Source 2 - Entertainment_2006

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Media &Entertainment

September 2006

www.imacs.in


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MEDIA &ENTERTAINMENTwww.imacs.in

Market Overview

Government regulations & policy

Advantage India and businessopportunities

Contents


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MarketOverview Market Overview


Advantage India and business opportunities


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Indian Media & Entertainment Industry -Zooming ahead

Market Overview

Source: IMaCS Analysis, FICCI-PWC Frames 2006 Report

Current Market Size is estimated at USD 7.72 bn

Expected to reach USD 18.32 bn by 2010, a CAGR of 19%

Maximum growth expected in Television and Film segments

More than 300 national and regional TV channels

Close to 1000 films made every year

Liberal FDI policies across all the segments of the industry

Government focusing on regulations to give further impetus to the industry

India Media & Entertainment Industry

353 402473

562686

837

0

200

400

600

800

1000

2005E 2006F 2007F 2008F 2009F 2010F

INRBillio n

CAGR 19%

* *

Years

E*: Estimate, F*: Forecast


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Major constituents

Market Overview

Television is the largest segment with close

to 42% share in industry revenues followed

by print media at 30.9% and films at 19.3%

in 2005

Televisions share expected to increase tomore than 50% by 2010 at the cost of print

medias share

Source: Industry estimates, IMaCS Analysis

Breakup of Indian Media & Entertainment Industry

Live Entertainment

2%

Internet Advertising

0.3%

Outdoor Advertising

2.5%

Print Media

30.9%

Radio

0.8%

Films

19.3%

Music

2.0%

Television

41.9%


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Key Drivers of the Indian Media &Entertainment Industry

Market Overview

KeyDrivers

Consumerism

AdvertisingspendPricing

Content

Technology

Regulation

Enabling regulations related to broadcasting,print and radio by the Government

Development of content for niche viewers Pricing remains a key driver, whether it is for

cable subscription, film tickets or newspaperprices

Increased consumerism and increasedadvertisement spend by marketers (i.e.morerevenues for media companies) fueling furthergrowth

Use of technology for special effects, animationand other creative work leading to betterquality of media products


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Indian Television Industry -Wholesome entertainment

Market Overview

Source: IMaCS Analysis

Indian Television Industry Revenue Breakup - 2005

TV

Subscription

58%

TV

Advertising

37%

TV Software

5%

148170

203250

327

427

0

100

200

300

400

500

2005E 2006F 2007F 2008F 2009F 2010F

Years

INRBillion

Projected size of Indian Television Industry

Largest segment in the industry with market size of USD 3.24 bn in 2005


Subscription accounts for 58% of the total revenues followed by advertisingand software

India currently has 105 million TV households and over 60 million cableconnections

TV penetration expected to increase to 135 million households and cableconnections to 85 million households by 2010

E*: EstimateF*: Forecast


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What do the viewers watch in India?

Market Overview

Source: TAM Media Research

Genrewise Television Viewership Share in India

39%

38%

5%

8%

2%4%

3%1%

News Channels

Sports Channels

Mass Entertainment

Hindi Film ChannelsKids Channels

Regional Channels

English Entertainment

Music Channels

Mass Entertainment Hindi and regional language channels attract almost 80% of the totalTV viewership in India

Niche channels like News and Sports gaining ground


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Indian Film Industry -The Bollywood dreams

Market Overview

Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report & UNESCO

Projected size of Indian Television Industry

3043 45 46

52 5361 77

117

12

0

20

40

60

80

100

120

Screens/

m

illion

population

UK

Belgium

Germany

Spain

Italy

Ireland

Denmark

France

US

India

Density of Film Theatres - India & Abroad

6879

971 13

132153

0

50

100

150

200

2005E 2006F 2007F 2008F 2009F 2010F

INRBil

lion CAGR 18%

Years

Largest number of films produced in the world~1000 films every year More than 3 billion tickets sold in 2005

Gross revenues of over USD 1.49 bn in 2005


Large scope for growth in number of screens

Digitisation of theatres and growth of multiplexes fueling further growth


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Hit or flop -Breakup of Indian films market

Market Overview

Source: IMaCS Analysis, Industry estimates

54 %

2 %2 %1 0 %

1 7 %

1 5 %

1 %8 %

Hindi Crossov er Hindi

Tamil Telugu

F or eig n Mal ay alam

B eng ali Others

Breakup of Films Market in India

Hindi films account for almost half of the total market

Foreign films, primarily from Hollywood have a market share of 2%

Regional language films account for the rest of the market

Dubbed Hollywood films a new trend


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Indian Music Industry -Soul searching

