MUMBAI: The Indian Media and Entertainment (M&E) industry is expected to be in excess of $25 billion in the next four years, predicts Ernst & Young?s (E&Y) report - ?Spotlight on India?s Entertainment Economy?.

As per the report, the industry registered revenues of $16.3 billion in 2010.

India?s growing digital media consumption and favourable demographics are key drivers for the media and entertainment industry?s future growth, it said.

Enticed by economic liberalisation, near double-digit annual growth, a fast-growing middle class and a huge volume of demand for leisure and entertainment, there has been a surge in investment by global media companies in India.

The Indian M&E now finds itself at a new turning point ? digital media. A surge in mass broadband adoption is expected, led by the launch of 3G and 4G services. By 2015, 90 per cent of India?s projected 187 million broadband subscribers will access the net through wireless devices. This presents global M&E companies with exciting opportunities to develop ?anytime, anywhere? content that caters to a new generation of Indian digital consumers.

?The M&E industry in India has been, and will continue to be, one of the biggest beneficiaries of India?s favourable demographics,? E&Y media and entertainment leader for Europe, Middle East, India and Africa Farokh Balsara said. ?Having one of the world?s youngest populations, high volumes of content consumption, a favourable regulatory framework and growing digital adoption, makes India an attractive investment destination for global media and entertainment companies.?

The study shows that India?s increasing per capita income, growing middle class and working population are generating huge domestic demand for leisure and entertainment. The country has more than 600 television channels, 100 million pay-television households, 70,000 newspapers and produces more than 1,000 films annually.

India has diverse regional markets with distinct cultures, languages and content preferences. These markets provide global media and entertainment companies with a variety of opportunities to deliver localized content.

India?s favourable regulations and reforms are creating investment opportunities for global media and entertainment companies.

The newspaper industry, which is facing declining readership in many international markets, continues to thrive in India, driven by increasing literacy rates, consumer spending and the growth of regional markets and specialty newspapers. Newspapers account for 42 per cent of all advertising spend in India, the most of any medium.

The mandatory digitisation of India?s television distribution infrastructure is driving growth of digital cable and DTH and creating a need for these companies to fund expansion.

The third phase of radio license auctions, expected soon, will see radio networks expanding their reach to add around 700 radio stations across the country.

?The growth strategies in most companies in the US and Western Europe are linked to India and other emerging markets,? E&Y global media and entertainment leader John Nendick said. ?However, to succeed in India, global media and entertainment companies need to navigate unique challenges in the areas of content localisation, distribution and pricing, regulations and piracy.?

According to the report, the two greatest challenges faced by media and entertainment companies doing business in India are low ARPUs (average revenue per user) and piracy. ARPU are lowest in India and piracy accounts for in excess of $4 billion per year.