Indian Entertainment Biz Revenues to Reach $25 Billion by 2014: Report

Ernst & Young's publication predicts that the Indian film biz will grow to $5 billion by 2014.

NEW DELHI -- The Indian media and entertainment industry registered revenues of $16.3 billion in 2010 and is expected to be in excess of $25 billion by 2014, according to a report by consultants Ernst & Young, Spotlight on India’s Entertainment Economy.

The Indian film industry is projected to grow from $3.2 billion in 2010 to $5 billion by 2014 at a compound annual growth rate of 14.1 percent.

“Growth is expected to come from the expansion of multiplexes in smaller cities, investments by foreign studios in domestic and regional productions, the growing popularity of niche movies and the emergence of digital and ancillary revenue streams,” the report said.
The Indian film industry is the most prolific in the world, with more than 1,000 films produced every year in more than 20 languages. Almost 90 percent of revenues are derived from local films leaving English and foreign films with a minority 10 percent market share. With 3.3 billion tickets sold annually, India also has the highest number of theater admissions. The report predicts that multiplex screens are expected to double from 900 to 1,775 screens in the next five years.

“Enticed by economic liberalization, near double-digit annual growth, a fast-growing middle class and a huge volume of demand for leisure and entertainment, there has been a surge in investment by global media companies in India. The Indian media and entertainment industry now finds itself at a new turning point – digital media,” the report added. By 2015, 90 per cent of India's projected 187 million broadband subscribers will access the net through wireless devices.

Broadcasting and cable TV industry revenue for 2010 was estimated at $7.2 billion, up 13.3 percent from the previous  year, mainly driven by a 19 percent growth in advertising revenue. The industry is projected to grow at a compound annual growth rate of 12 percent to reach $11.4 billion by 2014. India has over 600 television channels and 100 million pay-television households.

“Having one of the world’s youngest populations, high volumes of content consumption, a favorable regulatory framework and growing digital adoption, makes India an attractive investment destination for global media and entertainment companies,” said Ernst & Young media and entertainment leader for Europe, Middle East, India and Africa, Farokh Balsara.

“The growth strategies in most companies in the U.S. and Western Europe are linked to India and other emerging markets,” added Ernst & Young global media and entertainment leader John Nendick. “However, to succeed in India, global media and entertainment companies need to navigate unique challenges in the areas of content localization, distribution and pricing, regulations and piracy.”
According to the report, the two greatest challenges faced by media and entertainment companies doing business in India are low average revenues -- with the Indian average revenue per user among the lowest in the world -- and piracy, which is rampant in India and accounts for in excess of $4 billion per year.