Spotlight on India's entertainment economy
Seven growth drivers in the Indian media and entertainment industry
Networks, devices and content - core elements of the digital entertainment process - are converging rapidly in India.
The shift to digital is driving a new inflection point for India's M&E industry. And, there are other trends and growth drivers at work. Understanding the following trends we've identified may help your company seize growth opportunities.
- Increasing per capita consumption and media penetration: Between 2004 and 2008, Indian household income grew by 11% in the country's 20 largest cities1. This is increasing consumption and signals a potential for growth in media penetration, also backed by India's low advertising to GDP ratio.
Advertising to GDP ratio
Source: “India: Media — publishing and printing," J.P. Morgan, 28 January 2011
- Wireless broadband content consumption: Indian M&E companies have yet to face the "digital disruption" that has substantially transformed the business models of their global counterparts. Internet penetration in India is currently 7%, very low compared with countries such as Brazil (31%), Russia (41%) and China (34%)2.
However, the rapid convergence of networks, devices and content – core elements of the digital entertainment process – are set to dramatically alter the Indian M&E industry going forward. M&E companies in India are in a unique position to learn from the experiences of their global peers and to develop new digital business models as they seek to capitalize on growing digital media consumption.
Core elements of the digital entertainment process
Projected broadband subscribers (in millions)
Source: “Global broadband forecast,” Ovum Research, July 2010
- Regional markets: Consumption in India is dominated by Tier 2 and Tier 3 towns, which account for 73% of India's urban consumption3. This presents global companies with an exciting opportunity to deliver localized content.
- Niche content: Changing lifestyle patterns and growing disposable income have spurred the demand for niche content, supported by strong advertiser interest in targeting wealthy and urban consumers. TV broadcasters have recently launched new niche channel genres such as home shopping, crime, science, travel and lifestyle, while newspapers have launched special interest supplements focused on luxury brands and youth.
- Digitization of distribution: The digitization of the Indian M&E industry's distribution channels is a key growth driver, helping to increase industry revenues, curb piracy and reduce costs.
- Conducive regulatory environment and positive policy changes: There is active cooperation between the Government of India, regulatory bodies and M&E companies to introduce reforms that aid the development of the Indian M&E industry and spur further growth in the sector.
- Focus on profitable growth: Indian M&E companies implemented a number of cost-reduction initiatives during the economic slowdown in 2008-09. However, renewed growth has increased competition and is putting further pressure on their margins. This is leading several companies to improve on efficiencies already achieved by standardizing and centralizing repetitive processes, setting up shared services and adopting technology to drive efficiencies.
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1The new market shehers: tapping potential beyond the metros, EY, 2010
2"Internet penetration to reach double digit in 3 yrs," DNA Money, 4 March 2011, via Dow Jones Factiva, © 2011 Diligent Media Corporation Ltd.; "China internet users grow to 457m end-2010," ET net news, 19 January 2011, via Dow Jones Factiva, © 2011 ET Net Limited; "Chile leads internet, cable penetration in LatAm," Telecompaper Americas, 9 December 2010, via Dow Jones Factiva, © 2010 Telecompaper; "Total number of Internet users in Russia up 22 % in 2010," SKRIN Newswire, 10 May 2011, via Dow Jones Factiva.
3The new market shehers: tapping potential beyond the metros, EY, 2010.
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