The past decade marked the convergence of media and technology, of user-generated content, social media and new publishing models that have changed the pattern of media consumption
The Indian media and entertainment (M&E) industry is expected to grow at a compound annual growth rate (CAGR) of 14% to $28 billion by 2015, due to positive industry sentiment and growing media consumption, according to a report by FICCI and KPMG. The report, to be released at the inaugural session of FICCI Frames 2011 on 23rd March, states that in 2010 the Indian M&E industry gained 11% to Rs652 billion and that it is expected to grow by 13% in 2011.
Dr Amit Mitra, secretary general, FICCI, said, "The key industry highlights are the growing potential of the regional markets, increasing media penetration and per capita consumption, and increasing importance of new media, driven by changing media consumption patterns."
Overall, for the M&E industry, 2010 was a year of great dynamism, with growth across all sectors other than films. The report highlights a strong recovery in advertising spend as a key driver for growth.
Advertising spends grew by 17% to Rs266 billion and accounted for 41% of the overall industry size. While television and print continued to dominate the Indian M&E industry, sectors such as gaming, digital advertising, and animation VFX grew at a faster rate and show tremendous potential in the coming years.
Rajesh Jain, head of media and entertainment, KPMG, said, "The resurgence in advertising, growth in subscription revenues, the thrust on digitization, and emerging avenues for content monetization, were the key growth drivers for the Indian M&E industry in 2010. However, going forward, it will become imperative for media companies to reset their business models and build greater focus on profitability and changing consumer preferences."
According to the report, the number of TV households in India would reach about 156 million by 2015. The report expects, advertising and subscription revenues to touch Rs214 billion and Rs416 billion, respectively, over the next five years. FICCI-KPMG expect the print media to grow at a CAGR of 10% to Rs310 billion over the next five years, while it sees regional print media growing at a higher rate of 12% by 2015.
During 2010, social media gained significant popularity as a marketing and gaming platform. "Social media offers advertisers and content owners the ability to directly connect with their consumers/audiences. Businesses are now beginning to understand the power of this tool and integrating it into their core marketing plan to reach out to their target audience," said Jehil Thakkar, executive director, M&E, KPMG.
Following are some of the key highlights from the FICCI-KPMG report.
Digitization continues to be a key growth driver for the Indian M&E industry and this trend was even more pronounced in 2010. Film studios saw greater adoption of digital prints over physical and it was the first time in India that digital music sales surpassed that of physical unit sales.
DTH achieved robust growth of 75% in net subscriber base by adding 12 million subscribers in 2010. With the regulatory push on digitization, ongoing 3G rollouts, increasing mobile and broadband penetration, the market for digital distribution platforms is only expected to grow.
With increase in scale, expected changes in regulation from phase III and music royalty structure, the industry is expected to grow at 20% per annum and become profitable.
2010 was a challenging year for the industry. However, with better content, increase in multiplexes, investment in research and continued cost corrections, the industry is estimated to grow to Rs132 billion by 2015 from Rs83 billion at present.
With the economic resurgence, advertising on this medium bounced back with a growth of 21% in 2010 and it is expected to reach Rs29.6 billion in 2015.
Digital is here to stay! Spurred by environmental factors such as the growth in radio, a huge telecom subscriber base, live events and performances, device innovations in smartphones, tablets, notwithstanding the controversy over royalty, the industry is expected to register a healthy growth of 17% per annum, to cross Rs19 billion by 2015.
Animation and VFX
The growing demand for content, increasing investment in training talent, growing comfort of Indian production houses for VFX, continued growth in outsourced work, conversion of 2D to 3D formats and emerging digital platforms, are expected to help the industry grow at 18.5% per annum.
Backed by increasing purchasing power across tier-2 and tier-3 cities, regional media consumption is expected to continue to rise. In the print sector, revenues from Hindi and other language segments are expected to catch up with English, which has to date, enjoyed a majority share. Realizing the power of regional media, national and foreign players have ventured into regional markets and several others are likely to follow suit. Meanwhile, regional players have achieved scale and are now looking to go national and build a pan-India presence. Geographical expansion by existing players in television, print and radio is expected to intensify competition and leading to interesting times for these industries.
Growing importance of New Media
The past decade marked the convergence of media and technology; of user-generated content, social media and new publishing models that have changed the way of media consumption. These changes in the way media is consumed are being driven by factors such as content pull from telecom service providers due to the 3G launch, emerging gaming platforms and innovation in technological devices such as tablets.
Convergence of media, m-commerce and emergence of the app economy are trends likely to emerge. Availability of infrastructure and appropriately pricing content across these new media platforms are expected to be critical success factors for the Indian market.
Digital advertising and gaming are expected to witness the maximum growth and account for approximately Rs73.8 billion by 2015. This growth is expected to be driven by the 3Cs of consumer, connectivity and convergence.
