Magazine 2012
The Indian Media and Entertainment Industry-
ST
Prospectives and Challenges in 21 Century
Dr. Dave Daksha G.
Smt. M. M. P. Shah Womenb s College of Arts & Commerce, Mumbai
Introduction:
The Indian media and entertainment industry is poised to enter a golden era. Entertainment is always seen as a
major source for leisure, relaxation and information. Improved living standard translates into higher needs for
leisure and entertainment.
The Indian Entertainment industry, which is primarily consist of film software, distribution and exhibition, television
software and broad casting, music, radio, is one of Indiab s oldest and prominent industries.
The Indian Entertainment industry is one of the fastest growing industries. One of the largest markets in the
world, the industry is seeing strong growth and has the potential garner US $ 200 billion by 2015. An attempt is
st
made in this paper to study b b The Indian Entertainment industry b Prospective and Challenges in 21 Century.
Following are the main objectives of the study:
Objectives of the study: -
1
)
To analyze over all progress of the Entertainment industry.
To evaluate the progress of film industry.
2)
3)
To evaluate the shortcomings of the industry.
4
)
To suggest some recommendations for further development of industry.
To discuss the case study of ADLABS.
5)
Methodology:
The present study is totally depending on secondary data. However an attempt is made by researcher together
information from high quality of documents and sources are like price Water House Cooper (PWC) report,
FICCIb S reports on entertainment industry and capital market report on various films company, cinema systems
(Trade magazine) and VCK research report.
1)
Present scenario of the industry:
The entertainment industry has experienced growth of 30 percent over the previous decade. During 2007-2010
industry was shown decline growth rate because of global recession. Following table indicates the growth of
industry.
Table -1
The % Growth of Entertainment Industry in India.
Year
003
007
010
015
Growth Percent
2
15%
17%
18%
20%
2
2
2
Source: FICCIb S report-2007, 2011.
The above table it is a clear that industry is increased more than 2.5 times from 2003 to 2007. The forecasts
sustained growth for the 2015, estimating that the industry will grow to an overall size of Rs 25 billion. There is
a predication that a cumulative growth of 20% for the sector during the period.
(70)
Table -2
From above table we can conclude that mainstream sectors such as t, television and filmed entertainment
continue to grow robustly, emerging segments such as animation, gaming and visual effects, radio, out-of-
home advertising and online advertising grew faster, although on a much lower base.
The television industry grew 12%, rate which is above the industry average growth rate.. A digital distribution
platform such as direct-to-home (DTH) is transforming the industry as such addressable technologies ensure
more transparency and higher revenues from subscription. The study said the number of DTH subscribers
would grow cumulatively by 44% every year over the next five years.
According to a report by KPMG, a leading industrial body, India is the worldb s third largest Television (TV)
market with almost 138 million TV Households (HHs) next to China and USA. Cable and Satellite (C&S) penetration
has reached around 80 per cent with high growth shown by the direct-to-home (DTH) service. New technologies
like high definition (HD), Set Top Boxes (STBs) with inbuilt recorders and delivery platforms like mobiles are
evolving rapidly; creating ample opportunity .The DTH industry is likely to touch US$ 620.25 million in 2009-10
as compared to US$ 310.16 million in 2008-09. The growth will be triggered by the increase in the marketing
budget of DTH companies like Bharti Airtel, DTH, Big TV and Sun Direct by 20-25% in 2010.
Doordarshan, the government owned national television broadcaster of India is expected to become fully
digitalized by 2017 and TV channels like MTV, Cartoon Network, Disney, Star Plus and Pogo are all set to grow
their service market to cover Indiab s promising licensing and stock market. By 2015, television is expected to
account for almost half of the Indian M&E industry revenues, and more than twice the size of print, the second
largest media sector.
Print mediab s growth in 2007 to 2010 at 6% was lower than the industry average growth rate. The report predicts
the sectorb s cumulative annual growth rate, (CAGR), for 2012-15 at 10%. The increase in regional language
publications and the action in the magazines space, with a slew of niche launches.
