The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making high growth strides. Proving its resilience to the world, the Indian M&E industry is on the cusp of a strong phase of growth, backed by rising consumer demand and improving advertising revenues. The industry has been largely driven by increasing digitisation and higher internet usage over the last decade. Internet has almost become a mainstream media for entertainment for most of the people.
The Indian advertising industry is projected to be the second fastest growing advertising market in Asia after China. At present, advertising revenue accounts for around 0.38 per cent of India’s gross domestic product.
The Indian media & entertainment sector is expected to grow at a Compound Annual Growth Rate (CAGR) of 13.9 per cent, to reach US$ 37.55 billion by 2021 from US$ 19.59 billion in 2016, outshining the global average of 4.2 per cent.
Over FY 2016-21, radio will likely grow at a CAGR of 16.1 per cent, while digital advertising will grow at 30.8 per cent. The largest segment, India’s television industry, is expected to grow at a CAGR of 14.7 per cent, while print media is expected to grow at a CAGR of 7.3 per cent.
India is one of the highest spending and fastest growing advertising market globally. The country’s expenditure on advertising is expected to grow at 12 per cent to Rs 61,100 crore (US$ 9.47 billion) in the year 2017. Mobile advertisement spending in India is estimated to grow to Rs 10,000 crore (US$ 1.55 billion) by the end of 2018, according to a joint report titled ‘Mobile Ecosystem and Sizing Report’ by Mobile Marketing Association (MMA) and GroupM.
The Foreign Direct Investment (FDI) inflows in the Information and Broadcasting (I&B) sector (including Print Media) in the period April 2000 – June 2017 stood at US$ 6.58 billion, as per data released by Department of Industrial Policy and Promotion (DIPP).
- Growing internet penetration and data consumption is likely to increase digital advertisement spends in India at a compounded rate of 30.8 per cent between 2016 and 2021.**
- Google’s video platform, YouTube, plans to increase its user base in India to 800 million, as rising internet penetration in the rural areas will enable the consumers to access videos on their smartphones.
- PVR Cinemas plans to add around 75 screens across India during FY 2017-18, thereby raising its capacity to 650 screens and has a target to achieve 1,000 screens in India by 2020.
- Hotstar, a digital streaming platform owned by Star India Ltd, has entered into a partnership with Zapr Media Labs, a media tech company based in Bengaluru, to perform analysis on mobile audience that can be leveraged by brands to create personalised communication.
- Dentsu Aegis Network (DAN), a global digital marketing company based in United Kingdom, has acquired SVG Media Pvt Ltd, an Indian marketing services group, in an all-cash deal which is estimated to be in the range of US$ 100-120 million.
- GroupM, the US-based advertising media company, has acquired a majority stake in MediaCom India, a joint venture between GroupM India and Madison Media group’s principal shareholder Sam Balsara, for an undisclosed amount.
- Bigtree Entertainment Pvt. Ltd, which owns Bookmyshow, has acquired a 75 per cent stake in Townscript, an online event registration and ticketing platform based in Pune.
- PE major Warburg Pincus has purchased 14 per cent stake in India’s largest multiplex chain PVR Ltd for Rs 820 crore (US$ 123 million).
- ITW Consulting, a global sports consulting and management company, has forayed into the Indian market by launching its entertainment, media and communication arm, ITW Playworx, which will be based in Mumbai with offices across Delhi, Bengaluru, Chennai and Kolkata.
- Reliance Capital, part of Anil Ambani-led Reliance Group, has announced the sale of its radio and television broadcasting businesses under Reliance Broadcast Network to the Zee group for Rs 1,900 crore (US$ 285 million).
Mr M Venkaiah Naidu, Minister for Information and Broadcasting, Government of India, has stated that the Indian Media and Entertainment industry, mainly the broadcasting sector, is on the peak of a strong growth phase led by the recent government initiatives like Make in India, Skill India, Digital India and Goods and Services Tax (GST).
The Government of India has supported Media and Entertainment industry’s growth by taking various initiatives such as digitising the cable distribution sector to attract greater institutional funding, increasing FDI limit from 74 per cent to 100 per cent in cable and DTH satellite platforms, and granting industry status to the film industry for easy access to institutional finance.
The Indian media, entertainment industry is forecasted to grow at a compound annual growth rate (CAGR) of 13.9 per cent between 2016-21, to reach US$ 37.55 billion by 2021. The Indian Media and Entertainment industry is on an impressive growth path. The industry is expected to grow at a much faster rate than the global average rate.# TV advertising sector is expected to grow at a CAGR of 11.1 per cent during 2016-21, as against the global average of 2.8 per cent. Cinema in India is estimated to grow at 10.4 per cent compared to global average of 4.4 per cent. Internet video sector is expected to grow at a CAGR of 22.4 per cent while the global average is estimated to be 11.6 per cent. TV subscription will grow at CAGR of 11.6 per cent as against the global average of 1.3 per cent.
Growth is expected in retail advertisement, on the back of factors such as several players entering the food and beverages segment, e-commerce gaining more popularity in the country, and domestic companies testing out the waters. The rural region is also a potentially profitable target.
Exchange Rate Used: INR 1 = US$ 0.015 as on October 20, 2017
References: Media Reports, Press Releases, Press Information Bureau, Department of Industrial Policy and promotion (DIPP), Union Budget 2016-1, KPMG – FICCI Report 2017
Disclaimer: This information has been collected through secondary research and Kohli & Kohli Law Associates is not responsible for any errors in the same