The Indian Media & Entertainment Industry 2016

The Indian Media & Entertainment Industry

2016Trends & Analysis - Past, Present & Future

Chaitanya ChinchlikarVice President – Whistling Woods International

Vice President – Mukta Arts [email protected]

Source: FICCI-KPMG Report 2016

652728

821918

10261156

1314

1503

1723

1980

2261

0

400

800

1200

1600

2000

2400

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

INR

Bill

ions

Indian M&E Industry

The Indian M&E Industry - High-volume, low-value.

The Indian Media & Entertainment Industry includesFilm, Television, Print, Radio, Music, Digital Media, Animation & VFX, Gaming,

Events & Live Media, Out-of-home, Sports, Entertainment Parks & other media.

•  Valued at over US$ 17.4bn (1,15,600Cr INR) which is ~0.97% of the global M&E industry (estimated at US$ 1.8tn)

•  Expected growth (14.3%) over the next 5 years is to be higher than the global M&E industry (at 5.1%)

•  Dawn of Digital – 38.2% in 2015, 33.5% in 2016-2020.

12.8%

14.3%


Indian M&E Industry – SOTP

0

500

1000

1500

2000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

297 329 370 417 475 542

617 710

823 957

1098

193 209

224 243

263

283

305

330

356

384

413

83 93

113 125

126

138

159

174

190

208

227

10

11

13

15

17

20

23

28

33

38

43

9

9

11

10

10

11

12

14

16

18

21

16

18

18

19

22

24

28

32

35

40

45

24

31

35

40

45

51

58

67

78

91

108

10

13

15

19

24

27

31

34

39

45

51

10 15

22

30

44

60

81

114

153

199

255

INR

Billio

ns

TV Print Film Radio Music OOH Animation & VFX Gaming Digital

All sections are growing. Some are growing faster than others


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

46% 45% 45% 45% 46% 47% 47% 47% 48% 48% 49%

30% 29% 27% 26% 26% 24% 23% 22% 21% 19% 18%

13% 13% 14% 14% 12% 12% 12% 12% 11% 11% 10%

2% 2% 2% 2%

2% 2% 2%

2% 2%

2% 2%

1% 1% 1% 1%

1% 1% 1%

1% 1%

1% 1%

2% 2% 2% 2%

2% 2% 2%

2% 2%

2% 2%

4% 4% 4% 4%

4% 4% 4%

4% 5%

5% 5%

2% 2% 2% 2% 2% 2%

2% 2%

2% 2%

2%

2% 2% 3% 3% 4% 5% 6% 8% 9% 10% 11%

TV Print Motion Picture Radio Music OOH Animation & VFX Gaming Digital

Indian M&E Industry – Market-share


8393

113125 126

138

159174

190

208

227

0

50

100

150

200

250

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

INR

Bill

ions

The Indian Film Industry•  Largest in the world by

films produced with over 1,400 films produced & over 3.25bn tickets sold (~50% theatrical releases)

•  At US$ 2.1bn, it is less than the BO of Avatar

•  2015 was heavily polarised wrt film performance.

•  % of online ticketing grew by 5x from 6% to 32%

•  Regional & Hollywood are growing domestic theatrical

9.3%

10.5%

Studios have started getting into content production through own productions & strategic alliances

(Reliance – Phantom, Fox – Dharma)


The Indian Film Industry = ‘Bollywood’While‘Bollywood’ is a generally used term to define the Indian Film industry, Hindi films accounted for only 16% of the 1,400+ films that were produced.

The South Indian Film industry accounts for almost 50% of the films

Language No of Films Hindi 234 Tamil 210

Telugu 218 Kannada 157

Malayalam 108 Bengali 139 Marathi 122 Gujrati 67

Bhojpuri 84 Punjabi 9 Others 78 Total 1,426


0%

20%

40%

60%

80%

100%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

74% 76% 75% 74% 73% 73% 72% 72% 71% 70%

7% 7% 7% 7% 7% 7% 7% 7% 7% 7%

11% 11% 12% 12% 12% 11% 11% 11% 11% 11%

5% 5% 6% 7% 7% 8% 9% 10% 11% 11% IN

R B

illio

ns

Film Revenues % Breakdown

Domestic Theatrical Overseas Theatrical Home Video Cable & Satellite Rights Ancillary Revenues

Film Revenues BreakdownDomestic Revenues have always had a 90%+ market-share & expected to continue.

