the indian media & entertainment industry 2015

The Indian Media & Entertainment Industry

2015

Presentation by

Trends & Analysis - Past, Present & Future

Source: FICCI-KPMG Report 2015

The Indian M&E IndustryThe Indian Media & Entertainment Industry includes

Television, Film, Print, Radio, Music, Digital Media, Animation, Gaming, Events & Live Media, Out-of-home & other ancillary media.

•  Valued at over US$ 16.2bn (1,02,600Cr INR) which is 0.9% of the global M&E industry (estimated at US$ 1.8tn)

•  Its growth (11.7%) is nearly double the growth of the global M&E industry (at 6.1%)

•  High-volume, low-value.

580 587652

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

INR

Billi

ons

11.7%

13.9%


Indian M&E Industry – % BreakdownTV, which is currently 46% of the industry, is expected to break the 50% mark in

2019. Film is expected to drop from 12% in 2008 to 10% in 2018, indicating that it is not growing as fast as TV. Print is expected to decline even more. Digital is expected

double its share of the M&E market in the next 5 years.

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

42% 44% 46% 45% 45% 45% 46% 47% 47% 48% 49% 50%

30% 30% 30% 29% 27% 26% 26% 25% 23% 22% 21% 20%

18% 15% 13% 13% 14% 14% 12% 12% 12% 11% 11% 10%

1% 1% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2%

1% 1% 1% 1% 1% 1%

1% 1% 1% 1% 1% 1%

3% 2% 2% 2% 2% 2%

2% 2% 2% 2% 2% 2%

3% 3% 4% 4% 4% 4% 4% 4% 4% 5% 5% 5%

1% 1% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2%

1% 1% 2% 2% 3% 3% 4% 5% 6% 8% 8% 8%

TV Print Motion Picture Radio Music OOH Animation & VFX Gaming Digital


The Indian Film Industry•  Largest in the world by

films released theatrically or tickets sold (over 1,400 films released & over 3.25bn tickets sold)

•  2014 was a year of introspection when the ‘star-backed’ films performed average and the ‘script-backed’ films did great, marking a coming of age of Bollywood.

1913-2000 2000-2004 2004-2010 2010-2014Production Analog Analog Analog Analog & Digital

Post-Production Analog Digital Digital DigitalDistribution Analog Analog Analog & Digital Analog & Digital

The Digital-isation of the Industry

105

89 8393

113125 126

136

156171

186

204

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

INR

Billi

ons

Film

0.9%

10%


The Indian Film Industry = �Bollywood�While�Bollywood’ is a generally used term to define the Indian Film industry,

Hindi films accounted for only 16% of the 1,400+ films that released.

The South Indian Film industry accounts for almost 50% of the films

Language No of Films Hindi 234 Tamil 210

Telugu 218 Kannada 157

Malayalam 108 Bengali 139 Marathi 122 Gujrati 67

Bhojpuri 84 Punjabi 9 Others 78 Total 1,426


Film Revenues BreakdownDomestic Revenues have always accounted for over 90% of the Indian Film

industry’s revenues. The trend is expected to strengthen against International revenues. This is THE double-edged sword for the industry.

Proving the digital medium’s

dominance, Ancillary revenues as a % of total film revenue will increase 1.5x over the next 5

years.Home Video, like in the rest of the world,

is dying out fast. 0%

20%

40%

60%

80%

100%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

74% 74% 76% 75% 74% 73% 73% 72% 72% 71%

8% 7% 7% 7% 7% 7% 7% 7% 7% 7%

10% 11% 11% 12% 12% 11% 11% 11% 11% 11%

5% 5% 5% 6% 7% 8% 8% 9% 10% 11% IN

R B

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Film Revenues % Breakdown

Domestic Theatrical Overseas Theatrical Home Video Cable & Satellite Rights Ancillary Revenues


Exhibition needs to grow!•  India has one of the lowest screen

densities among global film markets•  Urgent & rapid infrastructure growth in

multiplex screens is needed•  Since the Box office is not as robust as

other countries, government intervention is needed by way of SOPs.

