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1
MEDIA & ENTERTAINMENT INDUSTRY
Group MembersPriya MeenaSaumya R SatpathySagar BehereRushabh Shah
Agenda
•INTRODUCTION – M & E INDUSTRY
• KEY PLAYERS IN INDUSTRY
•TRENDS IN M & E INDUSTRY
•DEMAND AND GROWTH IN M & E INDUSTRY
•OPPORTUNITIES ACROSS SEGMENTS
1
Entertainment
The sector is split into seven segments
Television
Others Print
Entertainment
Music Film
Radio AGV
2
Entertainment
TV has the highest share in the sector;AGV is one of the fastest growing
→ Total market size in 2011 was USD15.2 billion
→ The entertainment industry continues to be dominatedby television, print and films; together they have a
86.7 per cent market share
→ AGV has emerged as one of the fastest growingsegments with revenues growing by about 31 per centduring 2011
Segmental composition of entertainment (2011)
1.2%1.6% 6.3%
4.3%
12.8%45.2%
28.7%
Television Print Film AGV Radio Music Others
Source: : KPMG report 2012 ,Aranca ResearchNotes: AGV- Animation, Gaming and VFX, VFX- Visual Effects
3
Entertainment
The Indian entertainment industry isgrowing rapidly … (1/2)
→ The total market size grew from USD9.2 billion in 2006to USD15.1 billion in 2011, a CAGR of 10.6 per cent
16.0→ The industry recorded one of the highest growths in
the world in2010 (11.2 per cent); in2011 growth 14.0
picked up even further to touch 12.6 per cent12.0
Notes: CAGR - Compound Annual Growth Rate10.0 9.2
8.0
6.0
4.02006
Market size (USD billion)
CAGR 15.210.6 % 13.5
11.8 12.1
10.7
2007 2008 2009 2010 2011
Source: : KPMG report 2012,Aranca Research
4
Entertainment
The Indian entertainment industry isgrowing rapidly … (2/2)
→ During 2006-11, television revenues expanded at aCAGR of 11.4 per cent to USD6.9 billion
→ Advertising revenue growth has been behind theconsistent rapid growth of the television industry
→ Over the same period, revenues in the print segmentexpanded to USD4.4 billion, a CAGR of 10.0 per cent
→ The fastest growth during this period was however inthe AGV segment; it’s CAGR was 16.6 per cent
Television
Film
AGV
0
Size of major industry segments (USD billion)
6.94.0
4.42.7
1.91.8
0.60.3
1 2 3 4 5 6 7 8
2011 2006
Source: : KPMG report 2012, Aranca ResearchNotes: AGV- Animation, Gaming and VFX;
VFX- Visual Effects
5
Entertainment
Key players in the entertainmentindustry-Television
Company Business description
Star India Pvt Ltd• Fully owned subsidiary of News Corporation
• Portfolio includes 35 channels in seven languages across various categories such as reality, news andfilms
• Also manages a portfolio of business ventures including DTH operator Tata Sky,cable system Hathway,channel distributor STAR Den, news channel operator MCCS, film production & distribution businessFox STAR Studios India and STAR CJ Home Shopping
Zee Entertainment Enterprises Ltd• Fully owned subsidiary of Essel Group and first listed media company in India
• One of the largest producers and aggregators of Hindi programming in the world• An estimated reach of more than 500 million viewers across 167 countries
• Pioneer of television entertainment industry in India; launched Zee TV-the country’s first Hindi satellitechannel
• Range of businesses across the value chain in the M&E industry
Multi Screen Media Pvt Ltd• Fully owned subsidiary of Sony Pictures Entertainment
• Comprises of Sony Entertainment Television (SET) and SAB, leading Hindi entertainment televisionchannels; MAX, a movies and special events channel; and PIX, a channel that airs Hollywood movies
• Its programming spans across various genres including drama, reality, comedy, horror, and liveevents
Source: Company Websites, Business Week, KPMG report 2012 Aranca ResearchNotes: M&E- Media and Entertainment
6
Entertainment
Key players in the entertainmentindustry-Print
Company Business description
Bennett, Coleman and Co Ltd• Largest media conglomerate in India
• Publishes world’s most widely circulated English broadsheet daily ‘The Times of India’ and second most widely circulated financial daily ‘Economic Times’
• Other prominent publications include magazines eg. Zigwheels, Filmfare, Femina and TopGear and Hindi dailies such as Navbharat Times and Sandhya Times
• The group has also diversified into radio and television business
HT Media Ltd• Hindustan Times is the second most widely read English daily in India
• Other prominent publications include the business daily Mint and the Hindi daily Hindustan• The group has also forayed into many adjacent businesses such as print and digital services,
