We present key take-aways from the recently released FICCI-KPMG Indian Media & Entertainment Industry Report, 2015
The Media & Entertainment Industry in India is poised to grow at a CAGR of 13.9%, and grow from Rs 1,026 billion in 2014 to Rs 1,964 billion by 2019 Advertising grew on the back of heavy spending during the national and state elections, and a significant surge in spends by e-commerce companies Digital media continued to surge in 2014 with a significant growth in digital advertising of 44.5% over 2013 Critical tax and regulatory interventions key for enabling growth
Television
While digitization continues, promise of addressability, greater transparency and higher ARPUs yet to be realized
DTH operators improve realizations due to increased penetration of HD channels, premium channels and value added services
DAS rollout in Phases III and IV expected to be more challenging due to larger geographical spread, funding requirements and low potential for ARPUs
Robust growth expected in advertising over the next five years as economic growth comes back and categories like e-commerce and telecom increase spending
If new pricing structure takes hold, then ARPU will rise and benefit the entire TV value chain
FILMS
The gap between the top 10 films and the contribution of the rest of the industry widened in 2014
C&S sales of most films saw corrections in price and a drop in bulk deals.
Exhibition sector saw expansion - both organic (particularly in Tier II and Tier III cities) and inorganic, with significant consolidation deals in 2014, enabling economies of scale for exhibitors and stimulating growth, including a rise in in-cinema advertising deals
Drivers of growth in previous years, multiplex expansion, rise in ticket prices and theatre digitization, hit maturity levels
Cost structures and content will be paramount to ensure the health of the industry in the coming years
In 2014, the Indian print industry experienced a growth of 8.3% from Rs 243 billion in 2013 to Rs 263 billion in 2014
While advertisement revenue continues to be the growth driver, circulation revenue growth was higher than that of advertising revenue for Hindi and English markets last year
Print industry expected to grow on the back of growth in Tier II and Tier III cities
Print still commands the largest share of advertising in India
English market may see some challenges from digital in the years ahead, regional Print continues to grow in low double digits
Digital Media
Digital advertising industry grew from Rs 30.1 billion in 2013 to Rs 43.5 billion in 2014
India became the second largest country in terms of number of Internet users
In the music sector alone, revenue from distribution of music through digital channels or digital music accounts for nearly 50% to 60% of the overall size of the music industry
With Internet on mobile finding broader adoption, driven by cheaper smartphones and data plans, this sector will continue to power ahead
Mobile will be the defining medium for digital media with 435 million smartphones expected to be in use by 2019
Radio
Despite delays in the Phase III auctions, Radio industry showed one of the highest growth rates amongst other traditional media segments
Smaller and standalone stations feel the pressure of rising cost structures. Measurement, royalty fee issues and rising threat of the digital medium eating into the radio pie are the other challenges
Additional radio licenses post Phase III will ensure wider reach and enable industry to match other media. New regulations to enable a better business environment for the industry
Ability to own more than one station in a market and network nationally will be key to radio companies becoming more competitive
Out of home
Exceeding expectations, the Indian Outdoor advertising or Out of Home (‘OOH’) industry grew by 14% in 2014
Metros continue to dominate and enjoy more than 50% of the OOH market-share
Inventory utilization has improved but prices have not seen any significant changes
Tier II and Tier III cities continue to grow, largely on account of development of better infrastructure such as malls, airports, roads, etc. in these cities
Billboards continue to dominate, however, Airport and other transit media have been consistently growing over the last couple of years
Technological advancements and exploration of new avenues for advertising will likely increase in 2015
In terms of growth, Transit media will continue to expand, with the government making large investments in transport infrastructure
LIVE EVENTS
Positive shift in business sentiment and increased spending by the government and corporates on events resulted in a positive growth
Sector remains challenged by issues of fragmentation, poor infrastructure, and the need for more enabling taxation and regulatory interventions
Targeted brand communications and experiential marketing has been on the rise. There has been an explosion in IP or branded event properties, across segments like music, literature and the arts
Growth observed in Tier II and Tier III cities, which is likely to continue to be the focus for marketers and advertisers going forward
Sports
Consumption of sports in India driven by a large young population, increasing disposable income and supplemented by a rise in television and media penetration, coverage of domestic and global sporting events by dedicated sports channels
Key trend in 2014 was the growth of non-cricket sports in India
Success of IPL led to the creation of several other league-format sporting events, such as Indian Badminton League, Hockey India League, the Pro-Kabaddi League and Indian Super League
SURVEY ON Corporate Governance
KPMG in India conducted a Corporate Governance Survey - M&E sector -FICCI 2015, during January to March 2015, across leading M&E companies to understand the current state of the governance maturity across the sector and obtain an industry view on the road map for the future state of governance in this industry. The survey highlighted some interesting themes and the industry seems to have consistently echoed their views on the growing significance of governance within the M&E industry. Generally, the top executives agree that the governance maturity is evolving across the industry
71% of respondents believe that senior management and board succession planning needs to be enhanced
59% of respondents believe that senior management focus in the M&E sector is business-centric as against governance consciousness, which poses a challenge to strengthen governance across the sector
76% of respondents believe that their senior management actively promoted control consciousness and provided adequate oversight to strengthen processes and controls. Thus, suggesting that though there is intent to promote a control conscious culture, business takes precedence when it comes to governance matters.