1.1 1 1.11.4 1.6 1.6

0.9

1.52

2.7

3.5

4.7

00.5

11.5

22.5

33.5

44.5

5

2009 2010 2011 2012 2013 2014

Domestic Box OfficeSize (US$ Bn)

IndiaChina

1,000 1,250 1,470 1,650 1,750

6,256

9,200

13,118

18,195

22,000

-

5,000

10,000

15,000

20,000

25,000

2010 2011 2012 2013 2014

Multiplex Screens

IndiaChina

125

85 82

61 57

2613 7

0

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140Screens/Million


Industry = Value x Volume

No of screens that a film plays in has grown radically over the past decade, curbing piracy and augmenting theatrical revenues

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High End Multiplex

Multiplex Single Screen Low End Single Screen

Ticket Rates (INR)

5001000

3000

4500

0500

100015002000250030003500400045005000

1994 - Hum Aapke Hain Koun

2009 - 3 Idiots 2012 - Ek Tha Tiger

2013 - Dhoom 3

No of Screens

Average ticket prices of multiplexes are 3-4 times that of single screen theatres.


The Indian Film Industry - Key points•  Realisation of the value of Film education. Scale needed. Urgently.•  Script-backed v/s Star-backed.•  Hollywood films account for less than 10% of the Indian Film industry.•  Over-reliance on Domestic Theatrical revenues for mid-range films.•  Increased in-film advertising – Tourism & products•  Increased no of domestic prints – 5000•  Increased no of overseas prints – 2000•  Share of Revenue from first week is highly critical (ranges from

55-75% of box office collections)•  The industry lacks a globally merchandisable home-grown IP brand.


The Indian Television Industry•  The most consistently

performing sector of the Indian M&E Industry.

•  It is, presently, nearly 4 times the size of the Indian Film industry and is the largest employer in the M&E space.

•  India overtook the US in 2014 as the 2nd largest TV-owning market in the world (168 million TV households – 82% penetration).

The potential: The Indian average subscription rate is US$5-6 per month per TV for Cable TV / DTH against US$40-100 in evolved markets like US / UK / Europe.

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

INR

Billi

ons

TV

13.8%

15.5%


TV Connectivity – A Digital blitzWith digitisation

primarily successful for Phase 1 & 2

(over 95%) and the rest of the

country underway on

the same path, digital STBs

and DTH connections are the way of the

future. 0

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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

6574 69 68 70

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56 19 25 29

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85 90 94

28

3134

3740

48 61 7274

76

8

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99

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Subscribers

Analog Cable Digital Cable DTH Other Digital


TV Connectivity – A Digital blitz

TV households, C&S penetration & ARPUs are all expected to grow over the next 5 years, enabling distribution-led growth in TV

161 168196

80%82%

90%

0

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100

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250

74%76%78%80%82%84%86%88%90%92%

2013 2014 2019

TV Households (Millions) C&S penetration

175196

225248

273

301

200220

242266

292

322

150170190210230250270290310330350

2014 2015 2016 2017 2018 2019

ARPUs

Digital Cable DTH


TV Channels galore!•  Channel growth over

the past 14 years has been significant. On an average, India has added 3.2 channels per month for the past 14 years.

•  India has more than 400 news channels.

•  Channel differentiation is weak.

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1991 1995 2000 2005 2010 2014

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No of Channels


GEC – GRP v/s Profitability

Low GRP High GRP

Low Profitability

High Profitability

Long running soaps

Low-cost game / performance based reality shows

Mythological series

Recently released movies

Celebrity-based shows

Why do we see what we see on TV? How do funds available for content creation get allocated between building a viewer base and then en-cashing on the base?


TV Revenues – Promising future!The projected high growth of subscription revenue is expected to throw up

innovative, cutting edge, niche content as broadcasters would no longer need to cater to advertisers (& hence to a mass audience) for all their content.

158 169194 214

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82 88 103 116 125 136 155 175198

226260

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

INR

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TV Revenues

Subscription Revenue Advertising Revenue


TV Revenue Sharing – A concern!Of an amount collected of INR 320 billion, ONLY INR 75 billion is reaching

the broadcasters, which is less than 25%. Ideally, it should be in reverse with only 25-30% being retained by the LCOs, MSOs. However, underreporting of

subscribers, carriage fees & lack of digitisation is the reason for this.

245 281 320 369433

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57 69 75 90 114 145 174 201

23%25% 23% 24%

26%28% 29% 30%

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2012 2013 2014 2015 2016 2017 2018 2019

INR

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Subscription Revenue

Paid by Consumers Recd by Broadcasters %


Viewership & Ad-RevenueDisparity between viewership & Ad Revenue is stark, esp. in the case of English content. English News has 0.1% viewership but gets a whopping 5.2% of the Ad

Revenue. Similarly, English Entertainment has 1.1% of the viewership but 4.5% of the Ad Revenue pie. It reflects the SEC & spending capacity of its audience. Regional TV

is heavily discounted in pricing on account of the nature / SEC of its audience.


