Indian Media & Entertainment Industry to touch INR 1,457 billion by 2016: FICCI-KPMG report

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1 Indian Media & Entertainment Industry to touch INR 1,457 billion by 2016: FICCI-KPMG report Industry achieves 12 percent Growth in 2011; is projected to grow at CAGR of 15 percent over next five years Mumbai, March 10, 2012: In 2011, the Indian Media & Entertainment (M&E) Industry registered a growth of 12 percent over 2010, to reach INR 728 billon, says the FICCI-KPMG report. The growth trajectory is backed by strong consumption in Tier 2 and 3 cities, continued growth of regional media, and fast increasing new media business. Overall, the industry is expected to register a CAGR of 15 percent to touch INR 1,457 billion by The report will be formally released at the inaugural session of FICCI FRAMES 2012 on March 14, has been a challenging year not just for the Indian M&E industry, or even the Indian economy, but for the larger world economy. While India is still expected to grow at a healthy pace, growth is projected to be lower than earlier expectations. While television continues to be the dominant medium, sectors such as animation & VFX, digital advertising, and gaming are fast increasing their share in the overall pie. Radio is expected to display a healthy growth rate after the advent of Phase 3. Print, while witnessing a decline in growth rate, will continue to be the second largest medium in the Indian M&E industry. Also, the film industry had a reason to cheer, with multiple movies crossing the INR 100 crore mark in domestic theatrical collections, and INR 30 crore mark in C&S rights. Advertising spends across all media accounted for INR 300 billion in 2011, contributing to 41 percent of the overall M&E industry s revenues. Advertising revenues witnessed a growth of 13 percent in 2011, as against 17 percent observed in 2010.

2 Key highlights Print: The print industry grew by 8.3 percent from INR 193 billion in 2010 to INR 209 billion in The growth was slightly lower than our expectation of 9.5 percent last year due to the challenging macroeconomic environment and reduced advertising spends. Television: The over-all television industry is estimated to be INR 329 billion in 2011, and is expected to grow at a CAGR of 17 percent over , to reach INR 735 billion in The share of subscription to the total industry revenue is expected to increase from 65 percent in 2011 to 69 percent in The TV industry continues to have headroom for further growth as television penetration in India is still at approximately 60 percent of total households. Films: With several high budget Hindi releases lined up across the year, 2012 is expected to sustain the growth momentum witnessed in The Indian film industry is projected to grow at a CAGR of 10.1 percent to touch INR 150 Billion in The industry is estimated to be INR 93 billion in 2011 indicating a growth of 11.5 percent vis-à-vis Music: While 2010 was the year of structural shift from physical formats to digital ones, 2011 provided users viable options of music consumption through different digital platforms. The Indian music industry achieved revenues of INR 9 billion in 2011, registering a growth of 5 percent over In terms of performance, 2011 proved to be a year with mixed results in terms of growth across different sub sectors. The traditional media businesses experienced a slow down compared to last year, especially in the second half of the year. However, the new media segments like Animation and VFX, Online and Gaming businesses witnessed phenomenal growth rates. Says Dr. Rajiv Kumar, Secretary General, FICCI The key highlights are rise in digital content consumption, launch of diverse content delivery platforms, strong consumption in Tier 2 and 3 cities, rising footprint of the players in the regional media, rapidly increasing new media business and regulatory shifts. According to Mr. Jehil Thakkar, Head of Media and Entertainment, KPMG in India The Media & Entertainment industry landscape is undergoing a significant shift. Cable digitization, the promise of wireless broadband, increasing DTH penetration, digitization of film distribution, growing internet use are all prompting strategic shifts in the way companies work. Traditional business models are evolving for the better as a host of new opportunities emerge.

