Growth in digital media to help M&E industry in near term - livemint.com

The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is growing with a rapid pace. Proving its resilience to the world, the Indian M&E sector is on the cusp of a strong phase of growth, backed by rising consumer payments and advertising revenues across all sectors. The industry has been mainly driven by growing digitization and increasing internet usage over the last decade. Internet has almost become a mainstream media for entertainment for most of the people.

Its various segments like- film, television, advertising, prints media and music among others - have witnessed tremendous growth in the last few years. The entertainment industry continues to be dominated by the television segment, accounting for around 50 per cent of market share in terms of revenues, which is expected to grow further to 55 per cent by 2017.

Industry market size

India’s M&E sector is likely to grow at a compounded annual growth rate (CAGR) of 15 per cent between 2013 and 2018 and this will help the industry to surpass Rs 227,000 crore ($36.49 billion) by 2018. In 2013, the overall entertainment and media industry was estimated at Rs 112,044 crore ($18.01 billion) and grew by 19 percent over the previous year. The largest segment, television industry, continued its strong growth momentum led by subscription revenues, representing a year-on-year growth of about 15 percent. Internet access and internet advertising have been the fastest growing segments with annual growth rates of 47 percent and 26 percent, respectively.

Additionally, video games industry grew at a record 16 per cent in 2014 over 2013; wherein its net worth rose to $277 million. Meanwhile, the Indian animation industry was valued at $247 million in 2013 and is forecasted to grow at 15-20 percent per annum.

Acceleration in DTH, digital cable penetration to drive television sector growth

Television is the leading medium for media delivery in India in terms of revenue, representing around 50 per cent of the total media industry. The Indian television industry is on the path of continued growth, with increased digitization and the rollout of the mandatory DAS almost complete in Phase I (the four metropolitan cities) and Phase II cities (38 cities in India with a population of over one million).

As of 2014, India has 139 million TV-owning households, of which 55 million are analogue cable TV subscribers and 45 million have digital cable. DTH subscribers are 39 million. This number is expected to register higher growth in five years. Moreover, DTH is expected to grow to 64 million in 2018 from 56 million in 2017 while digital cable subscribers’ pie would go up to 90 million from 85 million in 2017. Hence, a gradual acceleration in pay TV (television) penetration will drive major growth for the television sector in five years, aided by the digitisation of cable TV in India. Pay TV refers to direct to home (DTH) and digital cable.

Meanwhile, Analogue cable subscribers’ base is expected to crash down to about 5 million by 2018, primarily led by cable TV digitisation plans of the government of India. Driven by digitisation, the number of digital cable subscribers is expected to rise, resulting into steep fall in the analogue cable households. The digital cable subscribers are expected to grow at CAGR of 25 per cent to reach about 90 million in 2018 while, DTH subscription pie is expected to witness growth of 13 per cent during 2014-2018. 

The cable TV digitization is on track and the third phase would begin from early FY16. Moreover, the third phase would be finished by December 2015 and then after a gap of a month or two the government will start the fourth phase of digitization in India. Meanwhile, the government is also planning to digitize the archives of Doordarshan and All India Radio and six companies have already filed expression of interest regarding the same.

Growth of Indian Print Media

In calendar year 2014, the Print industry grows by around 8.64 per cent to Rs 264 billion from Rs 243 billion in 2013. The long-term growth in the sector looks promising with industry players witnessing strong growth and a possible future demand in the regional market. Even though Print media has shown steady growth in the last calendar year, the macroeconomic environment continues to be challenging.

Contrary to the prevailing trends in the global print media, where there is intense competition from digital media, the print sector in India is showing a strong upsurge. The print industry is expected to grow at a CAGR of 9 per cent for 2013-18.

Much of this growth can be attributed to print media’s advertising revenues and the faith shown by advertisers in this medium. Most advertisers have shunned their cautious approach, backing the extensive reach and localisation benefits that print offers. Some of the big spending sectors such as FMCG, Retail and Real Estate have increased their media spend on print this year. Print has also witnessed a boost in advertising revenues due to the elections in several states last year. Advertising spends by political parties are expected to benefit the print media this calendar year as well

The print industry continued to derive most (94.4 per cent) of its revenues from the newspaper category. The Rs 14 billion magazine segment had a roller coaster ride this year. Some prominent publishing houses discontinued their magazines this year. On the other hand, specific niche magazines witnessed high growth with their well-defined readership and advertiser base. However, the magazine space in India continues to face growth challenges. The growth in the magazine industry is expected to decline over the next 5 years and may constitute 3.6 per cent of the total print industry.

