Film industry in India: New horizons | 3
With more than 600 television channels, 100 million pay-TV
households, 70,000 newspapers and 1,000 films produced
annually, India’s vibrant media and entertainment (M&E)
industry provides attractive growth opportunities for global
corporations. Enticed by economic liberalization and high
volumes of consumption, many of the world’s media giants have
been present in the Indian market for more
than two decades. However, in recent
years, with near double-digit annual
growth and a fast-growing middle
class, there has been a renewed surge
in investments into the country by
global companies.
Media sectors, regarded as “sunset”
industries in mature markets, are
flourishing in India, presenting
global media companies with exciting
opportunities to counter declining
revenues. For example, the newspaper
industry, which is facing declining
readership in many international markets
because of digital media, continues to thrive
in India, driven by increasing literacy rates
and consumer spending as well as the growth
of regional markets and specialty newspapers.
Newspapers account for 42% of all advertising
spend in India, the highest in all media streams.
India’s favorable regulatory environment
and recent reforms are creating investment
opportunities in a number of M&E sectors.
Entry restrictions for foreign companies
have been relaxed and Foreign Direct
Investment (FDI) caps have been
recently increased in key sectors, including
Direct-To-Home (DTH) and radio. Mandatory
digitization of the country’s TV distribution
infrastructure has spurred the growth of digital cable
and DTH, and created the need for these companies
to fund their expansion. The third round of radio license
auctions (phase III), expected in the near future, is expected
see radio networks adding around 700 radio stations across
the country.
Then, there are India’s diverse content markets. The bulk of the
country’s urban consumption is from non-metro cities (the tier
2 and tier 3 towns) and comprises regional markets with distinct
cultures, languages and content preferences. These markets,
which are huge markets within markets, provide global M&E
companies with a variety of opportunities to deliver localized
content. Many global film studios and TV broadcasters have
already entered these markets and are producing regional
language content.
Finally, there is the evolution of consumption of digital content,
which is at an inflection point in India. Although internet
penetration is currently low in the country, the recent launch of
3G services and the eventual launch of 4G are expected to bring
a late surge in wireless-based broadband adoption. In conjunction
with India’s mobile phone user base of more than 750 million
subscribers, the scale and impact of the country’s potential
for digital content consumption is huge. This presents M&E
companies, foreign and domestic, with an exciting opportunity
to develop digital businesses that cater to a new generation of
broadband users.
While there are many opportunities to tap, there are also unique
differences and challenges. Diverse content preferences and
the low price point and high volumes of content consumption
are some of the critical differences that global M&E companies
need to assess when entering the Indian market. Companies
that understand and adapt to the economic and social fabric of
the country’s operating environment and that invest in tailored
content and services are likely to maximize their success.
M&E companies operating in India continue to be exposed to
risks ranging from local competition to fraud, corruption and
piracy. Furthermore, although the development of corporate
governance norms and ongoing structural and regulatory
reforms are expected to mitigate these threats, global M&E
companies need to develop flexible business plans, and identify
and develop mitigation strategies for key risks.
Media &
Entertainment
industry in India
With more than 600 television channels, 100 million pay-TV
households, 70,000 newspapers and 1,000 films produced
annually, India’s vibrant media and entertainment (M&E)
industry provides attractive growth opportunities for global
corporations. Enticed by economic liberalization and high
volumes of consumption, many of the world’s media giants have
been present in the Indian market for more
than two decades. However, in recent
years, with near double-digit annual
growth and a fast-growing middle
class, there has been a renewed surge
in investments into the country by
global companies.
Media sectors, regarded as “sunset”
industries in mature markets, are
flourishing in India, presenting
global media companies with exciting
opportunities to counter declining
revenues. For example, the newspaper
industry, which is facing declining
readership in many international markets
because of digital media, continues to thrive
in India, driven by increasing literacy rates
and consumer spending as well as the growth
of regional markets and specialty newspapers.
Newspapers account for 42% of all advertising
spend in India, the highest in all media streams.
India’s favorable regulatory environment
and recent reforms are creating investment
opportunities in a number of M&E sectors.
Entry restrictions for foreign companies
have been relaxed and Foreign Direct
Investment (FDI) caps have been
recently increased in key sectors, including
Direct-To-Home (DTH) and radio. Mandatory
digitization of the country’s TV distribution
infrastructure has spurred the growth of digital cable
and DTH, and created the need for these companies
to fund their expansion. The third round of radio license
auctions (phase III), expected in the near future, is expected
see radio networks adding around 700 radio stations across
the country.
Then, there are India’s diverse content markets. The bulk of the
country’s urban consumption is from non-metro cities (the tier
2 and tier 3 towns) and comprises regional markets with distinct
cultures, languages and content preferences. These markets,
which are huge markets within markets, provide global M&E
companies with a variety of opportunities to deliver localized
content. Many global film studios and TV broadcasters have
already entered these markets and are producing regional
language content.
Finally, there is the evolution of consumption of digital content,
which is at an inflection point in India. Although internet
penetration is currently low in the country, the recent launch of
3G services and the eventual launch of 4G are expected to bring
a late surge in wireless-based broadband adoption. In conjunction
with India’s mobile phone user base of more than 750 million
subscribers, the scale and impact of the country’s potential
for digital content consumption is huge. This presents M&E
companies, foreign and domestic, with an exciting opportunity
to develop digital businesses that cater to a new generation of
broadband users.
While there are many opportunities to tap, there are also unique
differences and challenges. Diverse content preferences and
the low price point and high volumes of content consumption
are some of the critical differences that global M&E companies
need to assess when entering the Indian market. Companies
that understand and adapt to the economic and social fabric of
the country’s operating environment and that invest in tailored
content and services are likely to maximize their success.
M&E companies operating in India continue to be exposed to
risks ranging from local competition to fraud, corruption and
piracy. Furthermore, although the development of corporate
governance norms and ongoing structural and regulatory
reforms are expected to mitigate these threats, global M&E
companies need to develop flexible business plans, and identify
and develop mitigation strategies for key risks.
Media &
Entertainment
industry in India
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