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Indian M&E sector grows 12% to touch Rs 920 bn in 2013: Ficci-KPMG

MUMBAI: Despite the economic slowdown, the Indian media and entertainment (M&E) sector grew by 12 per cent to touch Rs 920 billion in 2013, according to FICCI-KPMG estimates.

In fact, 2013 was a year of building foundations to fuel growth. “It was a year in which many parts of the M&E industry paused and took stock. Focus shifted from topline growth to bottomline growth, with companies focusing on operations and efficiency. In spite of a very challenging macro environment, the industry grew 12 per cent, a far better performance than many other industries. The structural changes taking place in the industry, especially in television and digital, continued to take the industry down the path of fulfilling its potential,” said KPMG India head media and entertainment Jehil Thakkar.

As growth stayed muted, ad revenue-dependent sectors like TV were hit by the economic slowdown. The depreciating rupee had an effect on print, cable and direct-to-home (DTH) companies. However, it helped export sectors like animation and visual effects.

(L-R)-Jehil Thakkar, Uday Shankar, Ramesh Sippy

(L-R)-Jehil Thakkar, Uday Shankar, Ramesh Sippy

Carriage falls by almost 20%

The TV sector saw most of the action in the year—from digitisation to the new rating system to ad cap.

As per the KPMG estimates, digitisation of cable saw progress being made and the industry is moving in the right direction with the second phase of digitisation almost complete.

While carriage fees have fallen by almost 20 per cent, there are some lingering issues. The growth in average revenue per user (ARPU), subscription revenue for broadcasters and multi-system operators (MSO) are expected to happen only in the coming two to three years.

“Phases I and II have been achieved 90–95 per cent; however, the packaging is still pending. MSOs are yet to reap the benefits of digitisation. The MSO–LCO relationship is still in a flux,” Thakkar said.

The other important milestones of 2013 included the 12-minute ad cap, the inclusion of LC1 in the ratings measurement system and the shift in TV ratings measurement from TRPs to TVTs.

Gap between small versus big movies widens

The film industry recorded double-digit growth but this was slower than what was seen in 2012. Similarly, multiplexes recorded big box-office collections. However, the gap between small versus big movies is widening.

“Slowdown in real-estate development has impacted growth of multiplexes. This is also going to impact the box-office collections in the short term,” Thakkar explained.

He added that while 90 per cent of the movie screens in the country are now digital, there is a shift in focus to the second and third tier cities.

One trend, he said, is that the gap between big movies and small-budget movies is widening, and is going to widen more in future. “Top 20 per cent big movies collect almost 80 per cent of the revenues. The trend is continuing as the dependency on box-office collection of first weekend is increasing. For the same, big stars, big budgets and big marketing spend help,” he added.

The prices of satellite rights of movies are plateauing and cost of talent is going up.

Regional TV growth challenged

According to the estimates, the regional TV story has seen a challenge for growth. While the Marathi and Punjabi box office have seen growth, the softness in the macro economic scenario has affected regional TV channels.

Print bucks global slowdown trend

The print sector continued to buck the global slowdown trend. The sector grew at a CAGR of 8.5 per cent this year to reach Rs 243 billion. Regional markets performed exceedingly well on the back of steady advertiser spends, state election impact and new launches.

However, with the validity of IRS data called into question by the industry majors, the sector in the short term suffers from the lack of a robust measurement system which is critical for decisions on media planning and allocations.

Digital is fastest growing medium

Digital is the fastest growing medium with the total internet user base in India reaching 214 million by the end of the year, showing 40 per cent year-on-year growth. Almost 130 million users, or 61 per cent, are using the internet on mobile devices.

Digital media advertising in India also grew faster than any other advertising category.

Music degrows by 10%

While streaming and download services continued to see growth in the music industry, the consumption of music ‘on-the-go’ has increased. However, with the continued decline in physical sales, compounded by the significant fall in caller ring-back tone (CRBT), revenues (following the backlash of TRAI guidelines issued in 2012), the sector saw an overall fall in size by 10 per cent in 2013.

The FICCI-KPMG report, which will be released on 12 March, also highlights the opportunities that could come from tapping international markets such as the US and the Middle East, with a special feature on opportunities in South Africa and Nigeria.

FICCI M&E committee chairman and Star India CEO Uday Shankar said, “2013 has been an extraordinary year for the media and entertainment sector, a year of challenges and significant change which saw the industry dealing with a host of issues. Television saw the implementation of the 10+2 advertising cap and significant progress in seeding of set-top boxes in DAS 1 and II, setting the stage of revenue growth and expansion in genres. The film sector continued to mature on the back of multiplex expansion and a wide variety of content. Radio and print continue to defy global trends and await positive regulatory intervention that will take these sectors to greater heights. I am certain that the insights and findings from this report will provide a comprehensive and useful lens for all of us in the industry.”