BY PROF. INDRANI SEN

SIMC18.7.2011

Indian Media Industry

At a Glance

One of the largest media market globallyTotal size valued at $ 10 BnAdvertising revenue accounts for 41%Growing at 23.4% Top 10 media companies accounting for 44 % ofadvertising revenueAdvertising remains underinvested as a % of

GDPAt 0.4% compared to the global average of 1%

Enjoying Steady Growth Till 2008

As per FICCI Reports M&E industry was enjoying steady growth till 2008 Like many other Indian industries, its growth rate

surpassed the performance of Indian economy The global M&E industry recorded single digit growth

rate (6% to 7.5%) during 2006-2008 Indian M&E industry enjoyed much higher growth

rate (12% to 14%) during the same periodIn 2009 the industry growth rate slowed

down clocked at only 1.4%

The Slowdown in 2009

The recessionary pressure was the main reason for the slowdown Highest share of revenue comes from advertising

Higher in case of Print and TV Film, radio and OOH registered a negative growth during 20o9

Aggravated by several internal factors Delay in auctions of phase 3 FM radio and 3G mobile telecom The multiplex strike Lack of quality content on TV

Renewed focus on innovations, creativity and managing costs

Comparative Growth in Ad Spends 2008-2009

Country Growth in Ad spend

US -4.30%

UK -13.90%

Russia -19.00%

Spain -15.90%

Italy -9.80%

China 3.20%

India 0.00%

Source Group M

Source of Revenue for Media Industries In India

Segment Revenues INR billion 2008

Advertising/ Audience

Pay / Content Total

Print 153.75 41.44 195.19

TV 127.57 167.4 294.97

Film 2 124.8 126.8

Internet 11.08 29.37 40.45

Telecom NA 47 47

Events NA NA 22

Music None 27.47 27.47

Outdoor 13.89 None 13.89

Radio 8.4 0.028* 8.43

Total 316.70 437.50 776.19Based on various industry sources,courtesy: Vanita Kohli-Khandekar *Worldspace

subscribers

Estimated Share of Advertising Revenue (%)

TV41%

Print47%

Radio3%

OOH7%

I'net2%

2009

TV40%

Print52%

Radio1%

OOH7%

I'net0%

2005

Source Industry Estimates

Media Spend As % of GDP

India UK US China Japan0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

Source Worldwide Media & Marketing Forecasts Group M Summer 2009

World average is 0.80%

India Lags Behind

India is second only to China with 22% share of world population

China’s media spend as percentage of GDP 0.75% is close to the world average 0.80%

India is lagging far behind with only 0.41%

Under-Penetrated Market

India US

ChinaTV Penetration 47.6% 98.2%

92.0%Cable & Satellite 67.8% 85.8%

37.0%DTH 6mn 319mn

539mnBroadband 0.3% 39.3%

4.0%Internet Users 60mn 215mn

162mnLiteracy Rate 68% 99%

90.9%

Potential for Growth

As penetration of media increases and more audiences come into its fold, the gap between India and China will reduce China’s current media spend per capita is almost 8

times that of India Higher penetration of media channels may not result

in higher spend on media from the lower socio-economic strata and rural population

Infrastructural development in China is far ahead of India

Media Spend Per capita

India UK US China Japan0

100

200

300

400

500

600

251

27

US D

4

491

343

Source Worldwide Media & Marketing Forecasts Group M Summer 2009

Penetration of Mass Media

Growing at a slower rate compared to The growth of spends on media The investment on media industries

Focus on the great Indian middle class and the elite upper class Would that approach provide a long term result in

terms of overall development which would get reflected in the macro economic statistics?

Mass Media Reach (U + R): 2006 to 2008

Source IRS 2008 R2

The Potential of Press

Some of the largest print titles in the worldMostly concentrated in top 15% of the

population in urban India Currently Press Reach is 221 mn adultsThe literates( education of class V onwards)

constitute 495 mn adultsA potential of 274 mn readers to be added! Expecting a 5% circulation growth y-o-y in

next 3 years

Need for Focus on Rural Area

As per IRS 2007 to 2009 Literacy rates growing steadily Working female population increasing steadily Movement towards smaller household sizes

Rapid urbanization escalated The total working population Growth in the extreme ends of the strata SEC A and

SEC E Rural India is emerging as potential market for

many product categories In 2009 advertisers pulled back on their ad spends but

continued with their rural initiatives

Urban & Rural Population

5%

4%

7%

Source IRS 2008 R2

Mass Media Reach by Urban/ Rural

Source IRS 2008 R2

Uneven Media Penetration & Reach

An analysis of media reach by urban and rural highlights the inadequacy of media reach in villages The gap between urban and rural reach is lowest for radio

and highest for satellite TV

Technically footprint of TV covers the entire country but in reality 20% of urban and 60% of rural population are still outside its reach

On an average a person in urban area spends almost 90 minutes per day on different media related activities while a person in rural area spends almost 60 minutes

