Industry outline

The Indian Media and Entertainment industry can be sub divided into further categories such as television, print, films, radio, music, OOH, animation, gaming and digital advertising.

The most important categories in the Indian media sector are television, print and films which together account for ~85% of the industry size.

Chart 1: Categories of Indian Media industry (Source: FICCI-KPMG)

As per the FICCI-KPMG study the Indian Media and Entertainment industry is expected to grow at a CAGR of 13.9% f till 2019. The current size of the Indian Media and Entertainment is estimated at INR1026bn. The size of this industry is expected to nearly double to INR1964bn by 2019, a CAGR of 13.9%.

Chart 2: Size of the industry across 2014-2019(INR bn) (Source: FICCI-KPMG)

The digital advertising industry is expected to be the fastest growing industry, expected to clock in a 30% CAGR over 2014-2019. Barring print, which is expected to grow at 85 CAGR, the other categories are expected to grow in double digits.

Chart 3: Expected growth in various categories across 2014-2019 (Source: FICCI-KPMG)

Overview of the various categories of the media sector

Television

About 168mn households in India have television in India with an 82% penetration of cable or satellite. This penetration is expected to touch 90% in 2019.

The television industry is currently in the process of digitizing the entire television network. This simply means that a consumer can either go to a DTH operator or a cable operator who will provide him with a set top box which will enable him to receive his channels.

About 46% of the subscribers in the country are currently digitized either through DTH or cable operator

Chart 4: Subscribers mix in India (Source: FICCI-KPMG)

The digitization process has been implemented in four phases. The Phase 1 and Phase 2 digitization for the metro and other important cities is over. We are currently witnessing implementation of Phase 3 which is further digitization in Tier 2 and Tier 3 cities. Phase 3 implementation has a deadline of December 2015. Phase 4 digitization of even smaller towns has a deadline of December 2016.

 

 

 

 

Table 1: Status of Digitisation in India (Source: FICCI-KPMG)

 Phase

Target Date

Digital subs mn

Non Digital subs mn

 Phase 1

Jun-12

12

1

Phase 2

Mar-13

22

1

Phase 3

Dec-15

32

14

Phase 4

Dec-16

73

54

Print Media

As per FICCI KPMG, India has total of 99,660 registered publications of which 86,310 are periodicals and the rest dailies. Of these, around 40% of them are in Hindi and 47% are in other vernacular languages.

The print industry has two streams of revenues-circulation revenue and advertising revenues. Two thirds of the revenues for the print industry come from advertising.

Chart 5: Print industry revenue mix (Source: FICCI-KPMG)

The advertising revenues are expected to lead the growth for the print sector with a growth of 9.7% CAGR over 2014-2019. Circulation revenues are expected to grow at 4.2%  in the same period. The vernacular market will see a stronger growth at 10.5% as compared to the English print market which will grow at 4.2%

 

 

 

 

Chart 6: Growth rates across language mix (Source: FICCI-KPMG)

Films
India has one of the largest film industries in the world. This industry was worth INR126bn. This is expected to touch INR 204bn by 2019 implying a CAGR of 10%.

Chart 7: Expected growth in film industry (INR bn) (Source: FICCI-KPMG)

 

Digital Media
This segment showed the highest growth in the Media and Entertainment space registering a growth of 45%. The explosive growth in the usage of mobiles and internet across the country has driven the growth of this sector.

Given the popularity of the digital media, digital advertising spending contributed to 10.5% of the overall advertising spend of INR414bn  in 2014.The E-Commerce industry was the largest  digital ad spender, folloed by the telecom sector.

India’s internet penetration at 19% is only expected to increase going forward. It has around 281mn users which are expected to touch 640mn by 2019.

Chart 8: Expected growth in internet users (mn) (Source: FICCI-KPMG)

Similarly mobile internet usage penetration is also expected to be strong, from 173mn users currently to around 457mn by 2019.

These factors are expected to drive growth in digital advertising. This space is expected to show a 30% CAGR from the current INR43.5bn to INR163bn by 2019. The share of spend is also expected to increase from the current 10% of total ad-spend to around 20% of the total ad-spend by 2019.

 Chart 9: Expected growth in digital ad (INRbn) (Source: FICCI-KPMG)

To conclude, the Indian media sector is on the verge of take off. As digital penetration increases in the country, the reach of media will grow commensurately. Rising income levels, falling prices of television and other equipments as well as rapidly changing technology should combine to ensure continued growth of the sector.

 

Vinod Chari

A research analyst with IL&FS Broking Services Private Limited, based in Mumbai

 


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