Media Entertainment

Internet Media & Entertainment
He who rejects change is the architect of decay. The only human institution which rejects progress is the cemetery. - Harold Wilson
Media and Entertainment Industry Introduction

In 2011, the overall E&M industry was estimated at 805 billion INR, an increase of 17.5% over the previous year. It is the fastest growing industry followed by China (14 per cent), Russia (12 per cent) and Brazil (11 per cent) as it is projected to grow at 17 per cent compounded annual growth rate (CAGR) between 2012 and 2016, according to the 'Indian Entertainment & Media Outlook 2012' report prepared by industry body Confederation of Indian Industry ( CII) and consulting firm PricewaterhouseCoopers (PwC). The advertising segment, which contributes about 35 per cent of revenue in the M&E industry in India, is dominated by television (TV) and print that constitute about 80 per cent of the pie, according to the PwC-CII study. The report further pointed out that both the segments will continue to dominate the industry over the next five years. Internet and gaming segments have emerged as the fastest-growing sub-segments at 57 per cent and 33 per cent CAGR, respectively. Indian M&E sector's boom is largely attributed by burgeoning internet segment, which has the potential to outshine the print sector by 2014.
Segment
Segment Revenue2010 (billion INR) 294 178
Revenue Y-o-y - 2011 growth (billion (%) INR) 340 190 15.7% 7.2%
Contribu tion to the industry (%) 42% 24%
Television Print
Internet access
Film OOH Radio Music Gaming Internet advertising Total
74
88 14 13 10 8 8 685
116
96 16 14 12 11 10 805
57.2%
9.4% 10.7% 10.8% 25.0% 32.6% 30.9% 17.5%
14%
12% 1.9% 1.7% 1.5% 1.4% 1.3%
Source- India Entertainment and Media Outlook, by PricewaterhouseCoopers
Key Trends and Industry Drivers

Growth in digital content consumption across media: Digital technology continues to revolutionize media distribution be it the rapid growth of DTH and the promise of digital cable, or increased digitization of film exhibition - and has enabled wider and cost effective reach across diverse and regional markets, and the development of targeted media content. There has been increased proliferation and consumption of digital media content. Accordingly, online advertising spends have seen a spurt in growth viz-a-viz spends on traditional media. Rise of new age user devices: Smart phones, tablets, PCs, gaming devices, etc. all form the foundation of a new wave in media usage.This is gradually impacting the way content is being created and distributed as well. Multiple media including TV, films, news, radio, music etc are being impacted with this change New age consumers adapting themselves to the newer technologies: As Indian consumers evolve, there is a heightened need to engage them across platforms and experiences. There is a greater need for integration and innovation across traditional and new media, with changing media consumption habits and preferences for niche content. Media companies today have no choice but to provide more touch points to engage with audiences.
Key Trends and Industry Drivers

Regionalization: Regional television and print continued its strong growth trajectory owing to growth in incomes and consumption in the regional markets. National advertisers are looking at these markets as the next consumption hubs and the local advertisers are learning the benefits of marketing their products aggressively. Advertising revenue dependant industry: The ARPU (Average Revenue Per User) for television, average newspaper cost for print and average ticket price for films continue to be low on account of hyper competition in these industries. Segments like radio and a significant portion of online content are available free of cost to consumers. Owing to this, the Indian consumer is still not used to paying for content and hence the industry players are sensitive to the impact of the slowdown which affects the budgets of advertisers. Awaited regulatory shifts: Lastly, apart from the shifts in consumer preferences, company strategies and business models, one big change awaited for the next growth wave is the implementation of recently enacted and regulations on digitization for cable, implementation of Phase 3 and copyright for Radio and the roll out of 4G. These shifts are expected to be game changers in terms of how business is being done currently and what could be the path going forward.
Porters Five Forces Analysis

Bargaining Power of Consumers (High) --Consumers can switch channels --Increased Globalisation --Availability of a variety of alternate sources of entertainment
Threat of New Entrants (Low) --High Sunk cost and capital requirement --Difficult access to distribution --Steeper learning curve because of mature market
Bargaining Power of Suppliers (Low) --Decreasing bargaining power of suppliers --Increasing number of content providers

Competitiveness within the industry (High) --Highly fragmented industry --High fixed cost --Perishable products --Highly diversified rivals
Threat of Substitutes --Digital media --Significant sporting events like World Cup --Significant cultural events
Government Initiatives
In a bid to establish a stronger bi-lateral people-to-people and media partnership, the Australian Broadcasting Corporation (ABC) and Prasar Bharati have signed a memorandum of understanding (MoU), wherein the two entities will share program content by utilizing the extensive Doordarshan and ABC networks. The ABC-Prasar Bharati MoU endorses co-production, programming exchange, the supply of English language learning programs by the ABC to Doordarshan, and the possible coproduction and sharing of digital content. Indian Government intends to make India a teleport hub, enabling it to become an up-linking/down-linking centre, just like Hong Kong and Singapore. The initiative is expected to facilitate foreign investments, better technology and sustainable employment opportunities in the country. The Government has recently given its nod to 74 per cent of foreign direct investment (FDI) in direct-to-home (DTH), IPTV, and mobile TV.
Road Ahead
India's M&E industry is expected to grow at a compounded annual growth rate (CAGR) of 17 per cent between 2012 and 2016 to touch Rs.1.75 trillion (US$ 32.14 billion), according to the CIIPwC report. Print and television will continue to be the leaders in the advertising industry, wherein TV would have a 43 per cent share of total advertising in 2016, compared with print's 41 per cent. Internet access, advertising and gaming are projected to be the fastest growing avenues, each growing at a CAGR higher than 20%. The revenue from advertising is expected to grow at a CAGR of 13.4% to reach 525 billion INR in 2016, from 279 billion INR in 2011.
E&M Industry 2016- Projected Segment Contribution

1% 2% 2% 1% 2% 8% 38%
Sales
Television Print Internet Acces Films OOH Radio
29%
Music
17%
Gaming Internet Advertising
Television
Industry Structure and Content

Television in India is the most preferred entertainment medium with the highest impact of advertising on the audiences. India has the third largest TV households globally, second to only China and the US. However, the digital TV penetration in India is very low at 36% as compared to more than 90% in countries such as Finland, Spain, UK. As a means to bring addressability into the system, the Ministry of Broadcasting recently accepted the recommendations made by TRAI on the sunset of Analog transmission in India by 2014.. Digitalization is expected to help players in the television value chain to realize the true potential of their content and to cater to the unique and diverse needs of the viewer
Competition Issues in Television and Broadcasting Sector

Although the television and broadcasting sector witnessed the entry of private broadcasters over two decades back, it is still an emerging sector. New regulations are being implemented to address the changing markets and multiple regulators are governing various different aspects. The three main competition issues that are surfacing include scarcity of spectrum, abuse of dominance in television viewership ratings and the information asymmetry in the subscriber base in the analog mode.
1. Scarcity of Spectrum/Capacity Constraints: In January 2010, the Government temporarily suspended giving permission to new channels in India on the grounds of reviewing the transmission of existing channels, assessing the net worth of the channels and checking the availability of spectrum. TRAI was directed to give recommendations on whether the number of television channels in India should be capped and new entrants should be restrained because of the surge in the number of players in the industry. TRAI recommended that there should not be a cap on the total number of satellite based channels.
2.Television Viewership Ratings:
At present, television viewership ratings in India are published by TAM Media Research (TAM) and Audience Measurement and Analytics Limited (aMap). While TAM publishes its viewership data twice a week, aMap publishes its data every day. All television channels in the industry are focused on obtaining high ratings to increase their advertising revenues as these ratings are used by media planners to devise advertising strategies. As the broadcasters are closely monitored and frequently rated, competition amongst them is intensified owing to the dependence of the advertising revenues on these ratings.
Transparency, accountability and objectivity of the ratings are of prime importance as false and misleading ratings can harm the broadcasters, advertisers and viewers. Hence, ratings have a major impact on the programming content of television channels. Since there are only two rating agencies, the competition for television ratings is limited, thereby leading to a possibility of abuse of dominance and the ratings published can also be biased
3. Information Asymmetry on Subscriber
Base:
Television subscriber base in India is at present opaque owing to non-availability of reliable information. The distribution of subscribers is heavily skewed in favour of analog mode, which is characterized by low channel carrying capacity and little addressability. About 78.5 per cent are connected through analog cable, which provides a near monopoly power to the analog cable in terms of last mile connectivity.23 There exists a bone of contention in the supply chain of television broadcasting in the analog mode between the content aggregator and MSO and between the MSO and LCO regarding the subscriber base owing to its under declaration, which affects the revenue mobilised per channel, per consumer. LCOs do not reveal the exact number of households serviced by them as they directly cater to the consumers and have the last mile advantage. Owing to this, there have been many disputes between the pay channels and MSOs & LCOs.
Broadcasters & Industry Profits

Pay-TV broadcasters generated US$2.9 billion in sales during 2010, up 18.5% year-on-year, driven largely by advertising growth. Average operating margins remain sub-optimal at less than 15, due to continued cost inflation. Competition is intense, as there are 550 channels in the marketplace despite limited spectrum on dominant analog cable networks. As a result, carriage and placement fees continue to grow for new entrants and, in some cases, existing players. According to MPA analysis, the carriage fee pool topped US$400 million in 2010, while total affiliate fees for channel suppliers on cable (i.e. excluding DTH) reached only US$425 million.
Broadcasters & Industry Profits

Operating margins remain low for market leaders such as Star and Zee (EBITDA margins trending at 20-25%, versus 30-40% in other emerging Asian markets), due to escalating costs across the value chain. This level of cost inflation is unlikely to moderate over the medium term, but operating leverage may improve as affiliate fees grow from digital cable and DTH. Broadcasters will continue to benefit through advertising growth, DTH expansion, the slow digitization of the cable pipe, and the expansion of pay-TV audiences. Competition and fragmentation will remain significant pressures, while affiliate fee growth will come gradually rather than overnight. MPA sees total pay-TV channel revenues growing from US$2.9 billion in 2010 to US$6.3 billion by 2015 with advertising remaining dominant.
Structure of the Industry

Today, India is the third largest Television market after China and USA. The television subscriber base has grown at over 34 per cent per year for the last 20 years and the service providers have also increased to commensurate this growth.5 In 2003, DTH services were introduced and operators are adding various innovative offerings such as value added services (VAS), interactive services including movie on demand, gaming, shopping etc. Increase in the number of conventional TV channels and increase in the offerings by service providers indicates a healthy competition in the sector. The sector comprises of 800 plus satellite TV channels, 100 multi system operators (MSO), 26 pay broadcasters, 60000 local cable operators (LCO), 6000 independent cable operators, seven pay DTH operators, several IPTV service providers and public service broadcaster Doordarshan (DD)
Structure of the Industry

DD is the worlds largest terrestrial broadcaster with over 1400 terrestrial TV transmitters. DD covers 88 per cent of Indias geographical areas and provides coverage to about 92 per cent population of the country. During 2011-12, TV households in India grew at 4.66 per cent to 150 million.8 Direct to Home (DTH) services grew at 30.06 per cent to 46.25 million9 and is expected to reach a subscriber base of 70 million by 2015.10 DTH is leading the digital distribution as it accounts for more than 80 per cent11 of all digital TV subscribers in India. Total cable TV subscribers were 94 million
Strategies adopted by major players

Curent strategy adopted by ZEE 1. Strengthen its position as a leader in M&E company in India by continously creating high quality content 2. Enhance its channels bouquet offerings 3. Build high quality distribution networks through DTH and cable 4. Focus on shareholder value 5. Expand selectively in International markets
Strengthen its position as a leader in M&E company
Zee is continously investing in creating high quality content for south asian diaspora across various genres like news,movies, music,soaps,sitcoms,game shows, travel shows , childrens shows and across various languages such as hindi, english, punjabi, telugu,bangla. The company intends to periodically revamp its TV channels to provide a fresh and innovative experience for the viewers . For example, the company recently repackaged most of its channels with new look and logo to enhance viewer experience.
2.
Enhance channel bouquet offerings
ZEE has been consistently expanding its product portfolio and has grown from operating a single TV channel in 1992 to a bouquet of 22 TV channels. With a view to generate incremental reenue from the DTH market the company is offering its existing channels on the DTH platform as well. ZEE has launched sports, religious and business channels to offer a more complete entertainment package to its viewers. In addition, ZEE seeks to tie-up with international broadcasters for adding attractiveness to its distribution in India.
3.
Build high quality distribution network
The companys strategy is to straddle the entire entertainment value chain from content creation and aggregation to cable and satellite distribution. ZEE believes that both content and distribution are critical to its business and has undertaken a number of strategic initiatives to augment its ability to deliver quality entertainment to its viewers when they want it and the way they want it. In this process. ZEE has built Siticable , a wholly-owned subsidiary ,into one of the largest MSO in India with an estimated reach of 7 million homes.
4.
Expand selectively in International markets
ZEE distributes its television content to more than 120 countries worldwide including the United States, Canada,Europe,Middle East, Africa and most parts of the south Asia by catering to the south asian diaspora around the world with an estimated subscriber base of close to a million subscribers outside of India. The company plans to diversify its revenue streams further by selectively expanding its offerings in key international markets.
5.ZEE has also undertaken a corporate restructuring exercise