internet, radio, and events and marketing solutions• The company’s job portal www.shine.com has over 7 million registrations
Living Media India Ltd• India Today and Readers Digest are among India’s most circulated magazines
• Other prominent magazine publications include Business Today, Cosmopolitan, Time, Design Today, Money Today and The Chartered Accountant
• The group has interests in various other businesses such as radio, events, printing, music, television, education and publishing
Source: Company Websites, The Times of India, Aranca ResearchNotes: CAGR- Compound Annual Growth Rate, FY- Financial Year
7
Entertainment
Key players in the entertainmentindustry-Film
Company Business description
Yash Raj Films Studios• The only privately owned film studio in India
• Apart from film production, the company has also expanded into distribution of films and music,home entertainment, production of television software, ad films, documentaries and private label music production
• The company launched a youth films studio Y-Films in 2011 to connect with the large youngpopulation of the country
Eros International Media Ltd• Strong distribution network spanning across 50 countries & over 27 dubbed foreign l
l anguages• One of the largest content owners in the industry having a film library of over 2000 films, thus
ensuring stable, recurring cash flows• The company is diversifying into Marathi, Punjabi, Tamil and other regional language films to
leverage upon the growing demand for regional cinema
Red Chillies Entertainments Pvt Ltd• Founded in 2002 as a film production house, the company has branched into TV shows and
advertisement, visual effects and multi-media production equipment leasing• Its latest venture 'Ra.one‘ is Bollywood's most expensive movie and very first Sci-fi movie
• It also owns the Kolkata Knight Riders cricket franchise in the Indian Premier League
Source: Company Websites, Business Week, Aranca Research
8
Entertainment
Key players in the entertainmentindustry-Music
Company Business description
Music Bharti• A wholly owned subsidiary of Bharti Airtel
• The largest music company in terms of revenues• Provides mobile-based value-added music services (VAS) such as hello tunes, call back tunes,
music on demand, Mirchi mobile and Airtel radio
Saregama India Ltd• The company owns the largest music archives in India, one of the largest in the world
• It uses the music labels Saregama, RPG Music and HMV• The company is making efforts to digitise its catalogue to make inroads into the digital music
market and counter declining physical music sales
Super Cassettes Industries Ltd• The company owns the rights to over 2,000 video and 35,000 audio titles, comprising of nearly
24,000 hours of music• The company has diversified into film production, consumer electronics and mobile
phones manufacture
Tips Industries Ltd• The company owns 3,500 titles of which a minimum of 25 have been sold over a million copies,
with another 10 selling over 10 million copies• Since 1981, Tips has the highest number of gold and platinum discs to their credit in India
• Tips also holds soundtrack copyrights of over50 Hindi movies and has also ventured into filmproduction
Source: Company Websites, Business Week, Aranca ResearchNotes: VAS- Value Added Services
9
Entertainment
Notable trends in the entertainmentindustry … (1/2)
• The television industry has been aided by strong growth in advertising
• Television subscription accounts for around 65 percent of revenues in 2011
Television
Film
whereas advertising accounted for the rest
• The share of subscription to the total revenue is expected to increase to 69 %by 2016
• Unbundling of products to increase profitability
• Increasing income levels and evolving lifestyles have led to robust growth in niche magazines segment
• Increasing literacy levels leading to a rise in the readership base
• Rising circulation of English, Hindi as well as regional language dailies
• Growth to be fuelled by multiplex chains, increasing footfalls of consumers andhigher quality content
• Increasing share of Hollywood content in the Indian box office
• 3D cinema is driving the growth of digital screens in the country
• The Indian film industry is largest producer of films globally with 400 productionhouses and corporate houses involved in film production
Source: KPMG report 2012, Economic Times, Aranca ResearchNotes: DTH- Direct to Home, 3D- Three Dimension
10
Entertainment
Notable trends in the entertainmentindustry … (2/2)
• Growing focus on the ‘kids genre’ and rise in dedicated channels for them
• Increase in animation movies in theatres and use of animation and VFX in TVAnimation, Gaming
