PricewaterhouseCoopers in its “Indian entertainment and media outlook 2009″ report has estimated that the Indian Entertainment & Media industry will return to double digit growth in 2010 .
India’s E&M industry witnessed remarkable growth in recent years having consistently outpaced growth in domestic GDP. While annual average growth in nominal GDP was 14.48% over the period 2004-08, overall E&M growth in 2008 slowed, reflecting weaker overall economic conditions. This is expected to continue in 2009.
Timmy Kandhari, leader India Entertainment and Media practice, PricewaterhouseCoopers said, “The slowdown in growth requires the E&M industry to revisit their short term business plans and strategies. However, double digit growth is expected to return over the forecast period with India recording one of the highest growth in the E&M industry as well as in advertising spending in the world, along with China.”
After registering a growth of around 16.6% compounded annually over the period 2004-08, growth in the E&M industry is set to decelerate to 8.0% in 2009. This has largely been influenced by a marked slowdown in advertising spending, which is expected to touch 9.2% in 2009 after having posting a CAGR of close to 17.3% during 2004-08.
Growth rates will increase in 2010 to 10.4% as economic conditions are expected to gradually improve. For the remaining years of the forecast period, the industry will continue to grow at increasing rates, resulting in the overall compound annual growth rate for the period 2009-13 of 10.5%.
Television industry is projected to continue to be the major contributor to the overall industry revenue pie and is estimated to grow at a stable rate of 11.4% cumulatively over the next five years, from an estimated Rs. 244.7 billion in 2008. The overall television industry is projected to reach Rs. 420.0 billion by 2013. In the Television pie, television distribution is projected to garner a share of 60% in 2013. On the other hand, television advertising industry is projected to command a share of 41.0% in 2013, having increased from a present share of 39.0% in the total ad industry pie. The relative share of the television content industry is expected to remain constant at 4%.
Film industry is projected to grow at a CAGR of 11.6% over the next five years, reaching to Rs. 185 billion in 2013 from the present Rs. 107 billion in 2008. The relative shares of the film industry are expected to shift marginally from the traditional revenues to the new emerging revenues.
Print media industry is projected to grow by 5.6% over the period 2009-13, reaching to Rs.213 billion in 2013 from the present Rs. 162 billion in 2008. The relative shares of newspaper publishing and magazine publishing are not expected to change significantly and are expected to remain the same at around 87% in favour of newspaper publishing. Magazine publishing is expected to grow at a higher rate of 6.5% as compared with newspaper publishing which is expected to grow at 5.6% for the next 5 years.
Radio advertising industry is projected to grow at a CAGR of 18% over 2009-13, reaching Rs. 19 billion in 2013 from the present Rs. 8.3 billion in 2008; more than double its present size.In terms of share of ad pie, it is projected that the radio advertising industry will be able to increase its share from 3.8% to 5.2% in the next five years.
Emerging segments ,the key growth driver for the music industry over the next five years will be digital music, and its share is expected to move from 16% in 2008 to 60% in 2013. Within digital music, mobile music will continue to increase its share and maintain its dominance.
Given the trends of increased internet usage, internet advertising is projected to grow by 32% over the next five years and reach an estimated Rs. 20 billion in 2013 from the present Rs. 5 billion in 2008. The share of the online advertising too is projected to grow from 2.3% in 2008 to 5.5% in 2013 of the overall advertising pie.
The estimated size of Out of home (OOH) advertising spend is Rs 15 billion in 2008, which is projected to become almost twice its current size in 2013 (i.e., Rs 25 billion). Its share in the total ad pie is expected to go down marginally to 6.8% in 2013 from a current level of 6.9% in 2008.
Animation, gaming and VFX industry will continue to maintain its growth pace and is projected to grow at a CAGR of 22% to Rs. 42.5 billion in 2013 from its current size of Rs. 15.6 billion. In the animation space, domestic demand will create the fillip in its growth, as well as contribution from international co-productions, in the film and television space.
Owing to the economic slowdown, the growth in advertising spending has slowed after a period of robust growth. In 2008, overall advertising spending recorded a growth of 11.3%, over the previous year which is much lower than the growth rate of 20.7% in the earlier year. Overall spending expected to increase from the present size of Rs. 216 billion in 2008, to Rs. 366 billion in 2013 (a cumulative growth of 11.1% on an overall basis).
Timmy Kandhari added, “Against the backdrop of volatility in advertising spending, we are also experiencing increased fragmentation of media and its audiences. This will result in a structural change in the advertising world with advertising becoming more targeted, interactive and accountable.”
While on-line is currently the smallest component of total advertising spend, it will experience the highest growth over the next five years, growing at a compound rate of 32%. As a consequence its share of total advertising spend will increase to 5.5% in 2013 from 2.3% in 2008. The next highest growth over the period 2009-13 is expected by the radio industry at 18% – estimated to reach Rs.19 billion in 2013, from Rs. 8.3 billion in 2008. The share of the print advertising spend is expected to decline from 47.9% to 41.5%. Television, the other large contributor in the segment is expected to grow marginally from 39% to 41%.
Marcel Fenez, Global Entertainment and Media Leader PricewaterhouseCoopers, concluded, “Though operating in challenging and fast-moving times, there has never been such an exciting time for the industry The onset of increased digitization will expose the industry to new business models and dynamics. In order for each of the industry’s diverse segments to participate fully in this growth, they will first need to embrace the digital future. This is as true in India as in the other important entertainment and media markets globally.”
This 2009 edition of the PricewaterhouseCoopers report “Indian entertainment and media outlook 2009’ has in-depth forecasts and analysis of eight industry segments. These are – television, filmed entertainment, print media comprising newspaper and magazine publishing, radio, emerging segments like music, animation, gaming, internet advertising, out-of-home advertising and sports.
The report has been prepared on the basis of information obtained from key industry players, trade associations, government agencies, trade publications, and other industry sources. The performance trends in different segments of the industry were analysed and an attempt was made to identify the underlying factors. Models were developed to quantify the impact of each of these factors, to create a forecast scenario. PwC’s professional expertise, institutional knowledge and global resources of knowledge and excellence were applied to review and adjust those values wherever required. The entire process was then examined for internal consistency and transparency vis-à-vis prevailing industry wisdom. Feedback from key industry players was subjected to a rigorous validation process to ensure that it was consistent and conformed to the industry feel.