Share Of Media - Urban

All figs. Minutes / Day

89.5 min / day

Source: IRS 2008 R2

Share Of Media - Rural

All figs. Minutes / Day

61 min / day

Source: IRS 2008

A closer Look at Media Reach in Urban Sector

Urban Media Reach by SEC

A1 A2 B1 B2 C D E1 E20

20

40

60

80

100

8574

64

52

41

2621

8

97 94 92 89 8678

73

58

9083

79 7569

58 5340

4435

28 25 25 22 201413

97 7 6 5 5 4

31

17 116 4 2

1 0

Press TV Sat TV Radio Cinema Internet%

Urban Population Distribution by SEC

The Great Indian Paradox

M&E industry targeting only 50% of the urban audience in upper socio economic strata

The penetration of media goes down significantly as we go down the population strata

Left to the mechanism of the market driven industry, it may take decades before this anomaly is corrected

Pop-strata wise Media Reach

Mass Media & Marketing

Stage I : Marketing led expansion of mass media

Stage II : Media led growth of mass marketing

Stage III : Consumer led media segmentation

In India , all three stages are existing at different socio-economic and demographic segments

Uneven Media Penetration & Reach

An analysis of media reach by urban and rural highlights the inadequacy of media reach in villages The gap between urban and rural reach is lowest for radio

and highest for satellite TV

Technically footprint of TV covers the entire country but in reality 20% of urban and 60% of rural population are still outside its reach

On an average a person in urban area spends almost 90 minutes per day on different media related activities while a person in rural area spends almost 60 minutes

Infrastructure: A Major Issue

Electricity is one of the main issue which is slowing down the rate of broadcast media consumption Serious issues exist in the production and distribution

of electricity across the countryAccessibility is another issue which has

improved a lot over the last two decades Road and train links have opened up new markets Villages have come closer to towns

On Highways and railroads Connected by regular transport

TV is The Opium

Sweeping across social clustersAlmost 82 million TV homes with a viewing

population of more than 400 million TV penetration higher than cooking gas

Access to about 175 channels with 90% of TV sets accessing 12-16 channels only 3 hours of daily escape on TV

170+ channels available in India today Yet, top 6 channels account for 70 % of the TV

advertising revenues Dominating emphasis on media buying

Top TV Networks

Channel TVR Share SUN NETWORK 2.6 18 STAR NETWORK FINAL 2.3 17ZEE NETWORK 2.1 15CABLE 1.4 10SONY NETWORK 1.1 8DD NETWORK 0.5 4ETV NETWORK (EENADU) 0.5 4INDIA TODAY NETWORK 0.3 2TV 18 NETWORK 0.1 1NDTV NETWORK 0.1 1INX NETWORK 0.0 0Others 3.0 21Any Channel + 14.2 100

Emerging Trends in TV

Glut of TV channels leading to slowing down in the growth of revenue

A gradual opening up of the Pay TV marketUnregulated growth of cable and satellite homesKu-band DTH TV stalled by vested interestRegional TV is growing across the country Accelerated growth of C&S penetration

Penetration up from 33% to 63% in 7 years Proliferation of mass, niche and regional satellite

channels

Size of Key Regional TV Markets 2009

Language Ad spend INR Crore Estimated Growth

Telegu 700 20%

Malayalam 350 15%

Kannada 300 20%

Tamil 900 20%

Bengali 400 25%

Marathi 320 20%

Source Industry Estimates

Looking at Future

Will internet be the medium of delivery? A lot of hype has been created around the broadband

internet delivery of television to Indian TV or computer homes

It appears that TV will continue to be delivered via terrestrial and satellite transmission

What will be the role of Doordarshan as a Public Broadcaster as against the private channels ? Indian Government review the existing policy

Cinema: the great Equalizer

Industry estimates Rs.6800 cr ( USD 136 mn) in 2008

Estimated to be Rs15300 (USD 306 mn) by 2012

Bollywood going global Global investment by Indian players in film

industry Global film studios eyeing Indian market

Emerging Trends in Cinema

Associative marketing Integrating content along with brand communication is a

growing trend Advertiser Funded Programmes/ Entertainment In Serial placements of brands In film placements of brands

Celebrity endorsements dominate advertising content More and more brands trying to identify with famous

personalities In-film advertising opportunity

Including meet & greet by stars

Activations at multiplexes

Radio Realities

A single broadcaster market till 2002 Three channels / 203 stations

AIR covers 89.8% of the geographical area and 90.3% of the population of the country through AM broadcast AIR’s ‘Home Service’ programmes are beamed from 203

transmitters for over 5lakh hours every year AIR caters to all the important cultural and linguistic

regions Radio covers 40% of the population in 25% of the

geographical area through FM broadcastPrivatization has given radio a second life

Localization of content and advertising accelerated the growth of FM radio in India

Global Media Participation in FM Radio

A Canadian Financial Institute picked up 20% stake in Radio Mirchi

GW capital picked up 75% stake in radio City in 2005

Astro Asia joined hands with NDTV and value Labs to buy India Today’s Red FM in 3 cities in 2006

BBC along with a private investor picked up an undisclosed stake in Mid day West

Bright Future for Radio

Radio advertising has been growing steadily touching Rs 10 million in 2009

More licenses are expected to be given Multiple frequencies ? News broadcast?