Filmed entertainment grew negative 3% during 2007-2010 The report predicate that CAGR for 2012- 2015 is
predicted at 10%. The report notes several trends that are changing the nature of the industry. Emergence of
(71)
revenue streams such as mobile phones, Internet, home video, merchandise, re-make rights and branded
entertainment as well as the advent of the studio model of production will continue to grow de-risking the
business, the report says. FM radio will grow to an Rs 25 billion industry by 2015, up from Rs 10 billion in 2010.
The latest products in Indian music industry which have increased the industryb s revenue generation are the
non-physical formats like electronic downloads and ringtones. Currently the Indian music industry worth US$
1
49 million and is estimated to touch US$ 164.56 million by 2012.
The sales of digital music are likely to contribute 88% in the total music sectorb s profits in India in 2009. This
trend is likely to continue in the year 2008, with digital music accounting for 16% of the total music sales and
slowly reaching 60% in 2013.
Radio is the medium of masses reaching out to 99% of Indian population. Over the years it has seen vibrant
changes and will see some more in the near future.
In the year 2008-09, the government cashed in US$ 11.05 million from private owned radio channels. As per
PwC report radio sector is estimated to expand at a CAGR of 19% during 2009-13 from the current US$ 170.87
million.
In context of radio industryb s share in advertising, the radio advertising industry is expected to witness an
increase a 5.2% growth during 2009-13 from the present 3.8%.
India is fast emerging as an ideal hub for graphics industries such as graphic designing and animation. With the
emergence of hi-tech games incorporating 3D effects, companies like Intel and Advanced Micro Devices (AMD)
are revising their marketing strategies in India to expand their operations in computing sector. By 2013, the
Indian animation industry is likely to grow from the present US$ 362 million to US$ 811.2 million, as per the
combined FICCI-KPMG report.
Advertising, which contributed Rs10 billion or 39% to the revenues generated by the media and entertainment
industry, grew 22% year-on-year in 2010. Foreign direct investment (FDI) into the sector surged to $211 million
(
2
Rs854.55 crore), against $89.18 million in 2006. b FDI will continue to go up in the coming years. The year
007-08 was marked by the entry of media and entertainment conglomeratesb Viacom Inc., NBC Universal Inc.
and Walt Disney Co.b into India through partnerships with Network 18 Group, NDTV Networks Plc. and UTV
Software Communications Ltd, respectively.
Digital firms like Reliance Media Works have signed joint venture with In-Three for transformation of 2D movies
and videos into 3D and Tata Teleservices has launched Indiab s first mobile television - Photon TV with high
accessibility broadband services through which users can avail channels on laptops as well as desktops.
2)
Evaluation of film Industry:
The film industry is the oldest and the most prominent and popular form of entertainment in India and it is the
largest film industry in the world in terms of the number of films produced and admissions each year.
The Following table is expressing the growth of film industry.
Table b 3
The growth of film industry
Year
007
008
009
010
015
Rs.
2
93 billion
2
104 billion
89 billion
83 billion
132 billion
2
2
2
Sources: The CII b KPMG Report.
The above table clearly indicates that film industry is fastest growing industry till 2008. In 2007, the size of the
industry was Rs. 93 billion which increase Rs104 billion in 2007. It is estimated that in 2015 it will be a Rs. 132
billion. Revenue generation from releases in Domestic market is expected to grow annually at 17% from Rs. 34
billion CUSD- 0.75 billion in 2004 to 86 corers CUS $ 2.0 billion in 2010.
(72)
The Indian film industry currently realizes almost 70% of its total revenues from domestic and overseas box
office sales compared with the US film industry, which earns only 35% of its revenue from box office sales and
the remaining 65%of revenue sources such as sales of DVDb s and VHS taps and the scales of cables and
satellite television rights.
The film industry comprises over of three sectors
1)
Movie Production, which involves in making of movies.
2
)
Movie distribution, which involves the distribution of movies to cinemas, TV. And video stores and
Movie exhibition, which involves exhibiting the movies in cinemas.
3)
Indian film industry over the past few years has been receptive towards foreign investments. This has paved way
for many international production firms to make their debut in Bollywood along with opening their offices in the
country. As per FICCI-KPMG report, Indian film industry is worth US$ 2.11 billion and is likely to witness a 9.1%
growth till 2013.