With a view to streamline its businesses, improving operating effeciencies and to further rationalise its unprofitable operations in line with its strategic objectives.Zee believes that it has instituted robust systems and processes to ensure high standards of transparency and corporate governance, including the introduction of independent directors to its board and the establishment of an a audit committee,a remuneration committee and a share transfer and investor grievance committee.
6.The strategy of airing daily soaps starting Sunday through Wednesday has always paid off on sundays, ZEE has tried to get the viewer interested. Once the viewers get interested, ZEE hopes that the viewers stay in through the week.
7.The rejuvenation process of ZEE began with a shift in the Tarrget Group (TG) From the 35-plus to the 25-plus. The channel revamped some of its popular shows keeping in mind the youth taste. The grandeur of ZEE cine awards and the presence of SRK were used to unveil brand new logos for ZEE.
Success Strategy of SUN TV
TV gets the highest of advertising spends amongst all the advertising mediums. Post the economic downturn, the advertising spends on TV has rebounded to a double digit growth. First half of 2011 hosted two mega events, the World Cup and fourth Indian Premier League, on the most popular sport in the country Cricket. This gave a further boost to TV advertising. On back of this robust advertising spends in 2010 top broadcasters like Star, Zee and Sun have increased their rack rates. The advertisement spends on TV are expected to grow at around 12-14% in short to medium term and further it is expected that TV will continue to be preferred to other media for advertising.
Advertising revenue contributes almost 2/3rd to Broadcasters top line. Top five media buying agencies control almost 3/4th of the advertising spend in the country.
1. Existing rivalry
This sector has competition of three types
Brand competition
Clearly there is a great deal of competition that is brewing amongst these channels with each one fighting to get the eyeballs on their show.
Industry competition
The second level of competition too is evident in the current scenario. One major cricket match/news event is suffecient to drop in TRPs of the mass entertainment channels. Also, regional and niche channels are proving to be major competitors.
Form competition
This is where the largest competition is heading- Form competition, with a large number of consumers moving to different entertainment sources, channels are maturing to fight the same.
Business Business news Entertainment
Fixed costs High Low
Variable costs Low High
The competition amongst broadcasters is expected to increase further with Government approving 75 licenses for launch of new channels or re launch of existing channels in HD after a 2 year freeze. The major players who are launching new channels and HD channels are Discovery, UTV, Fox, ZEE and STAR amongst others.
2. Threat of New Entrants- Low

High start-up capital is a big de-motivator New entrants have difficulty accessing distribution channels. New entrant has some problems finding skilled employees, materials, and suppliers. Serviceable used equipment is expensive. Longlasting economies of learning and scale also demotivates the potential new entrant Economies of scale (minimum size requirements for profitable operations), Brand loyalty of customers Scarcity of important resources, e.g. qualified expert staff Access to raw materials is controlled by existing players, Distribution channels are controlled by existing players,
3. Threat of Substitutes
The relative price for performance of substitutes, Current trends. Customers incur no incur switching costs. Also, adequate substitutes are available. Possibly, One Broadcasting medium substitute for the other(movies as a replacement. For TV) Pirated content is a decent(and free substitute). Other free time activities be could be substitutes ( concerts, games, gambling, gardening, sports, restaurants)
4. Bargaining Power of Buyers

It is high.
Buyers (end users as well as advertisers) do not face significant switching costs and are extremely price sensitive. Viewers' tastes frequently change, providing little loyalty to any particular network Advertising buyers dictate television programming choices The suppliers customers are fragmented, so their bargaining power is low, The switching costs from one supplier to another are high, His threat is especially high when the buying industry has a higher profitability thanthe supplying industry
5. Bargaining Power of Suppliers

Bargaining power of suppliers is decreasing due to presence of large number of suppliers.
Since most suppliers to Broadcasters have either been acquired/ have a tie-up with the broadcasters, the bargaining power of suppliers is low. For ex- Viacom has acquired Paramount. However, Independent content providers pose a major challenge to online revenue model for broadcasters. The supplying industry comprises a large number of small operators The service is undifferentiated and can be replaces by substitutes, The customer knows about the production costs of the product
Brand Alliances
Advent of DTH technology: -Dish TV-ZEE telefilms -Space TV, Star TV and Tatas
The alliances formedZee bouquet

Zee tv, Zee cinema,Zee music, Zee business,Zee gujrati, Zee telugu,Zee premiere,Zee classic,Zee smile, CNBC awaaz ,Reality TV
2. Star
Star plus, Star movies, Star gold, Star world, Star one, Star utsav, Star ananda, the history channel, vijay tv, disney,toon disney , national geographic channel , channel V
3. Sony one alliance

Sony tv, max, axn, discovery, animal planet, NDTV india, NDTV 24x7, ndtv profit, nickelodeon, animax, sab tv, discovery travel and living, ten sports.
Key Challenges
Piracy continues to be a considerable and everincreasing threat to the revenues of broadcasters and platforms. In addition, internet streaming and the proliferation of many illegitimate over-the-top (OTT) services pose a significant threat to pay-TV revenues. This threat is more prominent in countries such as Nepal, Bangladesh, Pakistan, Afghanistan and Sri Lanka. Complicated tax laws - Recovery of dues from operators in international markets is a challenge in certain countries. Complicated tax laws and regulations in countries such as Bangladesh and Pakistan pose difficulties in timely collection of subscription revenues. Therefore, the risk of bad debts in these markets is high.
Key Challenges
The Way Forward

Emergence of new media The emergence of various new media platforms (IPTV, Mobile TV and OTT) is expected to increase adoption and monetisation of content. Consumption of entertainment through new media platforms is expected to rise and broadcasters are increasingly looking for opportunities to launch their channels on new media platforms. Emergence of DTH in emerging markets Broadcasters will now be able to address bandwidth-related constraints with the launch of DTH platforms in relatively small countries, particularly in Eastern Europe, Latin America and Africa, This is expected to enhance the presence of Indian broadcasters, especially that of more recent players, in international markets HD and 3D TV: LED and LCD Televisions are outselling the conventional televisions. Some broadcasters have sieged this opportunity to provide the subscribers with high quality viewing experience. This year will also see an increase in number of HD channels as broadcasters vie for larger share of viewers time spend on TV entertainment. 3D although an exciting and popular technology
Limited bandwidth - In most developing countries, TV signals are distributed via the analogue mode, which limits the channel-carrying capacity of distributors. Bandwidth constraint in these markets has created an entry barrier for broadcasters. Furthermore, platforms are not willing to carry too many Indian channels in countries where Indians do not have a significant presence. Broadcasting laws and regulations - Broadcasting laws and regulations differ from one country to another. Telecast feed has to comply with these regulations to avoid legal and regulatory non-compliance. The feed also needs to be customised for each market to comply with local advertising and content-related restrictions. Intense competition - With the advent of new broadcasters, local distribution platforms are adding more services to existing packages or bouquets at the same retail price to retain their customers. This increase in competition has resulted in the same pie being further divided among broadcasters, which results in a reduced share for all.
Digitalization of the TV distribution: DTH is leading the race for digitalization of the distribution system. The governments announcement on sunset date coupled with the right set of incentives and regulation, has the potential to change the distribution landscape in the county. Digitalization is not only expected to help the players in the value chain to realize the true potential of their content, but also to cater to the unique and diverse needs of the viewer when it comes to entertainment. Need for improved measurement tools: An effective measurement system is the backbone of advertising dependent industry. it has been well recognized that the current measurement system needs to be overhauled. Recently, a government committee has suggested increasing the sample size from the current 8,000 to 30,000 in next three years in both urban and rural areas.
New Strategies
1. Consolidation the game
changer
Since the viewers are becoming increasingly differentiated , the big players will need to diversify their offerings and this will be done eiether through acquiring new channels which focus on niche segment or start their new channels so as to exhaust the need gaps which exist to prevent the newer players to enter the market as the industry is not consolidated and entry barriers are small. Currently, the broadcasters are reeling from the effect of high carriage fee and low subscription realization from dominant analogue distribution system. Although digital platforms like DTH have partially been able to address the realization of subscription revenue, they have also started charging carriage fee due to transponder crunch.
2. Consolidation and Alliances amongst Broadcasters.

A large number of channels indicate high level of fragmentation. But some broadcasters are consolidating to increase their bargaining power with distributors with regard to the push for digitisation. Consolidation is also likely to be favoured due to large investments required in content and distribution. In 2010, Sun Network and Network18 entered into a strategic alliance to form Sun18 Media Services. Sun18 distributes more than 30 channels across all platforms in India via all networks including cable, DTH, IPTV and HITS.27 In 2011, Star Den Media Services Private Limited and Zee Turner Limited formed a 50:50 joint venture called Pro Media Enterprise to jointly aggregate and distribute television content.28 The broadcasting industry has already witnessed the initial steps towards consolidation with NDTV Imagine being acquired by Turner Asia Pacific Ventures in 2009 and 9X by Zee Entertainment Enterprises Limited in 2010.
3. Target new international markets

All broadcasters are aggressively expanding their presence in international markets. Zee TV has extended its presence to around 167 countries, while Star Plus is available in more than 70 countries. Viacom18 Media, the JV between Viacom and Network18, has also expanded the reach of its Colors channel to more than 50 countries. The 24-hour news channel from the NDTV group, NDTV 247, now reaches out to more than 75 countries. Broadcasters are also increasingly targeting new geographies such as Eastern Europe, China, South America to expand their presence in these. In March 2012, ZEEL obtained the rights to air its channel in China Recently, B4U has launched its channels B4U Movies and B4U Music in East Africa
4. Expansion
In addition, markets such as SAARC and the Middle East, where illegal/pirated signals are readily available, are being targeted by broadcasters to maximise their revenue from these markets. In October 2011, the Times Television Network launched its three channels Times Now, ET Now and Zoom in the UAE. UTV launched UTV Stars in West Asia in August 2011 and had earlier launched its other channels, UTV Bindass and UTV Movies, in the region in April 2011. FOODFOOD, a Hindi 247 food lifestyle channel, was launched in the UAE in September 2011.
5. Local channels with customised content

Like international broadcasters such as Discovery and the National Geographic Channel, Indian broadcasters are also increasingly customising their offerings to suit local needs and are launching local channels with differentiated content, in some key markets. Zee has already launched a wellness channel, Veria Living, in the US market and runs an Arabic channel as well. After launching its channels in the UAE, UTV plans to enhance its presence across the entire Middle East and North Africa (MENA) region by customising its offerings to cater to the viewing preferences of the region. In addition, broadcasters are subtitling their channels in English and other local languages to cater to mainstream audiences and bolster their subscription and adsales revenues.
Future Outlook for the TV Industry

According to the KPMG report, digitisation of cable television is expected to bring in transparency and increase subscription revenues for Multi System Operators (MSOs) and broadcasters Digitisation will change the dynamics of the broadcast industry. The early results of digitisation has been encouraging The fact that almost 70 per cent of television households are outside the current ratings system is a matter of concern The projected growth for television is a whopping 18 per cent
Conclusion
India is the third largest television market after China and USA. Television along with radio constitutes the most popular mediums of public broadcast with a wide coverage across the spectrum of population. These sectors would continue to grow at a double-digit rate due to higher penetration into smaller markets.
Digitisation is expected to be the major game changer in the television industry. Not only will it lead to emergence of more channels, but it will also minimize the capacity constraints in Analog cable television distribution platform. It will also improve the quality of viewing and evolve more transparent revenue-sharing models.
Conclusion
The market structure in broadcasting varies from a highly-competitive in content creation to concentrated in content aggregation. While market structure with respect to distribution to consumers in cable platform is fragmented, in DTH and IPTV it is limited to few players. The skewed nature of market structure in the different nodes of television broadcasting has given rise to certain competitive concerns. The industry has witnessed consolidation in the form of acquisitions and strategic alliances amongst various broadcasters, content aggregators and distributors, which may enhance the revenue base for the upstream players.
Print
Overview
India is one of the largest newspaper markets with more than 107 million copies circulated daily, surpassing China accounting for more than 20 percent of all dailies in the world. The total literate population in India is estimated to be 579 with over 30 percent readership penetration . The Indian print media is a highly fragmented industry comprising of 77,600 were 613 pending newspaper requests for registration. The Indian print industry is projected to grow at a CAGR of 9.2% over the period 2012-16 and is estimated to reach 296 billion INR in 2016 from the present 190.5 billion INR in 2011. The overall Indian M&E sector is estimated to be INR 65,244 crores in 2010, with print accounting for approximately 30 percent i.e. INR 19,288 crores of the total M&E revenues. It is expected to grow at a CAGR of 10 percent reaching INR 31,010 crores in 2015 .
Revenue Share
Indian Readership Survey

English readership in India larger readership in urban areas
Approximately 7% of the population in urban areas Only 0.3% of the population in the rural areas
Hindi readership in India proportionately larger readership in rural areas

Approximately 15% in urban areas 5% in rural areas
Largest read Hindi language newspapers

Dainik Jagran (55.7mn readers); Rajasthan Patrika(14mn readers)
Largest read English language newspapers

The Times of India (13.3mn readers); Hindustan Times(6.3mn readers) Other widely read English papers include: The Hindu (5.2mn); The Indian Express (1.8mn)
Largest read vernacular newspaper

Published in Malayalam, The Morning Bell (9.7mn readers) has the largest circulation amongst regional languages
Past Performance
In 2011, the Indian print industry witnessed moderate growth. Its revenue increased from 177.7 billion INR (2010) to 190.7 billion INR in 2011. Newspaper advertising witnessed higher growth than subscription, though it was tempered by the moderate economic climate. The magazine industry saw a marginal growth in 2011. The industry has been slowing down for the past few years and the economic slowdown affected it further. Its market size is estimated to be 20.4 billion INR in 2011 as compared to 19.6 billion INR in 2010. The print advertising was also affected by the unfavorable macroeconomic conditions such as rise in oil prices, rupee depreciation, high volatility in stock market, rise in inflation and the overall global economic slowdown.
Past Performance
Business Model
Industry Structure
The Indian print media segment includes
Newspapers Magazines Books
Indian print media is one of the largest in the world

Over 800 registered publications Printed in 18 languages Reach over 55% of the population everyday
Highly fragmented industry