Distribution platforms hold huge scope Mobile Internet or streaming radio Satellite radio Radio over broadband (offered by DTH operators) New trends

Hybrid digital radio (expensive) Podcasting (through i-pods)

Scope of cross media buys (BCCL etc) Educational institutes and NGOs in India encouraged to

come up with their own stations

The Magic of OOH

Largely fragmented, unorganized –many opportunities unauthorized! Monitoring and maintenance an issueEntry of large media houses :

Reliance, Star Network and Bennett & Coleman & Co to increasing

professionalism Technology coming in : 3M, LED,Interactive, store TV Coexistence of high end opportunities to rural

wall paintings

Emerging Trends: Mobile

Mobile phones becoming ubiquitous: most dynamic mobile market in the world

90 %penetration by 2014

Mobile ownership growing @ 12%

The New Media for New generation

Rising penetration of internet Current online penetration stands at: 55 Million Current Broadband penetration stands at: 6.22 million Net users growing at the rate of 30% y-o-y

Increased use of search enginesSocial networking and life streamingJobs, marriage uniquely Indian

Naukri.com 12 mn users Shaadi.com 10 mn users

Live/micro BloggingFacebook /Twitter Video viewing on the web: U TubeSignificant access in upscale youth- however media

optimality is still a challenge

Emerging Trends: Regionalization

Regionalization is likely to be one of the significant factor driving the growth in television National broadcasters are looking at the scope of

adding regional channels to their portfolio Demand for regional content is increasing OOH spends are increasing in tier 2 and 3 towns Newspapers are publishing editions from smaller

towns

Regionalization will help to increase media penetration in small towns and villages

Extending The Media Platform

Prosperity of smaller towns are drawing in media UFO Movies, the country’s largest digital theatre

chain has 80% of its 1080 screens in tier 2 and 3 cities NDTVKhabar.com was launched to cash in on the

traffic from small towns Big spending in retail is visible in smaller towns

adding to the crush for action in retail outlets Playing commercials on LCD screens in malls is a

prominent trend coupled with physical space

English & Metro Bias

Advertisers and agencies have an English and Metro bias for many years 30% of the Rs 20,000 odd crores of ad spend in 2008

was blown up on Mumbai-centric media 60% of the ad spend is concentrated on six top metros

Marketers have started focusing on small towns and beyond which will impact the media value chain

Other Emerging Trends

Sports & Gaming are emerging as strong Entertainment platforms providing scope for cross media deals

Engaging in consumer’s ecosystem Brand experience along with a shopping experience opening new

opportunities in retail sector Activation and ambient advertising

Music & Home Entertainment are growing rapidly Branding DVD or CD covers Placing ads in between the films

Innovations across product/ process/ marketing/ distribution model

Investment in talent and focus on HR within the industry

Hot Destination for World Media

Emergence of Media Conglomerates

This trend has started from the turn of the centuryHome grown media conglomerates

Network 18 (television, Internet, filmed entertainment, mobile content and allied

business) Pyramid Saimira

(filmed entertainment with focus on animation & gaming segment) UTV Group

(film production, film distribution, television production and broadcasting, animation and allied business …. Disney has 32% investment in the company)

NDTV Group (television, news and entertainment, media software, labs, emerging markets

business and media process outsourcing) Star Group

(television, national and regional, filmed entertainment with sister company Fox, new media and internet

Network 18: A Full Play Media Conglomerate

Network 18 TV18 – CNBC TV18 & CNBC Awaaz Web 18 Newswire 18 Through Global Broadcast News

CNN-IBN & IBN7 Homeshop18

Online and on-air retail venture Studio 18 Viacom 18

Channels managed by MTV Strategic alliance with Jagaran Prakashan for foray into

print

Growing in Size

In six years since 2003, almost every one of the top 10 media companies has grown twice if not three to four times in size The Times Group, Zee Group, Star India Group,

Network 18 Group, Reliance(ADAG), Ht Media, Living Media Group, Sony Group, Prasar Bharati Corporation, Sun Network, Deccan Herald Holdings, Jagaran Prakashan, Kasturi & Sons

Most of these media houses have multi media presence

200638.2

Rs bn

200743.13 Rs bn

200843.5 Rs bn

Investment in Media & Entertainment

Courtesy: Vanita Kohli Khandekar

Trends for Next Five Years

The M&E industry is expected to recover in 2010 and increase @ 11.2% The CAGR from 2006 to 2009 has remained at 10%

The expected growth rate for the industry for next five years is 13% TV and Print will continue to dominate the industry

with 70% share of the revenue TV is expected to grow @ 15% Subscription revenue of both Print and TV will

continue to grow @ 12% to 13% Internet and gaming will show very high growth due

to small revenue base

After one year, it is going to be an exciting time for all of you in the M&E

industry…..