and VFX (AGV)
Radio
Music
advertising
• Growing outsourcing of VFX and gaming to India
• Content localisation by Indiagames (by launching T20fever.com) & by Zapak(by launching ICC World Cup 2011 games)
• Increasing FM enabled radio phones and car music systems
• During 2010, there were a total of 245 channels operating across India
• Favourable government guidelines for expansion of the third phase of FMradio broadcasting services
• Earlier only educational institutions were permitted to set up a community radio; in 2008 liberalisation of policy on community radio took place andcurrently 71 community radio stations are operational in the country
• The Indian music industry is a consortium of 142 music companies
• Players are looking at new ways and mediums to monetise music, such asutilising social media to promote music
• Mobile phones, iPods and mp3 players - devices that enable music on-the-go -are becoming the primary means to access music
• Digital music on mobile continues to drive music industry revenue
Source: PwC India Entertainment and Media Outlook 2011, KPMG report 2012 Economic Times, Aranca ResearchNotes: AGV- Animation, Gaming and VFX, 3D- Three Dimension; VFX- Visual Effects, FM-Frequency Modulation11
Entertainment
Strong demand and policy supportdriving investments
Growing demand
Higher realincomes and
changing lifestyles
Inviting
Falling prices,increasingpenetration
Growing,young
consumer base
Policy support
support
Policy sops,favourable FDI
climateResulting
in
Measures toimprove
profitabilityacross segments
Increasingliberalisation,
tariff relaxation
Increasing investments
Higher FDI inflows
Increasing M&Aactivity
Increasing dealsizes
Source: ICRA, PwC, Business Standard, Business Today, Aranca ResearchNotes: M&A- Merger and Acquisition, FDI- Foreign Direct Investment
12
Entertainment
Multiple factors will drive growth indemand … (1/2)
→
→
→
India's per capita income (nominal) is $ 1219
Nominal per-capita income is estimated (IMF) to have recorded a CAGR of 11.5 per cent over 2001-11
It is estimated that India's Per Capita Income will register an average growth rate of 13% during 2011-20 so as to reach $ 4,000 by 2020
As the proportion of ‘working age population’ in totalpopulation increases, per-capita income and GDP areexpected to grow higher
2500
2000
1500
1000
500
0
Rising per-capita income in India
30%
25%
20%
15%
10%
5%
0%
-5%2001 2003 2005 2007 2009 2011E2013F 2015F 2017F
Per capita income, USD, LHS Annual growth rate, RHS
Source: IMF, Aranca Research
13
→
Entertainment
Multiple factors will drive growth indemand … (2/2)
→ Apart from the impact of rising incomes, widening of Changing income dynamics over the yearsthe consumer base will also be aided by expansion of
the middle class, increasing urbanisation, andchanging lifestyles
→ The entertainment industry will also benefit fromcontinued rise in the propensity to spend amongindividuals; empirical evidence points to the fact thatdecreasing dependency ratio leads to higherdiscretionary spending on entertainment
70 Million households
60 Aspirers : annual income
50 INR90,000 -200,000
40
30
20 Deprived: annual income< INR90,000
10
0
Seekers: annual incomeINR200,000 - 500,000
Strivers: annual incomeINR500,000 -1000,000
Globals: annual income> INR1000,000
2005 2010 2015 2020 2025
Deprived Globals Aspirers Strivers Seekers
Source: McKinsey Quarterly Report, Aranca Research
14
Entertainment
Policy support aiding sector growth … (1/2)
• Digitisation of the cable distribution sector to attract greater institutionalfunding, improve profitability and help players improve their value chain
• FDI limit increased from 49 per cent to 74 per cent for broadcast carriageTelevision
Film
Radio
service providers who upgrade to digital and addressable environments
• No restriction on foreign investment for uplinking and downlinking of TVchannels other than news and current affairs
• Co-production treaties with various countries such as Italy, Brazil, UK andGermany to increase the export potential of the film industry
• Granted ‘industry’ status in 2001 for easy access to institutional finance
• FDI upto 100 per cent through the automatic route has been granted bygovernment
• Entertainment tax to be subsumed in the GST; this would create a uniform tax rate regime across all states and will also reduce the tax burden
• FDI limit in radio increased to 26 per cent from 20 per cent
• Private operators allowed to own multiple channels in a city, subject toa limit of 40 per cent of total channels in the city.