Multiple players in every region giving rise to the importance of regional dominance Over 77,600 newspapers Divided on the basis of languages
Vernacular Hindi English - 46% - 44% - 10%
The content and circulation of English-language newspapers, are largely focused on the primary urban centers
Industry Revenues

1. Threat of new entrants Extremely high. Online, hyper-local news providers such as Patch.com and others are new players in many media markets of all sizes, including Pittsburgh. Content is often free. Costs are kept down by hiring recent college graduates and producing only online, not print, content. 2. Bargaining power of customers High. Individual readers can choose to read online content for free at most newspapers instead of paying 50 cents to $1 for a newspaper. Large advertisers another type of customers likely have a great deal of power to bargain. 3. Threat of substitutes Extremely high. Most markets have multiple news sources. Many people are content to seek news from TV stations or national publications. Even those who want focused, local news from print publications have more than one option (business journals, magazines, competing newspapers). 4. Bargaining power of suppliers Fairly low, and I think the inability for most newspapers to come up with a way to charge for online content proves that. 5. Current Rivalry: There are few major players region wise. Companies like Hindustan Times which are strong in northern India are trying to acquire shares of newspaper dailies like The Hindu in south. Also regional newspapers offer good competition to major players.
Growth Drivers
1. Higher literacy levels: In 2006, the literacy levels increased to 71.1% as compared to 69.9% in 2005. While rural literacy is at 64.8%, urban literacy touched 85.3%. Currently Indian print media is estimated to reach over 220 m people, and has immense growth potential since close to 370 m literate Indians are believed to not be served by any publication. Also, the reach of newspapers is only 27%, as compared to the global average of 50%. 2. Lower cover prices: Earlier, due to strong hold over a region, the newspaper had higher cover charges. However, with increasing competition and venture into newer regions the companies have reduced the cover prices to augment more sales. Many English dailies are sold for as low as Re 1 or Rs 2. The initial subscription offers of DNA and Hindustan Times (HT) in Mumbai, during their launch period, further reduced the cost of the newspaper to around 50 paise for an average issue 3. Higher ad spends: Print media accounts for 48% of the total Rs 137.5 bn advertising spend in the country. However, the ad spend in India is just 0.4% of GDP as against 0.5% in China, 1.3% in the US and a world average of nearly 1.0%. With rising consumerism and growing interest from domestic and global brands in Indian market, the growth in ad segment is expected to be strong.
Critical Success factors

1. Content: Niche channels are the only way to differentiate content and have a captive audience. The clutter of ads has now spilled out on the number of players due to which people are spoilt for choice. Thus Niche channels are the only way to maintain readers loyalty. 2. Consumerism: Increased consumerism and Multiplication of players is leading companies to increase their ad spend to create brand recall. This in return means more revenues for the media companies fueling further growth. 3. Pricing: Prices in India whether it is for cable connection, film tickets or newspapers remain one of the lowest in the world though huge volumes compensate for low prices. With increased purchasing power of the India urban class as well as the rural people, and the expendable income, prices will increase with increase in choice.
Critical Success factors

4. Regulations: Print has already opened for FDI ranging from 26% to 100% equity stake. With more and more players jumping on the bandwagon, even for abroad, the regulations will be relaxed and the industry will be a much bigger one. 5. Technology: Use of technology for special effects, animation and other creative work leading to better quality of media products. Digital technology is increasingly competing with print media by opening access to endless sources of news. It may now seem that the need of the reader to buy a newspaper for news and the need of the advertiser to advertise in it is slowly receding. Thus it is for the newspapers to look at emerging options and to rework their traditional sources of revenue.
Business Environment
PESTEL Model Political factor: The governments protection of copyright is crucial to the continued functioning of the media industry. Without government enforcement of copyright laws, the for-profit media industry would be unable to survive. Thus, the relationship between government and media is more complex than a simple freedom of the press slogan might suggest. Economic factor: For most of the 20th Century, newspapers were the primary source of information for the public. Whether the subject was sports, finance, or politics, newspapers reigned supreme. Just as important, their ads were the easiest way to find job opportunities or to learn the price of groceries at your town's supermarkets. The great majority of families therefore felt the need for a paper every day, but understandably most didn't wish to pay for two. Advertisers preferred the paper with the most circulation, and readers tended to want the paper with the most ads and news pages.
Business Environment
PESTEL Model Social factors: Social factors influence people's choices and include the beliefs, values and attitudes of society. So understanding changes in this area can be crucial. Such changes can impact purchasing behavior. Consumer attitude is very important social factor. Technological factor: Technology is increasingly competing with print media by opening access to endless sources of news. It may now seem that the need of the reader to buy a newspaper for news and the need of the advertiser to advertise in it is slowly receding. Thus it is for the newspapers to look at emerging options and to rework their traditional sources of revenue. Environmental factor: Newspapers face significant challenges on the back of economic slowdown and the consequent slowdown in advertising revenues, especially in the last quarter of 2008. Print media industry has to adapt to a fast-moving environment and players need to draw upon new capabilities to survive in this environment.
Key Trends
National Players looking to regional markets to gain advertising Newspapers and Advertisers joining hands to create innovative content formats and advertisement campaigns Hindi newspapers showing healthy growth in readership Newsprint prices affecting profitability of print players Vernacular dailies witnessing slowdown in readership but still hold potential : Top 10 language dailies have witnessed a cumulative drop of more than 5 lakh readers in Q1 of 2012 compared to Q4 of 2011.
Value Chain
Value Chain
Newspapers have successfully separated subscriber and advertiser cash flow timing from product delivery. As such, all financial flows within the newspaper supply chain are either discretionary (how much newsprint and ink inventory is carried), or direct costs resulting from the supply chain in place. The primary components affecting the total supply chain cost for a newspaper are: Inbound Information: advertising, news, editorial, pagination Press Operations: plate making through pressing Packaging Operations: handling, insertion, storage, package design & flow Distribution Operations: transport mode, timing, locations, and handling. Balancing time and workflow across the supply chain will yield the largest results. A dynamic cost and process flow model of the newspaper supply chain will be essential in keeping pace with changing needs and demands within the newspaper industry.
Recent events
1. App for magazines: Will it aid the ailing magazine industry? In early 2011, Apple announced that iPad users will be able to subscribe to magazines through its iBooks app from the latter part of the year. It would be downloaded to their devices in the same way as the Zinio app. The company plans to retain 30% of the subscription fee, with the publisher getting the remaining 70%. Some publishers are considering using a Google version, which will only retain 100% of its profit. Zinio also had to update its iPad app to comply with the Apple fee rules, with inapp purchases now made through users iTunes accounts. With iPad purchases, publishers will not have access to customer information and, initially, are resisting this model and looking for alternative outlets. In India, Zinio supplies most of the popular English magazines such as Filmfare, Hello, Femina, India Today, Business Today, etc. It will be interesting to see if such apps can open alternate revenue channels for the magazine publishers.
Recent events
2. Tablets: Self-publishing and rethinking childrens books With Micromax and similar low-cost players entering the tablet market fray, and the easy access to high-speed internet could also bring about traction amongst tablet users. Higher engagement experiences such as longform reading and interactive games are naturally suited to the medium, and present opportunities for niche publications and magazines (travel magazines, for instance, can use the platform to create compelling multimedia travelogues) to foster additional reader engagement. Publishers of textbooks and childrens books are likely to capitalise on the interactivity of the medium and re-imagine storytelling as a more dynamic feature; much like Apple set an example with its iBooks app. With the government pushing towards extremely low-cost tablets such as Aakash, this section of the market will see an immense opportunity of learning via storytelling. The opening up of Amazons Kindle store in India with the facility for independent publishing will further spur the growth.
Mergers and Acquisitions

1. Increasing interest by telecom companies: Recently, the multi-crore investments by Reliance in Network18 Group and acquisition of 27.5% stake in Living Media by Aditya Birla Group supports long held desire of telecom companies to get access to media content to expand their businesses. These deals follow global trend of telecom companies moving forward from being carrier to content provider. Such deals are a win win situation for both telecom and media companies. On one hand, such deals provide telcos easy accessibility to content in the era of content is king. On the other hand, media companies which are suffering on account of challenging macro-economic environment are benefitted due to infusion of fresh funds. Telcos have realized that quicker access to superior content will act as key differentiators for the companies and provide them with a competitive edge. These deals help media companies accomplish their desire to build scale and go national.
2.Decreasing dependence on Print of overall revenue of the company by expanding in other areas of business: Acknowledging its heavy dependence on print, companies such as HT Media are de-risking itself by expansion into other areas of business. The recent formation of a JV with US frim Apollo Global Inc, an expansion into education industry, supports such efforts. Amar Chitra Katha Private Ltds (ACK) plan to get into amusement park business is another such example. 3. Go national agenda for newspapers: The investment of 225 crore INR by Blackstone in Jagran Media provided the latter with funds to support its growth plans including acquisitions (recent media reports suggests interest of the group in buying. It helped in Jagrans plan to venture into regional languages across the country. As players with national hold are preferred by advertisers which enable them to garner better rates Stake sale to Aditya Birla Group is most likely the result of Living Medias attempts to raise funds to expand its print business. The company plans to start the Mumbai edition of its existing property Mail Today and may possibly want to get into the Hindi newspaper of majority stake by DB Corp in an Indore-based newspaper (Divya Prabhat Publications Pvt Ltd) and Asianet News Network Pvt Ltd acquisition of a Bangalore-based newspaper (Kannada Prabha Publications Ltd) also substantiates expansion of regional footprints by existing players in the industry.
COMPETITOR ANALYSIS
Key Strategies followed in Industry

1. Cost leadership In the case of media products, means they should be offered at a price lower than their competitors but with as good benefits, or, the unique benefits the media products offer can over-offset the premium. 2. Differentiation Differentiation in media refers to when a media organization provides unique benefits to the media users through product innovation. This is to increase the probability of the media users to choose the product. A media organization with a target user loyalty can concentrate more on how to fully meet the target users needs rather than on product cost saving. 3. Focus Focus strategy is also known as a 'niche' strategy. The clutter of ads has now spilled out on the number of channel availability due to which people are spoilt for choice. Thus Niche channels are the only way to maintain viewer loyalty. Some premium-branded newspapers, a bit like The Sunday Times is more niche-orientated.
Hindu
Circulation : 1.45 million Readership : 4.06 million Second largest circulated English Daily in India Largest base of circulation in South India, especially Tamil Nadu First newspaper in India to go online The Hindu's independent editorial stand and its reliable and balanced presentation of the news have over the years, won for it the serious attention and regard of the people who matter in India and abroad. The Hindu is the only newspaper which brings out supplements and features on all days of the week.
Hindu
Products : Apart from the Hindu, the company also publishes
The Hindu Business Line - Business Daily Sportstar - Weekly Sports magazine Frontline - Fortnightly magazine Survey of Indian Industry - An annual review on Indian industries Survey of Indian Agriculture - An annual review on Indian Agriculture Survey of the Environment - An annual review of the Environment THE HINDU SPEAKS ON series - Libraries, Information Technology, Management, Education, Religious Values, Music, Scientific Facts. FROM THE PAGES OF THE HINDU: Mahatma Gandhi The Last 200 days
Dainik Jagran
Parent Company : Jagran Prakashan Ltd (JPL) Readership : 5.59 million Largest read daily in the world With 37 editions, Dainik Jagran covers 11 states of India It has also been declared by the World Association of Newspapers (WAN) as the Largest read daily in the world. Not just the largest read, Dainik Jagran has also been voted as the Most Credible Source of News in a BBC-Reuters survey.
Dainik Jagran
Products:
Inext.co.in: Compact daily in bilingual format Mid-Day: Weekly English tabloid City Plus: Weekly English tabloid The Inquilab: Urdu newspaper Sakhi: Womens magazine Nayi Duniya: Hindi Daily in Madhya Pradesh and Chhattisgarh Jagran Engage : OOH division Jagran Solutions: The division that leads work in the Below the Line Marketing Solutions or Experiential Marketing area Pehel: A dedicated organization for Jagrans social initiatives Jagran Research: An independent and premier multidisciplinary research & consulting organization
Times Of India
Parent Company : Bennett Coleman and Co. Ltd. Readership : 3.14 million Largest read English daily in the world With 37 editions, Dainik Jagran covers 11 states of India It was certified by the Audit Bureau of Circulations as the world's largest selling English-language daily newspaper, placing as the 8th largest selling newspaper in any language in the world.
Times Of India
Products: The Times of India comes with several cityspecific supplements
The Economic Times, India's largest financial daily, and the world's second largest in terms of circulation after The Wall Street Journal Maharashtra Times, Marathi daily Navbharat Times, Hindi Daily in Delhi and Mumbai Sandhya Times, Hindi Daily Evening Tabloid in Delhi Mumbai Mirror India's largest circulated compact newspaper Kolkata Mirror Ahmedabad Mirror Pune Mirror Bangalore Mirror, Bangalore's first morning compact daily Brand Capital, Play a bigger game. Vijaya Karnataka, Kannada daily. ZigWheels, India's largest Automobile magazine. ET Wealth, India's largest Personal Finance compact weekly.
Hindustan Times
Parent Company : HT Media Readership : 3.7 million Growth : The companies revenues grew by 25% to reach Rs. 1,815 Crore, EBITDA grew by 26% to reach Rs. 365 Crore, net profit grew by 33% to reach Rs. 181 Crore. Its Hindi Daily Hindustan is second largest read Hindi daily in India Products: Mint: Business Newspaper Hindustan: Hindi Daily Fever 104: Radio channel Hindustantimes.com and livemint.com : Online news sites
Future Outlook
1. The Indian print industry is projected to grow at a CAGR of 9.2% over the period 2012-16 and is estimated to reach 296 billion INR in 2016 from the present 190.5 billion INR in 2011. While the world is going digital, we believe that in India, print will retain its stronghold, due to lower broadband penetration. However, the influence of digital news will only increase and a combination of print and digital will drive growth. 2. The English language market is projected to grow by 7 percent where as Hindi is pegged at 11 percent and Vernacular languages at 12 percent given their larger reach and relevance to the 22 emerging geographies in India . The advertising growth rates of Hindi and vernacular segments are expected to be higher than that of English in line with the expected correction in advertisement premium disparity, going forward.
Future Outlook
3. Another key growth area will be the regional markets that are steadily gaining importance in the eyes of advertisers. With higher proliferation of smart phones and tablets in India, it needs to be seen, if digital can impact the magazine market. Niche content in magazines and hyper-local news in regional and English newspaper are expected to be the focus of the existing players. 4. As the national advertisers look to target audience in Tier 2 and Tier 3 cities, the regional print media is expected to benefit more. However, English newspapers are focusing upon these towns with local editions and content, giving advertisers an option to go regional.
Strategies for Growth

