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Home » Bollywood » Latest News

Bollywood: The $100-billion dream

Can the Indian media and entertainment sector, which is growing in double digits for the past several years, hope to become a $100-billion industry in a decade? India earned $17 billion in M&E revenues in 2011, but with television, mobile and the Internet space growing at a fast pace, the industry is optimistic, provided it gets the right regulatory push from time to time, like digitisation and opening up broadcasting to FDI

In the past two years, Bollywood has been celebrating the entry of a handful of films in the R100-crore club. This year, at least, five films have already earned over R100 crore at the box office, including Rowdy Rathore, Barfi, Bol Bachchan and Ek Tha Tiger. But the question many are asking is whether the Indian film industry can take the next leap and be more ambitious? In fact, is the Indian media and entertainment industry, now ranked 14th in the global pecking order, ready to move up several places in the next few years? Can it dream of being a $100-billion industry?

At the recently concluded India-the Big Picture summit, organised by CII in Delhi, top players of the Indian media and entertainment industry came together to brainstorm on how such a roadmap can be created. It’s going to be a tall task, admit experts, because India is currently placed lower in the global M&E value chain. It's hovering around $17 billion and growing year-on-year at a compounded annual growth rate of 17%. The Indian M&E industry is slated to grow to $38 billion by 2016. In 2011, the US was ranked number one, earning $363 billion in revenues, followed by Japan with $173 billion and China at $89 billion.

Says Uday Shankar, CEO, Star India, “The target is achievable. I have no doubt in my mind that this is something that we as an industry should rightfully aspire for—why can’t a country with over a billion people and amongst the fastest growing media industries aspire for this? The $100 billion may seem to be a dream. But it is a dream worth living for.”

According to a CII-PwC entertainment report just released, in 2011, the overall M&E sector was pegged at R80,500 crore, with television and print contributing 66% to revenues. Internet access also contributed 14% at R116,00 crore, up from 11% in 2010. The television industry, which was pegged at R34,000 crore in 2011, is slated to grow at a compounded annual growth rate of 14.6% to R67,400 crore in 2016. The film industry, which was pegged at R9,600 crore in 2011, is slated to grow just under 10% in the next several years.

“We are seeing more and more films in the R100-crore club. Very soon, we will see a R150-crore club,” says Siddharth Roy Kapur, MD, UTV Disney Studios. “The pie must expand,” he adds.

Everyone agrees that India is one of the fastest growing media and show business markets in the world, but the Indian entertainment numbers don't reflect on the revenues contributed from this sector, which is less than 2% of the global M&E pie. But there are many promising factors, say experts, which can help take the industry to better numbers. India, according to industry estimates, produces 1,100 films in a year, sells six billion movie tickets, has a 30 million diaspora base, has 600 million TV viewers, 500 TV channels, 142 million TV homes, 897 million mobile subscribers and 65 million Facebook users.

“We are at an inflection point,” says Amit Khanna, chairman, CII National M&E Committee, and chairman, Reliance Entertainment, adding, “We have the potential to put this sector on a higher growth trajectory. As we move towards a networked (digital) society and more and more niches emerge in the media and entertainment universe, I am optimistic we will be able to achieve this goal of touching $100 billion.”

 

Increase ad & consumer spend

Smita Jha, leader, media and entertainment, PwC, says, “India has the potential to achieve path-breaking growth over the next few years, but this will require the entire ecosystem to collaborate, conceptualise and execute game-changing initiatives to drive a multifold increase in industry revenues. These initiatives should be primarily focused around the three pillars of the sector—advertising spend, consumer spend and infrastructure and policy support.”

Advertising spend in the M&E sector was R27,900 crore in 2011, contributing 35% of M&E revenues. Industry experts point out that there is a lot of potential for growth in advertising spend, because it is still only 0.3% of the GDP. Jha points out that advertising spend as a percentage of GDP is quite low when compared with other major economies, indicating a scope for growth. For instance, the US and the UK spend 1.1% and 0.9% of the GDP in advertising spend and even China spends 0.5%. While television and print dominate the advertising segment in India, the high demand for smartphones and tablets in India, and their increasing popularity provide a ready platform for the industry to drive growth in mobile television. A similar story will play out in the Internet space if broadband connectivity is improved, say industry experts.

For a population of over a billion, India’s TV penetration is just around 60%. Over 100 million homes are without a TV set. The broadband growth has not yet been tapped. The gaming sector, too, is emerging as a big player in the Indian M&E landscape, and you just have to watch Hollywood studios like Disney’s move into this space to realise how big the potential is.

Over the past few years, consumers have been increasing spend on entertainment, thanks to disposable income and better quality of content. In 2011, consumers spent 58% on TV, 17% on print and 19% on films. Jha says the potential for growth in consumer spend on E&M in India still remains high, as indicated by the existing penetration levels vis-a-vis other countries. The average annual spend (per capita) is estimated at a low $6.6 in 2011 in India, compared to $22 in China and $65 in Brazil.

 

‘Execute policies’

All of this will be possible if the proper infrastructure and policy frameworks can be executed. The deadline for digitisation in four metros was delayed once, and even now West Bengal and Tamil Nadu have sought extensions for switching to digital TV in Kolkata and Chennai. Though the second deadline, October 31, has passed, Kolkata and Chennai are still not on the digital map. The government says the whole country should be digitised by 2014. Experts hope that deadline is strictly followed. Driving high broadband penetration, sticking to the digitisation path, opening up broadcasting to FDI are some of the factors that should speed up growth in the M&E sector.

Says Shankar, “If we have to be competitive and get to a $100-billion M&E sector, we have to build scale and if we don't build scale there is no meaningful M&E business.” As the sector builds scale, the industry also will have to plug the leaks. Industry estimates say the Indian broadcast industry is losing approximately $5 billion because of piracy. Filmed entertainment alone loses over $2 billion each year. Experts say the ongoing digitisation will bring transparency and best practices in monetisation of content.

“Digitisation is a great initiative and it will benefit consumers and give more freedom to them. Digitisation execution will be a great potential for this sector,” says Man Jit Singh, CEO, Sony Entertainment Television, India. “Digitisation will be a significant thing for our $100-billion roadmap. Convergence, new media and broadband will empower this. The growth from $17 billion to $100 billion is achievable,” he adds.

 

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