Regulation to drive growth
The Government's thrust on digitization and addressability for cable television, is expected to increase the pace of digitization leading to tremendous growth in DTH and digital cable. The phase III auction of radio is expected to add about 700 licenses across tier-3 and few tier-2 towns. Moreover, TRAI has submitted recommendations to the government to increase the FDI limits across several broadcast and distribution platforms including radio, TV, DTH and cable. As the government, regulatory bodies and members of the industry actively work together, reforms that aid the development of Indian media companies will act as a catalyst to the growth of the sector.
Increasing audience segmentation is driving content and delivery. Television indicated this growing trend through the launch of several new niche channel genres such as food, action movies, etc. Similarly, movies targeted at specific segments of society that seem to capture the vibe of the local audience and their social issues appear to have found an audience. It has now become a business prerequisite to assess trends for continually changing customer preferences, lifestyle and media buying habits and incorporate the understanding in focused content, marketing and delivery strategies for each target audience segment.
With increasing fragmentation and intensity of competition, a deeper understanding of cultural and social references through focused study groups will enable players to target their consumers specifically and build loyalty.
It is becoming increasingly important for industry players to continuously innovate new formats and strategies in order to enable brand loyalty help expand the market.
Mature players are increasingly looking to build scale across the media value chain and explore cross-media synergies. In addition, existing foreign players are looking to expand their Indian portfolio and several others are expected to make an entry into India. Inorganic growth is likely to be a preferred route for many of these players. With increased digitization and accountability, Indian media companies are also expected to generate greater interest from private equity players.
Essar Steel’s capacity expansion at its Hazira plant is ‘almost’ complete, which will take its total production capacity to 10 million tonnes per annum
Ruias-owned Essar Steel's capacity expansion at its Hazira plant is 'almost' complete, which will take its total production capacity to 10 million tonnes per annum (MTPA), a senior company official said.
"All the units at Hazira (steel plant) will be commissioned in a month or so... Expansion work at Hazira is almost complete, except for the coke-oven battery, which will be commissioned in 2012," Essar Steel CEO Malay Mukherjee said.
The company had earlier said it would invest about Rs30,000 crore to have a total production capacity of 10MTPA in its integrated plant at Hazira, Gujarat by the end of this fiscal. In December 2010, the company had said it aims to commission a Corex module capacity of 1.74MTPA and CSP Caster and mill of 3.5MTPA capacity by the current fiscal-end. Mr Mukherjee added that construction of 12MTPA pellet plant at Paradip, Orissa has also been completed and "mechanical commissioning has got started."
"It is in a final stage of commissioning," he said. Post-commissioning, the company will have a total pelletisation capacity of 20MTPA as it already has an 8MTPA pellet plant at Vizag in Andhra Pradesh. Pellet, made from iron ore, is a processed raw material used for steel making.
On the tie-up with Japanese firm, Kobe Steel, for setting up a specialised unit of auto-grade steel, the Essar Steel CEO said that a feasibility study is still on and a team of Kobe Steel was here last week in this regard. Mr Mukherjee added that the MoU is valid for a year within which the agreement has to be finalised.
He added the company plans to focus more towards making specialised steel used for automobile manufacturing, as the Hazira plant is now capable of making it and its plans will not be hurt by the devastating impact of tsunami in Japan. Essar currently has a market share of about 18% in the regular steel market in the country.
Everest Industries will set up a new manufacturing facility in East India to cater to the growing demand as it aims to cross Rs1,000 crore revenue in 2011-12
Everest Industries Ltd said it will set up a new manufacturing facility in East India to cater to the growing demand as it aims to cross Rs1,000 crore revenue in 2011-12.
"We are looking at setting up a new manufacturing facility in one of the Eastern states. The plant will be commissioned within a year and it will be fully operational in 15 months," Everest Industries executive director (operations) Y Srinivasa Rao said.
The company is looking at acquiring about 22 acres for the facility that will start with the production of roofing materials and other products will be rolled out in a phased manner, he added.
Mr Rao, however, declined to share further details such as the possible location and likely investment for the construction of the plant. Industry sources, however, said the company has been offered land by the Orissa government and the firm has also decided to go into the state.
When asked about its sales target, Mr Rao said: "Our target is to cross Rs1,000 crore revenue in next fiscal." Everest is expecting its total income to grow 12%-15% in this fiscal from Rs660 crore in 2009-10, he added.
Everest Industries currently has five manufacturing facilities in Kolkata, Nashik, Coimbatore, Kymore and Roorkee. It manufactures products like roofing materials, fibre wall boards and steel building solutions.
"We are seriously considering to expand our steel building solutions capacity as there is good growth in this business. We are looking at both expanding the existing plants and adding more facilities," Rao said, without giving details.
The company's current annual production capacity for steel building material is about 30,000 tonne at its Roorkee facility. Besides, the company is likely to consider setting up a new factory for the fibre cement boards as it is at present utilising almost 100% of its 90,000 tonne of installed capacity across different plants.
The company is now undertaking de-bottlenecking of operations and other efficiency enhancement measures to increase productivity till the new plants come up, he added.
On Monday, Everest Industries ended 2.82% down at Rs132.80 on the Bombay Stock Exchange, while the benchmark Sensex declined 0.22% to 17,839.05.