Indian industry growing but slower

Film, television continue to grow, music contracting

NEW DELHI – 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.