1. Monetisation of Digital content: Influence of digital content is increasing especially among young readers. In the near future, print players should supplement their newspapers with digital content to retain their readers and maintain brand loyalty. E.g., integration of a classified advertisement along print, the internet and mobile will drive a powerful and unique value proposition to every advertiser. It is also essential for players to develop viable business models for monetisation of digital content. Utilising the distribution power of the internet and the lowered transaction costs offered by the computing platforms to design innovative pricing mechanisms can catalyse a new paradigm for the media industry. 2. Focus on Regional Consolidation: Backed by the increase in purchasing power across Tier 2 and 3 cities along with the rise in literacy rate, the regional media consumption will continue to rise. As is the trend with many players, editions with local content in regional
Future Outlook
Films
Overview
The Indian films industry is the largest in the world in terms of number of films produced and theatrical admissions. Bollywood, as the Hindi film industry is popularly known, is the largest contributor to the industrys revenue, followed by the South Indian movie industry and other language cinema industries such as Bengali, Bhojpuri, Marathi and Gujarati. Although the countrys filmed entertainment industry is the largest in the world in terms of the number of films it produces (around 900) and its theatrical admissions (around 3 billion), it continues to be small in size in terms of revenue, mainly due to low ticket realization and occupancy levels. Moreover, lack of quality content and rising competition from Hollywood films continue to affect it.
Overview
The success of the Indian film industry is contributing to rising exports, increased tourism and lower unemployment. The Indian film industry is the world's largest in terms of production and ticket sales. Businesses in the fashion, jewellery, construction, and advertising industries are thriving on the back of Bollywood success.
Market Size
2010 vs. 2011 (billion INR)
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
2010
Box Office-Domestic Home-Video
2011
Box-Office-Overseas Ancillary Rights
Market Structure
Highly fragmented market Multilingual market Not nationally integrated Decentralized
Languages Break-up of 2011

Language Hindi(Bollywood) No. of films 206
Telugu(Tollywood)
Tamil(Kollywood) Kannada(Sandalwood) Bengali Marathi Malayalam Bhojpuri Gujarati Oriya Punjabi Assamese English Rajasthani Haryanvi Dakhani Others
192
185 138 122 107 95 74 59 38 8 7 6 5 3 2 1
Total
1255
Source- Central Board of Film Certification
Components of Industry
Film Producers Film Distributors Film Exhibitors Directors Actors Miscellaneous like music, art directors etc
Value Chain
There are 3 players in film industry value chain
Producer Distributor Exhibitor
Value Chain
Value Chain
Film Production
Film Production
The producer decides to make a film and subsequently, arrange for the shooting, editing and dubbing of the film and finally, delivering the film to the audience. Producers get a minimum guarantee fee from distributors before a film is released in return for rights for distributing a film in a territory or several territories within the country. Producers, who feel that their films have the potential to do well in the international market, also sell rights for the international distribution of their films.
Film Production
After a film does well and the distributor has recovered his investment, any additional inflows usually get divided between the two in accordance with pre-defined arrangements. Producers finance their films either through internal accruals, bank finance, private financiers, or through equity. In some cases, cost of the film is raised by selling the rights upfront to distributors. It is estimated that producers can recover up to 30 per cent ofthe cost of the film by preselling it to distributors.
Revenue Streams Explored By Producers

Theatrical exhibition Overseas rights C&S telecast rights Music rights In-film advertising Digital rights (for example: Internet rights, ringtone downloads) Home video rights Merchandising
Risk Associated with Production

Completion risk
Producers face the risk of the film being left incomplete due tovarious factors such as inadequate funds, failing to retain talent etc.
Time and cost overruns

Not completing the film in the scheduled time could lead to costoverruns, which could negatively affect the producers margins.
Changing audience preference

Risks associated with the changing audience tastes and preferences over the course of the production of the film is inherent in film production.
Corporatization of Film Industry

The major and the biggest effect of corporatization was that finance was procured with legitimate means which put an end to underworld era. The resources have been streamlined. More control on the supply chain made the process of making films faster. Now films are made within 6 months time. There is more professionalism shown by the actors as well as the rest of the crew.This definitely generates more revenues. Independent producers formed a group and made corporations. A new business model came into play. Corporations who had no filmmaking experience would collaborate with independent producers to make films.
Film Distribution
Film Distribution
Film distributor is a company or individual responsible for the marketing of a film. The distributor may set the release date of a film and the method by which a film is to be exhibited or made available for viewing Film distributors buy theatrical distribution rights from a producer for distributing the films within a territory or across several territories. They then sell the rights for screening the film to the exhibitor. The price paid to purchase the distribution rights of a film in a particular territory is a function of the perceived revenue earning potential of the film in that territory and the timing of purchase of the rights (a films value is generally higher closer to release).
Film Distribution
The distribution rights are normally purchased for a period of 3years. In return, they offer a minimum guarantee fee to the producer. In some cases, the distributors purchase the distribution rights well in advance of the realease of the film. There is no scientific basis for the determination of the amountpayable towards distribution rights; this poses a huge risk to the distributor in case a film does not do well at the box office. Distributors play various roles including part financing of films, spending on print and publicisingthe film, selection of exhibition halls and managing the distribution of the film prints.
Highly Fragmented Film Distribution

The distribution segment of the films industry is highly fragmented with a majority of distributors having only a limited presence. Further, with a bulk of the films not doing too well in the lastfew years, the number of distributors available per territory has shrunk. Therefore, for theatrical distribution of a film throughout the country, producers need to typically tie up with a number of distributors.
Territory-wise Rights of Distribution

The country is geographically divided into six territories with each territory usually having 50-75 distributors. On an all India basis, there are 8-10 distributors operating. A distributor generally sells rights to sub distributors who cover certain sections in a territory.
Distribution of Revenues between Distributors and Producers

3 Models are followed
Minimum guarantee plus royalty model Commission model Outright sale model
Some film production houses (for example, Yashraj Films) usually distribute their films on their own. In such a case, while the risks are higher, the gains are also higher.
Minimum Guarantee Plus Royalty Model

In this model, the distributor shares any overflow of revenues over the minimum guarantee fees, print and publicity costs and his commission with the producer in a predetermined ratio. However, in case, the distributor does not earn any overflow i.e. the revenues earned by him are lower than his costs; he has to bear the entire loss. This model is most commonly followed in case of films produced by established producers and big banner production houses. The overflow money, if any, is generally shared in the ratio of 50:50 between the producer and the distributor
Commission Model
The distributor does not bear any risk in this model. He simply retains a commission on the total amount collected from the exhibitor and remits the rest to the producer. With film distributors losing heavily in recent years due to the poor performance of films at the box office, the commission model is increasingly gaining acceptance and being adopted by distributors, especially for small budget films.
Outright sale model

The distributor purchases the entire rights for a territory or several territories from the producer. In this model, the distributor bears the entire upside and downside arising from the outright purchase of rights .
Film Exhibition
Film Exhibition
Exhibitors are the link between the film distributors and the audience. They control the last mile in the box office value chain i.e. the theatre. The theatre hire model was once the most commonly followed model, wherein the distributors paid a rental to the theatre irrespective of whether a film ran or not. Overtime, this has changed. Today, revenues collected at the boxoffice usually get shared between the theatre owners and the distributors, especially in the case of multiplexes. The Indian film exhibition segment is undergoing a rapid transformation due to the advent of multiplexes and digital cinema.
Rise of Multiplexes
The upkeep and maintenance of many single screen theatres in India was poor, as most owners did not make any investments in upgrading facilities at their theatres. The poor condition of movie theatres meant was a deterrent to family audiences Multiplex cinemas are characterisedby their limited seating capacity per screen (around 250 seats), good ambience, quality viewing with high-end sound systems, comfortable seating, excellent service and good quality food and beverages. Multiplex cinemas are fast changing the way movies are viewed, particularly in big cities. Multiplexes have succeeded in attracting family audiences back to the theatres and watching movies incinemashas once again become a highly preferred source of family entertainment.
Major Pan India Multiplex Operators

PVR Cinemas Big Cinemas (formerly Adlabs Cinemas) Fame Cinemas Inox Multiplex Cinemax Fun Cinemas
Advantages of Multiplexes
Enhanced viewing experience
Before the onset of multiplexes, a large number of family audiences avoided single/double screen cinemas due to their pathetic conditions. Multiplexes, with their excellent infrastructure and facilities,provide an enhanced viewing experience to an audience, willing to pay a premium for this improved experience
Higher occupancy rates and realizations
Multiplex cinemas score over single screen cinemas in terms of occupancy and realisations. The average occupancy of multiplexes is estimated to be between 30-35 per cent, while that of single screen cinemas ranges from 15-35 per cent. Multiplex ticket prices are also much higher than single screen tickets.
Better exploitation of a movie
Multiplex cinemas can shift a movie across various screens depending upon the response to the movie. For example, multiplexes often screen a movie in multiple screens in the first week of its release; the movie is then shifted to the screen with the largest capacity and subsequently to smaller capacity screens. In this manner, the revenue earning potential of a movie can be fully exploited.
Sharing of costs
All the screens of a multiplex equally share its facilities such as ticketing window, toilets, food and beverages outlets and manpower. This, consequently, results in lower overheard costs and thereby, improved profitability.
Diversified revenue stream
Multiplexes have a diversified revenue model; they earn around 75 per cent of their revenues from the sale of tickets, 20 per centfrom food and beverages and the rest from advertising, sponsorship and renting out retail space. On the other hand, single screen cinemas earn almost all of their revenues from the sale of movie tickets.
Some Established Players
Top 3 Players
Yash Raj Films

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 young population of the country
EROS International Media Ltd

Strong distribution network spanning across 50 countries and over 27 dubbed foreign languages 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
Critical Factors
Potential to drive growth in admissions
An Indian on an average watches only 1.7 films in a year compared to 4 in US market Focus on increasing penetration of screens
Increase in average ticket price by providing enhanced customer experience

Delivering higher value and providing differentiated experience High quality audio-visual, improved customer service
Increasing spend on in home entertainment
Key Growth Drivers

Emergence of New Sources of Revenue Collaboration with International Studios Rise of 3D cinema Growth of Multiplexes Advent of digital cinema Policy Support
Emergence of New Sources of Revenue

Although revenues from the theater segment constitute around 60% of the overall revenue generated for a movie, other revenue streams have begun to make a meaningful contribution. Revenue from new media, including mobile and online rights, is expected to increase after the recent introduction of 3G services by mobile operators. In addition, film production houses have the opportunity to monetize their content through gaming on mobile and online platforms. New sources of revenue will reduce a movies dependence on its theatrical performance for it to achieve success and is expected to enable fuller exploitation of content.
Collaboration with International Studios

International film studios such as Warner Bros., Disney, Fox and Dreamworks have entered collaborations with local film production houses to develop Hindi and regional movies Walt Disney, who earlier held a 50% stake in UTV, has now acquired a controlling stake in UTV Software Communications[1] Viacom18 has also entered a deal with global movie company Paramount Pictures to market and distribute the latters movies in India, Bangladesh and Sri Lanka. It has already ventured into production of Hindi language movies, and the new deal is expected to help it create a distribution network[2] Local film production can leverage the experience of these international studios to expand their international reach and incorporate enhanced project planning and cost controls.
Source- [1] Hollywood expands footprint, Screen, 24 February 2012, via Dow Jones Factiva [2] Viacom18, Paramount Pictures in movie distribution pact, Exchange4Media. com, 19 May 2011, via Dow Jones Factiva, 2011 Adsert Web Solutions Pvt. Ltd
Rise of 3D cinema
3D was a prominent theme in 2010 and has amply demonstrated its significant potential with benefits such as enhanced audience engagement, increased ticket prices and the exclusivity of the medium, i.e, the theaters. Multiplexes could look at the feasibility of investing larger amounts on 3D screens to meet the growing demand to view 3D.
Growth of Multiplexes
The growth of multiplexes has improved the movie-going experience for Indian audiences and has led to increased per-ticket realization. Rising urbanization and growing disposable incomes are also driving increased investments in multiplexes. In addition, theaters with low seating capacities allow cost-effective screening of movies that are targeted at niche audiences. The number of multiplex screens in India is expected to increase from 1,000 in 2010 to around 1,405 by 2013.
Advent of digital cinema

60% of box-office collections are realized in the first week of release of a movie. Thereby, a big-budget Hindi movie, which would have been released earlier with 400500 prints, now enjoys a wider release with almost 1,0001,500 prints being distributed.
Policy Support
Co-production treaties with various countries such as Italy, Brazil, UK and Germany 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 by government 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
Key Trends Film Industry- 2011

Content driven films giving big budget films a run for their money Regional cinema producing some of the biggest hits, attracting bollywood producing houses Increased digitization leading to wider release, higher collections Films increasing using social media and other innovative marketing forms Experimentation with new monetization models for home video segment
Comparison with Global Trends

