The power of a billion - Realizing the Indian dream

202 Pages·2013·8.8 MB·English

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The power
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Indian dream
FICCI-KPMG
Indian Media and Entertainment
Industry Report 2013

kpmg.com/in
We would like to thank all those who have
contributed and shared their valuable
domain insights in helping us put this
report together.
IMAGES COURTESY: Eros, Sony Music, Disney UTV, Reliance Entertainment, Zee Network, Times Music, Only Much Louder, T-Series,
United Mediaworks, F ox Star India, Milestone Interactive, Viacom 18, Star India, 9X Media, Vserv.mobi, Graphiti Multimedia,
Green Gold Animation, Prime Focus, DDB Mudra, Times OOH
© 2013 KPMG, an Indian Registered Partnership and a member frm of the KPMG network of independent member frms affliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The power
of a billion
Realizing the
Indian dream
FICCI-KPMG
Indian Media and Entertainment
Industry Report 2013
© 2013 KPMG, an Indian Registered Partnership and a member frm of the KPMG network of independent member frms affliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Foreword
The Promise of a Billion...
The promise of a billion consumers – this year’s theme for the
FICCI Frames, symbolizes the immense potential of India as a
Media and Entertainment (M&E) market.
Why is this the relevant year to articulate this theme? While 2012
was a challenging year for the industry as a whole, it was also
a year of significant changes; one where value chains were re-
arranged and business models re-defined. These changes, while
painful in the short run, will position the Indian M&E industry on
a stronger footing for the future.
This year, we have included several guest columns in the report.
We believe it is important to have multiplicity of perspectives.
There is a wide range and breadth in the points of view offered
in these columns; but we hope these opinions will enhance the
value of the facts and information contained in this report.
In 2012, the economic slowdown hit the industry hard –
especially advertising revenue. Advertising budgets were cut
and plans had to be modified. Most companies had to revise
previously robust projections to reflect a new macro – economic
reality.
However, many seeds of positive change were sown this year.
The digital transformation of the industry, which we highlighted
last year, has finally entered the implementation phase.
Digitisation of cable in India was rolled out. Phase 1, though
somewhat delayed, is now largely complete in Mumbai and
Delhi and progressing in Kolkata. Phase 2 is now underway.
FDI in cable and DTH was also a welcome announcement and
we are likely to see significant interest from foreign strategic
investors and private equity players in these sectors.
Films saw robust growth of close to 21 percent on the back
of content that addressed various consumer segments. The
digitisation of theatres is close to 80 percent and projected to
be nearly complete in 18-24 months – improving access for
audiences and the economics for the business as a whole. Also,
macro factors will enable the film industry in India to continue
with its robust growth for years to come – rapid urbanization,
headroom for multiplex growth and increasing sophistication
in production and marketing will continue to drive revenue at
near 11 percent for the next several years. We are not far from
achieving our next benchmark – the INR 10 billion box-office
film!
© 2013 KPMG, an Indian Registered Partnership and a member frm of the KPMG network of independent member frms affliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Radio too, is set for the – roll out of new licenses
in 294 cities as announced by the Finance Minister
in his Union Budget speech of 2013 – a positive
step that can accelerate the sector’s growth. Print
continues to grow in India unlike in most countries.
It has become more competitive and vibrant
over the last few years. And the industry is finally
acknowledging that challenges to its business
model, though not immediate, will emerge
eventually. English markets will be challenged
by the emergence of the digital ecosystem first
followed by regional markets. However, for the
foreseeable future, growth will continue at 9-10
percent CAGR.
New media also emerged as a growth driver in
Uday Shankar
2012 – we saw the impact of new media revenue
Chairman
for music companies reach critical mass, Youtube
became a significant revenue driver, the App FICCI Media and
economy in India began to take off and OTT Entertainment Committee
models are being experimented for TV.