Indian mobile entertainment grows with tremendous pace

The mobile entertainment industry in India is witnessing significant growth and expected to reach $4.9 billion in 2015, growing at a CAGR of 26% in the period 2009-2015. The mobile entertainment has a huge potential in India and the current localization of mobile entertainment content is driving the industry in the right direction, bringing in greater usability of content. In the coming years mobile entertainment landscape will see several changes with respect to greater integration of mobile entertainment services with social networking, increased significance of user generated content, which will be a major focus area for telecom operators, and the growth of infotainment services. Moreover, a rise in mobile advertising programs is also expected focused on providing credits to users for watching advertisements. Mobile music will, however, continue to dominate the mobile entertainment services landscape with significant growth potential presented by mobile video and TV.

With the launch of 3G services, the mobile TV and video landscape in India is also witnessing rapid changes. Moreover, India has good future potential for mobile video streaming services, especially for videos focused on cricket highlights and updates, in addition to film based content. However, as many subscribers are not accustomed to paid subscription-based services, the monetization of video content will be primarily through advertisements. It is also expected that greater adoption of mobile TV with users preferring to watch television on mobile while being on the move.

Government clears Phase III auction of FM radio

The proposal for auctioning for phase III of FM channels was given a go ahead by the government recently. The Union Cabinet, chaired by Prime Minister Narendra Modi also approved migration (renewal) of private FM Radio licenses from Phase-II to Phase-III in 69 existing cities for 135 channels on payment of migration fee according to TRAI recommendations. As of now, with the implementation of two phases of private FM Radio -- Phase I (1999-2000) and Phase II (2005-06) -- there are 243 private FM channels in operation in 86 cities of the country, spanning 26 states and three Union Territories.

Meanwhile, twenty-eight companies have submitted applications for the first batch of e-auction of 135 channels in 69 cities as part of Phase-III of the expansion of private FM radio. The 28 applicants have cumulatively submitted Earnest Money Deposit (EMD) of about Rs 316.91 crore. Moreover, 15 of the companies which have applied already hold licences for private FM channels under Phase-II.

Proposals of the 2014-2015 Union Budget:

Indian government has allocated Rs 100 crore to encourage the growth of community radio stations. Moreover, Rs 500 crore has been allocated for launching a pan-India programme named Digital India and a national rural internet and technology mission for services in villages and schools, training in IT skills and e-kranti for government service delivery and governance scheme. Meanwhile, the government has also allocated Rs 100 crore for launching a programme to promoting good governance.

FDI Policies

Broadcasting carriage services:

FDI in Teleports, direct-to-home (DTH), cable networks, mobile TV, Headend-in-the-Sky Broadcasting Services are allowed up to 74% with FDI, up to 49% under the Automatic route. FDI beyond 49% (up to 74%) is permitted under the government route.

FDI in cable networks is allowed up to 49% under the Automatic route.

Broadcasting content services:

FDI in FM radio is allowed up to 26% under the government route.

FDI uplinking of ‘News and Current Affairs’ TV channels are allowed up to 26% under the government route.

FDI uplinking of ‘Non-News and Current Affairs’ TV channels/downlinking of TV channels is allowed upto 100% under the government route.

Print media:

26% FDI under the government approval route is allowed in the publishing of newspapers and periodicals dealing with news and current affairs.

26% FDI under the government approval route is allowed in the publication of Indian editions of foreign magazines dealing with news and current affairs.

100% FDI under the government approval route is allowed in publishing/printing of scientific and technical magazines/ speciality journals/ periodicals, publication of facsimile editions of foreign newspapers.

Outlook

Indian M&E sector will continue depending on the digital area in future. With a growing internet user base of over 200 million, the industry’s potential to generate revenue is enormous. Television and print are expected to remain the largest contributors to the advertising pie in 2018 as well. Internet advertising will emerge as the third-largest segment, with a share of about 16 per cent in the total M&E advertising pie. Within TV, subscription revenues are expected to be three times more than advertising revenues, by 2018. Growth in the regional reach of print and radio shall provide opportunities to further improve the advertisement revenue and simultaneously help in growing Media and entertainment sector.

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Fast & Furious 7 becomes the highest Hollywood weekend grosser in India : The Economic Times

MUMBAI: Fast & Furious 7 has become the highest Hollywood weekend grosser in India, earning Rs 70 crore (gross box office).The Universal Pictures' franchise, has been estimated to have generated over $ 2.5 billion worldwide.

The film, starring Vin Diesel and Paul Walker ­who died while the film was being made ­was released in India with around 1,651 prints at about 2,600 screens. Of them, at least 1,500 screens were e­cinemas (digital) and not 2K compliant which ensured the film a wider reach in B and C centres. This was a first for any of the six big Hollywood studios that had agreed not to release films in screens which were not 2K compliant. In what could be a one­off case, Universal Pictures International India got permission to release the movie at such screens. 