Global Trend Screening of 3D films helping raise ticket prices Indian Scenario 3D films are on rise but quality of local production is low and wearing 3D glasses for 3 hrs is uncomfortable and hence trend can reverse in future While digital cinema is showing growth, cinema advertising is at nascent stage Piracy has not allowed home video players to expand Lack of good broadband structure but can see growth in future
Digital Cinema boosting cinema advertising revenues
Electronic video expanding at the cost of home video Electronic distribution on rise globally
Recent Changes in industry

Mergers and Acquisitions
Walt Disney Co. acquired a controlling interest in UTV Software Communications Ltd, one of Indias leading media and entertainment companies
Revenue dependency on theatrical box office went down from 90% to about 40%-50 % for Indian theatrical
VFX Industry
The visual effects (VFX) industry is a rapidly evolving segment in India. It involves the creation of live action imagery by using computergenerated effects. It is being increasingly used by the visual media in India and can be broadly classified into the following verticals movies, TV shows and advertisements. The segment is still at its nascent stage with mainly low-end work being done in India. Domestic consumption is fairly small, and therefore, the bulk of the work includes outsourced projects from the US and the UK. However, the domestic market is seeing bigger budget movies and ad campaigns, which are now open to spending more on VFX to provide an enhanced visual experience to viewers.
Key Trends in VFX

Outsourcing of work to India on the rise Moving up the value chain Dominant domestic players setting up offices abroad Increasing consumption in the domestic market
VFX- Outsourcing of work to India on the rise

Significant growth in the number of VFX companies operating in India. More than 40 major domestic VFX companies catering to domestic and international clients. Currently, India accounts for only around 10% of the total animation and VFX outsourcing pie.
VFX- Moving up the value chain

VFX post-production houses in India have been doing lowend work such as wire removal and clean-ups for a long time. Of late, the industry has been shifting toward higher-end assignments. Industry players are also tying up with film and entertainment companies on dedicated projects. In late 2011, VenSat Tech Services, a VFX company, joined hands with Reliance MediaWorks Limited to set up a VFX, computer graphics and animation team that was dedicated to projects obtained from the latter. This enables the companies to move up the value chain by working on end-to-end VFX assignments.
Dominant Domestic VFX Players Setting up Offices Abroad

Dearth of adequate demand from the domestic market has led dominant players in the VFX space to scout for more work abroad. These companies have to hard-sell their expertise, since not every production studio in the US or the UK may be comfortable with outsourcing. The absence of domestic work is also an impediment for domestic VFX companies while showcasing their capabilities to clients in developed markets. Therefore, domestic players are setting up local offices abroad to provide enhanced client servicing.
Increasing Consumption of VFX In The Domestic Market

The domestic market was slow in adopting VFX as a means of enhancing the visual experience, mainly due to cost constraint and skill gaps. However, Indias advertising industry has been lately seeing increasing adoption of VFX. The countrys movie industry is also experimenting with VFX, especially with the increasing popularity of the sci-fi genre in the country. Movies such as RA.One and Robot used VFX extensively. Moreover, its use is not limited just to Bollywood, but is increasingly used in regional cinema as well.
Key challenges in VFX

Lack of required skill sets Increasing employee costs for VFX companies Limited use of VFX in Indian movies Absence of a steady pipeline of projects
Challenges- Film Industry

Piracy Content Regulation Lack of transparent data
Piracy
Counterfeiting and piracy costs entertainment industry huge losses The countrys film industry continues to lose around INR50 billion in revenues and over 50,000 jobs every year due to piracy[1] India is one of the top countries witnessing peer-to-peer file-sharing infringement worldwide. Curbing piracy will entail proactive measures being implemented by state governments through initiatives such spreading awareness against piracy and the formation of antipiracy cells, similar to those currently run in states such as Tamil Nadu and Maharashtra.
Source- [1] Piracy, a serious threat to the Indian film industry, Financial Express (India), 19 March 2010, via Factiva, (c) 2010 YYY Indian Express Pty Ltd.
Content Regulation
Should there be a content regulator or should the industry be allowed self-regulation under a broad framework? If there needs to be one, should the content regulator be independent of the carriage regulator?
Lack of transparent data

Frequently, large foreign studios or investors indicate that they do not want to invest in the Indian film industry because there is no way of verifying or validating the data made available in the public domain about the amount a film has grossed and its profitability. It is difficult to procure reliable data relating to box office collections and it is even more difficult to gauge the producer and distributors share. While film experts may know and can provide numbers based on their experience and network, there needs to be a more transparent and reliable method to collect and make this data public.
Future Outlook
The Indian film industry is projected to grow from 95.8 billion INR in 2011 to 153.6 billion INR in 2016 showing CAGR of 9.9%. In 2011, CAGR was 9.4%
Future Outlook- Growth

Indian box office expected to overtake UK and Australia markets in next few years
Domestic box-office is expected from 68.0 billion INR in 2011 to billion INR in 2016 Overseas box-office is expected from 68.0 billion INR in 2011 to billion INR in 2016 to grow 112 to grow 112
Future Strategies
Ancillary rights to remain fastest growing sub segment in films to increase its share in overall pie We can expect movement towards electronic distribution With an increasing number of digital screens we expect cinema advertising to grow in future Home video market expected to continue its decline
Music
Introduction
Indian Music Industry has a rich musical tradition and is capable of generating sizeable revenue for the country in every genre of the music industry. There are lot of loopholes in the industry due to the unabated growth of piracy. Raids spanning the length and breadth of the country, the Indian music industry has lost of over Rs. 1800 crores in the past three years. There are registered offices in Kolkata, Mumbai, New Delhi, Chennai, Bangalore and several other cities, towns across India focusing on surveillance, law enforcement and intelligence teams. Indian Music Industry is now working with newer strategies and better infrastructure to reach and strike at the very roots of piracy in India. Indian Music Industry along with MTV launched the first music awards in India, THE IMMIES which has been having a resounding success. The objectives of the award were to reward music talent.
Porters Five Force Model

1. Bargaining power of Suppliers : Unlike other industries, the main suppliers for the music industry consists of sources through which music labels get access to music. They include the artists and their managers. In addition, due to the rise of the reality shows, producers of shows have also become suppliers for music labels with new talent. The bargaining power of artists are high as it can be said that the voice and ability of each artist is unique and cannot be substituted. Due to the demand for new talent from a wide range of record labels, the options for artists are high which makes signing of new artists for a record label very difficult. This, hands over a high bargaining power to the artists.

2. Bargaining power of Customers : Bargaining power of customers is another aspect which helps in assessing the industry attractiveness can be two fold, individual and corporate. Corporate customers in the music industry include online & offline retailers who purchase albums in bulk from the music label. The bargaining power of the corporate customers can be said to be low due to prices being agreed between them and the labels at the time of contract signing. Individual customers in this industry can be identified as the music listeners who purchase music either online or offline. The bargaining power of individual customers has been rising in recent years due to piracy which has forced the whole music industry to drive down album prices. In addition, with intense competition in the industry, price cutting is evident especially in online music sales. Therefore bargaining power of customers can be assumed to be very high.

3. Threat of new entrants : The music industry is a highly specialized sector. Established music labels spend millions in undertaking image development campaigns, recording and test marketing before the work of an artist is released to the public. These areas require specialist skills and having access to money. In addition they might need an extensive distribution network, including online partners for online distribution, which is handy in immediate distribution of albums to points of sale. It will be difficult for a new entrant to the music industry to undertake all above activities and beat the competitors in a short time. Due to the experience of industry giants such as Saregama and T Series and their financial power in the industry, it is very difficult for a new entrant to capture a significant share of the music market. Therefore it can be said that the threat of new entrants is very low when considering the music industry.

4. Threat of Substitutes : In music industry the substitutes for paid music purchases or downloads can be identified to be free streaming music online, pirated music downloads online and the TV & Radio channels playing 24 hour music. As part of the entertainment industry, music can also be substituted by other channels of entertainment such as movies and games. Although they may not be direct substitutes for music. It may be said that compared to music, movies and games have a larger utility although the prices are set higher than music. Therefore it can be said the threat of other entertainment sources are also posing a mid to low level of threat of substitution to music industry.

5. Industry Rivalry : The Indian music industry has been competed for by the three- four recording studios for decades. Although there is fierce competition among these players, their market shares remained stable for years as new competition rarely entered the market due to high entry barriers. The product differentiation achievable in the music industry is very low due to all genres being represented by artists being common. The differentiation may be achieved through the formats of music provided such as CD, DVD, Blue-ray and online formats such as MP3, WMV, etc. With digital downloads being more popular than the regular visit to the music store, music industry has continuously reduced number of outlets and focused on developing an online strategy. In terms of the attractiveness, the industry can be said to be highly attractive. With more and more talent coming out through reality shows such as Indian idol in India, more and more prospective artists may be introduced to the market.
Classifictions
The Indian Music can be broadly classified into 4 types: Classical : Indian Classical music is usually dividend into two broad categories namely the Hindustani music and the Carnatic music. The Carnatic music has its traditions from the southern part of the Indian subcontinent which emphasizes on vocals. While the Hindustani music is a traditional form from North India. Indian Folk Music : Folk music usually comes from the rural lands, emerging from various regions of India, which are distinctive and are embedded with a strong element of the regional culture. Bhavageete which literally signifies as a emotional poetry is quite popular in India especially in Karnataka and Maharashtra. Another popular genre in Indian folk music is the Punjabi Bhangra done by farmers to celebrate the spring season that marks the time of harvest. There are various folk music of Maharashtra are called Lavani and Gaulan and the Dandiya music from Gujrat and the Baul from Bengal.
Classifications Contd.
Indian Film Music : The music of Indian films has always been popular & full of entertainment for their song and dance sequences they produce. Music has been a crucial part of Indian movies right from the beginning. The popularity of music in Indian films is such that almost every filmmaker incorporates at least four to five songs in the movies which is enjoyed by one and all.
Indian Pop Music : Indian pop music is a mixture of almost everything like folk, classical, and even western music beats. Some of the pop singers include Usha Utthup, Peenaz Masani Sharon Prabhakar from the early nineties. Other successive generation of pop singers include the Baba Sehgal, Alisha Chinai, Shaan, Sagarika, Lucky Ali, and Sonu Nigam.
Size of the industry

The Indian entertainment industry is known and incomplete without music. Other segments such as remix, Indi-pop, mobile music have also gained popularity. The Indian music market is expected to grow from 12 billion INR in 2011 to 22 billion INR in 2016 with CAGR of 12% over the next five years. The digital spending on music is expected to increase continually and dominate overall industry revenues by 2016, while contribution from physical distribution will slowly decline to negligible levels. India has become increased significantly in the global economic arena - it is known to be the world's fourth largest economy in PPP (purchasing power parity) terms and is a strong founding member of the WTO. India is amongst the world's top five fastest growing economies, with real GDP growth at around 5.5% for the some years.
No. of players
The major players in the Indian Music Industry in the film and non-film music categories are: T-series Saregama (HMV) Times Music BMG Crescendo Polygram Tips Magna sound Sony Music Universal Virgin
Analysis of T-series
Super Cassettes Industries Limited (SCIL), is a music company of India. It owns the music label T-Series. It is also a film production and distribution company. It was established by Gulshan Kumar and is now run by his son Bhushan Kumar. It entered into film production in 2001 with the film Tum Bin. The first original film soundtrack released by it was for film Lallu Ram in 1984, with music scored by Ravindra Jain. Later it ventured into manufacturing consumer electronics goods and audio-video systems also under the T-Series brand, until 2009. It then went into the mobile phone handset market.
Bhushan Kumar took control over the music empire in 1997 and nurtured T-Series into a diversified group with US$ 120 million in core business of music and films. Today the music company has ventured into not only acquiring soundtracks but also in new media revenue streams like mobile VAS, on-line digital, TV, IPTV, FM & Satellite Radio licensing and music publishing along with producing movies. It is estimated that the company earns around Rs. 40 crore annually from TV channels, radio stations and cable operators which pay for playing its content as it is or for use in their own programming. T-Series estimated to be Rs 350 crore (Rs 3.5 billion) Company.
Analysis of Saregama
Kolkata-based Saregama India Limited is an Indian music company and also an integrated entertainment company with the largest music archive in India. It was earlier called as Gramophone Company of India. Its business includes music, film production, home video, television software, and digital distribution and of audio and video content. The company operates in the entire entertainment space. Saregama has four regional offices in metro cities and 13 branch offices. The Gramophone Company has always been better known as HMV (His Master's Voice) in India. So strong has been this recognition, that after the RPG Group takeover, it could not phase out the brand. RPG Group has been using the brand under license from the former parent company, EMI. It has tried to introduce parallel brands, such as RPG Music.
In an attempt to build its own brand, on 3 November 2000, RPG Group decided to change the company's name to Saregama India Limited, and also introduce a music label of the same name and use this and HMV for eight years on new recordings, and on old ones for 23 years, thereby attempting to gradually transfer the strong recognition from HMV to the Saregama brand. Saregama is one of the oldest and the largest record label in India. Saregama has an inventory of more than 70000 songs and 600 cassettes and CDs. Saregama has copyrights of 70% of music ever recorded in India. Saregama also has produced movies such as Godmother, Karma aur Holi, Chain Kulii Ki Main Kulii, Jhoota Hi Sahi, Soundtrack, Khela, the Japanese Wife etc.
Analysis of Times Music

Operated by Bennett Coleman and Company Limited. Indias only music label accorded SuperBrand status, Times Music has made a niche for itself in international, spiritual, remix and Indi-pop genres with over 4,000 releases since its launch in 1997. Times Music pioneered the concept of spiritual, world and remix music in India and has established itself as the most popular music label in the spiritual music genre. Some of the biggest names in the music scene have rendered their voices to produce some of the best known albums for Times Music - The Golden Raaga Collection, Gayatri Mantra, Himalayan Chants and Hanuman Chalisa.
With the advent of digital music, the music industry once again started experiencing a boom. However, the revival was primarily led by commercial film music and therefore the group decided to launch its independent Hindi and regional film music label Junglee Music in 2008. Junglee Music started off with the biggest commercial blockbuster of 2007, Welcome followed by Singh is King and Horn OK Please amongst others. Today it has several releases and is going strong in regional film music too. The Times Group has over 11,000 employees and revenue exceeding $1.5 billion
Contribution to Economy
Music is the main important part of Indian film industry. Music contributes as much as 15% of an individual earnings in the Film Industry. The industry analyzers and estimatations say approximately 15 crores of unit sales of music cassettes and cds in a year, with an average realization of Rs.40-45 crores. Which brings the size of the industry of the music industry to about Rs.800 crores though piracy will continue to hamper the growth of the industry.
FICCI-KPMG Report
According to a FICCI-KPMG Indian Media and Entertainment Industry Report 2012, the Indian music industry achieved a 19 % year-on-year decline in sales of physical music which was compensated by a significant jump of 24 % yearon-year in digital music consumed last year. Physical sales of music continue to slide with digital music consumption on a steady rise. This phenomenon was more pronounced in the urban centres where mobile and Internet penetration is higher; however regional markets were less affected.
Growth of Industry
Consumption of online music has seen consistent growth during the last 2-3 years and mobile presents itself as an even more exciting domain, which has grown incredibly well. The explosion of smartphones and high speed 2G and 3G connections in urban markets has largely contributed to this. According to a survey by Neilsen released in June this year, there are 27 Million Smartphone users in Urban India across 1 lakh+ towns. Currently, mobile contributes around 85-90 % to the total digital music consumption in India.
Growth of Industry Contd.

