Media & Entertainment industry in India
With over 600 television channels, 100 million pay-TV households, 70,000 newspapers and 1,000 films produced annually, India’s media and entertainment (M&E) industry provides attractive growth prospects for global corporations.
While there are many opportunities to tap, there are also unique differences and challenges. Global M&E companies need to develop flexible business plans and strategies to minimize key risks.
The Hindi film industry, or Bollywood, is the largest contributor to the industry’s revenue, followed by the South Indian movie industry and other language cinema industries. India’s filmed entertainment industry is the largest in the world in terms of the number of films it produces and its theatrical admissions. However, it continues to be small in size in terms of revenue, because of:
- low ticket realization and occupancy levels
- lack of quality content
- rising competition from Hollywood films
- Emergence of new sources of revenue besides theaters, such as satellite and home-video rights, mobile and online rights and gaming
- Collaboration with international studios such as Warner Bros., Disney, Fox and DreamWorks.
- Rise of 3D cinema and its benefits such as enhanced audience engagement, increased ticket prices and the exclusivity of the medium, i.e., the theaters
- Reducing the number of movies released every year and a shift toward a portfolio approach for movies with small, medium and large budgets
- Resurgence of regional cinema such as Marathi, Punjabi, Bhojpuri and Bengali cinema, besides the South Indian film industry
- Focus on niche movies with refined audience tastes and the arrival of miniplexes
- Advent of digital cinema and the growth of multiplexes
- Shortening of release windows: The largest chunk of the revenues generated by a film flows into the value chain within the first three days of its release.
- Piracy: The Indian film industry continues to lose around INR50 billion in revenues and over 50,000 jobs every year due to piracy.
- Lack of transparent data: There is no way of verifying the data publicly available about the amount a film has grossed and its profitability. Because of this, large foreign studios or investors often hesitate to invest in the Indian film industry.
- Planning process: A Hollywood film typically takes 36 months to plan and 12 months to execute, whereas an Indian film takes 6 months in planning and 18 months in execution.
- Intellectual property (IP): The Indian film industry lacks a process to systematically develop IP and create an IP bank.
- Interaction with emerging technologies: We are moving toward a multiple-screen world with each screen having the ability to consume the same mass of IP in different forms.
- Film incentives: Countries worldwide offer various incentives to encourage film producers to use their locations to shoot films. Incentive regimes are offered in the following forms:
- Cash rebates
- Tax credits
- Exemption from or refund of VAT and Customs duty
- Encashable credits
- Interest free loans
- Soft funding
- Incentives based on satisfaction of a cultural test
The visual effects (VFX) industry is being increasingly used by the visual media in India. The domestic market is seeing bigger budget movies and ad campaigns, which are now open to spending more on VFX to provide an enhanced visual experience to viewers.
- Outsourcing of work to India on the rise
- Moving up the value chain by working on end-to-end VFX assignments
- Dominant domestic players setting up offices
- Increasing consumption in the domestic market
- Lack of required skill sets: Artists in India often lack technical know-how on the latest developments in the VFX industry.
- Increasing employee costs for VFX companies: Artists with advanced VFX skills are in short supply, leading to an exponential rise in salaries.
- Limited use of VFX in Indian movies: VFX work conducted in India is mainly for international projects.
- Incentives by governments abroad: The trend of outsourcing VFX work from Hollywood and the film industries of other developed countries to low-cost ones has been rising. This has adversely affected VFX artists in these countries.
- Need for quick turnaround in TV shows: Indian VFX companies need to leverage their offices (located in the US) to secure projects that require a quick turnaround.
- Absence of a steady pipeline of projects: Domestic VFX companies usually take up projects as they come.
Films and travel and tourism
The tourism boards of many countries, such as Switzerland, have in the past targeted Bollywood to showcase themselves as destinations for high-spending Indian travelers. Typically, most countries offer tax sops in the form of VAT refund ranging from 10-20%, depending on the location and budget. Film production companies are eligible for such refunds if they spend a certain percentage of their entire budget filming in a particular country and using local talent.
There are also ample opportunities for inbound tourism beyond popular destinations such as Goa, Kerala and Rajasthan.
Benefits of film incentive regimes
The following factors can help to promote India as a location for shooting films:
- Heritage and attractive locations
- Availability of low-cost facilities and skilled talent
Film education in India
India currently has a dearth of institutes that impart formal training and education in film and creative technologies. There is a need to formally train technicians in the industry, who are largely self-trained.
Film-makers and studios must recognize how the use of modern technology can transform various aspects of film-making, including the creative, production and planning functions, effective communication of messages, cost efficiencies, etc., which can trickle down to all the different levels through formal or informal processes.
The media and entertainment industry is poised to witness momentous growth. It is of prime importance to encourage art, artists, technicians, directors and producers and give them the opportunity to showcase their talent.