"The Indian gross box office is close to $1.5 billion. Hollywood, which is at a tipping point in terms of getting on par with large Indian releases, is using all its might to further increase its share. The success of Hollywood movies like Fast & Furious 7 shows that we will increasingly see action movies with strong story lines doing well in India," said Farokh Balsara, partner and media & entertainment industry leader ­Europe, Middle East, India and Africa ­Ernst & Young. Until a few years ago, Hollywood was considered an urban phenomenon and it released movies only for English­speaking audience.

 However, much has changed over the last few years as wider distribution network, growth in multiplexes and robust marketing have aided the growth of Hollywood content in India. The share of Hollywood may still be small (8­9%) in the overall domestic market, however, players are not complaining as its films continue to draw footfalls. In fact, dubbed versions in languages such as Hindi, Tamil and Telugu contribute about 35% of the total revenues. 

What could change things around is the e­cinema or digital non­DCI compliant release of Fast & Furious 7. Exhibitors, who had invested heavily in converting their screens to 2K, are not very happy . "It's disappointing that Universal chose to make Fast & Furious 7 available in non­DCI compliant cinemas, as well. That said, the impact of Hollywood films releasing in e­cinemas, on Hindi and other Indian language films, would be minimal at best. Indian films remain the most­preferred choice of content for cinemas in B and C centres," said Kamal Gianchandani, CEO, PVR Pictures. 

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PVR denies talks with SPI Cinemas:the businessline

Movie exhibition company PVR Ltd has denied news reports that it is likely to acquire the Chennai-headquartered SPI Group that runs Sathyam Cinemas. In a regulatory filing to the stock exchanges today, PVR said, “as part of its continuing business strategy to look for growth opportunities, the company is constantly on the look-out for, and in discussions with, potential partners in various capacities to further its business.” The company is not aware of any negotiations or transactions with SPI Cinemas.

According to industry sources, PVR is close to acquiring SPI Cinemas that runs more than 40 screens in Chennai and Coimbatore. SPI Cinemas plans to add another 40-50 screens to its portfolio, and was weighing various options, including PE, to fund its expansion. 

Swaroop Reddy, Director, SPI Cinemas, said, “I do not want to comment on this now.” Another leading player in the movie exhibition business said PVR is an asset-light company, and since Sathyam owns some of its screens, particularly the close to two-acre, six-screen property near Anna Salai in Chennai, PVR may not be in a position to fund the buy on its own.

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Amagi Media Labs announces expansion to Middle East and Brazil : the economic times

BENGALURU:Media technology company, Amagi Media Labs, has announced expansion of its international operations to the Middle East and Brazil through partnerships with general news channel, NDTV 24x7 and Sundance Global Channel. 

Launched in 2008, Bengaluru­based Amagi's cloud technology platform, STORM, allows advertisers to deploy targeted advertisements and region specific content, across both traditional and OTT (over­the­top) TV platforms, thereby making it a cost effective proposition. "We are in the process of expanding our presence in international markets through our managed service," said KA Srinivasan, co­founder of Amagi. 

The managed service vertical designed specifically for international markets works on the same technology platform as the one for domestic market and allows television networks to go directly to advertisers provide different targeted advertisements in different countries to increase revenue. In India, Amagi buys advertisement inventory from television channels and then splits it using its platform, so advertisers can relay ads in specific regions.

 The company has more than 10 international clients and has deployed its technology across 18 countries including the UK, Netherlands, Sweden, Bangladesh, Singapore, Hong Kong, Australia and several countries in Africa. It set up an office in London in December and in Japan in September last year. "Amagi is a pioneer in geotargeted advertising. They have clearly demonstrated value to both advertisers and TV networks through their technologically advanced adinsertion platforms. 

We had evaluated a few other solutions, but chose Amagi platforms for its simplicity, reliability, scalability and technical superiority," said Dinesh Singh, chief technological officer of NDTV 24x7. This partnership will allow the channel to insert region specific ads in Middle East, which is home to a large expatriate population from India, as well as generate a new revenue stream. "Amagi can help us monetise a potential market by offering advertisers a direct access to their target audience segment," said Singh.

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Non­tent pole Hollywood movies gain popularity : the economic times

MUMBAI: Six years ago, 20th Century Fox pulled out all the stops when it was distributing James Cameron's Avatar, making it the first Hollywood blockbuster to cross the Rs 100 crore mark at the Indian box office. 