Indian Animation picks up•  Broadcasters are willing to pay

double for good quality Indian Animated content as compared to daily soaps / Hindi general entertainment content, even though this segment gets only 7.3% of the viewership, as compared to 31.1% for Hindi GECs.

•  Also the fact that this segment continues to be under-indexed, with only 3.8% ad-revenue share doesn’t bother broadcasters as this content has long-tail revenue

•  It offers repeat viewing value, multi-language dubbing value and merchandising value.


Hindi GEC Fiction content changing. Slowly.

•  GECs have finally embraced the tele-series format with season-based programming

•  The value:volume ratio is reversed in such programming as compared to the daily / weekly soaps.

•  For the past 20-odd years, the content has largely mirrored American programming of the 70s-80s, with our soaps comparable to content like the Bold & The Beautiful, Santa Barbara, Dallas, etc.


TV – Key Points• Digitisation – increased revenue for the broadcaster, should lead to

more investment in content (& hence better quality content)• Global proliferation of Indian-origin content is increasing, albeit for

the Indian diaspora only. This is THE BIG opportunity.•  Indian animation on TV is starting to matter.• Hindi GECs are exploring new content programming & a changed

value:volume mix in revenue models.•  Lack of quality viewership measurement systems is an issue.

Hopefully, digitisation should resolve this.


The Digital Business – A BLITZ of growth!•  India has the lowest net penetration

among all developing countries and much lower than the developed ones.

•  Despite that, India has more internet users than the US.

•  Increasing cellphone penetration, large number of low-cost smartphones fuels this growth.

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2014 2015 2016 2017 2018 2019

20 22 25 27 30 32

210273

337402

469528

Mili

ons

of U

sers

Internet Users

Wired Wireless

19%

53%46%

60%

87% 90% 86%

0%

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India Brazil China Russia USA UK Japan

Internet Penetration

050

100150200250300350400450500

2014 2015 2016 2017 2018 2019

173

232286

342

399

457

116

188

249299

369

435

Mill

ions

of U

sers

Net on Mobile

Net on Mobile Smartphones

21%


Telecom Base – Volume galore!

The overall tele-

density in India was

77.27.

Urban tele-density

was 143.08 and

rural teledensity was

47.78

Telecom Service Provider (as of March 31, 2015)

Subscribers (in millions)

Bhar%&Airtel& 226.02&Vodafone&& 183.81&IDEA& 157.81&Reliance& 109.47&Aircel& 81.40&BSNL& 77.22&Tata&Teleservice&& 66.32&Telewings& 45.62&Sistema& 8.86&Videocon& 7.13&MTNL&& 3.51&Quadrant&Televentures& 2.73&

Total 969.89


TV v/s Digital

Digital is the medium for the future.

The web user base is expected to grow at an incredible 18% annual growth rate over the next 5 years as compared to 3% of TV. AD Spend on Digital platforms is growing at four times the rate of TV.

825 857 886 913 938 960

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2014 2015 2016 2017 2018 2019

Mill

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TV Internet

18%

38.3 54.872.4

98.6116.1

135.4

5.27.7

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2014 2015 2016 2017 2018 2019

INR

Billi

ons

Digital Advertising Growth

Web Mobile

30.16%


Digital – Key Points•  The Digital platforms of web, mobile & web-connected smart TVs

are the future.• Content consumption modes & patterns are already starting to

change with a large number of sub-18-yr-olds are switching to YouTube to find their new ‘stars’• YouTube is taking the Indian market very seriously and has set up

a ‘YouTube space’ in India, in partnership with Whistling Woods International• YouTube has ‘approved’ a credit-based semester-long training

course for ‘Content Creation, Audience Development & Monetisation for digital platforms’ developed by Whistling Woods.


Music•  The Music industry has

plateaued over the last 2 years, after dropping by 10% in 2013.

•  Over 50% of Indian web users access unlicensed services.

•  Music-on-cloud is expected to gather steam as it rides the 3G/4G wave to deliver streamed music, ad supported, free of cost as well as ‘freemium’ music, hopefully denting piracy.