Worldb s largest film industry in terms of production volume is undergoing a massive international presence with
Reliance ADA Group signing a production pact with DreamWorks Studios, endorsed by Steven Spielberg, a
well known Hollywood director, to produce movies with the preliminary investment of US$ 825 million.
Following the lines, Yash Raj Films has signed joint partnerships with Walt Disney, to produce animated films.
Other such east meets west stories include, Sippysb film projects being sponsored by Warner Group, Sanjay
Leela Bhansali Filmsb collaboration with Sony Pictures Entertainment and TV 18b s association with Viacom to
form Viacom b 18.
Ad labs has emerged as the only movie chain in India providing 3D and 6D formats and PVR is all set to infuse
around US$ 52.2 million to grow its film production and bowling trade in India.
3)
Why in Indian, entertainment industry is growing very fast?
1)
Most popular source of entertainment: Movie viewing continuing to remain a very popular source of
entertainment there is currently a lack of readily available alternative entertainment option in India such as
theme park, concerts and gaming and this is not expected to change in the medium term.
2)
Continued progression of people into higher income and consumption segments: The lower income
bracket household has fallen by 13.5 percent between 2001 & 2006. Households with an annual income of over
INR 500,000will almost double during the same period as shown in the chart.
The percentage wise Economical distribution of the urban households.
5
4
4
3
3
2
2
1
1
0
5
0
5
0
5
0
5
0
5
0
Affluent
Upper Middle
Middle
Lower Income
2
001-02
2005-06
2009-10
Source: Lifestyle Consumption by Edelweiss Securities PVT.
) Favorable demographic change: Nearly two-third of Indiab s one billion plus population is below 35 years
3
of age, making it one of the youngest nations in the world on a sizeable base. Naturally younger population
has more demand for movies as a leisure & relaxation. Out of a population of around one billion people, an
estimated 30 million pass through Indiab s 13,000 cinema halls every day.
4) Changing lifestyles: Strong economic growth after liberalization and increasing globalization has resulted in
higher household incomes, and these continue to rise with the Indian economy growing at a brisk pace. Purely
(73)
spending on basic products and services does not satisfy the young urban. They want to indulge by spending
more on lifestyle products like watching movies in multiplexes, eating out, travel, etc.
5) A Non- Homogenous Market: In rural sector, the demand of entertainment is continuously increased because
of increasing income of the rural people. I.e. 77 percent house holds has televisions sets. Small towns and
village accounts for over one million cellular teliphoneusers.
6
) Increasing Corporation of The Film Production Sector: It should result in an increase in the number of high
quality films produced, which should increase demand for movie. In an increasingly corporate environment,
unviable movie with weak scripts should find it difficult to garner funding. Consequently, although the average
number of films produced annually in India is expected to fall from over 900 in 2004 to around 600 by 2010, the
quality of the movie produced is expected to increases (source: CII-KPMG Report, 2005)
7
) Digital Cinema: A significant increase in the number of digital cinemas should also fuel growth of the film
exhibition industry in B and C- class centers.
8) Government Initiatives: The Govt. has initiated major reform measures, which have had a cascading effect on
the growth of the film industry. I.e. permitting 100 percent foreign direct investment through the automatic route
for film industry and giving industry status to the films segment. The opening of the film industry to foreign
investment coupled with the granting of industry status to this segment has had a favorable impact, leading to
many global production units entering the country. For example, Walt Disney has partnered with Yash Raj
Films to make animated movies, the Warner Group is funding the Sippysb film projects, Viacom has a joint
venture with the TV 18 group to form Viacom-18, and Sony Pictures Entertainment has co-produced Saawariya
with SLB Films (Sanjay Leela Bansali Films).
9) Going Global: With the growing popularity of Indian content in the world market in general and South Asians
in particular, Indian entertainment industry players are venturing abroad to tap this booming segment. For
example, in the films segment, in 2007, of the top 20 foreign films in UK, 14 were Indian. These were part of a
total 69 Indian films that constituted 13.7 per cent of all releases. In fact, according to a report by CII-AT
Kearney, the share of international markets in total box office collections is estimated to increase from 8 per
cent in 2006 to 15 per cent in 2010. Consequently, many domestic players like Yash Raj Films, Reliance-Adlabs
and UTV among others have set up distribution arms overseas.
