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Media &
Entertainment
September 2006
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Contents
• Market Overview
• Government regulations & policy
• Advantage India and business
opportunities
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Market
Overview
• Market Overview
• Government regulations & policy
• Advantage India and business opportunities
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Market Overview

Indian Media & Entertainment Industry -

Zooming ahead
India Media & Entertainment Industry
1000
837
800 CAGR 19% 686
INR Billion

600 562
473
400 353 402

200
* * E*: Estimate, F*: Forecast
0
2005E 2006F 2007F 2008F 2009F 2010F
Years
• Current Market Size is estimated at USD 7.72 bn
• Expected to reach USD 18.32 bn by 2010, a CAGR of 19%
• Maximum growth expected in Television and Film segments
• More than 300 national and regional TV channels
• Close to 1000 films made every year
• Liberal FDI policies across all the segments of the industry
• Government focusing on regulations to give further impetus to the industry

Source: IMaCS Analysis, FICCI-PWC Frames 2006 Report

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Market Overview

Major constituents
Breakup of Indian Media & Entertainment Industry • Television is the largest segment with close
Outdoor Advertising to 42% share in industry revenues followed
2.5% by print media at 30.9% and films at 19.3%
Live Entertainment
Internet Advertising in 2005
0.3%
2% • Television’s share expected to increase to
more than 50% by 2010 at the cost of print
Television media’s share
Print Media 41.9%
30.9%

Radio
0.8%
Films Music

19.3% 2.0%

Source: Industry estimates, IMaCS Analysis

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Market Overview

Key Drivers of the Indian Media &

Entertainment Industry
• Enabling regulations related to broadcasting,
Regulation print and radio by the Government
• Development of content for niche viewers
• Pricing remains a key driver, whether it is for
Content Consumerism cable subscription, film tickets or newspaper
prices
• Increased consumerism and increased
Key advertisement spend by marketers (i.e.more
Drivers
revenues for media companies) fueling further
growth
Advertising • Use of technology for special effects, animation
Pricing spend and other creative work leading to better
quality of media products

Technology
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Market Overview

Indian Television Industry -

Wholesome entertainment
Projected size of Indian Television Industry Indian Television Industry Revenue Breakup - 2005
500 427 TV Software
400 5%
327
INR Billion

300 250 TV
203
170 Advertising
200 148
37%
100 TV
E*: Estimate Subscription
0 F*: Forecast
2005E 2006F 2007F 2008F 2009F 20 10F 58%

Years

• Largest segment in the industry with market size of USD 3.24 bn in 2005
• Expected to reach USD 9.34 bn by 2010, a CAGR of 24%
• Subscription accounts for 58% of the total revenues followed by advertising
and software
• India currently has 105 million TV households and over 60 million cable
connections
• TV penetration expected to increase to 135 million households and cable
connections to 85 million households by 2010

Source: IMaCS Analysis

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Market Overview

What do the viewers watch in India?

Genrewise Television Viewership Share in India
3%
4% 1%
2%
8%
39%
Mass Entertainment
Hindi Film Channels
5% Kids Channels
Regional Channels
English Entertainment
Music Channels
News Channels
Sports Channels

38%

• Mass Entertainment Hindi and regional language channels attract almost 80% of the total
TV viewership in India
• Niche channels like News and Sports gaining ground

Source: TAM Media Research

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Market Overview

Indian Film Industry -

The Bollywood dreams
Projected size of Indian Television Industry Density of Film Theatres - India & Abroad

117
200 120

Screens/ million
1 53
CAGR 18%
INR Billion

1 50 132 100

population
1 13 77
97 80
100 68 79 61
60 52 53
43 45 46
50 30
40 12
0 20
2005E 2006F 2007F 2008F 2009F 2010F 0

Denmark

US
France

India
Ireland
Belgium
UK

Italy
Germany
Spain
Years

• Largest number of films produced in the world~1000 films every year

• More than 3 billion tickets sold in 2005
• Gross revenues of over USD 1.49 bn in 2005
• Expected to reach USD 3.35 bn by 2010, a CAGR of 18%
• Large scope for growth in number of screens
• Digitisation of theatres and growth of multiplexes fueling further growth

Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report & UNESCO
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Market Overview

Hit or flop -
Breakup of Indian films market
Breakup of Films Market in India
8%
1%
15%

45 %
Hindi Cro ssover Hindi
Tamil Telugu
Foreign Malayalam
B engali Others
17%

10% 2% 2%

• Hindi films account for almost half of the total market

• Foreign films, primarily from Hollywood have a market share of 2%
• Regional language films account for the rest of the market
• Dubbed Hollywood films a new trend

Source: IMaCS Analysis, Industry estimates

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Market Overview

Indian Music Industry -

Soul searching
Projected size of Indian Music Industry Gerewise Music Sales in India - 2005

7.6 7%
8%
7.4 7.4
INR Billion

7.4 7.3
7.2 7.2 10% 40%
7.2
7.0
7.0
E*: Estimate
6.8 F*: Forecast
8%
2005E 2006F 2007F 2008F 2009F 2010F
6%
Years 21%
• Unique structure with film and devotional music New Film Music
dominating the market Popular Music
Others
• Non-film albums and remixed songs gaining market
International
• Total revenues close to USD 0.15 bn in 2005 Old Films Music
• Expected to reach USD 0.16 bn by 2010, a CAGR of 1% Devotional
• Government and industry taking firm action to reduce Regional Film Music
piracy of all forms

