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Regional print industry will continue to surge: Deloitte

MUMBAI: In its ‘Technology, Media & Telecommunications India Predictions 2014’ report, Deloitte has forecast that regional print industry will continue to surge primarily driven by such factors as under penetration in regional markets, rise in regional ad rates and sustained pressure on English print advertising by digital media.

The print industry continues to depend on ad spends, which, owing to its high correlation with economic growth, remains under pressure. On the contrary, local retail growth and local advertising favouring the regional newspapers could hedge the pressure on advertising revenues for regional newspapers. Furthermore, the fact that people consume content in local languages and that a sizeable proportion of the population live in Tier II and III cities, towns and villages would continue to fuel this growth.

An indicator of regionalisation is the comparative analysis of expected growth of vernacular print industry in South India and the English print market there. The advent of regionalisation is not just limited to languages but also to geographies.

Average penetration of newspapers is low in the country and stands at approximately 15 per cent. However, the penetration numbers are as high as 70 per cent in cities while as low as 5 per cent in the countryside. India’s literacy stood at 73 per cent, according to the 2011 census and is expected to continue its upward growth. Even among the literate population, the penetration of newspapers is low. As an indicator of the level of under penetration in regional markets, only 30 per cent of literate population in South India (Andhra Pradesh, Karnataka, Kerala and Tamil Nadu) read newspapers. This indicates a huge potential for newspapers to expand with respect to their readership base.

With its continued march towards higher literacy, the country is witnessing upward mobility along the class lines. This will make newspapers important for the aspirational middle class. Further, such consumers in smaller cities, towns and villages would continue to consume news in their local languages rather than English.

Due to the growing interest of national players in the regional print sector, as well as growth witnessed by the vernacular print industry, the gap between the ad rates commanded by the English newspapers and vernacular newspapers has reduced. This was evident last year as well with the share in print advertising of Hindi and vernacular medium gradually increasing.

The industry believes that this gap will reduce further with sustained growth of the regional print industry backed by market inclination to consume news in local languages and growing relevance of local advertising.

On the back of such factors, English newspapers have started expanding into regional territories. For instance, The Hindu has recently launched a Tamil newspaper under the same name. The Times of India is contemplating entry into regional languages including Tamil; it currently runs a Bengali daily ‘Ei Samay’.

This push has been further aided by the growth of digital advertising. It witnessed approximately 41 per cent growth in revenues in FY2012 compared to almost 7.3 per cent accrued by the Indian print industry. It is expected to grow further on the strength of a rising internet user base in India, which is slated to become world’s second largest by June 2014 with 243 million users.

A majority of this internet user base resides in the urban areas and hence is also the target base for digital advertising. As advertisers embrace digital advertising, they may increasingly choose internet over English newspapers to target such urban populace. As a result, the English dailies are increasing their focus on regional markets through special editions and local dailies.