When it comes to big­budget releases, studios make the most of the opportunity by showing them on as many screens as they can by dubbing the films in Hindi and regional languages, offering the lure of 3D and raising ticket prices 10­15% besides making sure that debuts coincides with the global opening. Films like The Amazing Spiderman, Guardians of the Galaxy, XMen and Transformers: Age of Extinction are released with over 700­800 prints, for instance. 

But of late, less­populist Hollywood movies­—titles that wouldn't have got a theatrical release a few years ago­— have also found a ready audience. Films like The Imitation Game, Birdman, The Grand Budapest Hotel and even Cinderella (albeit subtitled in Hindi for 14 markets) were only released in English with 200 prints or less. But they've been successful nevertheless. "Hollywood films had a good year in 2014 and grew by 16%. Importantly, we are seeing greater audience acceptance for high­concept, non­tent pole films," said Vijay Singh, CEO, Fox Star Studios. 

"The Fault in Our Stars, Gone Girl are great examples which reflect the maturing of audiences who are seeking differentiated content. Even say one­two years ago, such films would not have released in India." Christopher Nolan's Interstellar, with 289 prints, had a 19­week run and a gross box office (GBO) of Rs 48 crore, which is regarded as highly creditable.

To be sure, movies such as Gone Girl, The Grand Budapest Hotel, Birdman and The Imitation Game all had star casts and were fuelled by Oscar hype. 

But they also had narratives that didn't easily fit the formula. Ben Affleck­starrer Gone Girl was an edgy thriller with adult certification. It had a collection of Rs 12 crore, which far exceeds anything it would have made even two years ago. Likewise with the Benedict Cumberbatch­starrer about Alan Turing.

 "PVR Pictures released The Imitation Game, which has done approximately a GBO of Rs 6­6.5 crore. The same film would have done less than Rs 2 crore about three years ago, an indication of rapid growth in discerning audience numbers," said Kamal Gianchandani, president of PVR Pictures, the largest exhibition chain in the country, which contributes 35­40% of the total Indian Hollywood market— Rs 905 crore in 2014.

 According to KPMG, the gross box office collections of the top 10 Hollywood films increased from Rs 320 crore in 2013 to Rs 420 crore in 2014. The lure of non­mainstream films has grown thanks to greater audience awareness through the Internet. As a result, more cinema halls are playing foreign language films in the top 10 cities. Mumbai may have seen three­five halls releasing a move like 

The Imitation Game five years ago — that's gone up to 12­15 cinemas, experts said. Cinepolis, the Mexican chain that entered India five years ago and has 193 screens following the acquisition of Fun Cinemas, said 10% of its total revenue comes from such fare. 

"Hollywood is something we consciously push specially in our megaplexes. A film like Gravity ran for straight two years in Bangalore. Also, 3D content contributes a 10% higher ticket price and a 15% higher food and beverage ratio," said Devang Sampat, chief strategy officer at Cinepolis. 

None of the above films crossed the 200 print mark, the number going down to 61 for The Imitation Game, yet each exceeded the Rs 2.5 crore collection mark, an indicator of the evolving audience profile. "Hollywood films such as these are definitely huge competition, though not a threat," said Sharat Katariya, director and writer of one of this year's surprise Bollywood hits, Dum Laga Ke Haisha, produced by Yash Raj Films.

 "The audience that is going to see films like Dum Laga Ke Haisha are the ones watching Little Miss Sunshine, which are also movies without big star casts but close to life." Katariya's film struck a chord with audiences with its down­toearth story about a young couple. "While these (Hollywood movies) may not be a threat, one has to be aware of such good films which are competition because it's the content that works," Katariya said. 

"I saw Foxcatcher at Cannes and loved it­­great performances, very relatable and a clean story... We have to raise our own standards or for sure movies like Interstellar will get more screens in the future." Audiences can't be taken for granted, said Vikas Bahl of Phantom Films and director of Queen, another surprise hit that had a strong female central character. "Our audience was always evolved and have been used to watching some great cinema over the years," he said. "It is we as an industry who must evolve to meet up with our audience. Over the years, they have lost trust in our content, they are tired of our gimmicks like item songs. We consciously manipulate them and so those people will eventually move to better cinema."

 Movies need to get better technically as well. "Look at (Colin Firth starrer) Kingsman­­it is a completely Bollywood film, made 100 times better," Bahl said. "Their drama is our drama but it is their execution which makes the difference. "Director and writer Rohan Sippy agrees. Growing exposure to western cinema thanks to social media and torrent downloads is shaping the audience. "Tickets are expensive and at Rs 300 and above, people want to see good cinema," he said.

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