This is THE double-edged sword for the industry.

Proving the digital medium’s

dominance, Ancillary revenues as a % of total film

revenue will increase 1.5x over the next 5 years.Home Video, like in the rest of the

world, is dying out fast.


Film – Revenue SplitWhen you pay Rs 100 for a movie ticket, what is the split?

•  Gross – 100% (Rs 100)

•  Entertainment Tax – 30% (Rs 30)

•  Exhibitor – 50% of balance 70% (Rs 35)

•  Distributor – 50% of balance 70% (Rs 35)

•  Producer(s) – depends on what deal they have made with distributor – Outright / MG / Commission / Distribution Fee

•  Co-producer(s) – deal-specific

•  P&A funding – deal specific, but usually is last-in-first-out.

•  Talent – actors / director – sweat equity.


Exhibition needs to grow!•  India has one of the lowest screen

densities among global film markets•  Urgent & rapid infrastructure growth in

multiplex screens is needed•  Since the Box office is not as robust as

other countries, government intervention is needed by way of SOPs.

126

85 82

61 57

2613

6

0

20

40

60

80

100

120

140Screens/Million

9,200

13,118

18,195

22,000 25,000

1,250 1,470 1,650 1,750 1,950

10,000 8,700 7,600 6,500 6,000

-

5,000

10,000

15,000

20,000

25,000

30,000

2011 2012 2013 2014 2015

Screens

Multiplex-China Multiplex-India SingleScreen-India

2.0

2.7

3.5

4.7

5.7

1.0 1.3 1.4 1.4 1.5

-

1.0

2.0

3.0

4.0

5.0

6.0

2011 2012 2013 2014 2015

Bill

ion

$

Domestic Box Office Size

China India


Industry = Value x Volume

No of screens that a film plays in has grown radically over the past decade, curbing piracy and augmenting theatrical revenues

Average ticket prices of multiplexes are 3-6 times that of single screen theatres.

5001000

30003500

4200

0500

10001500200025003000350040004500

1994 - Hum Aapke Hain

Koun

2009 - 3 Idiots

2012 - Ek Tha Tiger

2013 - Dhoom 3

2015 - Bajrangi Bhaijaan

No of Screens

250

130

7540

0

50

100

150

200

250

300

High End Multiplex

Multiplex Single Screen Low End Single Screen

Ticket Rates (INR)


The Indian Film Industry - Key points

•  Realisation of the value of Film education. Scale needed. Urgently.•  Digital gaining over C&S for release window.

•  Regional shows its importance – Marathi, Gujarati, Punjabi

•  Hollywood films account for less than 10% of the Indian Film industry.

•  Share of Revenue from first week is highly critical (ranges from 55-75% of box office collections)

•  Funding avenues grow significantly – Banks (IDBI, Exim, Kotak, YES), Film Funds, Crowd-funding.

•  The industry lacks a globally merchandisable home-grown IP brand.


297329

370417

475542

617

710

823

957

1098

0

100

200

300

400

500

600

700

800

900

1000

1100

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

INR

Bill

ions

TV

The Indian Television Industry•  The most consistently

performing sector of the Indian M&E Industry.

•  It is, presently, nearly 4 times the size of the Indian Film industry and is the largest employer in the M&E space.

•  India overtook the US in 2014 as the 2nd largest TV-owning market in the world. The potential: The Indian average subscription rate is

US$4-5 per month per TV for Cable TV / DTH against US$40-100 in evolved markets like US / UK / Europe.

