Indian M&E industry registers 12 per cent growth in 2011: FICCI-KPMG

Advertising spends accounted for Rs 300 billion across all media and contributed to 41 per cent of the overall M&E industry revenues.

The Indian Media and Entertainment (M&E) industry posted a growth of 12 per cent over 2011, says the latest FICCI-KPMG report. The registered growth is backed by strong consumption observed in Tier II and Tier III cities, continued growth of regional media and fast increasing new media business.

In comparison, the industry had registered a year-on-year growth of 11 per cent last year to become an industry worth Rs 652 billion.

Going forward, the M&E industry is expected to register a CAGR of 15 per cent to touch Rs 1,457 billion by 2015.

The report notes how 2011 has been a challenging year not just for the Indian M&E industry and the Indian economy but the global economy as well. While India is still seen growing at a healthy pace, it is expected to be lower than early projections.

According to the report, advertising spends across all media amounted to Rs 300 billion in 2011, contributing to 41 per cent of the overall M&E industry revenues. Advertising revenues saw a growth of 13 per cent last year, versus 17 per cent in 2010.

The year 2011 was seen to be one with mixed results in terms of growth across different sub-sectors. The traditional media businesses witnessed a slow down over the previous year, particularly in the second half of 2011. New media segments such as animation and VFX, online and gaming businesses registered high growth rates.

Television, which continues to be the dominant medium, is seen as an industry worth Rs 329 billion in 2011 and is expected to grow at a CAGR of 17 per cent over 2011-16. It is expected to touch Rs 735 billion in 2016. Potential for further growth of the industry is still seen as television penetration in India is still at approximately 60 per cent of total households.

The study notes that the print industry grew by 8.4 per cent, from Rs 193 billion in 2010 to Rs 209 billion in 2011. The growth was lower than what was expected and is attributed to the challenging macroeconomic environment and reduced advertising spends.

Regional television and print have continued their strong growth trajectories, with rising incomes and consumption in regional markets, the study says. The markets are being looked at as the next consumption hubs by national advertisers, while local advertisers are learning the benefits of marketing their products aggressively.

The film industry is expected to post sustained growth in 2012/03, much like the previous year, thanks to several high-budget Hindi releases lined up across the year. The Indian film industry indicated a growth of 11.5 per cent in 2011 over 2010 and is estimated to be worth Rs 93 billion in 2011. It is projected to grow at a CAGR of 10.1 per cent to touch Rs 150 billion in 2016.

The industry had a good year in 2011, with multiple movies crossing the Rs 100-crore mark in domestic theatrical collections and the Rs 30-crore mark in cable and satellite rights.

The music industry, observes the report, witnessed music consumption through different digital platforms after the structural shift from physical formats to digital in 2010. The Indian music industry achieved revenues of Rs 9 billion in 2011, growing by 5 per cent over 2010.

Digital technology continues to revolutionise media distribution. Increased proliferation and consumption of digital media content - newspapers and magazines, digital film prints, online video and music and social media - have been observed. Similarly, online advertising spends have also risen vis-a-vis spends on traditional media.

The new wave in media usage is being boosted by smartphones, tablets, PCs and gaming devices, which is gradually seen impacting the way content is being created and distributed as well.

Jehil Thakkar, head of media and entertainment, KPMG, says, "The M&E industry landscape is undergoing a significant shift. Cable digitisation, the promise of wireless broadband, increasing DTH penetration, digitisation of film distribution and growing internet use are prompting strategic shifts in the way companies work. Traditional business models are evolving for the better as a host of new opportunities emerge."

"The M&E landscape is beginning to change, with national cross-media conglomerates emerging and consolidation and deal making finally picking up pace," adds Rajesh Jain, head, markets, KPMG.

The report will be formally released at the inaugural session of FICCI FRAMES 2012/03 on March 14.