The media and entertainment industry crossed Rs 1 lakh-crore in 2014, growing at 13.9 per cent, according to the Ficci-KPMG India media and entertainment industry, 2015 report. The growth was spurred by heavy advertising spends during the general and state elections, and robust spends by e-commerce companies.
The overall ad pie expanded to Rs 41,400 crore in 2014, a growth of 14.2 per cent (in 2013 it was Rs 36,200 crore). The electoral spends were among the highest in the world, second only to the 2012 US presidential election.
Television continued to contribute the lion’s share of revenue (including both subscription and advertising) with Rs 47,500 crore.
While digitsation of cable continued to progress, greater transparency and higher ARPUs (average revenue per user) remained a challenge. Implementation challenges delayed tiered packaging and billing. However, DTH operators continued to improve realisations by increasing penetration of HD and premium channels and value added services.
Big e-commerce spenders and election advertising made the television industry the second-largest contributor to the overall ad pie with Rs 15,500 crore, second only to print. By 2018, TV ad revenue is estimated to surpass print.
“Advertising will continue to show robust growth over the next five years as economic growth comes back and categories like e-commerce and telecom increase spending,” says Jehil Thakkar, head of media and entertainment, KPMG, India.
India continued to buck the trend of declining print revenue as print grew at 8.3 per cent (Rs 26,300 crore in 2014); advertising grew at 8.5 per cent (Rs 17,600 crore in 2014).
Print ad pie was buoyed by regional publications, which grew at 9.8 per cent compared to their English counterparts that grew at 5.2 per cent.
Ad revenue formed a sizeable portion of the total revenue pie, circulation revenue growth was higher for Hindi and English markets in print.
As tier II and tier III cities grow, and the disposable income and literacy rate rise in these cities, providing impetus, print is only expected to grow.
Radio, too, gained big from election spends, with one of the highest growth rates among traditional media at 17.6 per cent to reach Rs 1,700 crore. Being a free-access medium, ads are radio’s main revenue stream, helped on by political parties spending as much as 12 to 15 per cent of their ad budget on radio.
Advertisers increasingly view the medium as an integral part of their media plans. The government’s auctions, planned for 135 channels in 69 cities, bodes well for radio could help the sector battle rising costs.
Digital advertising beat the expected rate of growth (33 to 36 per cent) to expand at 44.5 per cent. It is expected to be worth Rs 6,300 crore in 2015, growing at 43.7 per cent.
India became the second-largest country of Internet users. The adoption of smartphones, healthy growth in number of 3G subscribers, continued adoption of 2G in the hinterlands and concerted efforts by the digital eco-system under the Digital India Programme have helped.
“2014 was a real wake-up call for the Hindi film industry. It’s time for the industry to revisit some business models, cost structures and content. The drivers of growth in previous years – multiplex expansion, rise in ticket prices and theatre digitisation – all hit maturity levels,” says Thakkar.
The film industry grew at under 1 per cent, with regional films saving the day. Box office growth in Bollywood was 0.1 per cent. A reduction in cable and satellite revenue by 2.7 per cent dealt a blow (15 per cent for Bollywood).
The gap between the top 10 films and the rest of the industry further widened. The category-A films with top league actors continued to perform well.
The exhibition sector grew both organically (tier II and tier III cities) and inorganically, with major consolidation in 2014. This enabled economies of scale for exhibitors and growth of in-cinema ad deals.