14.2%

15.1%


TV Connectivity – A Digital blitz

With digitisation primarily

successful for Phase 1 & 2

(over 95%) and the rest of the

country underway on

the same path, digital STBs

and DTH connections are the way of the

future. 0

20

40

60

80

100

120

140

160

180

200

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

74 69 68 70 65

41

5 5 5 5

6 19 25 29 37

55

80 84 87 90

3134

3740

44 55 7476 78 79

8

99

1015

1920

2122 22

Subscribers

Analog Cable Digital Cable DTH Other Digital


TV Connectivity, Channels, ARPUs

•  India has added, on an avg 4.5 channels/month for the last 15 yrs.

•  India has ~400 news channels. Channel differentiation is weak.

138

175200

71%

83% 87%

0

50

100

150

200

250

0%10%20%30%40%50%60%70%80%90%

100%

2010 2015 2020

TV Households& Penetration

248 258 266

299

334

367

214 219 230

261

298

343

150

200

250

300

350

400

2015 2016 2017 2018 2019 2020

ARPUs

DTH Digital Cable

5 55 130

263

550

800

0

100

200

300

400

500

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700

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900

1990 1995 2000 2005 2010 2015

Channels & Growth

TV households, C&S penetration & ARPUs are all expected to

grow over the next 5 years


GEC – GRP v/s Profitability

Low GRP High GRP

Low Profitability

High Profitability

Long running soaps

Low-cost game / performance based reality shows

Mythological series

Recently released movies

Celebrity-based shows

Why do we see what we see on GECs? How does programming get divided between building a viewer base and profitability, thorough the application of the concept of ‘stick-ability’!


TV Revenues – Getting better, slowly!•  High subscription revenue

growth expected to bring about innovative content / content for a niche audience.

•  In 2015, of INR 360 billion paid by consumers, ONLY INR 86 billion reached the broadcasters, which is less than 25%. Underreporting of subscribers, carriage fees & lack of digitisation is the reason for this. 213 245 281 320 361 407 468

548637

733

47 57 69 75 86 100 118 145 174 203

22% 23%25% 23% 24% 25% 25%

26% 27% 28%

0%

5%

10%

15%

20%

25%

30%

0

100

200

300

400

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600

700

800

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

INR

Bill

ions

Subscription Revenue

Paid by Consumers Recd by Broadcasters %

213 245 281320

361407

468548

637

733

116 125 136 155 181 210 242 276320

365

0

100

200

300

400

500

600

700

800

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

INR

Bili

ons

TV Revenues - Split & Growth

Subscription Revenue Advertising Revenue


Viewership & Ad-Revenue – Disparity!

View Ad Rev Regional GEC 29.6% 15.9% Hindi GEC 28.4% 27.5% Hindi Movies 13.4% 6.7% Regional Movies 6.6% 2.8% Kids 5.6% 3.8% Regional News 3.5% 8.3% Hindi News 3.0% 8.4% Regional Music 2.7% 1.4% Music 2.6% 3.0% Sports 2.1% 4.3% Infotainment 1.1% 2.0% English Entertainment 0.5% 4.6% English News 0.0% 5.0% Others 0.9% 6.3%

100.0% 100.0%

•  Regional GECs break the Hindi GEC glass ceiling in viewership.

•  Regional / Kids channels highly under-indexed

•  Hindi movies under-indexed on account of changed release window – TV vs digital.

•  News, Sports, English enjoy severe over-indexing


Indian Animation picks up•  Broadcasters are willing to pay over

double for good quality Indian Animated content as compared to daily soaps / Hindi general entertainment content, even though this segment gets only 5.6% of the viewership, as compared to 28.4% for Hindi GECs.

•  Also the fact that this segment continues to be under-indexed, with only 3.8% ad-revenue share doesn’t bother broadcasters as this content has long-tail revenue

•  It offers repeat viewing value, multi-language dubbing value and merchandising value.


Hindi GEC Fiction content changing. Slowly.

•  GECs have finally embraced the tele-series format with season-based programming

•  The value:volume ratio is reversed in such programming as compared to the daily / weekly soaps.

