Media & Entertainment September 2006

Media &Entertainment September 2006

www.imacs.in

MEDIA & ENTERTAINMENTwww.imacs.in

• Market Overview

• Government regulations & policy

• Advantage India and business opportunities

Contents


Market Overview• Market Overview




Indian Media & Entertainment Industry - Zooming ahead

Market Overview

Source: IMaCS Analysis, FICCI-PWC Frames 2006 Report

• Current Market Size is estimated at USD 7.72 bn

• Expected to reach USD 18.32 bn by 2010, a CAGR of 19%

• Maximum growth expected in Television and Film segments

• More than 300 national and regional TV channels

• Close to 1000 films made every year

• Liberal FDI policies across all the segments of the industry

• Government focusing on regulations to give further impetus to the industry

India Media & Entertainment Industry

353 402473

562686

837

0

200

400

600

800

1000

2005E 2006F 2007F 2008F 2009F 2010F

INR

Bil

lion CAGR 19%

* *

Years

E*: Estimate, F*: Forecast


Major constituentsMarket Overview

• Television is the largest segment with close to 42% share in industry revenues followed by print media at 30.9% and films at 19.3% in 2005

• Television’s share expected to increase to more than 50% by 2010 at the cost of print media’s share

Source: Industry estimates, IMaCS Analysis

Breakup of Indian Media & Entertainment Industry

Live Entertainment

2%

Internet Advertising

0.3%

Outdoor Advertising

2.5%

Print Media

30.9%

Radio

0.8%

Films

19.3%

Music

2.0%

Television

41.9%


Key Drivers of the Indian Media & Entertainment Industry

Market Overview

Key Drivers

Consumerism

Advertising spendPricing

Content

Technology

Regulation• Enabling regulations related to

broadcasting, print and radio by the Government

• Development of content for niche viewers

• Pricing remains a key driver, whether it is for cable subscription, film tickets or newspaper prices

• Increased consumerism and increased advertisement spend by marketers (i.e.more revenues for media companies) fueling further growth

• Use of technology for special effects, animation and other creative work leading to better quality of media products


Indian Television Industry - Wholesome entertainment

Market Overview

Source: IMaCS Analysis

Indian Television Industry Revenue Breakup - 2005

TV

Subscription

58%

TV

Advertising

37%

TV Software5%

148 170203

250

327

427

0

100

200

300

400

500

2005E 2006F 2007F 2008F 2009F 2010F

Years

INR

Bil

lion

Projected size of Indian Television Industry

• Largest segment in the industry with market size of USD 3.24 bn in 2005


• Subscription accounts for 58% of the total revenues followed by advertising and software

• India currently has 105 million TV households and over 60 million cable connections

• TV penetration expected to increase to 135 million households and cable connections to 85 million households by 2010

E*: Estimate F*: Forecast


What do the viewers watch in India?Market Overview

Source: TAM Media Research

Genrewise Television Viewership Share in India

39%

38%

5%

8%2%

4%3%

1%

News Channels

Sports Channels

Mass Entertainment

Hindi Film Channels

Kids Channels

Regional Channels

English Entertainment

Music Channels

• Mass Entertainment Hindi and regional language channels attract almost 80% of the total TV viewership in India

