Big Picture: India’s booming media sector

The nation, backed by favourable resources as well as a growing consumer base, is emerging as a lucrative market for high-value investment in the media and entertainment (M&E) space, which will in turn empower the broader economy.

January 5, 2018

India's M&E sector is anticipated to grow at a compound annual growth rate of 13.9 per cent to reach US$37.6 billion by 2021

The M&E sector primarily includes radio, television, gaming, animation, advertising, promotion, music, films, and print media

The industry, which already employs 1.2 million people, is expected to add 700,000-800,000 new jobs in India in the next five years

From April 2000 to June 2017, FDI Inflows into the Information and Broadcasting sector (including print media) totalled US$6.6 billion

Backed by an improving support system and a growing consumer base, India is projected to become the third largest economy in the world by 2028. Concurrently, the country’s Media and Entertainment (M&E) industry is poised to play a crucial role in the growth of the economy. The importance of the sector’s contribution to the economy has been upheld by the Confederation of Indian Industry (CII), an industry body, which in December suggested a number of initiatives to aid the M&E industry. A joint report by CII and the Boston Consulting Group (BCG), a management consulting firm, has stated that India’s M&E sector is anticipated to grow at a compound annual growth rate (CAGR) of 13.9 per cent to reach US$37.6 billion by 2021 from US$19.6 billion in 2016.The industry is expected to add 700,000-800,000 new jobs in the next five years.

The M&E sector broadly splits into nine segments: radio, television, gaming, animation and VFX, out of home (OOH) promotion, music, digital advertising, films, and print media. India is the second largest television market in the world with US$9.6 billion revenues recorded in 2016. The country has one of the largest broadcasting industries with about 892 satellite television channels, 243 FM channels and more than 190 operational community radio networks. Meanwhile, India’s film industry is expected to grow by 10.4 per cent to become the third largest movie market after the USA and China by 2021. India has the capability to become a global M&E hub. With increased technology adoption, young talent pool, stable macroeconomic outlook and progressive Government policies such as Digital India, Make in India and Skill India, opportunities have truly become global.

Economic impact

The media and entertainment industry added around $7.9 billion in output and was valued at around US$22.1 Billion in 2017 as per the CII-BCG report. Factoring in indirect and induced benefits to the Indian economy, the total valuation of the industry will be around US$71 billion, or about 2.8 per cent of the national gross domestic product (GDP). The industry also employs up to 1.2 million people, across formal and informal sectors. The vast sector is experiencing a fundamental shift at many levels with changing consumer behaviour and advent of new technologies and systems of operation further expanding avenues of income generation. Driven by the continuous upgrading of resources and infrastructure in the sector, India’s M&E sector has come up as a leading contender for foreign direct investment (FDI).

With population of 1.3 Billion and almost two-thirds of population under 35, India is an extremely attractive marketplace

Advantage India

  • Augmented demand: With population of 1.3 Billion and almost two-thirds of population under 35, India is an extremely attractive marketplace. Rising disposable income and expanding middle class are set to foster consumption and spending on leisure and entertainment.
  • Market expansion: Many of India’s population especially across rural India is still not connected to the internet and is largely untapped by the growth in the sector. With rapid increase in the Internet connectivity in the coming 5-7 years, there is high potential of organic growth in revenue streams.
  • Policy support: The Indian government has backed the M&E sector through several initiatives such as digitalization of cable networks, raising FDI limits in cable and satellite platforms from 74% to 100% and granting industry status to the film industry. These initiatives have helped Indian companies to raise institutional finance and further accelerate growth.

Foreign Direct Investment

From April 2000 to June 2017, FDI Inflows into the Information and Broadcasting sector (including print media) totalled around US$6.6 billion, as per a report by the India Brand Equity Foundation, a portal of the Ministry of Commerce and Industry. The recent big-ticket deals in India’s M&E industry included London-based Dentsu Aegis Network’s acquisition of SVG Media Pvt. Ltd, a digital media company. Additionally, in order to promote India as a filming destination for foreign production houses, the government is setting up a single window clearance system for shooting permissions. To promote joint productions, co-production agreements have been signed with Italy, Germany, Brazil, UK, France, New Zealand, Poland, Spain and Canada.

India As A Global Digital Hub

The visual effects (VFX) industry in India is rapidly evolving and has emerged as a great example of India becoming a global digital hub for production of media and entertainment content. Several Hollywood blockbusters such as Avatar, Life of Pi, and The Jungle Book have greatly benefited from VFX work done in India. To mention one among many success stories, The Jungle Book won the Academy Awards for Best Visual Effects. Many Indian production houses are also setting up international offices to strengthen presence in existing markets and tap into uncharted territories, while taking advantage of the popularity of Indian content and resources. Indian firms such as Tata Elxsi has opened an office in Los Angeles, Pixion has acquired two studios in London and Prime Focus has established offices in US, UK and Canada. At present, India accounts for only 10 per cent of global VFX work, which leaves vast room for future growth.

Animation film exports, currently at US$150 million, are also poised to grow to US$500 million in two years. Indian TV content export is estimated at US$380 million, which is just a fraction of what the potential is. In comparison, currently, the top seven US broadcasters’ global revenue is US$21 billion.

New trends

Sales and marketing potential in the M&E industry is being augmented with the latest in content, promotion, marketing, technology and analytics. Accordingly, M&E is at the forefront of creating a talented and skilled workforce for India. With content creation, marketing strategies and technology increasingly moving towards hand-held devices, the M&E industry stands to gain from the fast expanding mobile devices as well as internet market in India. This has also created favourable ground for digital innovation and new avenues of revenue generation. In print media, steady rise in literacy rate, population, and income in smaller towns are likely to drive future expansion of circulation and readership across India. As a result, accelerated growth is forecasted, especially in regional media segments.

Three key opportunities in India’s M&E sector over the next five to seven years will be rapid increase in customer base from rural india, growth in digital content and availability of accurate data analytics to target specific markets. All these factors offer high-margin investment opportunities for foreign investors and have already seen interest pouring in.

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