As per FICCI-KPMG study, the online music industry crossed one of the most important milestone 2011 when digital sales overtook physical sales for the first time ever, currently around 55-60 % of music sale happens through digital route. Players operating in this space have also been witnessing significant growth in terms of unique visitors and amount of time consumers spending on music streaming sites like Gaana.com. Hungama that offers streaming as well as download services to consumers also boasts of robust growth. During calendar year 2011, the company claimed to have 20 million subscribers and has been witnessing 9 million traffic on month on month (MoM) basis .
Growth of Industry Contd.

Siddhartha Roy, CEO, Hungama said Total number of downloads including mobile and web at Hungama touched 75 million. To tap the international markets with Indian movies (Bollywood and regional), Hungama had recently launched its services to UAE and Singapore. On the other hand, launched in February 2012, Flipkarts music store Flyte had crossed 600,000 downloads in August and generates Rs. 1 crore of revenue per month.
Key Trends
Access to Music become easier: The consumption of music in India is growing as it is increasingly available through different mediums to consumers. Easy access has made this differencebe it through mobile apps, internet radio, social sharing or traditional music CDs. It is now also easier to share music with others through different networkssocial and mobile. Urban India has more than 27 million smartphone users and 121 million internet users as per recent estimates.
Music promoted across country, social meadia playing a vital role : MTVs Coke Studio in partnership with Red Chillies Idiot Box launched in India, following its success in Brazil and Pakistan. Reliance Entertainment has formed a JV with US-based Talenthouse, an online platform for artists. In India, Talenthouse already has a user base of over 10,000 artistes and associations with approximately 350 creative schools. Social media has become an effective medium of sharing music. Proof being the Tamil-English song Kolaveri Di which became an overnight rage and created history as being the most watched Indian video on YouTube. The video has generated more than 53 million views and has become a viral phenomenon.
Efforts taken to curb music piracy : Piracy had negatively impacted the sales of physical music keeping CD prices stagnant. Also, the digital music industry is on its path to gain traction as India tightens its antipiracy laws. The government has enforced patent laws, blocked illegal music websites, positioned piracy as a criminal act and has set up a piracy hotline to enable piracy reporting. Awareness campaigns through cinema chains, etc are also being rolled out in order to dissuade people from consuming illegal music.
Companies tie-up with various telecom operators to provide mobile music : With the growing VAS market for mobile phones, it comes as no surprise that companies are now collaborating with music channels and telecom providers in order to bring music on the phone at a cost. Hungama Mobile has partnered with entertainment and music channel Vh1 to offer a dial-in music service on Airtels mobile network, Radio Gaga. A service such as this one will be able to cater to Indias growing audience for international music. Music and entertainment channel 9XM has partnered with Hungama, which has a catalogues of 1,00,000 tracks, film trailers and original videos, in order to launch an online and mobile music store where users pay 99 INR per month to download unlimited videos and songs among other things.
Global Trends
The global music industry grew marginally as growth in concerts and music festivals offset a modest decline in recorded music. Beginning in 2013, growth in digital spending will offset the ongoing decline in physical spending, leading to a rebound in overall spending on recorded music. Streaming services to boost digital spending: New streaming services will add fuel to the growing digital distribution of music. This will be accentuated by increasing broadband, smartphone and tablet penetration. Popular music streaming service Spotify in Europe entered the US market in 2011 with a freemium package. A limited-access advertiser-supported option is available for free to users.
India perspective: Since India does not match the extensive broadband infrastructure of the west, streaming services have picked up mainly in metro cities. With improved capabilities through more digital devices and connectivity, this will drive growth in the Indian digital music market. Growth in music festivals to propel spending on live music :
The market benefitted in 2011 from fewer but better promoted concert tours. Average attendance has increased pulling the average grosses up. Labels and artists are entering into full-service or 360 deals that incorporate touring and music sales in a single package.
India perspective: A growing economy, rising disposable incomes and a growing appetite for world music has led to a boom in the number of music festivals being held each year in India. Sunburn, the largest music festival in India has now spread to more cities and is held more than once during a year.
Composition of Revenues
Currently, the music industry derives annual revenues of INR 10.2 billion, of which music sales contributes around 92 percent and the non physical formats contribute the balance. Ring-tones now contribute around 5 percent, and royalty revenues 2.5 percent. It appears that the negative trend in revenues, seen in the earlier years, has been reversed. Sales in 2004 have increased at a very modest 1.2 percent vis--vis a 4 percent decline in 2003 and 14.5 percent drop in 2002), while the bottomlines have significantly improved.
Recovery and Growth

From a perspective of pure financial returns, and looking at other alternative and more attractive avenues available to the entertainment sector, the music industry will need to completely reinvent its business model in order to attract significant investments. In the future, it is hoped that the film and the music industries will work collaboratively, aided by digital infrastructure, effective distribution formats and a more conducive and effective regulatory regime, to combat piracy and get the listener back into the buying mode.
With mobile phone penetration already over 50 million and expected to double in the next two years, revenues from ringtones are expected to become a significant contributor to the top lines of music companies. Also, as additional end-users like pubs and discotheques, hotels and restaurants are brought under the royalty payers' net, publishing (royalty) income is expected to grow significantly, from INR 254 million currently to INR 747 million in 2010. This number can increase significantly with investments in technology to track and record online usage and a more cooperative approach from the royalty payers. A firm regulatory push, together with investment in Digital Rights Management, will eventually bring down losses currently suffered by the original IPR holders.
Phase III radio licensing to create opportunities :
Phase 3 of radio licensing could be used by record labels and music companies to strengthen their hold on their rights in the industry by demanding larger percentagesOf profits. Also the growing trends of radio channels playing music of a specific genre or language today will make companies owning music from those genres more desirable. This could help garner more revenues and royalties from the respective channels.
Music Industry Challenges

Royalty Collection Companies Antics :
Of course you should get paid when your music is used, but royalty collection companies are crossing the line of idiocy in your name. From trying to collect additional royalties on music usages you are already compensated for (ringtones) to demanding music fans pay for a public performance license for listening to the radio in their stable with their horses, the actions of these companies seem to have more to do with making up for their own financial problems than making sure you get your due. The problem - aside from the fact that you pay a fee for this service - is that your fans don't know that you have little control over what your royalty collection company does in your name. To them, you're the greedy one. Great impression.
Internet Copyright and Royalty Issues :
The internet offers lots of options for music promotion, but what licensing regulations should be in place? Who gets to decide what is fair usage? Should labels be able to pull their artists' music off of sites like YouTube against the artists' wishes? Speaking of YouTube, what is a fair royalty for video plays on such a site? How do you balance the need of musicians to be paid for their work with the realistic earning potential (and ability to pay) of sites that host music? Focusing on fan file sharing turns attention away from the real problem: the inability for music rights holders to hammer out a realistic game plan for licensing and compensation with websites that host and promote music.
The RIAA/File Sharing Lawsuits : Much like the first item on our list, we have a group that is
damaging the relationship between musicians and fans, all in the supposed name of their music industry members. Many musicians and labels have spoken out against file sharing lawsuits, but for the RIAA, debate is out of the question. The average music fan doesn't really know enough about the industry to understand that their favorite musician isn't the one going to around suing fans for hundreds of thousands of dollars for sharing music. Their actions don't do much to stop downloading, and they create a bad impression of the music industry with fans.
The FM factor : It is believed among certain sections of the music industry that the proliferation of FM radio stations across the country has led to a decline in the sale of audio cassettes and compact discs. Globally, FM stations help promote albums and labels by playing their songs. However, in India, FM is considered more of a threat than a promotional medium for the music industry the reason once again being the unique genrepreference of the Indian listener, which is heavily skewed towards new film music.
Other Challenges
Almost all music streaming websites in India enjoy good traction though turning traction into profitability has been a challenging game. And this challenge has not only been faced by Indian streamers but well positioned global players too. According to a recent PrivCo report, Spotify, one of the popular music streaming sites in US and across European nations had incurred loss of $ 59 million in 2011, which is up from $38 million the year before.
In download businesses, besides bandwidth constraints, unavailability of micro-payment tools is a big challenge, typically to enable a song download from Flyte or Hungama, consumers need to pay around Rs.10-15. And to pay such small amount it is unlikely that consumer would use his/her credit or debit card. However, emergence of mobile based IMPS payment could solve this payment hassle to some extent.
Piracy in Music Industry

Though the problem of piracy has been in existence for the last twenty odd years, It has emerged as an all-engulfing menace in the last five years or so. The volume of pirated units has been rising consistently despite the falling prices of legitimate music. Piracy, which is currently estimated at INR 4.3 billion, accounts for as much as 42 percent of the industry's total revenues. Unless stringent measures are taken now, this is expected to rise further. A look at the Indian audio-video market shows that the VCD/ DVD/ MP3 segment is growing at an explosive pace of almost 300 percent. However, this growth has not been reflected in a corresponding growth in the legitimate sale of CDs, VCDs and DVDs.
Piracy Contd.
On the other hand, there has been an alarming rise in the production and sales of CDs and DVDs, far in excess of demand, in India and certain countries. Evidently, such growth has only resulted in increased piracy. While local CD-R burning is assuming a larger percentage of the piracy revenues (replacing VCDs and manufactured CDs), import of pirated CDs and DVDs from neighbouring countries continues unabated.
Apart from physical piracy, another increasing problem is digital piracy. It is powered by the rising popularity of MP3 technology and rising PC penetration, making free downloads a convenient option for the consumer. While India has a large, indigenous copyright industry and a reasonably sound copyright law, there are several obstacles to reducing piracy. These are: 1. Reluctance by law enforcers to accord due attention to the issue, 2. Lack of resources and training (to track sophisticated MP3 piracy), 3. Lack of an optical disc law and 4. Lenient punishments.
However, there is some light at the end of the tunnel. Indian Music Industry (IMI),an industry body comprising over 50 member companies, has stepped up its efforts to curb piracy through regulation as well as through technology. The members have decided to contribute 1 percent of their annual turnover, which works out to approximately INR 40 million, towards this cause, though this amount is considered rather inadequate. The recent strengthening of the Civil Procedure Code and the proposed Optical Disc Law are steps in the right direction. Strict vigil at the customs check-points and more stringent implementation of the law by the police will go a long way in reducing physical piracy in the near future.
The Road Ahead

Consumption of music through digital route is set to increase in coming years, FICCI KPMG report estimates digital music industry to grow at an expected CAGR of 22% till 2016. Currently, most of the consumption via streaming and download are audio based; however it may see a shift towards video. Online streaming of music has also been facilitated by record labels such as Saregama and in future more labels would join the streaming business. This clearly shows that record labels acknowledge the fact that their largest target audience is now online and they are looking at it as a major revenue channel. Though Flyte and Hungama have widened the horizon of choice for music lovers to get their music online, it remains to be seen how they will manage to get past the fierce competition from free online streaming sites, pirated music download portals and prominently catching up mobile music download segment.
Radio
Introduction
The cheapest and oldest form of entertainment in the country Public sector broadcast was launched in India by the British in 1920s The Indian Radio industry has been dominated by the public sector run All India Radio (AIR) The industry has witnessed a sea-change in the last decade and half mainly due to changes in government policies
Porters Five Forces
Competitive Rivalry in Radio Industry

Tremendous rivalry between players broadcasting shows and events of similar genres Rivalry is also strong between broadcasters to purchase the broadcasting rights for the most popular programs and events Channels try to use various Customer acquisition and retention strategies to increase their no. of listeners Small players frequently engage in price wars while established players command premium for their brand
Bargaining Power of Suppliers

Typically depends upon the quality of content A Radio Jockey (RJ) is the star of a channel who drives listenership Shortage of talent force players to poach talent and thus provides huge bargain to the star RJs Limited size of the industry poses problems in attracting talent
Bargaining Power of Customers

Radio has 2 types of customers Listeners and Advertisers For listeners, radio is free to air, so the primary source of revenue is through Ad sales The content is created according to the listeners in order to attract more advertisers Advertisers prefer going to the players who have national presence Advertisers try to get last minute best deals thus encouraging price wars
Threat of New Entrants

