Indian Entertainment Business to Top $21 Billion

MUMBAI: The Indian media and entertainment market is projected to rise by 12.5 percent in the next five years, reaching 1.05 trillion rupees ($21 billion) by 2013, according to a new report from the Federation of Indian Chambers of Commerce and Industry (FICCI) and KPMG.

The industry grew by 12.4 percent in 2008 to 584 billion rupees ($11.7 billion). While optimistic about India’s growth prospects, the report cautions that the market is challenging, with TV, print, radio and outdoor all impacted by the ad slowdown. Ad spend increased by a 17.1-percent compound annual growth rate (CAGR) over the past three years. A CAGR of 12.4 percent is expected from now until 2013.

Drivers of the growth in India’s media sector in the past year have included the rollout of regional channels and the progress made by DTH platforms.

Announcing the findings of the FICCI-KPMG report, Dr. Amit Mitra, the secretary general of FICCI, stated: "India is one of the few countries where economic growth will be led by domestic consumption. With a low advertising spend to GDP ratio of 0.47 percent, a growing consumer class and middle class, young population, low media penetration and increasing discretionary spending; India continues to be an attractive market for Media & Entertainment."

Rajesh Jain, the head of information, communication and entertainment at KPMG India, added: "Media companies are under pressure to change, innovate and re-examine their existing business models. Players need to draw upon new capabilities to survive in this environment. In the immediate future, media corporates are likely to focus more on operating margins, and assess opportunities for consolidation, while building on core strengths."

The television business was worth 241 billion rupees last year, a 14.2-percent year-on-year increase. A 14.5-percent growth rate is forecast for the 2009 to 2013 period, reaching 473 billion rupees. Drivers include the increase in the number of digital-TV enabled households, the continued expansion of the channel landscape and overall growth in the number of TV and cable and satellite homes. In response to India’s signal piracy problems, the report advises lobbying for mandatory digitization of all TV distribution and the development of alternate audience measurement systems.

The filmed entertainment sector experienced a 17.7-percent CAGR in the last three years, reaching 109.3 billion euros last year. By 2013, the industry is expected to grow at a slower 9.1-percent CAGR to reach 168.6 billion in 2013.