• Private players allowed to carry news bulletins of All India Radio
• Further boost may be given to the radio sector by charging licence fees onthe basis of ‘net income’ so as to provide relief to loss making radio players
15
Entertainment
Policy support aiding sector growth … (2/2)
• FDI/NRI investment upto 26 per cent in an Indian firm dealing with publicationof newspaper and periodicals
• FDI/NRI investment upto 26 per cent in publications of Indian editions of foreignPrint magazines
• FDI/NRI investment upto 26 per cent in publications of scientific and technicalmagazines/ specialty journals/ periodicals
• Parliamentary approval on the Copyright Act (Amendment) Bill, 2012, whichstrengthens the royalty claims of musicians, lyricists and others in the field
• Policies are adopted against digital piracy and file-sharing; steps have beenMusic taken to block illegal music websites
• Adoption of revenue sharing model by Copyright Board requiring FM radiocompanies to share 2 per cent of their net advertising revenues with music
companies
Animation, Gaming •100 per cent FDI allowed in the sector through automatic route provided it is inand VFX (AGV) compliance with Reserve Bank of India guidelines
16
Entertainment
Increasing investments in the sector-key deals and FDI inflows … (1/2)
→ Consolidation will be the major route to grow
inorganically for entertainment companies in order to
Mergers and Acquisitions (M&A) deals during 2011-2012
Deal valueexpand their portfolios and enter into new regions Acquirer Target Deal date(USD million)
→ A few big deals have come about, the most notable TV18 Eenadu Group Jan 2012 395ones being Walt Disney-UT V and T V18-ET V (together
amounting to around USD700 million) Walt Disney UTV Feb-2012 300
Educational Trustee Metronation
Company Chennai TelevisionMar-2012 3.2
BlackstoneJagran Media
NetworkJul-11 46.9
Source: Company ‘s news, KPMG report 2011, Aranca Research
17
Entertainment
Increasing investments in the sector-key deals and FDI inflows … (2/2)
→
→
→
FDI inflows into the entertainment sector betweenApril 2000 and February 2012 stood at USD2.9 billion
By February 2012, the share of FDI in ‘Information andBroadcasting’ was 1.8 per cent of total FDI inflows into
the country
Demand growth, supply advantages, and policysupport have been the key drivers in attracting FDI
Cumulative FDI inflows into Information and Broadcastingfrom April 2000
3.5
3.0 2.9
2.5 2.2
2.0 1.8
1.5 1.3
1.00.6
0.5
0.0FY08 FY09 FY10 FY11 FY12*
Source: DIPP, Aranca ResearchNotes: DIPP- Department of Industrial Policy and Promotion,
*For FY12, the figures are till February 2012 whereas for others itis till the end of the financial year (i.e. March)
18
Entertainment
UTV - One of the largest mediaconglomerates
Interactive
Broadcasting
Games content
Motion pictures
Television content
Ventured intointernet content
creation andaggregation
Started as acontent providerfor Doordarshan
Deal with Disneyto dub its content
into Indianlanguages
Disney becomes amajority shareholder with astake of 32.1%
Launched IPO as Became world’s firstUTV Software company to record
communications over 100 millionLtd downloads on
Nokia store
AcquiresIndiagames Ltd,enters gaming
software andcontent
Launched HungamaTV
1990 1996 2000 2004 2005 2007 2008 2012Source: Company annual report, Company website, Aranca Research
Notes: IPO- Initial Public Offering
19
Entertainment
SUN TV : The South-Indian behemoth
Magazine
Newspaper
Launches a slew ofother channels in
Acquires Dinakarannewspaper, Tamil
Nadu’s leadingdaily
Enters FilmProduction and
Distribution through‘SUN Pictures’
Launches three paychannels and four
ad-free actionmovie channels
Launches SUNDirect to provide
Radio
Motion pictures
Direct to Home
Broadcasting
various South Indianlanguages
Founded asSumangali
Publications
‘SUN TV’ islaunched with
daily three hoursof programming
Direct -to -Home(DTH) services
Starts its first FMChannel
‘Sumangali FM’
1985 1993 2000 2003 2005 2007 2008 2012Source: Company website, Aranca Research
Notes: FM-Frequency Modulation
20
Entertainment
The entertainment industry is slated forrapid growth … (1/2)
→
→