3 Radio : Owing to increase in listenership Radio: Overall, in both the metros industry and grew non-metros, 15 percent overall in CY 2011 the industry to reach grew INR at percent billion, in compared CY 2011 to to INR reach 10 billion INR 11.5 in billion CY compared Volume to INR increases 10 billion in certain CY markets and rate increases for the leaders in New metros Media: drove Growth growth. in advertising revenues is expected 40percent New Media: over Digital last year; advertising online is adspend expected reached to grow approximately at a CAGR of 30 4percent of from total ; M&E industry digital ads advertising spend reached revenue. approximately Growth is 5 largely percent driven of total by increase M&E industry internet advertising penetration revenue and in proliferation Growth is largely of new driven age devices. by increase in internet penetration Animation and proliferation & VFX : Animation, of new devices. VFX and Post Production industry achieved Animation estimated & VFX: revenues Animation, of INR VFX 31 and billion Post in Production 2011, a robust industry growth achieved of 31 estimated percent over revenues of Growth INR 31 was billion achieved in 2011, on the a robust back of increased growth of contract 31 percent work, over higher VFX Growth content was in movies, achieved 2D/3D on the back conversion of increased projects. contract work, higher VFX content in movies, 2D/3D Out conversion of Home: projects. The OOH sector was hit relatively harder by the global Out economic of Home: slowdown The OOH sector than other was sectors hit relatively of the Advertising harder by the global economic slowdown than The Media & Entertainment landscape is beginning to change with national cross media conglomerates emerging and consolidation and deal making finally picking up the pace, says Rajesh Jain, Head of Markets, KPMG in India. Key trends and industry drivers: Growth in digital content consumption across media Digital technology continues to revolutionize media distribution be it the rapid growth of DTH and the promise of digital cable, or increased digitization of film exhibition - and has enabled wider and cost effective reach across diverse and regional markets, and the development of targeted media content. There has been increased proliferation and consumption of digital media content be it newspapers and magazines, digital film prints, and online video and music or entirely new categories such as social media. Accordingly, online advertising spends have seen a spurt in growth viz-a-viz spends on traditional media. Rise of new age user devices Smart phones, tablets, PCs, gaming devices, etc. all form the foundation of a new wave in media usage.this is gradually impacting the way content is being created and distributed as well. Multiple media including TV, films, news, radio, music etc are being impacted with this change. New age consumers adapting themselves to the newer technologies As Indian consumers evolve, there is a heightened need to engage them across platforms and experiences. There is a greater need for integration and innovation across traditional and new media, with changing media consumption habits and preferences for niche content. Media companies today have no choice but to provide more touch points to engage with audiences.

4 Regionalization Regional television and print continued its strong growth trajectory owing to growth in incomes and consumption in the regional markets. National advertisers are looking at these markets as the next consumption hubs and the local advertisers are learning the benefits of marketing their products aggressively. An advertising revenue dependant industry The ARPU (Average Revenue Per User) for television, average newspaper cost for print and average ticket price for films continue to be low on account of hyper competition in these industries. Segments like radio and a significant portion of online content are available free of cost to consumers. Owing to this, the Indian consumer is still not used to paying for content and hence the industry players are sensitive to the impact of the slowdown which affects the budgets of advertisers. Awaited regulatory shifts Lastly, apart from the shifts in consumer preferences, company strategies and business models, one big change awaited for the next growth wave is the implementation of recently enacted and regulations on digitisation for cable, implementation of Phase 3 and copyright for Radio and the roll out of 4G. These shifts are expected to be game changers in terms of how business is being done currently and what could be the path going forward. About KPMG KPMG is a global network of firms providing professional services. We operate in 152 countries and have 145,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG in India is the Indian member firm of KPMG International and was established in September It strives to provide rapid, performance-based, industry-focused and technology-enabled services, which reflect a shared knowledge of global and local industries and its experience of the Indian business environment. KPMG provides services to over 2,700 international and national clients in India and has offices in Delhi, Chandigarh, Ahmedabad, Mumbai, Pune, Bangalore, Cochin, Chennai, Hyderabad, and Kolkata. For a copy of the report, log on to

5 About FICCI: FICCI is the rallying point for free enterprises in India. It has empowered Indian businesses, in the changing times, to shore up their competitiveness and enhance their global reach. With a nationwide membership of over 1500 corporates and over 500 chambers of commerce and business associations, FICCI espouses the shared vision of Indian businesses and speaks directly and indirectly for over 2,50,000 business units. It has an expanding direct membership of enterprises drawn from large, medium, small and tiny segments of manufacturing, distributive trade and services. FICC maintains the lead as the proactive business solution provider through research, interactions at the highest political level and global networking. For Further Information please contact: KPMG Aman Abbas FICCI. Taresh Arora Associate Director Marketing and Corporate Communications Mobile : indiawebsite@kpmg.com