Due to the huge infrastructure setup and licensing costs involved, it is difficult for new entrants to enter this sector Big players are able to maintain high levels of capital expenditure in purchasing rights of the most popular content Difficult for new entrants to secure the rights to popular programs It is controlled by large business groups which have sizeable stake in other media properties
Threat of Substitute Products

A significant increase in the popularity of other entertainment media A rise of downloading songs through the internet, both legally and illegally Advertisers are still not aware of the potential of radio as a medium New technologies like Live TV on 3g pose a huge threat to radio as an audio only medium
Market Size and Demand
Market Size
The radio industry in India has around 36 FM radio operators The market is estimated at Rs 1,200 crore (US$ 240.46 million) Emergence of regional media in a big way has driven the growth of Indian radio segment. With the advent of Phase 3, the industry will experience another growth wave after the implementation of awaited policies like copyright for radio and roll out of 4G.
Demand
Demand w.r.t. Media Industry
Industry Landscape
Structure of Indian Radio Industry

The Indian Radio industry had been dominated by the All India Radio with no private sector presence till the early 90s In 1993, AIR allocated slots to the private players to broadcast their programmes In order to have private sector participation in the industry, the government of India allocated licenses in 3 phases detailed in the following table.
FM Licensing Phases
Geographical Segmentation
Major Players - Ownership
Major Players - Reach

AIR reaches out to 99.37 of Indias population through its network of around 300 stations BIG FM owned by the ADAG group leads the private sector with a national presence through its 45 radio stations Sun TV network owned Red FM and Surya Radio are close followers and dominate the South Indian radio market Radio Mirchi, owned by the Times of India Group is another national player with 32 stations across the country
Major Players - Network
Source: E&Y Report
Major Players Listenership in Top 2 Metros
Mergers & Acquisitions
Industry Growth
Key growth drivers

Increase in FM penetration in the country Increase in advertising Increase in usage of mobile phones Political advertising Introduction of new performance measurement tools Favorable demographic changes Extensive focus on events and activations to give more practical solutions to advertisers Retention of key sales talent and client relationships
Growth - Revenues
The industrys revenues have been estimated at INR 14.2 billion, and have been growing at a CAGR of 14% over the last three years. However, the rate of growth is slowing down due to limited expansion opportunities and the overall economic slowdown affecting all segments of media. The following graph shows the revenue growth in the last 3 years.
Growth - Revenues
Growth - Advertising
In the past three years, retail advertising on FM radio has grown twice as fast as national advertising Overall, there is a 10-20% growth in the no. of ad campaigns using radio
Growth w.r.t Media Industry
Industry Competition
Competitive Offerings
State: Mumbai
Critical Value Factors
Competition Dynamics: Customer Acquisition
Recent Events in the Industry
Recent Events
Distribution of radio sets coming under welfare schemes Rise of internet radio Government to monitor radio broadcast content FM radio offered as a part of DTH services Earlier only educational institutions were permitted to set up a community radio; with the liberalisation of policy on community radio, currently 29 community radio stations are operational in the country
Changes in Devices owned by Listeners
FM Phase III Policy

839 new FM radio channels in 234 cities Will result in coverage of all cities with a population of 1 lakh+ with private radio channels Radio operators permitted to carry news bulletins Non-news and current affairs broadcasts also permissible FDI limit in radio increased to 26 per cent from 20 per cent Private operators allowed to own multiple channels in a city, subject to a limit of 40 per cent of total channels in the city.
FM Phase III Policy

Further boost may be given to the radio sector by charging licence fees on the basis of net income so as to provide relief to loss making radio players Special incentives given to North-east regions, J&K and island territories FM broadcasters advised to build and use common transmission infrastructure
Cost & Profit Analysis
Cost Elements of a Radio Station

Payroll and talent costs
Salary costs tend to increase at 8-10% per annum due to inflation Cost of top radio talent increases even faster due to increase in popularity
Music royalties
The Copyright Board ruling of August 2010 has set 2% of revenues as the royalty payable by radio broadcasters to all music providers The Copyright Act 2012 has provided for Statutory Licensing, wherein broadcasters can play any music released in the country, even in the absence of a voluntary license, by paying the royalty prescribed by the Copyright Board.

License fees
There are 2 aspects of license fees the One Time Entry Fee paid by the radio companies to acquire a license and 4% of their gross revenues paid as annual license fees The license fees are expected to increase with the Phase III implementation
Overheads and utilities

Overheads comprise of costs such as rent for premises, IT, electricity, travel, repairs, maintenance, administration costs and tower rentals. These costs are largely fixed and beyond the control of radio companies
Profitability
Most companies have not achieved EBIDTA breakeven even after 50-60% of their license period has expired It is estimated that only 2-3 companies are positive at a PAT level Radio Mirchi is the only radio channel to have reported consistent profits for the last seven years. Among the other leading listed players, BIG FM, My FM and Fever FM have reported their EBIDTA break-even in recent years. Radio City remains at around break-even levels.
Profitability
Given the limited inventor and revenue growth opportunities, profitability has been largely achieved by companies by:
controlling their costs through centralization of operations employee productivity enhancement networking of stations.
While industry revenues are growing at 1015%, inflation is at 8% and inflation of salaries even higher. Therefore, only revenue growth can increase overall profitability.
Industry Leaders Analysis
All India Radio: About

All India Radio (AIR), officially known since 1956 as Akashvani (literally Sky's Voice), is the radio broadcaster of India and has the largest broadcasting network in the world It is a division of Indias largest public broadcaster Prasar Bharti It was started in British India in 1923, was taken over by the government in 1930 and named AIR in 1936 When India became independent in 1947 the AIR network had six stations (in Delhi, Bombay, Calcutta, Madras, Lucknow, and Tiruchi)
All India Radio: National Services

AIR has many services in a number of languages across India: Vividh Bharati Primary Channel National Channel Home News Service External Services in 27 languages Yuv-vani, the Voice of Youth FM Channels
AIR FM Rainbow AIR FM Gold Amrutha Varshini
All India Radio: Regional & External Services

The headquarters of the Regional Deputy Directors General are located at Delhi and Chandigarh (NR), Lucknow and Bhopal (CR), Guwahati (NER), Kolkata (ER), Mumbai and Ahmedabad (WR), Chennai and Bangaluru (SR) Presently, the External Services Division is broadcasting to:
1. 2. 3. 4. West, North, East and Southeast Asia. North, West and East Africa. Australia and New Zealand. United Kingdom and some other European countries. 5. Indian Sub-continent.
All India Radio: Profitability

Since the AIR is a public sector enterprise, the primary objective is to reach most people than profit making Prasar Bharti posted a revenue of Rs 10.38 billion for 9 months in March 2012 The commercial revenue by All India Radio Rs 2.45 billion The operating costs also went up to around Rs 13 billion
Big FM: About

BIG FM is India's largest FM network with a strong presence across the country and a weekly reach of 4.3 crore Indians It is owned by the Reliance ADAG group After the launch of its first station in September 2006, it has expanded at a phenomenal pace, launching 45 station network in record breaking time of 18 months. Since 2008, BIG FM included Singapore, the first city outside India, in its broadcasting network.
Big FM: Size

65 Stations network
45 Owned 20 Alliance partners
Coverage
1200+ towns 50,000+ villages
Reach
4.3 crore listeners
Performance
BIG FM is # 1 station in 15 cities, #2 in 6 cities, and has established leadership in Metros.
Big FM: Branding Strategy

Brand positioning: Suno Sunao, Life Banao! Big FM claims to use the power of radio to not only entertain listeners but also positively impact their lives.
BIG FM: Business Strategy

The company is working on setting up a strong transmission network as a competitive advantage BIG FM enjoys leadership in cities where the Company has brought in the new wave of private FM The parent company owns properties like BIG FM 92.7, BIG CBS, BIG Connect, BIG Street, BIG Live The advertisers prefer to partner with channels which have a wide presence in various geographies and sectors
BIG FM: Profitability

The company remained EBITDA positive for the quarter at Rs 16.3 crore It posted a profit after tax of Rs 2.3 crore for the current quarter It witnessed a growth of 22% in revenues at Rs 49.5 crore Closed the last quarter of FY12 with a brand count of over 1800 advertisers every month.
Radio Mirchi: About

The most popular private radio channel in India Operated by Entertainment Network India Limited (ENIL) Promoters Bennett, Coleman & Company and Times Infotainment Media Limited Started operations in October 2001 from Indore Radio Mirchi is the only radio channel that will be heard with complete clarity across all of UAE, streaming across three frequencies
Radio Mirchi: Size

Currently, Radio Mirchi has a presence in more than 33 cities and 10 metros Including Delhi, Mumbai, Kolkata, Pune, Jaipur, Hyderabad, Indore, Ahmedabad, Chennai and Bangalore It is the leading radio station with a 52% market share in listenership It has the highest reach of about 5 crore Indians
Radio Mirchi: Branding Strategy

Radio Mirchi offers programmes in local languages in order to appeal to its vast set of consumers It promotes itself in various cities in their local language and comes up with innovative and contemporary programmes It also promotes its RJs and facilitates their connection with the listeners It associates with various CSR activities to improves positive brand presence It collaborates with various other events, movies and TV programmes as their radio sponsor
Radio Mirchi: Business Strategy

Radio Mirchi takes benefit of its position of market leader and charges high advertising rates The company is pursuing pre-emptive defense strategy to defend its listenership share through consistently active promotions Since the holding company (BCC) already has a strong presence in use, it utilizes its strong advertising network presence by offering Combo pricing It is aiming to increase its presence within and outside the country through collaborations
Radio Mirchi: Profitability

The company reported a net profit of Rs 10.3 crore for the quarter ending September 30, 2012 This is up 14% from Rs 9 crore reported in Q2FY12 Revenues for Q2FY13 stood at Rs 77 crore, compared to Rs 69.1 crore in the year-ago period. The company's EBITDA stood at Rs 18.9 crore and the margin was 24.5%. Consolidated PAT was Rs 10.5 crore, up 26.2%.
Future Outlook
Phase III Implications

Scope to experiment with different content genres and target niche audiences Potential to grow revenues from increased inventory, particularly in larger cities Increased cost efficiencies Scope for operational efficiencies (operating costs by up to 35% for some stations) Makes smaller stations viable, which is important for the spread of FM radio Ensures expansion of private FM radio companies across India-a population of more than 0.1 million to be covered

Scope to experiment with different content genres and target niche audiences Huge cost rise for incumbents when Phase II licenses are renewed in a few years, as they will in all probability be renewed at Phase III auction rates Increased stress on profitability due to license fee renewals being based on the highest bids received Increased license acquisition costs due to
Bidders ability to see all bids and keep increasing their own bids Bidding will be performed in a situation of scarcity

Broadcasting news will increase listenership and stickiness Increase in programming variety with larger operators getting more channels A longer license period expected to enable radio companies to absorb their initial losses and improve their ROI Scope for portfolio expansion, enabling the creation of station bouquets provide advertisers with a robust alternative to print, and thereby, enhance the industrys advertising revenue potential
Future Outlook of the Radio Industry

Radio in India is expected to grow at a compound rate of 16.7% over the next 5 years from 14 billion INR in 2011 to 30 billion INR in 2016 The growth is expected to compound with the roll-out of Phase III where the licence period has been increased from 10 to 15 years for the radio industry relieving the pressure off radio companies. It is expected that inventory utilization of smaller stations will increase to 65% in 4-5 years while that of the large stations will continue to remain high
Traditional Media Vs Internet Media
The start of 2012 has seen the tension between the vested traditional media and the newer Internet media companies heat up, with the age old issue of copyright and online piracy at the core of the problem.
Internet Media & Entertainment Overview

Insights into the competitive online entertainment environment Social network and gaming insights Online video and web TV insights Key online entertainment segment insights Advertising and marketing in the digital age Insights into the impact on traditional media Regional overview of online entertainment industry
Digital Media & Entertainment Outlook 2011-2012

Global Market Highlights: Online video, also known as web TV, makes up the largest component of global Internet traffic The next phase of growth for online video involves consumers accessing Over-the-Top (OTT) via other devices such as Smart TVs, connected TVs and online game consoles Google retains global online video dominance with over 40% of videos viewed via YouTube worldwide
As online entertainment and media operate in a virtual environment, this sector is seen as a prime area for benefiting from cloud computing developments

Global Market Highlights: Blinkx and Burst Media partnering to offer specific Internet channels or websites offering videos (and advertising) aimed at target audiences Seven Latin American countries are among the worlds top thirty in terms of Facebook users. Twitter usage increases twenty-fold in South Africa in 2011. The young and tech-savvy of Asia-Pacific region spend vast amounts of time online in their pursuit of digital media entertainment.

Global Market Highlights: In Australia the mobile wagering market is experiencing nearly 400% growth New Zealand will see 2.1 million consumers spend around NZ$2.4 billion online in 2012 Google remains the most popular web property worldwide Internet traffic from non-computer devices is increasing with Canada and Singapore just two countries with a high percentage of tablet use

Global Market Highlights: On average, almost 24 hours is spent online by the global Internet population each month Internet Explorer (IE) and Google Chrome are two of the most popular web browsers worldwide

61.3% believe integrating mails and social media is extremely important Social Media Initiatives are gaining momentum Increase in the budget allocated towards digital marketing Social Media (68.8%) & Email Marketing (53.1%) emerges as the top 2 online initiatives Satisfaction level of effectiveness of email/ SMS for meeting marketing objectives, goals grown by 20% over last year.