Over 2011-16, the total market size is expected to riseat a CAGR of 14.9 per cent to USD30.4 billion
The next five years will see digital technologiesincrease their influence across the industry leading toa sea change in consumer behaviour across allsegments
Market size (USD billion)
3530.4
30CAGR
25.025 14.9 %
22.219.7
20 17.3
15.215
10
5
02011 2012E 2013E 2014E 2015E 2016E
Source: KPMG report 2012 ,PwC India Entertainment andMedia Outlook 2011, Aranca Research
21
Entertainment
The entertainment industry is slated forrapid growth … (2/2)
→
→
Television will continue to be the lead contributor tooverall industry growth; the segment is estimated togrow in size to USD15.3 billion by 2016 (CAGR of 17.3per cent since 2011)
Animation, Gaming and VFX (AGV) is likely to witnessthe fastest growth - a CAGR of 27.2 per cent (2011-16); its size is set to touch USD2.0 billion in 2016
Notes: AGV- Animation, Gaming and VFX; VFX- Visual Effects
Television
Film
AGV
Size of major industry segments (USD billion)
15.36.9
6.54.4
3.11.9
2.00.6
0 5 10 15 20
2016 2011
Source: KPMG report 2012 ,PwC India Entertainment and MediaOutlook 2011, Aranca Research
22
Entertainment
Opportunities across segments in theentertainment industry … (1/2)
Television
AGV
• Television distribution is projected to garner a share of 62 per cent in the television pie by2015
• Television advertisement is also expected to witness robust growth; its share in the advertisingindustry is expected to touch 42.5 per cent by 2015 from 41 per cent in 2010
• The Indian animation industry was worth USD511 million in 2010 and is expected to grow atCAGR of 23 per cent to USD961 million by 2013
• Growth in international animation films, especially 3D productions, and the subsequent work for Indian production houses will help growth in this segment
• Newspapers and niche magazines are likely to drive industry growth
• Accelerated growth is forecasted in regional print and local news segments
Source: KPMG Report 2012 ,PwC India Entertainment and Media Outlook 2011, Aranca ResearchNotes: 3D- Three Dimension, AGV- Animation, Gaming and VFX; VFX- Visual Effects
23
Entertainment
Opportunities across segments in theentertainment industry … (2/2)
• Size of the Indian film industry is expected to touch USD3.1 billion by 2016, up from USD1.9 billion in 2011
Film• Increasing digital screens and 3D films are expected to help industry growth
• Big ticket releases lined up for the next couple of years are also expected to boost revenues
• Phase III of e-auctions for FM radio licences will provide an impetus to the segmentRadio
• Radio advertising is another area likely to experience accelerated growth
• Mobile VAS and arrival of 3G are likely to lead to a surge in paid digital downloadsMusic
• Phase III radio licensing will also help in increasing music revenues from radio
Source: KPMG report 2012 ,PwC India Entertainment and Media Outlook 2011, Aranca ResearchNotes: 3D - Three Dimension
For updated information, please visit www.ibef.org OPPORTUNITIES24
Entertainment
Advantage India
2016EGrowing demand
• Rising incomes and evolvinglifestyles have led to higher
demand for aspirational productsand services
• Higher penetration and a rapidlyincreasing young population willprovide further boost to demand
Higher investments• Higher FDI inflows
• Increasing M&A activity
Opportunities
• Industry is set to grow at aCAGR of 15 per cent over 2011-2016, one of the highest ratesglobally
• Television and AGV segmentsexpected to lead industry
growth; opportunities in digitaltechnologies as well
AdvantageIndia
Policy support
• Policy sops, increasing FDI limits
• Measures such as digitisation of cabledistribution to improve profitability
Market Size:
USD30.4billion
•
2011
Market Size:
USD15.2
billion
More big-ticket deals such as WaltDisney- UTV, Sony-ETV and Zee-Star
and ease of institutional finance
• Increasing liberalisation and tariffrelaxation
Source: KPMG report 2012, Aranca ResearchNotes: AGV- Animation, Gaming and VFX, VFX- Visual Effects, M&A- Merger and Acquisition, CAGR-
Compound Annual Growth Rate, FDI- Foreign Direct Investment, E- Estimate
25
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