Ad spends of 0.34% to GDP compare low against developed nations

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Key policy

initiatives such as revenue share regime, foreign investments and opening to private players expected to drive growth

Convergence to

play a crucial role

Mumbai, March 15

The Indian media and entertainment industry is expected to grow at 19 per cent compound annual growth rate to reach Rs 83,740 crore by 2010 from Rs 35,300 crore at present, a study by FICCI and PricewaterhouseCoopers said.

Low media penetration in lower socio-economic classes and low ad spends are factors that would drive growth for the industry. Advertising spends, as a percentage of GDP - at 0.34 per cent - are low in comparison to other developed and developing countries, where the average is around 0.98 per cent.

"Advertising revenues are vital for the growth of this industry. While today the low ad spends may seem like a challenge before the E&M industry, they also throw open immense potential for growth," the report said. If India was to reach the global average, advertising revenues would at least double from the current level of around Rs 13,200 crore.

TV growth

According to the study, the television industry is poised to grow at 24 per cent to Rs 42,700 crore from its current size of Rs 14,800 crore. "Subscription revenues would be the key growth driver for the industry over the next five years. Subscription revenues will increase both from the number of pay TV homes as well as increased subscription rates," the study said.

New distribution platforms such as DTH and IPTV will help increase the subscriber base and push up subscription revenues. The film industry is slated to grow at 18 per cent to Rs 15,300 crore in 2010 from the current size of Rs 6,800 crore.

"Advancements in technology are helping the Indian film industry in all the spheres - film production, film exhibition and marketing," the study said.

Print media

According to the study, the print media is projected to grow at 12 per cent CAGR to Rs 19,500 crore in 2010 from Rs 10,900 crore. "A booming Indian economy, growing need for content and government initiatives that have opened up the sector to foreign investment are driving growth in the print media," the FICCI report said.

Radio is poised for big growth with projected size for 2010 at Rs 1200 crore from the current level of Rs 300 crore.

Key policy initiatives announced by the Government such as migration to a revenue share regime, allowing foreign investment into the segment and opening of licenses to private players are expected to drive growth in this sector.

Live entertainment sector is also seen growing at 18 per cent to Rs 1,800 crore by 2010 from Rs 800 crore. "The growing number of corporate awards, television and sports events is helping this sector. However, issues like high entertainment taxes in certain states, lack of world-class infrastructure and the unorganised nature of most event management companies continue to hinder growth of this industry," the study said.

Out-of-home advertising is also on an upward curve, growing at 14 per cent to Rs 1,750 crore by 2010 from Rs 900 crore. Technological innovations would drive growth.

Internet advertising

Internet advertising is projected to grow at 50 per cent rate to Rs 750 crore by 2010 from the current level of Rs 100 crore. "The Internet is being used for a variety of reasons, besides work, such as chatting, leisure, doing transactions, writing blogs etc.

This offers a huge opportunity to marketers to sell their products. With broadband becoming popular, this segment is expected to grow further," the study said.

However, music industry is expected to show a flat growth of one per cent to Rs 740 crore in 2010 from Rs 700 crore.

Piracy plague

"The industry has been plagued by piracy and had been showing very sluggish growth in the physical format over the last few years, both in India and globally. However, `mobile music' and `licensed digital distribution' services are projected to fuel the recovery of the music industry the world-over," the study said.

According to the study, convergence will play a crucial role in the development of the Indian entertainment and media industry where consumers will increasingly be calling the shots in a converged media world.

"Broadband access and Internet Protocol (IP) will be the technology enablers that will evolve this new breed of consumers, as opportunities for them to access and manipulate content and services will be overflowing, while their time and attention will be limited," the study said.

(This article was published in the Business Line print edition dated March 16, 2006)
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