Digital Media - Entertainment Today is Online:
From updating social networks, browsing interesting websites, watching online videos, downloading and listening to music and participating in games and gambling - the online platform offers a myriad of services based on entertainment
The digital music sector continues to grow; video streaming is beginning to overtake music downloading over fixed and mobile networks Online gaming is one of the most popular online activities after social networking

Digital Media - Entertainment Today is Online: Internet Media companies are focusing including developments in mobile and enhancing fixed online services Microsoft is revitalising its online advertising offerings via partnerships Purchasing and accessing online music has been very popular for a number of years and was one of the key drivers behind the early developments in digital media

Significance of Online Media for Latest News in India: The prevalent habit of stay updated with news, is the reason for cropping up of many news websites sharing latest breaking news Leading newspapers in India such as Dainik Bhaskar, Times of India, Hindustan Times etc. have their websites to communicate news through internet Most of the leading news channels are utilizing web sphere to share day to day latest news in India

Online Media and Its Effects on Indian Postal Services: People now resort to quicker and easier transfer of
mails and money with the help of electronic media
Speed, reliability and availability are some of the major advantages of online media. Indian Postal Services has expanded its services in the field of e-billing, e-post, media post, retail post, western money transfer, logistic post and so forth

Digital Media - Online Video and Web TV Insights : Online video/web TV over the Internet is being used by many different industries for advertising, marketing, demonstration, entertainment and communication purposes. In 2013 around a couple of billion online videos are watched worldwide each month Online Video-On-Demand has gained the attention of Internet heavyweights Google and Facebook There is a movement towards creating online video channels over the Internet aimed at target audiences and YouTube has established a number of popular channels of its own.

Internet Infrastructure : Driving High Broadband Penetration

Internet Infrastructure : Driving High Broadband Penetration
India Gearing up for Online Growth

The KPMG report assumes that the Indian Media &Entertainment sector will grow to touch 1.457 billion Rs by 2016 Internet usage in India has almost tripled over the last three years with:
o 100 million internet users o 800 million mobile connections
As per the TRAI, India had around 23 million wired internet subscribers in March 2012 of which around 14 million had broadband connections.

As per IMRB estimates, out of 35 million claimed Indian mobile internet users, 26.3 million (75%) are active mobile Internet users The size of the wired internet market increased from about 45 billion INR in 2010 to almost 55 billion INR in 2011 Indias mobile internet access market is expected to grow more strongly

Indias wired internet advertising market is expected to grow robustly and reach almost 29 billion INR in 2016, representing a CAGR of over 23% The mobile internet advertising market is also expected to grow strongly, albeit from a low base, over the next few years, with revenues touching 1.4 billion INR in 2016, representing CAGR of over 70%.
Indian Internet Markets

Wired internet access
o Current under-penetration to drive growth but significant challenges remain
Mobile internet access

o Affordable smart-phones and data-plan driving growth o Indian market already has handsets priced lower than 5,000 INR that support mobile internet access o Several GPRS and EDGE compatible handsets are available at even lower prices. o Leading mobile operators in India reduced tariff rates for 3G plans by up to 70%
Popular Sites in India
Top Social Networking Sites in India: July 2010 Vs July 2009
Facebook Stats in January 13
Emerging Indian Internet Users
India Perspective in comparison with Global Trends

Although Indias wired internet access market is expected to show modest growth over the next few years, it is unlikely to approach saturation levels over the medium term due to inadequate existing infrastructure, inadequate new investments and costs associated with using wired internet However, this will be compensated to a great extent by the rising proliferation of mobile internet, driven by increasing smart-phone penetration and relatively lower total costs (e.g. no investment in PCs or laptops required) of mobile internet access
India Perspective in comparison with Global Trends

Indias wired internet advertising market is currently low as compared with various international peers, it is expected to grow faster than many of its peers over the next few years
The driving factors include increasing adoption and usage of internet from a low base and rising interest levels of advertisers
Indias mobile internet advertising market is expected to grow even more rapidly as the global trend of increasing adoption of smart-phones and high-speed mobile data access is being witnessed in India as well and this will lead advertisers to follow them on this platform
Indian Key Trends: Wired Internet Advertising

Increasing internet user base driving strong growth
o The increasing number of internet users, along with the growing frequency of use and time spent per browsing session, are driving internet traffic (eg: no of web pages viewed) and propelling the growth of the internet advertising market.
Distinct benefits over other media also boosting internet advertising

o Internet advertising can be highly cost-effective for SMEs and SOHOs to attract target customers and build their brands. o As per a study, Indian internet users spent 25.2% of their time online on social networking sites in June 2012 as compared to 24.4% in the previous year. o Advertising expenditure on social networks is expected to grow on the back of continued affiliation of Indian internet users with social networking sites

Search advertising dominates other formats
o Search, Display, classified and video are the four key types of wired internet advertisements. o In 2011, search advertising towered above other categories with about 47% market share and 4.7 billion INR in revenue, representing over 30% yearon-year growth o Search advertising offers the distinct benefit of enabling advertisers to convey messages when consumers are looking for specific information o Display and classified advertisements comprised approximately 26 and 25% market shares with revenues of 2.6 billion INR and 2.5 billion INR respectively o Video ads are still nascent in India with about 2% market share and 0.2 billion INR in revenues

Importance of delivering highly relevant ads to small screen
o mobile internet advertising market faces the challenge of small screen sizes, especially when browser-based advertisements are considered. o It is necessary to make such handsets more affordable for the masses o It is important that advertising networks and publishers are able to deliver highly relevant ads to consumers considering the limitations on the quantity of ads that can be displayed

By 2016, Search advertising to continue its domination, video ads to grow faster
o Search advertising will continue to dominate the wired internet advertising market and reach almost 14 billion INR in revenues by 2016, representing a CAGR of almost 24%, a little faster than the growth of the broader market o The fastest growth will be witnessed in video ads, which will exceed 1 billion INR in revenues by 2016. However, they will comprise only 4% (approximately) of the total market, which is still more than their current share of about2% o Display and classified advertisements will also exhibit strong growth, although less than the broader market growth, and reach revenues of 7 billion INR and 6.7 billion INR, representing CAGR of approximately 22% and 21.5% respectively.
Projected Growth 2012-2016 (India)
The revenue from Internet advertising is expected to grow at a CAGR of 24.2%.
Indian wired internet advertising market
Consumer adoption of digital devices

Connected living for the consumption of traditional content:
Viewing goes nonlinear: Global consumers no longer give TV their undivided attention Cannibalization is real: Traditional media and devices are in decline, including newspapers, DVDs and portable game players, amid early evidence that consumers are practicing cord shaving and cord cutting Pricing is optional, but payment isnt: Digital adoption leaders endorse a variety of payment models, including indirect payer models like advertising, as well as direct models, such as subscription and pay-per-use
Consumer adoption of digital devices

Connected living for the consumption of traditional content: Viewing goes nonlinear: Global consumers no longer give TV their undivided attention Cannibalization is real: Traditional media and devices are in decline, including newspapers, DVDs and portable game players, amid early evidence that consumers are practicing cord shaving and cord cutting Pricing is optional, but payment isnt: Digital adoption leaders endorse a variety of payment models, including indirect payer models like advertising, as well as direct models, such as subscription and pay-per-use
Monetization of Online Content

Companies can monetize their offerings through advertising and subscription-based models.
Online Advertising Ecosystem
Experts Take on Online Advertising
Experts Take on Online Advertising
Online Advertising expected Growth
Experts Take on Mobile Advertising
Experts Take on Mobile Advertising
Mobile Advertising expected Growth
Marketers Outlook: Primary Online Marketing Goal

Costumer Acquisition is the primary goal (55%) of Indian Marketers
Primary Online Marketing Activity in 2011

Email Marketing topped the list of online activities
Internet Investment Trends in 2012
Gaming in India
Gaming can be classified under four segments:
o o o o Personal Computer Games (PC) Mobile Games Console Games Online Games
The Indian mobile gaming industry was estimated at 13 billion INR in 2011
It is the fastest growing gaming segment with a projected CAGR of 31% till 2015
Indian Online Gaming Key trends

Sharp growth in mobile gaming driven by massive mobile subscriber base
o With a massive mobile subscriber base of almost 920 million users, rise in disposable incomes, favourable young demographics, advent of powerful smartphones, growing influence of tablets, increasing broadband penetration and rise of 3G networks, the mobile gaming phenomenon is poised for exponential growth
Social Media and online gaming continues to grow
Indian Online Gaming Key trends

Console Gaming on rise
o Console games refer to those games which typically require an output device (computer or television) and an input device (controller). The popular gaming consoles in the Indian market are Play Station 3 (Sony), Xbox 360 (Microsoft) and Wii (Nintendo). With the majority of the population under the age of 35, the demographics make an attractive case for the console gaming industry. Falling prices coupled with rising awareness and easy availability of console games are going to be the major growth drivers of this industry for the next few years.
Rise of Online Gaming in India

Social Media and online gaming continues to grow: The following factors have led to the rise of online gaming in India:
o Popularity of social networking websites:
The number of Facebook users in India has risen dramatically from about 2 million in 2010 to over 50 million in 2012 (August). The Indian gaming companies are capitalising on this popularity to make avid gamers out of these users by integrating their games with such websites
Higher internet penetration:

The rising number of Indian internet users, which currently stands at about 10% of the total population, will fuel the growth of the online gaming industry in the future.
Rise of Online Gaming in India

The following factors have led to the rise of online gaming in India:
o Profitable Business Model:
Rampant piracy in the Indian PC games industry does not make this industry an attractive market for developers from a financial point of view On the other hand, the emergence of alternate revenue channels such as advertising, micro transactions, subscription fee in the online gaming industry have grabbed the attention of developers With nearly half of the Indian Facebook users falling under the 18 to 24 age category in-game advertising remains a formidable marketing force for brands from sectors as diverse as FMCG, apparel, insurance, banking, IT, telecom, etc. to reach their target audience
Indian gaming firms Opportunities

Opportunities for Indian gaming firms across the segments value chain
Google Transparency Report India- Nov12

Authorities worldwide made 20,939 requests for access/amend to personal data from Google users, including search results, access to Gmail accounts and removal of YouTube videos Requests have risen steeply from a low of 12,539 in the last six months of 2009, when Google first published its Transparency Report India: 2319 data requests 64% of data requests fully or partially complied with 3,467 users/accounts specified
Recent News Internet Media & Entertainment

Social website in Assamese language launched
Popularity of social networking sites throughout the world has encouraged a young Assamese entrepreneur to launch a new networking site- entirely in Assamese language
Online payment for cable subscription: notification stayed TV

The Madras High Court Bench here on Wednesday stayed the operation of a notification issued by Tamil Nadu Arasu Cable Television Corporation (TACTV) on February 20 for extending
Facebook posts have greater recall value than face

People's memory for Facebook posts have greater recall value than human faces or sentences from books, says a new study
Finally, govt wakes up to social media

Having been blindsided by the power of the social media in mobilizing spontaneous protest crowds, and by the speed at which it can crystallize opinion

TOI Social Impact Awards: They battled the odds to even the chances
Times of India Social Impact Awards in association with JP Morgan
Social media can help hire people with the right skill sets
Companies need to take advantage of the burgeoning use of social media by employees to find out what they're talking about and to hire the right person
Jayalalithaa for digital licence for state TV corporation Tamil Nadu Chief Minister J. Jayalalithaa
Sunday urged Prime Minister Manmohan Singh to direct the ministry of information and broadcasting to issue the digital addressable system licence to a state-government

FIGHTBACK, Indias first Mobile Application for Women Safety
o FightBack, the womens safety application, sends SOS alerts from your phone
o FightBack uses GPS, SMS, location maps, GPRS ,email and your Facebook account to inform your loved ones in case you are in danger
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Submitted By : Group 1, SecA

Gaurav Garg Sonal Garg Sourabh Kumar Vijaylaxmi Shinde Vivek Mehta Zeenat Saba Khan 19018 19069 19071 19078 19080 19028

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Internet Media & Entertainment

Media and Entertainment Industry Introduction

Segment Revenue2010 (billion INR) 294 178

Contribu tion to the industry (%) 42% 24%

Source- India Entertainment and Media Outlook, by PricewaterhouseCoopers

Key Trends and Industry Drivers

Key Trends and Industry Drivers

Porters Five Forces Analysis

Porters Five Forces Analysis

E&M Industry 2016- Projected Segment Contribution

Television Print Internet Acces Films OOH Radio

Gaming Internet Advertising

Source- India Entertainment and Media Outlook, by PricewaterhouseCoopers

Industry Structure and Content

Competition Issues in Television and Broadcasting Sector

2.Television Viewership Ratings:

3. Information Asymmetry on Subscriber

Broadcasters & Industry Profits

Broadcasters & Industry Profits

Structure of the Industry

Structure of the Industry

Strategies adopted by major players

Strengthen its position as a leader in M&E company

Enhance channel bouquet offerings

Build high quality distribution network

Expand selectively in International markets

5.ZEE has also undertaken a corporate restructuring exercise

Success Strategy of SUN TV

Porters Five Forces Analysis

Business Business news Entertainment

Fixed costs High Low

Variable costs Low High

2. Threat of New Entrants- Low

4. Bargaining Power of Buyers

5. Bargaining Power of Suppliers

The alliances formedZee bouquet

3. Sony one alliance

The Way Forward

1. Consolidation the game

2. Consolidation and Alliances amongst Broadcasters.

3. Target new international markets

5. Local channels with customised content

Future Outlook for the TV Industry

Indian Readership Survey

Hindi readership in India proportionately larger readership in rural areas

Largest read Hindi language newspapers

Largest read English language newspapers

Largest read vernacular newspaper

Indian print media is one of the largest in the world

Highly fragmented industry

Porters Five Forces Analysis

Critical Success factors

Critical Success factors

Mergers and Acquisitions

Key Strategies followed in Industry

Strategies for Growth

Source- India Entertainment and Media Outlook, by PricewaterhouseCoopers

Languages Break-up of 2011

Source- Central Board of Film Certification

Revenue Streams Explored By Producers

Risk Associated with Production

Time and cost overruns

Changing audience preference

Corporatization of Film Industry