•  For the past 20-odd years, the content has largely mirrored American programming of the 70s-80s, with our soaps comparable to content like the Bold & The Beautiful, Santa Barbara, Dallas, etc.


TV – Key Points• Digitisation – increased revenue for the broadcaster, should lead to

more investment in content (& hence better quality content)• Global proliferation of Indian-origin content is increasing, albeit for

the Indian diaspora only. This is THE BIG opportunity.•  Indian animation on TV is starting to matter.

• Hindi GECs are exploring new content programming & a changed value:volume mix in revenue models.

•  Lack of quality viewership measurement systems is an issue. Hopefully, BARC should resolve this.

•  Targeted advertising is the next step


Digital – Growth galore!

10 1522

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60

81

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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

INR

Bill

ions

Digital is expected to quadruple its size in the next 5 yrs


Telecom Base – Volume galore!

Tele-Density: 81.83 Urban: 153.45, Rural: 49.94

AsofDecember2015

TelecomServiceProviders

Ac0vesubscribers

Bhar3Airtel 243,289,404Vodafone 193,600,085

IDEA 171,912,608Reliance 100,890,431

Aircel 85,632,249BSNL 82,507,640Tata 60,727,856

Telenor 50,702,396Sistema 8,006,814

Videocon 6,958,178MTNL 3,614,439

Quadrant 3,047,100TOTAL 1,010,889,200

What’s coming?


Digital – global comparison!

•  India has the lowest net penetration among all developing countries and much lower than the developed ones.

•  Despite that, India has more internet users than the US.

19%

53%46%

60%

87% 90% 86%

0%10%20%30%40%50%60%70%80%90%

100%

India Brazil China Russia USA UK Japan

Internet Penetration

Avg Broadband speed % of connections > 4MBPS 2014 2015 2014 2015

South Korea 25.3 20.5 96% 96% Hong Kong 16.3 15.8 89% 92%

Japan 15.0 15.0 87% 90% Singapore 12.2 12.5 83% 87%

Taiwan 9.5 10.1 78% 88% New Zealand 7.0 8.7 77% 87%

Thailand 6.6 8.2 85% 93% Australia 6.9 7.8 66% 72% Malaysia 4.1 4.9 39% 53%

China 3.8 3.7 34% 33% Indonesia 3.7 3.0 35% 17%

Vietnam 2.5 3.4 14% 31% Philippines 2.5 2.8 9% 10%

India 2.0 2.5 7% 14%


Digital – Usage growthIndia's Top Apps (in hours of usage)

1WhatsApp 2UC Browser 3Hotstar4Facebook 5ShareIT 6FB Messenger7Crizbuzz 22Wynk 71Twitter

96%

44%36%

97%

50%38%

0%

20%

40%

60%

80%

100%

WhatsApp FB Messenger

Hike

% of Smartphone users accessing Apps Oct-Dec 2014 Oct-Dec 2015

22%19%

10%

37%

22%17%

0%5%

10%15%20%25%30%35%40%

PayTM Freecharge MobiKwik

2%0% 1%

18%

10%

3%

0%

5%

10%

15%

20%

24%

10% 13% 9%3%

49%

30%23%

14%4%

0%10%20%30%40%50%60%

42%

0% 0%

60%

12%4%

0%

10%

20%

30%

40%

50%

60%

70%

YouTube Hotstar ErosNow

15%

6%4%

0% 0% 1% 0%

15%

8%6%

3% 2% 2% 2%

0%4%8%

12%16%20%


The Digital Business – A BLITZ of growth!

0

100

200

300

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500

600

700

800

2015 2016 2017 2018 2019 2020

21 23 25 28 30 33

311388

470564

671

792

Mili

ons

of U

sers

Internet Users

Wired Wireless

51.1 64.9 85.2 107.3 129.5 153.19

16.228.4

46

69.8

102.1

0.0

50.0

100.0

150.0

200.0

250.0

300.0

2015 2016 2017 2018 2019 2020

INR

Bill

ions

Digital Advertising

Web Mobile

0100200300400500600700800900

1000

2014 2015 2016 2017 2018 2019

825 857 886 913 938 960

281348

420494

570640

Mill

ions

of U

sers

TV Internet

18%

050

100150200250300350400450500

2015 2016 2017 2018 2019 2020

173232

286342

399457

116

188249

299

369435

Mill

ions

of U

sers

Net on Mobile Smartphones


All the major global digital platforms are already here


Indian Digital Platforms


Digital – Key Points•  The Digital platforms of web, mobile & web-connected smart TVs

are the present & the future.

