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Media & entertainment industry to grow at 13.9% CAGR: FICCI KPMG report
MUMBAI: The Indian media and entertainment (M&E) industry is expected to grow at a phenomenal rate of 13.9 per cent CAGR till 2019, said KPMG head of media and entertainment in India Jehi Thakkar.
In a recorded message before the launch of the FICCI KPMG report on the industry on 25 March, Thakar said, “Overall, the M&E industry will grow at 13.9 per cent, which is almost double the global growth estimates and puts India in a phenomenal position on the global M&E map.”
In the television sector, KPMG is projecting the long-term growth to go back to 15.5 per cent from 13.8 per cent last year.
Talking about the television industry, which is approximately 37 per cent of India’s total advertising pie, he said that lots of changes are happening within the TV industry. “New pricing structures have been introduced, cable digitisation has been finally taking hold, and there is a lot of activity and movement. We are hoping that all these things translate into greater growth in the subscription revenue of the industry going forward,” he said.
He added that subscription revenues are likely to fall into place in the next two years, marking the largest development for the TV industry.
The movie segment, the big beacon of the Indian M&E industry, took quite a hit in 2014, Thakkar said. The industry witnessed just 0.1 per cent growth in 2014. It would have actually de-grown if not for a couple of big movies at the end of the year.
“It was quite a surprise, given that a couple of years ago, this was the industry that grew north of 20–25 per cent. The film category was largely dragged down by the Hindi film industry. The Tamil and Telugu and other regional markets seem to do pretty well,” Thakkar opined.
He emphasised the need for some serious rethinking of the business model. “Talent cost has gone out of hand and the cable and satellite revenue market has receded to some extent. However, with the launch of new channels, that will come back to certain extent, but we don’t believe that the froth that existed in pricing over the last couple of years will really sustain.”
Thakkar said that the big story of 2014 was digital spending. “We projected about 30–35 per cent growth of the sector but this category has just surprised everybody. We estimate that in 2014, this category grew close to 45 per cent. That’s a phenomenal growth by any standards,” he said.
He added that digital is now bigger than radio as a category and continues to grow very rapidly. “This is largely on the back of the mobile ecosystem. We already have between 115–120 million smartphones in the country. They are getting cheaper by the day, penetration is increasing, and with 4G likely to be rolled out across the country in 2015–17, the headroom for growth for this industry seems unlimited at this point of time,” he added.
KPMG projects 18 per cent growth for the radio industry for over next five years. “Even in 2014, the industry grew by about 17 per cent,” Thakkar noted.
Radio, which has been at the background of the M&E industry, suddenly started coming to the foreground this year. Phase III auctions, which the industry has been anticipating for the past three years, were finally announced in 2014. “The first phase of auctioning is scheduled for April 2015. By the time the auctioning is done, a large part of the country will be covered by private FM,” he said.
He mentioned that there are some significant changes in the radio regulations as well. “Networking is now going to be allowed, which means that a company can produce programming in a hub and then network the programming across the country. This is a massive change that will result in lots of cost saving and finally showing some healthy profitability for the radio industry as a whole,” he added.
However, he added the caution that the radio auction pricing is likely to be very high because of e-auctions, but overall it was necessary.
Thakkar added that 2014 was an excellent year and while print is about 43 per cent of India’s total advertising pie, it is largely dependent on advertising.
“Print is 70 per cent dependent on advertising. We estimate this market to grow by 13–14 per cent going forward,” he added.