Constrain:
The Indian entertainment industry has also some constrain, which creates obstacles in development of the
industry. Following are the main constrain.
1)
Finance: The entertainment industry largely depends for itb s funding on private financings who lend at
about 40 percent a year.
2)
Single Screen Theatres: Historically, most movie theatres in India have been set up as single screen
theatres with large seating capacities. A typical single theatre has a capacity of 8000-1200 seats. The
upkeep and maintenance of many single theatres in India is very poor. Indian theatresare owned individually
and more importantly also managed as stand alone basis. This feature makes it difficult for individual
theatres to upgrade technically and also hinders them from offering higher quality service as demanded
by customers.
3)
Government Policy and Regulations: The major impediment to the industry is the higher rate of
entertainment tax levied by the respective state government. For instance, in Bihar the tax rates 110% of
the basic admission rates, in Delhi, it ranges from 40%to 60% on basic admission rates. In the West
Bengal, the rates are classified as per the language of the movie says, 70% for Hindi films and 20% for
Bengali films. Fortunately in Tamil Nadu, the government has drastically reduced the entertainment tax
rates to an averages rate of only 12.5% and also has removed the compound tax.
4)
Piracy: Next setback to industry is piracy, whether it may be of cable or CD From and it is estimated that
2
0%of the revenue is taken away due to piracy.
4
)
Suggestions:
1)
Investment in exhibition infrastructure: It is increasing theatrical capacity, digitization of distribution is
helping filmmakers maximize revenues. Take, for example, b Vivahb , a film by Rajshri Production released
simultaneously in November 2006 in theatres and online on its website - the first such attempt by any
production house in India.
(74)
The movie was made available on a free view basis for the first few days, post which it was sold at Rs. 400
$10) per download. Nine months later, it had sold 6,500 downloads.
(
2)
b Digitization: Paving the Way for New Mediab , multiplexes set box office tills ringing with 100 percent
revenue and manifold increase in ticket prices, compared to the old single screen theatres. Digitization,
coupled with the new awareness among consumers and industry alike, has brought in a change of
content.
Distribution costs will drop further when digital cinema grows into a b sizeable massb and the transmission
process becomes centralized like TV broadcast. Explaining the impact of digitization on content, the
spurt in mobile telephony, the use of Internet and the burgeoning Indian Diaspora abroad, have led to
increased sharing of content and vigorous net consumption because of the high bandwidth connectivity.
Mobile telephony users in India are currently estimated at close to 220 million, while Internet penetration
is pegged at 46 million, with an active base of over 32 million.
3)
Multiplexes: Multiplexes are providing a platform for thematic and stylistic exclusivity, which were so
long sacrificed at the altar of profit and big banners.
Take the small budget film b Bheja Fryb , a multiplex comedy made by Rajat Kapoor with a modest budget
of Rs. 6 million ($150,000). The movie was released last April with just 60 prints, virtually without marketing.
But by the end of the second week, revenues had picked up to such an extent that its makers ordered 60
more prints. Publicity was chiefly by word of mouth.
Given that niche films are released in limited numbers, a producer has to rein in production and distribution
costs to ensure maximum gains. But digitization, says the report, will slash print duplication cost to mere
Rs. 5,000 ($125) as against Rs. 60,000 ($1,500) per print on the celluloid format.
4)
To tap wider market: according to the industry, will allow the producer to tap wider markets - at least 10
times the existing one on the first day itself. Timely screening will check piracy losses, estimated at Rs.
1
10 billion ($2.75) annually.
5)
Revival of regional cinema: It has been found that demand for regional diversity to suit individual ethnic
groups or communities are increased. i.e. Marathib s abroad now want to watch Marathi cinema, Gujarat
is crave for their own films, while Bengalis pine for their vernacular content. The global demand for
Bollywood staple is also ever increasing.
But the report points to an imbalance in the growth of regional content. Hindi movies from Bollywood
and Tamil and Telugu movies from the south shoot past all other regional players, which are yet to get a
toehold in the new domain.