• Content consumption modes & patterns are already starting to change with a large number of under-18-yr-olds finding their ‘stars’ online.

• YouTube is taking the Indian market very seriously and has set up a ‘YouTube space’ in India, in partnership with Whistling Woods International.

• Most TV networks & some film companies are seriously investing in app & web-based OTT platforms.


2431

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58

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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

INR

Bill

ions

Animation, VFX & Post-Production•  The industry has shown growth on

the back of strong VFX / post-prodn growth, but Animation has not grown as much.

•  Lack of original IP creation is a major reason of the plateau-ing of the Animation industry.

16.1%

13.8%

1

2 2

4

6

1

4

1

5

3 3

00

1

2

3

4

5

6

7

2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Animated Films Released Theatrically

2014

2015


23% 22% 20% 18% 16% 15% 14% 13% 12% 12%

14% 13% 12% 11% 11% 10% 10% 9% 8% 8%

20% 22% 23% 25% 28% 31% 34% 36% 39% 42%

44% 44% 45% 45% 45% 44% 43% 41% 40% 39%

0%10%20%30%40%50%60%70%80%90%

100%

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Animation Services Animation Product Creation VFX Post-Prodn

Animation, VFX & Post-Production•  Even though all areas of the industry are growing, the growth is disparate between Animation & VFX / post-prodn.•  From a 65:35 ratio in 2011, the sub-segments reach a 80:20 ratio in 2020.

7.1 7.6 8.0 8.1 8.3 8.8 9.5 10.4 11.4 12.5 4.2 4.5 4.7 5.1 5.6 6.0 6.5 7.0 7.6 8.4 6.2 7.7 9.3 11.3 14.4 18.0 22.5 28.4 35.8

45.1

13.5 15.5 17.7 20.4 22.8

25.5 28.6

32.3

36.5

42.0

-

20.0

40.0

60.0

80.0

100.0

120.0

INR

Bill

ions


Animation on Indian ScreensWhile, only 3 out of the top 10 characters on Indian TV are of Indian

origin, 7 out of the top 10 episodes are for Indian shows


1013

1519

2427

3134

39

45

51

0

5

10

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25

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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

INR

Bill

ions

Gaming

Gaming•  Grew over 20%, on the back of

mobile gaming.•  With 1bn+ users, increasing travel

time & a young population, India is one of the fastest growing mobile gaming markets in the world

13.9%

46% 49% 51% 52% 55% 57%

39% 35% 32% 30% 28% 26%

15% 16% 17% 18% 18% 17%

0%10%20%30%40%50%60%70%80%90%

100%

2014 2015 2016 2017 2018 2019

Mobile Console PC & Online

12.8%


9 9

1110 10

1112

14

16

18

21

0

2

4

6

8

10

12

14

16

18

20

22

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

INR

Bill

ions

Music•  The Music industry shows

growth for the first time in 3 years.

•  Over 50% of Indian web users access unlicensed content.

•  Music-on-cloud is expected to gather steam as it rides the 3G/4G wave to deliver streamed music, ad supported, free of cost as well as ‘freemium’ music, hopefully denting piracy.

13.8%

10.2%


Music - Consumption•  The consumption % reversed

from 2010 to 2015 between physical & digital.

•  Films fuel over 80% of the Music industry (Not good!)

•  Indian non-film music (Indie / pop / rock / regional) is struggling, with only Religious & Indian Classical music managing to survive.