Market Overview

Source: IMaCS Analysis, Industry estimates

Unique structure with film and devotional musicdominating the market

Non-film albums and remixed songs gaining market

Total revenues close to USD 0.15 bn in 2005


Government and industry taking firm action to reducepiracy of all forms

Projected size of Indian Music Industry Gerewise Music Sales in India - 2005

40%

21%

6%

8%

10%

8%7%

New Film Music

Popular Music

Old Films Music

Regional Film Music

Devotional

International

Others

7.0

7.2 7.27.3

7.4 7.4

6.8

7.0

7.2

7.4

7.6

2005E 2006F 2007F 2008F 2009F 2010F

Years

INRBillio

n

E*: EstimateF*: Forecast


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Indian Radio Industry -Singing a growth tune

Market Overview


India has over 190 million radio sets reaching 99% of the population

More than 330 FM Radio licenses being allotted by the Government (~240 already allotted)

Move from license fee to revenue share model to give a further boost to the industry

New platforms to access radio like satellite radio, mobile phone radios and internet radio growing fast

Revenues in 2005 - USD 0.06 bn

Expected revenues in 2010 - USD 0.26 bn, a CAGR of 32%

Ad spend on radio set to increase with more FM radios operational

Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report

3.0 3.75.5

8.0 10.0

12.0

0.0

5.0

10.0

15.0

2005E 2006F 2007F 2008F 2009F 2010F

INRBillion

CAGR 32%

Projected size of Indian Music Industry

20%

13%

9%7%

1%

0%

5%

10%15%

20%

Shareoftotalad

spend

Sri

Lanka

USA

Spain

Australia

India

Global 8%

Global ad Spend on Radio

Years

E*: Estimate

F*: Forecast


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Indian Print Media Industry -Readers choice

Market Overview

Source: NRS 2006

Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report E*: Estimate, F*: Forecast

More than 220 million readers of English andvernacular language newspapers and magazines

English language newspapers and magazines

readership close to 10% of the total base

Newspapers account for 90% of the market,Magazines~10% market share

Revenues expected to grow from USD 2.38 bn in2005 to USD 4.37 bn in 2010

Subscriptions contribute 57% of the total revenues,rest by Advertisement

Print media, especially newspapers, attracting alarge number of strategic overseas investments

109 12 1135

153173

195

0

50

100

150

200

250

2005E 2006F 2007F 2008F 2009F 20 10F

INRBillion

Projected size of Indian Music Industry

Years

21.2Dainik Jagran

Dainik Bhaskar

Eenadu

Lokmat

Amar Ujala

Hindustan

Daily Thanthi

Dinakaran

Rajasthan Patrika

Leading Newspapers in India

Times of India

The Hindu

Hindustan Times

English

Vernacular Readership (Million)

21.0

13.8

10.9

10.8

10.4

10.4

9.6

9.4

7.4

4.1

3.9


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Governmentregulations & policy Market Overview




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FDI Regulations for Indian Media &Entertainment Industry1



(b) FDI up to 26% is permitted in publishing News Papers and Periodicals dealing in News andCurrent Affairs subject to a few conditions

(a) FDI up to 100% is permitted in publishing/printing scientific & technical magazines, periodicals &journals3. Print Media

FDI is permitted for the full value chain like film financing, production, distribution, exhibition andmarketing upto 100% through the automatic route2. Films

FDI is permitted upto 100% through the automatic route1. Advertising

Guidelines for Foreign Direct Investment in the Indian Media & Entertainment Industry


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FDI Regulations for Indian Media &Entertainment Industry2


a)TV Software Production100% foreign investment allowed subject to a few conditions

b) Setting up hardware facilities, such as uplinking, HUB, etc.FDI allowed upto 49% (inclusive of both FDI and portfolio investment) of paid up share capital

c) Cable NetworkFDI allowed upto 49% (inclusive of both FDI and portfolio investment) of paid up share capital.

d) Direct-to-HomeMaximum foreign investment of 49% paid up share capital include

e) Terrestrial Broadcasting FM

Foreign investment is permissible to the extent of 20% (including portfolio investment, investmentby OCB/NRI/PIO etc.) of the paid up share capital of the company. The licensee should be acompany registered in India under the Companies Act.

f) Terrestrial TVNo private operator is allowed in terrestrial TV transmission.

g) Establishment and Operation of SatelliteFDI up to 74% is permitted with prior Government approval

4. Broadcasting

Guidelines for Foreign Direct Investment in the Indian Media & Entertainment Industry



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Advantage India andbusiness opportunities Market Overview




