MUMBAI: The Indian media and entertainment industry grew by about 12 per cent in 2013 amid overall muted growth due to economic slowdown, but digitization of cable TV worked wonders for the television industry, according to a FICCI-KPMG report released ahead of FICCI Frames 2014.
The three-day trade event for the entertainment industry will be held from 12 March, and is expected to be attended by over 2,000 Indian and 600 foreign delegates.
The FICCI-KPMG report said due to the economic slowdown, advertising revenue dependent sectors such as TV and print were impacted on a large scale. The depreciation in the rupee also affected print, cable and DTH companies adversely but helped export oriented sectors such as animation and VFX to some degree. At the same time, this was countered by the impact of continued digitisation of media products and services, and growth in regional media.
Digitisation was moving in the right direction, with the mandatory Digital Access System (DAS) rollout almost complete in Phase II cities. The impact was felt to the extent that carriage fees saw a reduction of 15-20 per cent overall, however the anticipated increase in ARPUs and subscription revenues for broadcasters and MSOs (Multi System Operators) is expected to be realized only over the next 2-3 years.
Other key highlights in 2013 were the inclusion of LC1 (less than class I) markets in TV ratings, the 12 minute advertising cap ruling and the shift from TRP to TVT ratings.
What gained was the film industry by recording a double digit growth, albeit slower than in 2012, thanks to the multiple movies scoring big at the box office collections. Approximately 90-95 per cent movie screens are now digitised in the country, with a shift in focus to tier II and III cities. Going forward, multiplex growth is expected to slow down, in line with the overall delays and future expectations for retail sector and commercial real estate development, impacting box office growth in the short term.
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 INR 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, critical for decisions on media planning and allocations.
The total internet user base in India grew to approximately 214 million by end of the year with almost 130 million going online using mobile devices. Mobile Internet users dominated the total internet user base capturing an overall share of 61 per cent.
Digital media advertising in India grew faster than any other advertising category. Streaming and download services continued to see growth in the music industry, with the growth in mobiles, in particular smartphones, contributing significantly to increased consumption of music 'on-the-go'. However, with the continued decline in physical sales, compounded by the significant fall in ringback tone revenues (following the backlash of TRAI guidelines issues in 2012), the sector saw an overall fall in size by 10 per cent in 2013.
Going forward, digital revenues are expected to drive growth in the sector. Further, the vibrant live events sector is expected to continue its role as a catalyst for driving growth in artists' fan-base, and public performance royalties.
FICCI M&E committee chairman Uday Shankar said 2013 was a challenging year for the media and entertainment sector. He opines: “2013 has been an important year for the media and entertainment sector. It was a year of challenges and significant change. The industry dealt with a host of issues that will lay the foundation for robust growth in the years to come.”
Television saw the implementation of the 10+2 advertising cap, seeding of set top boxes in DAS 1 and II phases was largely completed - 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 range of content succeeding.
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.
KPMG head of M&E Jehil Thakkar states: “2013 was a year in which many parts of the M&E industry paused and took stock. Focus shifted from top line growth to bottom line growth with companies focusing on operations and efficiency. Inspite 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."
This year, the report also highlights opportunities that could come from tapping international markets such as the US and Middle East, with a special feature on opportunities in South Africa and Nigeria.
Going forward, there is need for continued positive regulatory intervention, such as implementation of Phase III for the radio sector. In an increasingly digitised media world, the ability to create compelling and targeted content across multiple channels, will be the bedrock for creating differentiation in a cluttered market.
