• search

Entertainment, media industry to grow by 19 per cent: PwC

Written by: Staff
Subscribe to Oneindia News

Mumbai, Apr 2: The Rs 35,300 crore Indian entertainment and media (E&M) industry is expected to grow at a compounded annual growth rate of 19 per cent in the next five years.

As per industry estimates and Pricewater house Coopers (PwC) analysis, the television industry continues to dominate the E&M industry by garnering a share of over 42 per cent. This is expected to increase further by nine per cent and reach about 51 per cent.

The share of the film industry currently stands at 19 per cent and is not expected to change materially over the next five years.

Print media, which stands at over 31 per cent, is projected to lose some of its share in favour of emerging segments.

The report says the E&M industry is a cyclical one, which grows faster when the economy is expanding. It grows faster than the nominal GDP rate during all phases of economic activity due to its income elasticity. On the other hand, when incomes rise, more resources are spent on leisure and less on necessities. Besides, consumption spending is increasing due to rise in disposable income of individuals, following sustained growth in income levels. This also builds the case for a strong bullish growh in the sector.

Last year new players across all segments of the E&M industry made an entry. The most prominent entry was that of the Reliance group into the film entertainment and radio segment. In the previous year, Reliance Capital bought a majority stake in Adlabs, enabling it to have a presence across the entire value chain of film entertainment segment, ranging from film production to exhibition and distribution.

Through Adlabs, Reliance also, made a feray into the radio segment by bidding for over 50 FM radio stations across the country for over Rs 150 crore.

The other significant entry was that of Tata group through its subsidiary VSNL. It tied up with the Paris-based Thomson group with the objective of identifying opportunities in managing and delivering content to third parties. Thomson group recently announced its partnership with Tata Sky Limited for manufacturing set top boxes and providing sales services and support network for their DTH customers.

The report further notes that owing to a strong impetus from the economic and demographic factors coupled with some regulatory corrections, the sector witnessed an increase in foreign inflows in most segments especially in the print media.

Recent examples include foreign investments in Hindustan Times and Business Standard by Henderson Global and Financial Times, respectively.

The vernacular media too saw its share of foreign investment with a strategic equity investment by independent media groups such as in Dainik Jagran, a leading Hindi daily.

On the broadcasting front, most channels beaming into India such as Walt Disney, ESPN-Star Sports, Star, Discovery and BBC have established foreign investment subsidiary companies for content development and advertisement airtime sales.

In television distribution space arena, foreign investment is being drawn by larger cable operators referred to as 'multi system operators' like Hathway and Hindujas. In the television content space, the recent investment in Nimbus Communications by a foreign equity private player is seen as the start of a significant trend in foreign investment inflows.

As many as 338 licenses are being given out by the Government for FM radio channels in 91 big and small towns and cities with the opening up of the radio sector to foreign investment.

The report says the Indian entertainment and media industry has everything going for it, be it regulations that allow FDI, the impetus from the economy, the digital lifestyle and spending habits of the consumers and the opportunities thrown open by the advancement of technology. All it has to do is to cash in on the growth potential and opportunities. The Government, on its part, needs to play a more active role in sorting out policy-related impediments to growth. The industry needs to fight all bottlenecks -- such as piracy -- in a concerted manner, which churns out high quality, world class products.

On the future outlook of the industry, the report said convergence will play a crucial role in the development of the Indian entertainment and media industry, where all 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.

The report states that a lot more investment can be drawn into the entertainment and media industry if certain sectoral policy barriers can be addressed. The problem of piracy impacts all segments of the industry especially films, music and television. Most of the credible efforts today to combat piracy have been initiated by the industry bodies themselves.

On part of the Government, lack of empowered officers to enforce anti-piracy laws remains the key issue, which is encouraging the menace of piracy. This is coupled with lengthy, legal and arbitration process. Similarly, the copyright act does not address the needs of electronic media. The draft of the optical disc law to address the need to regulate piracy at the manufacturing stage is still lying with the ministry for approval.

The report says the sector lacks a consistent and uniform media policy on foreign investment. The report also calls for a level-playing field with incumbents. It says limited frequencies of FM broadcasting have been opened to private players but with a license fee, which is not applicable to AIR, while in television segment, all terrestrial broadcasting rights continue to be with Doordarshan.

It says that there has been a long standing debate among the industry members on regulation of content. The need of the hour is to work out the modalities. The report is also against price regulation in television industry.

The Government has been mulling over evolving cross-media ownership rules for which even a public draft has not been evolved as yet. In the absence of any draft, rules or an established time frame for evolution of such rules, potential foreign investors can not evolve their long term strategy for India.

The report says that the Government has not acted on several recommendations by TRAI like broadcasting and distribution of television channels, digitalisation of cable TV, privatisation of terrestrial broadcasting and licensing of satellite radio, among other things.

Some industry members are of the view that converting the current cap on foreign institutional investment to foreign direct investment is not an encouraging move by the Government. The policy does not recognise the need for creating an environment that encourages strategic investors in making investments in the sector.

Similarly, the tax treatment of foreign companies in broadcasting sector is emerging as single-most policy issue deterring foreign investment. A major issue pertains to taxation of satellite segment usage fee paid by broadcasters to foreign satellite companies.

UNI

For Breaking News from Oneindia
Get instant news updates throughout the day.

X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more