• Niche channels like News and Sports gaining ground


Indian Film Industry - The Bollywood dreams

Market Overview

Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report & UNESCO

Projected size of Indian Television Industry

3043 45 46 52 53

6177

117

12

0

20

40

60

80

100

120

Scre

en

s/m

illi

on

p

op

ula

tion

UK

Belg

ium

Germ

an

y

Sp

ain

Italy

Irela

nd

Den

mark

Fra

nce US

Ind

ia

Density of Film Theatres - India & Abroad

68 7997

113132

153

0

50

100

150

200

2005E 2006F 2007F 2008F 2009F 2010F

INR

Bil

lion CAGR 18%

Years

• Largest number of films produced in the world~1000 films every year

• More than 3 billion tickets sold in 2005

• Gross revenues of over USD 1.49 bn in 2005


• Large scope for growth in number of screens

• Digitisation of theatres and growth of multiplexes fueling further growth


Hit or flop - Breakup of Indian films market

Market Overview

Source: IMaCS Analysis, Industry estimates

54 %

2%2%10%

17%

15%

1% 8%

Hindi Crossover Hindi

Tamil Telugu

Foreign Malayalam

Bengali Others

Breakup of Films Market in India

• Hindi films account for almost half of the total market

• Foreign films, primarily from Hollywood have a market share of 2%

• Regional language films account for the rest of the market

• Dubbed Hollywood films a new trend


Indian Music Industry - Soul searching

Market Overview

Source: IMaCS Analysis, Industry estimates

• Unique structure with film and devotional music dominating the market

• Non-film albums and remixed songs gaining market

• Total revenues close to USD 0.15 bn in 2005


• Government and industry taking firm action to reduce piracy of all forms

Projected size of Indian Music Industry Gerewise Music Sales in India - 2005

40%

21%

6%

8%

10%

8%7%

New Film Music

Popular Music

Old Films Music

Regional Film Music

Devotional

International

Others

7.0

7.2 7.27.3

7.4 7.4

6.8

7.0

7.2

7.4

7.6

2005E 2006F 2007F 2008F 2009F 2010F

Years

INR

Bil

lion



Indian Radio Industry - Singing a growth tune

Market Overview


• India has over 190 million radio sets reaching 99% of the population

• More than 330 FM Radio licenses being allotted by the Government (~240 already allotted)

• Move from license fee to revenue share model to give a further boost to the industry

• New platforms to access radio like satellite radio, mobile phone radios and internet radio growing fast

• Revenues in 2005 - USD 0.06 bn

• Expected revenues in 2010 - USD 0.26 bn, a CAGR of 32%

• Ad spend on radio set to increase with more FM radios operational

Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report

3.0 3.75.5

8.010.0

12.0

0.0

5.0

10.0

15.0

2005E 2006F 2007F 2008F 2009F 2010F

INR

Bil

lion

CAGR 32%

Projected size of Indian Music Industry

20%

13%9%

7%

1%

0%

5%

10%

15%

20%

Sh

are

of

tota

l ad

sp

en

d

Sri

Lan

ka

US

A

Sp

ain

Au

stra

lia

Ind

ia

Global 8%

Global ad Spend on Radio

Years



Indian Print Media Industry - Reader’s choice

Market Overview

Source: NRS 2006

Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report E*: Estimate, F*: Forecast

• More than 220 million readers of English and vernacular language newspapers and magazines

• English language newspapers and magazines readership close to 10% of the total base

• Newspapers account for 90% of the market, Magazines~10% market share

• Revenues expected to grow from USD 2.38 bn in 2005 to USD 4.37 bn in 2010

• Subscriptions contribute 57% of the total revenues, rest by Advertisement

• Print media, especially newspapers, attracting a large number of strategic overseas investments

109 12 1 135153

173195

0

50

100

150

200

250

2005E 2006F 2007F 2008F 2009F 20 10F

INR

Bil

lion

Projected size of Indian Music Industry

Years

21.2Dainik Jagran

Dainik Bhaskar

Eenadu

Lokmat

Amar Ujala

Hindustan

Daily ThanthiDinakaran

Rajasthan Patrika

Leading Newspapers in India

Times of India

The Hindu

Hindustan Times

English

Vernacular Readership (Million)

21.0

13.8

10.9

10.8

10.4

10.4

9.6

9.4

7.4

4.1

3.9


Government regulations & policy• Market Overview




FDI Regulations for Indian Media & Entertainment Industry…1

Government regulations & policy


(b) FDI up to 26% is permitted in publishing News Papers and Periodicals dealing in News and Current Affairs subject to a few conditions

(a) FDI up to 100% is permitted in publishing/printing scientific & technical magazines, periodicals & journals3. Print Media

FDI is permitted for the full value chain like film financing, production, distribution, exhibition and marketing upto 100% through the automatic route2. Films

FDI is permitted upto 100% through the automatic route1. Advertising

Guidelines for Foreign Direct Investment in the Indian Media & Entertainment Industry


FDI Regulations for Indian Media & Entertainment Industry…2

Government regulations & policy

a)TV Software Production100% foreign investment allowed subject to a few conditions

b) Setting up hardware facilities, such as uplinking, HUB, etc.FDI allowed upto 49% (inclusive of both FDI and portfolio investment) of paid up share capital

c) Cable NetworkFDI allowed upto 49% (inclusive of both FDI and portfolio investment) of paid up share capital.

d) Direct-to-HomeMaximum foreign investment of 49% paid up share capital include

e) Terrestrial Broadcasting FMForeign investment is permissible to the extent of 20% (including portfolio investment, investment by OCB/NRI/PIO etc.) of the paid up share capital of the company. The licensee should be a company registered in India under the Companies Act.

