M & E Back in the Spotlight

M & E Back in the Spotlight

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An overview by NGI Managing Editor Ujjwal K Chowdhury, on the emerging scenario of the Indian Media & Entertainment industry in the light of the report brought out by FICCI and KPMG together during FICCI Frames 2010 on March 16-18 in Mumbai.

From 12% growth in 2008 to a very modest 1.4% growth in 2009, the Indian Media & Entertainment industry had gone through the worst last year, being dependent for 38% of its revenue on advertising of corporates and brands which was fast shrinking due to acute economic slow down.

So the focus of 2009was on cost efficiencies, multi-skilling, retrenchment, newer formats (like Reality Shows), innovations, boost to the digital media, and all that. While films, radio and OOH had negative growths, print maintained status quo, TV grew moderately, and internet and gaming had the last laugh. The last quarter of the year was surely the best and signs of recovery were seen.

While the Indian media spend at 0.41% of the nation’s GDP, which is just half of the world average (0.8%), with signs of economic recovery and rise of a brand conscious society, the potentials ahead are big. It is even lesser than 0.75% of China, though being close in population to our larger neighbours.

With the government of India looking at 7.5% growth-rate and IMF putting the figure at 6.8% at least, both of which are higher than the world average, the M&E industry is expected to have a steady growth over the next one to five years. The industry is looking at reaching newer target segments, geographies and mediums, while tapping the potential of the existing ones.

Among the drivers for growth, digitisation is all set to help in spreading the reach and impact of the M&E industry. Availability and penetration of newer distribution platforms like digital cable, DTH and IPTV, digitisation of newspapers, magazines, films and the sale of online and mobile music are some of the ways in which the M&E industry has benefitted from digitisation and the growth will be faster in the coming years.

There is a potential for the film industry to explore additional revenue streams like Pay Per View and digital downloads in future. With the increase in mobile and broadband penetration and the expected 3G rollout, the market for other digital distribution platforms for music beyond ring tones and caller tones, will open up, like full track downloads, streaming music and subscriptions, etc.

With the growing increase in literacy, consumption and disposable incomes in Tier 2 and 3 cities, Regionalisation of media is likely to be a significant factor driving growth. Ad spends on regional TV channels in increasing and national broadcasters are looking at adding regional channels to their portfolios. The share of local advertisers in radio and print is on the rise. Over the last three years, Hindi cinema has lost share to other languages in terms of the total number of films certified.

Further, convergence and the impact of the new media are poised to benefit the media players more than ever before. Advertisers are looking at multiple delivery platforms for content to break through clutter. New Media is bringing about a revolution by merging the functionalities and uses of the customer end devices like TV, PCs and mobile phones, leading to the convergence of two or media into a converged/integrated communication channel.

The recent launch of I-pad has the potential for becoming a delivery platform for news, entertainment, and commerce in future.

There are existing players expanding horizons in newer media, and IT and telecom, foreign players coming into the media business. Also, media players are looking at leveraging their content across platforms leading to the emergence of conglomerates. This could help in the emergence and growth of players with superior product, marketing, distribution, technological and innovation capabilities. In turn, this is likely to aid the growth in the overall market size and reach of the industry.

The entry of Colors expanded the Hindi GEC market in Bihar and Madhya Pradesh, Star Jalsa expanded the Bengali GEC market nationally, and Sun Direct in DTH sector has tapped the entire Southern Pay TV market. So, competition has added to the past media market over the last one to two years.

Focused HR practices for the peoples driven M&E industry have started in the form of effective induction of new hires, roles and responsibilities being linked to the organization’s strategic priorities, employee engagement and focus on development of talent. Identifying and managing high potential staff effectively by media players is key to retaining talent in the industry, and all are waking up to this reality.

Innovations are now being seen across product, process, marketing, distribution and business model by media players. An example of successful product innovation is the evolution of IPL as a brand, combining sports and entertainment, attracting also the female audiences and kids, after the slicker version of the game got popular through T20 format. Zoozoo campaign was a content innovation by Vodafone, marking a departure from celebrity driven advertisements. Advent of social networking sites like Facebook, Twitter and LinkedIn is another innovation that enabled brands and advertisers to gather momentum and attract media and consumer attention.

The media business models in India are undergoing a change with the audiences becoming more willing to pay for content and value added services. The growth in ticket prices in movies in the multiplexes, increasing number of Pay TV subscribers, increasing penetration of DTH with its user-friendly interface and technology, and introduction of Value Added Services by media players are some examples of pay markets gaining importance.

There is also an increasing need for investments and focus on research in concept testing, new product development and delivery platforms. Companies are increasingly spending on consumer research as the stakes have increased in the context of all-time inherent diversity in consumer preferences in India, who are now becoming savvier and demanding, even in the rural markets.

Also, both the media and the consumer brand players are looking for a 360 degree connect with their consumers. They are taking help of multiple touch-points simultaneously to communicate to the consumers across platforms like TV, Print, Radio, OOH, Films, Internet, Mobile and Retail. Convergence is here and to stay for long. Recent examples of the success of Avatar and 3 Idiots and their integrated communications prove the point.

Growth in the industry is expected to be driven by growth in both advertising and subscription revenues, and the later will be driven by enhanced penetration and expansion of the digital delivery infrastructure. A strong focus on talent development, consumer research and innovation can help players in differentiating themselves amidst growing competition.

While the economy grew at 9-10% a few years earlier, media grew by 18-20%. Now while the economy is expected to grow around 7%, media and entertainment is poised to expand by 12% or more. The aforesaid drivers of change will make this and more. Exciting times ahead for those who can differentiate, digitize, research and innovate.

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