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Indian Media & Entertainment Industry to touch Rs 1,457 billion by 2016: FICCI-KPMG report

Industry achieves 12 percent Growth in 2011; is projected to grow at CAGR of 15 percent over next five years
In 2011, the Indian Media & Entertainment (M&E) Industry registered a growth of 12 percent over 2010, to reach INR 728 billon, says the FICCI-KPMG report. The growth trajectory is backed by strong consumption in Tier 2 and 3 cities, continued growth of regional media, and fast increasing new media business. Overall, the industry is expected to register a CAGR of 15 percent to touch INR 1,457 billion by 2016. The report was released at the inaugural session of FICCI FRAMES 2012 last month.
2011 has been a challenging year not just for the Indian M&E industry, or even the Indian economy, but for the larger world economy. While India is still expected to grow at a healthy pace, growth is projected
to be lower than earlier expectations.
TV on topWhile television continues to be the dominant medium, sectors such as animation & VFX, digital advertising, and gaming are fast increasing their share in the overall pie. Radio is expected to display a healthy growth rate after the advent of Phase 3. Print, while witnessing a decline in growth rate, will continue to be the second largest medium in the Indian M&E industry. Also, the film industry had a reason to cheer, with multiple movies crossing the Rs 1 billion mark in domestic theatrical collections, and Rs 300 million mark in C&S rights.
Advertising spends across all media accounted for Rs 300 billion in 2011, contributing to 41 percent of the overall M&E industry’s revenues. Advertising revenues witnessed a growth of 13 percent in 2011, as
against 17 percent observed in 2010 In terms of performance, 2011 proved to be a year with mixed results in terms of growth across different sub sectors. The traditional media businesses experienced a slow down compared to last year, especially in the second half of the year.
 Animation, VFX, online  on the goHowever, the new media segments like Animation and VFX, Online and Gaming businesses witnessed phenomenal growth rates.
Says Rajiv Kumar, Secretary General, FICCI “The key highlights are rise in digital content consumption, launch of diverse content delivery platforms, strong consumption in Tier 2 and 3 cities, rising footprint of the players in the regional media, rapidly increasing new media business and regulatory shifts.”
According to Jehil Thakkar, Head of Media and Entertainment, KPMG in India “The Media & Entertainment industry landscape is undergoing a significant shift. Cable digitization, the promise of wireless broadband, increasing DTH penetration, digitization of film distribution, growing internet use are all prompting strategic shifts in the way companies work. Traditional business models are evolving for the better as a host of new opportunities emerge.”
In terms of performance, 2011 proved to be a year with mixed results in terms of growth across different sub sectors. The traditional media businesses experienced a slow down compared to last year, especially in the second half of the year. However, the new media segments like Animation and VFX, Online and Gaming businesses witnessed phenomenal growth rates. 
Adds  Rajiv Kumar: “The key highlights are rise in digital content consumption, launch of diverse content delivery platforms, strong consumption in Tier 2 and 3 cities, rising footprint of the players in the regional media, rapidly increasing new media business and regulatory shifts.”
According to Jehil Thakkar,  “The Media & Entertainment industry landscape is undergoing a significant shift. Cable digitization, the promise of wireless broadband, increasing DTH penetration, digitization of film distribution, growing internet use are all prompting strategic shifts in the way companies work. Traditional business models are evolving for the better as a host of new opportunities emerge.”

• Regionalization
Regional television and print continued its strong growth trajectory owing to growth in incomes and consumption in the regional markets. National advertisers are looking at these markets as the next
consumption hubs and the local advertisers are learning the benefits of marketing their products aggressively.
• An advertising revenue dependant industry
The ARPU (Average Revenue Per User) for television, average newspaper cost for print and average ticket price for films continue to be low on account of hyper competition in these industries. Segments
like radio and a significant portion of online content are available free of cost to consumers. Owing to this, the Indian consumer is still not used to paying for content and hence the industry players are sensitive to the impact of the slowdown which affects the budgets of advertisers.
• Awaited regulatory shifts Lastly, apart from the shifts in consumer preferences, company strategies and business models, one big change awaited for the next growth wave is the implementation of recently enacted and regulations on digitisation for cable, implementation of Phase 3 and copyright for Radio and the roll out of 4G. These shifts are expected to be game changers in terms of how business is being done currently and what
could be the path going forward.

About KPMG
KPMG is a global network of firms providing professional services. They operate in 152 countries and have 145,000 people working in member firms around the world. www.kpmg.com
About FICCIEstablished in 1927, FICCI is the largest and oldest apex business organisation in India. www.ficci.com 
April 7 2012