f) Terrestrial TVNo private operator is allowed in terrestrial TV transmission.

g) Establishment and Operation of SatelliteFDI up to 74% is permitted with prior Government approval

4. Broadcasting

Guidelines for Foreign Direct Investment in the Indian Media & Entertainment Industry



Advantage India and business opportunities• Market Overview




Advantage IndiaAdvantage India & business opportunities

• Second fastest growing economy in the world

• Favourable FDI policies for all the segments of Media & Entertainment Industry

• Regulatory environment being strengthened for faster growth of the industry

• High quality of creative and technical talent pool

• Large untapped potential especially in Television and Films

• Indian consumers willing to spend more on entertainment

• Growing middle class with more disposable income


Business opportunities in the Indian Media & Entertainment Industry…1Television

Radio

• Production/co-production of content

• Broadcasting of TV channels

• Distribution of TV channels through cable and new delivery platforms like DTH and IPTV

• Technology transfer for digital content creation

• Marketing of TV rights/air times

• Strategic investment in existing companies in broadcasting, distribution and content

• Investment in FM and Satellite Radio

• Content creation for radio channels

• Marketing of air times

Advantage India & business opportunities


Business opportunities in the Indian Media & Entertainment Industry…2Films

Music

• Production/co-production of films

• Processing, distribution and exhibition of Bollywood films

• Shooting of overseas films in India

• Development, distribution and exhibition of Hollywood/overseas films

• Training for technical and functional areas of film making

• Supply of Hardware to film studios

• Creation of content for film and non-film music

• Marketing of film and non-film music

• Strategic investment in local music companies

Print

• Strategic investment in news and non-news publications

• Tie-ups for providing content to Indian publications



Key Players - Indian Film Industry



Key Players - Indian Television & Radio Industry

Doordarshan is the largest TV network in India with 19 channels reaching 90% of the population through 1400 transmitters

News Corporation owned Star TV Network entered India in 1991 and offers more than 10 channels in mass entertainment, sports, news,, music, movies etc.

Zee is one of the pioneers of the Indian Television industry with 22 channels in its bouquet. It is present in broadcasting, cable distribution, production and distribution of films, creation of animation software among others

Sony Pictures Entertainment is present in India with 3 channels focusing on Hindi entertainment and sports

Sun Network is based in South India with 14 channels in four languages and a focus on entertainment, news, movies, music, kids shows among others. Also present in FM Radio

Walt Disney is present in India through two kids channels and has recently bought one more kids channel

All India Radio, owned by Government of India is the largest radio network in India with 214 broadcasting centres covering more than 99% of the Indian population



Key Players - Indian Music Industry


BMG is one of the earliest music companies to enter India in a joint venture with Crescendo, an Indian company

EMI owned Virgin Records is another international music company operating in India

Universal is one of the leading names in Indian music industry with a strong presence across all genres

Sony is one of the leading music companies of India with a presence in both Indian and International albums

Saregama, formerly known as The Gramophone Company of India Ltd. is India’s oldest music company with largest repertoire of music across all genres and languages including top-recording artistes of the past hundred years


Key Players - Indian Print Media Industry


One of the leading English dailies owned by Bennett, Coleman & Co, a leading media group of India

Another leading English newspaper with multiple editions published from many states in India

One of the oldest newspapers with a strong presence in South India

Hindustan Times is another leading English newspaper with more than 4 million readership mostly in North India

Published in English and Malayalam, this newspaper enjoys a strong readership in South India. It also publishes a large number of well known magazines in English and regional languages


The India Brand Equity Foundation is a public-private

partnership between the Ministry of Commerce & Industry,

Government of India and the Confederation of Indian

Industry. The Foundation’s primary objective is to build

positive economic perceptions of India globally

India Brand Equity Foundation

c/o Confederation of Indian Industry

249-F Sector 18, Udyog Vihar Phase IV

Gurgaon 122015, Haryana, INDIA

Tel +91 124 401 4087, 4060 - 67

Fax +91 124 401 3873

Email [email protected]

Web www.ibef.org


DisclaimerThis publication has been prepared by ICRA Management Consulting Services (IMaCS) for the India Brand Equity Foundation (“IBEF”).

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The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication), modified or in any manner communicated to any third party except with the written approval of IBEF.

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Media & Entertainment September 2006