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Advantage India

Advantage India & business opportunities

Second fastest growing economy in the world

Favourable FDI policies for all the segments of Media & Entertainment Industry

Regulatory environment being strengthened for faster growth of the industry

High quality of creative and technical talent pool

Large untapped potential especially in Television and Films

Indian consumers willing to spend more on entertainment

Growing middle class with more disposable income


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Business opportunities in the IndianMedia & Entertainment Industry1Television

Radio

Production/co-production of content

Broadcasting of TV channels

Distribution of TV channels through cable and new delivery platforms like DTH and IPTV

Technology transfer for digital content creation

Marketing of TV rights/air times

Strategic investment in existing companies in broadcasting, distribution and content

Investment in FM and Satellite Radio

Content creation for radio channels

Marketing of air times



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Business opportunities in the IndianMedia & Entertainment Industry2Films

Music

Production/co-production of films

Processing, distribution and exhibition of Bollywood films

Shooting of overseas films in India

Development, distribution and exhibition of Hollywood/overseas films

Training for technical and functional areas of film making

Supply of Hardware to film studios

Creation of content for film and non-film music

Marketing of film and non-film music

Strategic investment in local music companies

Print

Strategic investment in news and non-news publications

Tie-ups for providing content to Indian publications



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Key Players - Indian Film Industry



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Key Players -Indian Television & Radio Industry

Doordarshan is the largest TV network in India with 19 channels reaching 90%of the population through 1400 transmitters

News Corporation owned Star TV Network entered India in 1991 and offers more than10 channels in mass entertainment, sports, news,, music, movies etc.

Zee is one of the pioneers of the Indian Television industry with 22 channels in itsbouquet. It is present in broadcasting, cable distribution, production and distributionof films, creation of animation software among others

Sony Pictures Entertainment is present in India with 3 channels focusing onHindi entertainment and sports

Sun Network is based in South India with 14 channels in four languages and a focus onentertainment, news, movies, music, kids shows among others. Also present in FM Radio

Walt Disney is present in India through two kids channels and has recentlybought one more kids channel

All India Radio, owned by Government of India is the largest radio network in India

with 214 broadcasting centres covering more than 99% of the Indian population



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Key Players -Indian Music Industry


BMG is one of the earliest music companies to enter India in a joint venture withCrescendo, an Indian company

EMI owned Virgin Records is another international music company operating in India

Universal is one of the leading names in Indian music industry with a strongpresence across all genres

Sony is one of the leading music companies of India with a presence in bothIndian and International albums

Saregama, formerly known as The Gramophone Company of India Ltd. is Indiasoldest music company with largest repertoire of music across all genres and languagesincluding top-recording artistes of the past hundred years


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Key Players -Indian Print Media Industry


One of the leading English dailies owned by Bennett, Coleman & Co, a leadingmedia group of India

Another leading English newspaper with multiple editions published frommany states in India

One of the oldest newspapers with a strong presence in South India

Hindustan Times is another leading English newspaper with more than 4 millionreadership mostly in North India

Published in English and Malayalam, this newspaper enjoys a strong readership inSouth India. It also publishes a large number of well known magazines in Englishand regional languages


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The India Brand Equity Foundation is a public-private partnership

between the Ministry of Commerce & Industry, Government of India

and the Confederation of Indian Industry. The Foundations primary

objective is to build positive economic perceptions of India globally

India Brand Equity Foundation

c/o Confederation of Indian Industry

249-F Sector 18, Udyog Vihar Phase IV

Gurgaon 122015, Haryana, INDIATel +91 124 401 4087, 4060 - 67

Fax +91 124 401 3873

Email [email protected]

Web www.ibef.org


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Disclaimer

This publication has been prepared by ICRA Management Consulting Services (IMaCS) for the India BrandEquity Foundation (IBEF).

All rights reserved. All copyright in this publication and related works are jointly owned by IBEF and IMaCS.

The same may not be reproduced, wholly or in part in any material form (including photocopying or storingit in any medium by electronic means and whether or not transiently or incidentally to some other use of thispublication), modified or in any manner communicated to any third party except with the written approval ofIBEF.

This publication is for information purposes only. While due care has been taken during the compilation ofthis publication to ensure that the information is accurate to the best of knowledge and belief of IBEF andIMaCS, the content is not to be construed in any manner whatsoever as a substitute for professional advice.

IBEF and IMaCS neither recommend nor endorse any specific products or services that may have beenmentioned in this publication and nor do they assume any liability or responsibility for the outcome ofdecisions taken as a result of any reliance placed on this publication.

IBEF or IMaCS shall in no way, be liable for any direct or indirect damages that may arise due to any act oromission on the part of the user due to any reliance placed or guidance taken from any portion of thispublication.

ICRA Management Consulting Services Limited

Source 2 - Entertainment_2006

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