•  Very little structured music education & training

81.0%

10.0%4.0%2.2% 2.8% Music Consumption

by Genre

Bollywood

International

South Indian

Punjabi

Others

58%

33%

6%3%

20%

55%

15%10%

0%

10%

20%

30%

40%

50%

60%

70%

Physical Digital TV & Radio Public Performance

Music Consumptionby Source

20102015


10 1113

1517

2023

28

33

38

43

0

5

10

15

20

25

30

35

40

45

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

INR

Bill

ions

Radio

Radio•  The growth in 2015 has been built

around increased ad revenue from politics, entertainment, real estate & e-commerce.

•  The shift to radio is as it is a cost-effective advertising vehicle, as compared to TV.

16.9%

15.3%


Sports•  With the ‘private’ sports

leagues being taxed on lines similar to live entertainment, the line between sports and entertainment has blurred.

•  Sports is one of the largest content providers to the broadcast, live events & digital industries.

•  Female viewership was at an unprecedented 35-38%, rural viewership at 45%, in 2015.

Inve

stm

ent

IPL

Rea

ch

Investment

ISL

PKL

IPTL PWL

IBL

UBA

HIL

Star SportsINR 200 billion

Sony SixINR 192 billion

Ten SportsINR 6 million

Neo SportsINR 120 million


Live Events•  Yet to be ‘organised’

•  Growth of ~20%

•  Margin growth not as much

•  Government spending (elections / events)

•  Licensing issues

•  Taxation issues

•  Live IP-based entertainment on the rise:

o  Stand up Comedy

o  Theatre


Theme Parks•  Emerging area•  Destination

entertainment (non-natural-tourism based) yet to consolidate in India

•  Evolution:o  1980 – Appu Gharo  1990 – Esselworldo  2010 – Imagica &

Wonderlao  2015 – INR 300 bn+

investment committedo  Over next 5 yrs, 19%

CAGR.


Jobs in M&E•  As per the NSDC, by 2022, the

Media & Entertainment industry would be requiring 12.5 lakh professionals, ~85% of these in the Film, TV & digtial verticals.

•  The media industry as a whole still lacks sufficient world-class training facilities to enable professionalism and best practices.

•  Significant government-intervention and private investments will be needed to correct this imbalance

1.60 2.40

4.40

1.40

2.80

6.40

0.60 0.70

1.30

0.20 0.30 0.40 0.20 0.30 0.40

-

1.00

2.00

3.00

4.00

5.00

6.00

7.00

2014 2017 2022

EmploymentGrowth

Film

TV

Print

Radio

Animation, VFX, Gaming


Key Disruptions in 2015 / Trends for 2016

•  ANALYTICS – Audience Analytics, Operations Analytics, Event Driven Analytics, Predictive Analytics, Campaign Analytics

•  Film – 4k, Digital Rights, Immersive, VR / AR

•  TV – 2nd/3rd screen, Targeted Advertising, Interactivity

•  Animation & VFX – 3D printing, non-photorealistic rendering, VR / AR

•  Advertising – Cross platform, Targeted, Programmatic buying

•  Music – Predictive analytics

•  Radio – Online platforms

•  OOH – Watcher Analytics, Interactivity


What are the pain-points of the Indian M&E Industry?

•  Lack of original Intellectual Property creation leading to lack of a globally merchandisable brand.

•  M&E Education & Training o  Of the 4 lakh people employed, nearly 75% involved in content creation have

no formal training.

o  Very few world-class Film & Media institutes with a combined output of approx 500 graduates a year, with 200 of them being from a single institute.

•  Innovation – we are followers, not leaders when it comes to formats or technical / narrative innovation.

•  Piracy - Affects every sector of the industry & causes nearly 35% revenue reduction


The Great Opportunities in M&E

In the M&E industry, building volume is hard. India already has the volume. We now need to build value to each unit of the already

existing volume. This is done by enhancing quality. The best way to build quality is be educating & training the industry.

The big opportunities in M&E are:

• Screens for Film

• Digital platforms

• Education in M&E

•  IP creation – 360deg

Thank You!Chaitanya Chinchlikar

Vice President – Business [email protected]