2013 will be the year in which the promise of
wireless broadband starts to find fulfillment. There
Ramesh Sippy
is a renewed push on 3G and limited launches of
Co-Chairman
4G services – which are likely to go wider this year.
FICCI Media and
This should provide content companies a whole
Entertainment Committee
new platform on which to reach, entertain and –
engage its audience of a billion.
Karan Johar
Chairman
FICCI Frames
Jehil Thakkar
Head
Media and Entertainment
KPMG in India
© 2013 KPMG, an Indian Registered Partnership and a member frm of the KPMG network of independent member frms affliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Table of
contents
Indian M&E
Industry in 2013
An Introduction
06 12
Television
The march to
digital begins
Radio
Renewed hope
88 114 126
New Media Music
Let the games Streaming to
begin! success
172
Technology
Changing the
game
© 2013 KPMG, an Indian Registered Partnership and a member frm of the KPMG network of independent member frms affliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Print
Regional to the
rescue
42 58
Films
A Blockbuster
year
Animation,
VFX and Post
Production Convergence
Lights, Camera… Waiting for
Animation! bandwidth
146 158 166
Out of Home
Displaying
resilience
Deal volume and
value in 2012
Consolidating for
scale
180 186
Tax and Regulatory
Two steps
forward...
© 2013 KPMG, an Indian Registered Partnership and a member frm of the KPMG network of independent member frms affliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
6 The power of a billion: Realizing the Indian dream
Indian M&E
Industry in 2013
01 An Introduction
© 2013 KPMG, an Indian Registered Partnership and a member frm of the KPMG network of independent member frms affliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The power of a billion: Realizing the Indian dream 7
Introduction
Not long ago, the thought of being able to reach and engage with the
billion-strong and significantly diverse Indian customer base seemed far
fetched. Today, powered by digital technologies, growth in penetration of
broadband and digital cinema, increasingly sophisticated mobile devices, and
a regulatory framework that is enabling growth and change in several sectors
of the industry, the dreams of advertisers, media houses, and telcos are
beginning to move towards fulfillment.
Not so surprising then, that the theme for the FICCI
01Frames 2013 conclave is ‘A Tryst with Destiny:
Engaging a Billion Consumers’
At the same time, this comes against the backdrop of a subdued macro
environment that has dampened advertising spends. Key sectors still
struggle with challenges of sub optimal scale, fragmented audiences,
distribution leakages and the need for better industry co-ordination. Along
with the opportunities presented by digitization and convergence, to realize
the promise of a billion, come key questions for M&E companies and the
government.
• Global slowdown in economic growth
• Continued crisis in the EU
• 5 percent growth in real GDP (nominal growth 11.7 percent ) in India
in 2012-13 (vis a vis 6.2 percent previous year)1
How can we extend our reach?
How can we formulate multi platform distribution strategies to reach new
audience segments and enable better subscription revenues? How do we
penetrate emerging and lucrative regional pockets? How can we ensure
access to media at realistic price points for the under-served population near
the bottom of the pyramid?
730 million TV Viewers2
181 million Press AIR3
159 million Radio listeners3
176 million Internet users4
Significant potential to grow reach in a country of one billion
How do we create true connect?
How can we effectively segment a diverse audience base and then research
and customize content for each segment, to ensure relevance? For example,
how do we balance dubbed vs localized content in newly penetrated regional
and rural markets? Or international vs locally produced content targeting key
cities? Is there a business case for further zoning/ going hyperlocal within
penetrated markets for greater localization of offerings? How do we engage
the multitasking youth of today? How do we then inculcate processes to
measure and monitor audience and reader responses, and then to ensure
responsiveness and flexibility?
