MUMBAI: The Indian media and entertainment (M&E) industry is poised to start recovery in 2010, after hitting a rough patch in the previous year due to the global economic slowdown.

The M&E industry, which is dependent on advertising for almost 40% of its revenues, was hit due to shrinking ad budgets of the corporate world. However, the industry as a whole remained at an almost flat rate registering a very modest growth of around 1.3% in 2009 compared to 12% in 2008. It is poised for recovery in 2010, riding on the back of economic growth picking up and favorable demographics of the country as per the FICCI-KPMG report on the Media and Entertainment industry. Sectors like films and out-of-home (OOH) were impacted more than the others and registered a negative growth during the year. The report says that even in 2010, they are expected to recover with an almost flat or moderate growth rate.

On the other hand, sectors like print, radio and music either remained flat or showed a very moderate growth. The television industry displayed an almost double-digit growth rate, mainly on account of subscription revenues; though advertising revenues also showed positive growth. Internet, gaming and animation, brought reasons to cheer for the industry with their growth rates touching double digits, albeit on a smaller base.

Growth in the M&E industry is likely to be driven by the growth in subscription through enhanced penetration and expansion of digital delivery infrastructure. As per the report, rising disposable incomes of the working population and increased spend on discretionary items, not only in Tier 1 but also Tier 2 and 3 cities is expected to continue impacting the M&E industry favorably.

Growth of newer delivery platforms with superior technology and functionality is likely to expand horizons for the M&E business. Aspirations of Indian players to go global and foreign players entering the industry will also help the industry target a double-digit growth in next five years.

The report states that the role of new media is becoming increasingly important in the distribution portfolio of advertisers. Focus on talent development, consumer research and innovation will help the players in differentiating themselves amidst growing competition.