some industry observers who have expressed
concern over a deeper impact on the sector
due to a global downturn.
The
sector grew at 12.4 per cent in 2008 over
the previous year, according to the report.
A higher growth could have been possible,
but was pulled down by a slowdown in advertising
revenues during the last quarter.
“The
market environment has become increasingly
challenging for the sector, on the back
of economic slowdown and the consequent
slowdown in advertising revenues, especially
in the last quarter of 2008. Sectors like
TV, Print, radio and outdoor which depend
on advertising revenues were largely affected
and this is estimated to continue into the
current year too,” the report says.
Ad
spends grew at a CAGR of 17.1 per cent in
the past three years, and are expected to
exhibit a robust growth rate at a CAGR of
12.4 per cent over the next five years.
Growing
acceptance of the digital TV distribution
technology, entry of DTH players, the success
of small budget films, and rising competition
in the regional markets were some of the
key highlights of the previous year. However,
it was the Indian Premier League (IPL) cricket
tournament which proved that innovation
in traditional formats resulted in runaway
success.
The
projected 12.5 per cent growth will be driven
on the back of factors like favorable demographics,
strong long term fundamentals of the Indian
economy, expected rise in advertising to
GDP ratio compared with developed economies
and increasing media penetration.
Given
the industry’s changing landscape and
emerging challenges, the focus of industry
players too is changing; with a strong emphasis
on profitable growth in the current scenario.
Media companies are increasingly concentrating
on strengthening existing operations and
assessing options for growth through consolidation,
while continuing to innovate. Factors like
narrowcasting, Regionalisation, internationalisation,
Organised funding, digitisation and deregulation
have become the ‘buzzwords’ in
the industry, the report notes.
According
to Ficci secretary general Dr Amit Mitra,
“India is one of the few countries
where economic growth will be led by domestic
consumption. With a low ad spend to GDP
ratio of 0.47 per cent, a growing consumer
class and middle class, young population,
low media penetration and increasing discretionary
spending; India continues to be an attractive
market for media and entertainment."
KPMG
India head information, communication and
entertainment Rajesh Jain said, “Media
companies are under pressure to change,
innovate and re-examine their existing business
models. Players need to draw upon new capabilities
to survive in this environment. In the immediate
future, media corporates are likely to focus
more on operating margins, and assess opportunities
for consolidation, while building on core
strengths.”
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