01. Central Statistical Organization (CSO) estimates
02. KPMG Analysis based upon Census 2011 and Industry discussions
03. IRS Q3 2012
04. KPMG Analysis based upon TRAI, IAMAI estimates and industry discussions.
© 2013 KPMG, an Indian Registered Partnership and a member frm of the KPMG network of independent member frms affliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
8 The power of a billion: Realizing the Indian dream
Industry size and projections
• ‘Alive’ App enables readers to interact with the The overall Indian economy slowed down in 2012 due to
print medium. both domestic and external factors. Domestically, the
• Increased integration of events with print/radio monetary and fiscal stimulus provided by the Government
campaigns ensures on-ground reach. of India post financial-crisis led to strong growth in demand
and consumption in 2009-10 and 2010-11. However, this
• Barfi combined online apps, college and in mall
resulted in higher inflation and a powerful monetary
events, and multimedia appearances in a high
response that slowed consumption demand. Moreover,
recall marketing campaign.
corporate and infrastructure investment were also pulled
• Internet Radio stations: Purani Jeans (retro hits), down by the tightened monetary policy as well as the
Club Mix (party tracks) and Sufiyaana (Sufi and policy bottlenecks. Externally, a slowing global economy
ghazals) cater to tastes of niche audiences. weighed down by the continued crisis in the Euro area
and uncertainty in the US fiscal policy also increased risks
• Satyamev Jayate utilized Big data analytics to
to growth. The Central Statistical Organization’s (CSO’s)
analyze large volumes of multiformat responses
estimates indicate a 5 percent growth in real GDP in
within and post each show, to tailor future shows
2012-13, as compared to a growth of 6.2 percent posted
and leverage data to lobby for change.
in 2011-12. These factors resulted in a challenging year for
the M&E industry, with reductions in advertising budgets
across sectors.
The Indian M&E industry grew from INR 728 billion in 2011
to INR 821 billion in 2012, registering an overall growth
5
How can the power of media be harnessed of 12.6 percent . Recent policy measures taken by the
to influence and be an instrument of social government can pave the way for gradual recovery for the
Indian economy. With some improvement also likely in
change?
the global economy in 2013, the prognosis for the Indian
How do we leverage the people’s trust in media to
economy looks somewhat better and real GDP growth is
influence, educate and be change agents for the better
expected to be in the range of 6.1 to 6.7 percent in 2013-
of society? How can we develop platforms that enable 6
14 . Given the impetus introduced by digitization, continued
our audiences to connect with each other and create
growth of regional media, upcoming elections, strength in
communities with common causes?
the film sector and fast increasing new media businesses,
the industry is estimated to achieve a growth rate of 11.8
percent in 2013 to touch INR 917 billion. The sector is
• ‘Nirbhaya’ protest and women’s safety campaign projected to grow at a healthy CAGR of 15.2 percent to
across traditional and social media, garners reach INR 1661 billion by 2017.5
widespread awareness and support.
Television clearly continues to be the dominant segment,
• Satyamev Jayate draws attention to key social
however we have seen strong growth posted by new
issues.
media sectors, animation/ VFX and a comeback in the Films
• Successful films OMG and Vicky Donor present (21 percent growth in 2012 over 2011 vis a vis 11 percent
social themes in an entertaining way. per growth in 2011 over 2010) and Music sectors (18
percent growth in 2012 over 2011 vs. 4.7 percent growth
• Press campaigns such as Lead India and Teach in 2011 over 2010) on the back of strong content and the
India aim to mobilize and empower readers. benefits of digitization.
• ‘Have a Heart’ Radio channel campaign in Mumbai
Radio is anticipated to see a spurt in growth post rollout
and Delhi aims to promote acts of kindness.
of Phase 3 licensing. The benefits of Phase 1 cable digital
access system (DAS) rollout, and continued Phase 2 rollout
are expected to contribute significantly to strong continued
growth in the TV sector revenues and its ability to invest in
and monetize content. The sector is expected to grow at a
5
CAGR of 18 percent over the period 2012-2017 .
05. KPMG in India Analysis and industry discussions
06. Economic Survey 2012-13
© 2013 KPMG, an Indian Registered Partnership and a member frm of the KPMG network of independent member frms affliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.