Friday, July 31, 2009

Indian industry growing but slower....Film, television continue to grow, music contracting

Indian industry growing but slower

Film, television continue to grow, music contracting

July 30, 2009

By Nyay Bhushan
After a two-month cinema strike in the first half of this year, projections for the Indian entertainment industry reflect a slower growth, according to a report by PriceWaterhouseCoopers India released Wednesday.
“Indian Entertainment and Media Outlook 2009” states that the industry will grow 10.5% cumulatively over 2009-13 to reach about 929 billion rupees ($20 billion).
A similar growth rate was also predicted in another report early this year by industry body Federation of Indian Chambers of Commerce and Industry and consultants KPMG India that projected a 12.5% growth rate over the next five years for the industry to touch about $22 billion.

Last year's FICCI report (also prepared by PwC India) which projected a compound annual growth rate of 18% for 2008-12.PwC's India report this year --
part of the consulting firm's “Global Entertainment and Media Outlook 2009-13” study --
also states that in 2008 the Indian industry slowed to 10.3% as compared to 16.7% in 2007 while growth in 2009 will be even lower at 8.3% but “will return to double digit growth in 2010.”
Advertising spending slowed to 11.3% in 2008 as compared to 20.7% in 2007.
Globally, the entertainment and media market is expected to grow 2.7% compounded annually over the five years to US$1.6 trillion in 2013.
This will see an expected 3.9% drop in 2009 and a mere 0.4% advance in 2010, followed by a much faster growth during the remaining period to 7.1% in 2013.
The slow growth in the Indian industry reflects “weaker overall economic conditions” compared to previous years where the Indian industry “consistently outpaced growth in domestic GDP” at around 16.6% during 2004-08, while annual average growth in nominal GDP was 14.48% in this period.
However PwC India leader India Entertainment and Media practice, Timmy Kandhari is optimistic “with India recording one of the highest growth rates in the E&M industry as well as in advertising spending in the world, along with China.”
A major drag on the industry has been the marked slowdown in advertising spending which is expected to touch 9.2% in 2009 after having posting a CAGR of close to 17.3% during 2004-08.
Television continues to be the major contributor to the overall industry, estimated to grow at a stable rate of 11.4% cumulatively over the next five years projected to reach about $9 billion by 2013, from an estimated $5.3 billion in 2008.
The film industry is projected to grow at a CAGR of 11.6% over the next five years, reaching $4 billion in 2013 from the present $2.32 billion in 2008.
Animation, gaming and visual effects will grow steadily at a CAGR of 22% to $923 million in 2013 from its current size of $339 million.
Animation will see a boost in domestic demand “as well as contribution from international co-productions” for both film and television content.
The music business continues to suffer and is the only segment in the entertainment industry showing a negative CAGR growth rate of 4.5%, dropping from 2008's $ 136 million to $108 million by 2013.
Last year saw a new low of a fall in 14.1% for the business over 2007.
The global music business will also see a 2.5% drop in growth from $29 billion in 2008 to $26 billion by 2013.
Robust growth is seen for radio, with the industry projected to grow at a CAGR of 18% over 2009-13, reaching $413 million in 2013 from the present $180 million in 2008, which will also see this segment increasing its share of the ad pie from 3.8% to 5.2% in the next five years.
Advertising grew by 11.3% in 2008 over 2007, which is much lower than 20.7 per cent in 2006.
Overall spending is expected to increase from the present $4.7 billion in 2008 to $ 7.9 billion in 2013, a cumulative growth of 11.1%.
Print and television continue to dominate their shares of total ad spend;
print advertising share is expected to decline from 47.9% to 41.5% while television's share will grow marginally from 39% to 41% by 2013.

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