Conclusion:
The Indian entertainment and Media industry has tremendous scope in Indian Economy. Government is
also providing support for the development of the industry i.e.tax benefit, allowing FDI and many other facilities
which required for development of the industry. The digital lifestyle and spending habits of the consumers and
the opportunities has thrown open by the advancement in technology. All it has to do is to cash in on the
growth potential and the opportunities. The Government, on its part, needs to play a more active role in sorting
out policy-related implements to growth. The industry need to fight all roadblocks such as piracy- in a connected
manner, while churning out high quality, world class end products. As the world turns digital, only those
players who use the available resources intelligently and optimally will be able to survive the race. And grab a
slice of the revenue.
A case study of ADLABS:
Adlabs Films Limited, apart of the Reliance Anil Dhirubhai Ambani Group, is Indiab s fastest growing film
entertainment company. It is currently the largest cinema chain of India. Adlabs was founded in1978 by Man
Mohan sheety as a film processing unit. In 2001, Adlabs entered the multiplex business by launching Indiab s first
IMAX theatre inWalada Mumbai . The company expanded by converting single-screen cinema halls into
multiplexes like the famous Metro-Adlabs in Mumbai . In 2005, Adlabs was acquired by ADAG ( A group owned
by Anil Ambani) . In 2007, Adlabs acquired all the properties of Rave cinemas, a cinema chain based in Kanpur.
The company recently acquired majority interest in Malaysia-based lotus five star cinemas , and will be
operating a 51 screen cinema chain in Malaysia. The international network, in addition to Malaysia, also
includes 220 screens covering the east, mid west and west coast of USA as also Mauritius and Nepal. Currently
(75)
Adlabs operates 70 properties and 181 screens in more than 40 cities across India. Adlabs commands a
significant presence in Mumbai and Maharastra.
The chain recently signed a deal with phoenix mills for the countryb s largest multiplex cinema at the upcoming
phoenix market city in Bandra-Kurla Complex in Mumbai. The 140,000 sq.ft. Multiplex will have 15 screens and
over 4000 plus seats. ADAGb s groupb s Philosophy of Think Bigger, Think Better. The company expects over
three million people to visit its theatres next year. Recently, the cinema chain was re-branded as b Big Cinema.b
Adlabsb television venture, Synergy Adlabs, is among the top players in the television programming
industry.Recently big cinema has launched 3D and 6D technology and is the only cinema chain to screen filims
in all three formats. It is also launching the first megaplexes in the country.
Companyb s Financial Performance:
1)
Income from theatrical distribution during the 2008 amounted to Rs. 1051 Millions. This substantial
increase is due to an expansion on properties across the country.
2)
Contend Film Production and distribution: Revenues from this division contributed to Rs. 1,018 Millions.
In the coming year Adlabs has a share of top films for release and its distribution network is continuously
expanding to maximize benefits.
3)
Processing and allied services. Income from processing announced to Rs. 639 millions. Adlabs has
dominated position in Bollywood processing the highest amount of prints in a year, with 73 percent market
share.
Film production: Not only in bollywood, but also in Hollywood Films production and distribution bussiness.
Big philax: Dvd rentel portal Big philaxdotcom.In India, more than 50 DVD rental storeIn future it will be more
than three hundrad stores.
Big FM radio: It has 44 radio stations in cities.
Bigadda.com.It has 60 lakhs users.
Zapak dotcom.Online: Gaming portal,in thirteen cities have has 20 gameing
Film distribution: In foreign 48 and in india 20 flilms distributed.
cafC).In 2009 it will be a 700.
DTH: under Big TV. Brand DTH and IPT services will be launched with in short periods.
Broadcasting: 20 TV Chanal.
Above discussion made clear that in future ADAG Groups will be a leader of the entertainments industry. New
innovation, new technology, huge financial capacity, management efficiency, dynamic talent of Mr. Anil Ambani
leads entertainment industry at worldwide.
References:
1)
S.Srinivas. (2006) b New Indian Industryb .
2
)
Executives Report of Price Waterhouse Cooper b 2007-08.
FICCIb S Report on Entertainment industry b 2008.- 2011.
Adlabs Report 2008- 2010
3)
4)
Websites:
1
2
3
4
www/.economictimes.indiatimes.com.
Www. Businessworldindica.com.
www.ukfilmcouncil.org.
www.adlabs.com.
(76)