78

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

INRB

illio

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Music14%

2.3%


Music - Consumption•  The consumption % reversed

from 2009 to 2014 between physical & digital.

•  Bollywood fuels over 80% of the Music industry

•  Indian non-Bollywood music (Indie / pop / rock / regional) is struggling, with only Religious & Indian Classical music managing to survive.

•  Hardly ANY innovation in Music, since AR Rahman.

•  Hardly any proper music schools

58%

33%

6%3%

20%

55%

15%10%

0%

10%

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40%

50%

60%

70%

Physical Digital TV & Radio Public Performance

Music Consumptionby Source

20092014

81.0%

10.0%4.0%2.2% 2.8% Music Consumption

by Genre

Bollywood

International

South Indian

Punjabi

Others


Gaming• Grew over 20%, on the back of

mobile gaming.• With 960 mn+ users & a young

population, India is one of the fastest growing mobile gaming markets in the world

7 810

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

INRB

illio

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Gaming14.3%

46% 49% 51% 52% 55% 57%

39% 35% 32% 30% 28% 26%

15% 16% 17% 18% 18% 17%

0%10%20%30%40%50%60%70%80%90%

100%

2014 2015 2016 2017 2018 2019

Mobile Console PC & Online

22.4%


Radio•  Small industry size, primarily

on account of restriction of content by the government (no news radio, talk radio allowed)

•  Hence every FM radio station sounds the same.

•  The growth in 2014 has been built around increased ad-ex by e-commerce, real estate and retail.

•  The shift to radio is as it is a cost-effective advertising vehicle, as compared to TV.

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

INRB

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Radio18.1%

17.6%

21266

401

1232

12 98 167

431

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Phase 1 (1990s) Phase 2 (2006-07)

Phase 3 - 1 (2015)

Phase 3 - 2 (2015-16)

Licences available Cities


Animation, VFX & Post-Production•  The industry has shown decent

growth, on the back of VFX / post-prodn, not Animation.

•  Increased consumption of VFX & digital post production in Film & TV.

•  Lack of original IP creation is a major reason of the stagnation of the Animation industry.

18 2024

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

INRB

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Animation & VFX16.3%

13.1%

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1992 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Animated Films Released Theatrically


Animation, VFX & Post-Production

The industry has split with itself, with the Animation industry tanking and the VFX / post-prodn growing.From a 60:40 ratio in 2010, the industry reaches a 80:20 ratio in 2019.

26% 23% 22% 20% 18% 16% 15% 14% 13% 12%

16%14% 13% 12% 11% 11% 10% 9% 9% 8%

19%20% 22% 23% 25% 27% 29% 30% 32% 34%

38% 44% 44% 45% 45% 46% 46% 46% 46% 46%

0%

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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Animation Services Animation Product Creation VFX Post-Prodn


Animation on Indian ScreensOnly 3 out of the top-10 characters on Indian TV are of Indian origin!


Jobs in M&E•  By 2022, as per the NSDC, the

Media & Entertainment industry would be requiring 12.9 lakh skilled professionals, over 80% of these in the Film & TV vertical.

•  The media industry as a whole still lacks sufficient world-class training facilities to enable professionalism and best practices.

•  Significant government-intervention and private investments will be needed to correct this imbalance

1.60 2.40

4.40

1.40

2.80

6.40

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1.30

0.20 0.30 0.40 0.20 0.30 0.40

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1.00

2.00

3.00

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7.00

2014 2017 2022

EmploymentGrowth

Film

TV

Print

Radio

Animation, VFX, Gaming


What are the pain-points of the Indian M&E Industry?

•  M&E Education & Training

o  Of the 4 lakh people employed, nearly 75% involved in content creation have no formal training.

o  Very few world-class Film & Medua training institutes in India with a combined output of approx 500 graduates a year, with 200 of them being from a single institute.

•  Piracy - Affects every sector of the industry & causes nearly 35% revenue reduction

•  Lack of original Intellectual Property creation leading to lack of a globally merchandisable brand.


The Great Opportunities in M&E

•  Digital – with an increasing youth population who are open to new platforms and new content ideas, the next generation of Indian consumers are ready and waiting for content for the digital platforms.

•  In the M&E industry, building volume is hard. India already has the volume. We now need to build value to each unit of the already existing volume. This is done by enhancing quality. The best way to build quality is be educating & training the industry.

Thank You!Chaitanya Chinchlikar

Vice President – Business [email protected]