MUMBAI: The Big Picture! The entertainment industry, currently valued at Rs 222 billion, is expected to grow to over Rs 580 billion by 2010. The main growth driver will be television, which accounts for 60 per cent of the revenue. That sector will grow to Rs 371 billion in 2010 from the current Rs 139 billion, according to a CII-KPMG report titled `Focus 2010-Dreams to Reality'.
The growth in the television sector will be fuelled by subscription revenues which will touch Rs 250 billion. Advertising revenue is expected to grow at a modest rate of eight per cent to reach Rs 78 billion.
Television’s growth will happen due to new delivery platforms like IP TV and DTH. This will lead to value added services like video on demand (VOD). However the report notes that subscription revenue distribution is skewed towards the cable operator on account of an unregulated environment.
The consumer has lack of choice when it comes to choosing the last mile operator. The new platforms will result in a more equitable distribution of revenue. However at the moment the new platforms do not have a level playing field.
Cable and satellite reaches 48 million homes. The study notes the disparity in the subscription price paid, which varies from Rs 100 to Rs 300. This is the situation regardless of the quality of content. If an LCO has 1500 subscribers only 375 are declared. The broadcaster collects just 12 per cent of revenue.
The remedy: To correct the situation, the report proposes that voluntary addressability be introduced. Tiering of channels is another option. Distributors should offer multiple tiers of programming. The basic tier should have mass and FTA channels. The premium tier can happen in an addressable environment and would cover sports, lifestyle and other niche
segments. In 2010, out of 85 million non-terrestrial television homes digital platforms will be available in 13 million homes.
Niche genres will grow. They have already significantly strengthened their value proposition the report notes. In addition, there will be more opportunities in areas like animation and lifestyle. This is proven with the recent entry of Zoom and Discovery Travel & Living. On the advertising front, the report estimates that last year the overall pie was Rs 118 billion. Press has a share of 46.1 per cent followed by television with a share of 41.1 per cent. Out of home advertising gets a 7.2 per cent share. However at 0.50 per cent India has one of the lowest advertising spends to GDP ratios in the world.
How different genres are performing: Mass entertainment channels get 40 per cent of the viewership. The report notes that broadcasters are starting to realise that viewers cannot be taken for granted. While they have been able to capture the mood of the viewer sports and Hindi film channels have had to spend heavily to acquire properties.
For instance the cricket World Cup in 2003 fetched a price of $85 million. In 1992 the price was $10 million. This marks a 750 per cent rise. News channels have registered a 100 per cent growth in viewership in the past three years. The same goes for kids channels and English entertainment channels.
The report notes that with Mirza and Karthikeyan doing well, viewership for F1 and tennis is growing. However viewership for sports channels will be cyclical depending on the frequency of important events. As far as news channels are concerned the next growth driver will be in the business space.
The news channel space is expected to grow at the rate of 40-50 per cent in the coming three years. Going forward the report states that broadcasters and content producers will begin to work out backward and forward integration models.
The ad scenario: Until recently FMCG companies and consumer durable marketers were advertising. Today, the advertising segment has expanded to include youth and teen products, financial products and services, telecom. Mass entertainment channels like Star Plus, Sony have the largest loyal advertising base. Almost 17-18 of the top 25 advertisers only look at these channels. Not surprisingly, financial products can be seen on news and business channels.
One source of revenue for channels could be differentiated content. For instance you could have ads free telecast of cricket with a differentiated on-ground coverage. English film channels enjoy the highest ads to viewership ratio. Regional channels
have the lowest ads to viewership ratio. The report notes that regional channels have had to jostle for viewership in the face of an increasing variety in offering from the mass entertainment channels.
The Film segment: The film industry revenue is expected to touch Rs 140 billion in 2010. The report states that while film contribute just 27 per cent to entertainment revenues they form the heart of the entertainment industry. Compared to television this sector is unorganised with a low level of discipline.
The Music segment: Reversing the slide, the music industry has grown to Rs 10.2 billion in 2004. The report predicts the sector to enjoy a five per cent year-on-year growth to touch Rs 13.2 billion in 2010.
The music industry needs to reinvent its business model in order to attract significant investments. Digital infrastructure, effective distribution formats and a conducive regulatory regime to combat piracy is necessary to push growth, according to the CII-KPMG report.
