Film industry sees 14% growth in 07; projected size Rs 176 bn in 2012: FICCI – PwC Report

MUMBAI: The Indian filmed entertainment industry is projected to grow from the current Rs 96 billion to Rs 176 billion in 2012.

In 2007, the film industry saw a growth of 14 per cent as compared to 2006 as per the FICCI- PricewaterhouseCoopers 2008 Report on Indian Entertainment and Media Industry 2008.

FICCI-FRAMES 2008 will unfold against the backdrop of a 17 per cent growth in the Indian Entertainment & Media (E&M) industry in 2007 over the previous year.

The E&M industry reached an estimated size of Rs 513 billion (Rs 51,300 crore) in 2007, up from Rs 438 billion in 2006. In the last four years 2004-2007, the industry recorded a cumulative growth of 19 per cent on an overall basis, according to the report.

Indian E&M Industry is projected to grow by 18 per cent cumulatively over the next five years; projected to reach Rs 1.157 trillion by 2012.

The advertising industry recorded a growth of 22 per cent in 2007 over 2006 to reach Rs 196 billion in 2007, up from Rs 161 billion in 2006; contributed 38 per cent of the industrys revenues.

FICCI secretary general Dr. Amit Mitra said, With FRAMES, we monitor the growth of the entertainment industry on an annual basis. Growth in 2007 has indeed been robust, with expansion of the radio and TV recording a CAGR of 22 per cent and 18 per cent, respectively. We can proudly say that our networking with the government and industry segments is paying rich dividends. It is now for the industry to fan out and have a global outreach."

Sector-wise hightlights

  • Overall
  • Filmed Entertainment
  • Television industry
  • Print Media
  • Radio
  • Outlook for the next 5 years

Overall E&M Sector

Current size in 2007: Rs 513 billion;

Projected size in 2012: Rs 1,157 billion

Growth in 2007 over 2006: 17 per cent; CAGR 2008-12: 18 per cent

Continuing with the trend of the previous years, the emergence of media conglomerates further intensified in 2007. Several media groups expanded beyond their traditional domains to leverage on the synergies of advertising, thus aiming to have a presence across all segments of the Indian E&M industry.

In 2007, foreign investments in the E&M sector reached a record high of $ 211 million (approximately Rs 8.5 billion). This was seen as result of the extremely high number of investment deals announced in 2006 and the years before.

The advertising industry is experiencing a paradigm shift with digital platforms enabling to reach the critical mass. This had resulted in consumers shifting from passive mediums to spending more time on digitally interactive mediums. Internet and mobile are two keys enablers for the same. Internet advertising is estimated at Rs 4.2 billion in 2008 growing at 32 per cent CAGR, expected to touch Rs 11 billion in 2012.

The E&M industry saw several deals in 2007 across various segments. As the case last year the television segment generated the most interest among investors.

2007 continued the trend towards increased convergence between the E&M industry and the telecom industry. The most notable of these trends were witnessed in the mobile music segment. Other initiatives included newspaper industry going on-line with e-papers and mobile with m-papers. Digital cinema continued to make significant progress in the filmed industry, which also saw a rise in on-line and mobile ticketing sales. Most television broadcasters today have foraying into online and mobile portals.

Filmed Entertainment Highlights

Current size in 2007: Rs. 96 billion;

Projected size in 2012: Rs. 176 billion

Growth in 2007 over 2006: 14 per cent; CAGR 2008-12: 13 per cent

The filmed entertainment industry is poised to grow at a CAGR of 13 per cent from 2008-2012.

Emergence of various revenue streams beyond traditional box office is changing the face of the Indian filmed entertainment industry such as television, mobile, internet, home video, merchandise, music, re-make rights and several branded entertainment opportunties.

Advent of Studio Model is further de-risking the business; 2007 saw interests by Hollywood studios in India such as Sony Pictures, Viacom and 20th Century Fox.

Entry of players like Moser Baer is changing the Indian model for Home Video from rental to a sell-through; incumbents are following suit.

Talent is becoming commoditized; huge rush in 2007 to lock-in talent for a long term period.

Television Industry Highlights

Current size in 2007: Rs 226 billion;

Projected size in 2012: Rs 600 billion

Growth in 2007 over 2006: 18 per cent; CAGR 2008-12: 22 per cent

Television industry is transforming with digitalization of distribution networks through increase in DTH subscribers which projected to grow at 44 per cent CAGR over the next five years.

CAS was made mandatory from January 1, 2007, but saw lukewarm response during the year.

High growth in advertising revenues and emergence of alternate revenue streams especially SMS is driving the launch of several new channels, especially in the general entertainment genre.

Print Media Highlights

Current size in 2007: Rs 149 billion;

Projected size in 2012: Rs 281 billion

Growth in 2007 over 2006: 16 per cent; CAGR 2008-12: 14 per cent

New magazine launches in 2007 dominated the print industry in 2007 as a result of favorable FDI policies and manifested growth potential especially in the high-end niche genres

Newspaper publishing was dominated with the increased regional publications

Radio Industry Highlights

Current size in 2007: Rs 6.2 billion;

Projected size in 2012: Rs 18 billion

Growth in 2007 over 2006: 24 per cent; CAGR 2008-12: 24 per cent

Over 150 radio channels have operationalised by 2007 thus increasing the spread of radio.

Phase-III plans have been drawn up which recommend additional 560 radio stations in the next five years

Radio regulator TRAI has recommended to Government for allowing news on radio and increasing the FDI limit amongst other provisions; these recommendations are expected to make radio more favourable with advertisers.

Outlook for the next 5 years

Globally, the migration to digital formats is accelerating and this trend is likely to emerge in India too.

Distribution of entertainment and media content over digital and mobile platforms, online digital streaming, digital movie/TV downloads, video-on-demand, music downloaded from the Internet, music downloaded to wireless phones, online advertising, online video games, wireless video games, and online gaming is like to rise significantly in the next five years.

"Digitalization is the future for most segments and companies have to adopt this revolution with appropriate infrastructure, relevant business models, and technology upgradation along with associated costs. The pace of adoption will determine industry dynamics," said Timmy Kandhari, executive director and leader TICE (Technology, Infocomm and Entertainment & Media) practice, PricewaterhouseCoopers in India, while commenting on the future outlook for the industry.

"As digitization sets in, it will lead to reduction in costs for content and delivery in the long run, shifting the emphasis on quality content," he added.