Source: IMaCS Analysis, Industry estimates

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Market Overview

Indian Radio Industry -

Singing a growth tune
• India has over 190 million radio sets reaching 99% of the population
• More than 330 FM Radio licenses being allotted by the Government (~240 already allotted)
• Move from license fee to revenue share model to give a further boost to the industry
• New platforms to access radio like satellite radio, mobile phone radios and internet radio growing fast
• Revenues in 2005 - USD 0.06 bn
• Expected revenues in 2010 - USD 0.26 bn, a CAGR of 32%
• Ad spend on radio set to increase with more FM radios operational

Projected size of Indian Music Industry Global ad Spend on Radio

20%

Share of total ad
15.0 20%
12.0
13%
INR Billion

10.0 15%

spend
10.0
CAGR 32% 8.0 9%
10% 7% Global 8%
5.5
5.0 3.0 3.7
5% 1%

0.0 0%

Australia

India
Lanka

Spain
USA
Sri
2005E 2006F 2007F 2008F 2009F 2010F
Years

E*: Estimate
F*: Forecast

Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report Source: IMaCS Analysis
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Market Overview

Indian Print Media Industry -

Reader’s choice
Leading Newspapers in India
• More than 220 million readers of English and Readership (Million)
Vernacular
vernacular language newspapers and magazines Dainik Jagran 21.2
• English language newspapers and magazines Dainik Bhaskar 21.0
Eenadu 13.8
readership close to 10% of the total base
Lokmat 10.9
• Newspapers account for 90% of the market, Amar Ujala 10.8
Hindustan 10.4
Magazines~10% market share
Daily Thanthi 10.4
• Revenues expected to grow from USD 2.38 bn in Dinakaran 9.6
Rajasthan Patrika 9.4
2005 to USD 4.37 bn in 2010
English
• Subscriptions contribute 57% of the total revenues, Times of India 7.4
The Hindu 4.1
rest by Advertisement
Hindustan Times 3.9
• Print media, especially newspapers, attracting a
Projected size of Indian Music Industry
large number of strategic overseas investments 250
195
INR Billion

200 173
153
150 12 1 135
109
100
50
0
2005E 2006F 2007F 2008F 2009F 20 10F
Source: NRS 2006 Years
Source: IMaCS Analysis, FICCI - PWC Frames 2006 Report E*: Estimate, F*: Forecast
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Government
regulations & policy
• Market Overview
• Government regulations & policy
• Advantage India and business opportunities
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Government regulations & policy

FDI Regulations for Indian Media &

Entertainment Industry…1
Guidelines for Foreign Direct Investment in the Indian Media & Entertainment Industry

1. Advertising FDI is permitted upto 100% through the automatic route

FDI is permitted for the full value chain like film financing, production, distribution, exhibition and
2. Films marketing upto 100% through the automatic route

(a) FDI up to 100% is permitted in publishing/printing scientific & technical magazines, periodicals &
3. Print Media journals

(b) FDI up to 26% is permitted in publishing News Papers and Periodicals dealing in News and
Current Affairs subject to a few conditions

Source: IMaCS Analysis

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Government regulations & policy

FDI Regulations for Indian Media &

Entertainment Industry…2
Guidelines for Foreign Direct Investment in the Indian Media & Entertainment Industry

4. Broadcasting
a)TV Software Production
100% foreign investment allowed subject to a few conditions

b) Setting up hardware facilities, such as uplinking, HUB, etc.

FDI allowed upto 49% (inclusive of both FDI and portfolio investment) of paid up share capital

c) Cable Network
FDI allowed upto 49% (inclusive of both FDI and portfolio investment) of paid up share capital.

d) Direct-to-Home
Maximum foreign investment of 49% paid up share capital include

e) Terrestrial Broadcasting FM
Foreign investment is permissible to the extent of 20% (including portfolio investment, investment
by OCB/NRI/PIO etc.) of the paid up share capital of the company. The licensee should be a
company registered in India under the Companies Act.

f) Terrestrial TV
No private operator is allowed in terrestrial TV transmission.

g) Establishment and Operation of Satellite

FDI up to 74% is permitted with prior Government approval

Source: IMaCS Analysis

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Advantage India and

business opportunities
• Market Overview
• Government regulations & policy
• Advantage India and business opportunities
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Advantage India & business opportunities

Advantage India
• Second fastest growing economy in the world
• Favourable FDI policies for all the segments of Media & Entertainment Industry
• Regulatory environment being strengthened for faster growth of the industry
• High quality of creative and technical talent pool
• Large untapped potential especially in Television and Films
• Indian consumers willing to spend more on entertainment
• Growing middle class with more disposable income
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Advantage India & business opportunities

Business opportunities in the Indian

Media & Entertainment Industry…1
Television

• Production/co-production of content
• Broadcasting of TV channels
• Distribution of TV channels through cable and new delivery platforms like DTH and IPTV
• Technology transfer for digital content creation
• Marketing of TV rights/air times
• Strategic investment in existing companies in broadcasting, distribution and content

Radio

• Investment in FM and Satellite Radio

• Content creation for radio channels
• Marketing of air times
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Advantage India & business opportunities

Business opportunities in the Indian

Media & Entertainment Industry…2
Films

• Production/co-production of films
• Processing, distribution and exhibition of Bollywood films
• Shooting of overseas films in India
• Development, distribution and exhibition of Hollywood/overseas films
• Training for technical and functional areas of film making
• Supply of Hardware to film studios
Music
• Creation of content for film and non-film music
• Marketing of film and non-film music
• Strategic investment in local music companies
Print

• Strategic investment in news and non-news publications

• Tie-ups for providing content to Indian publications
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Advantage India & business opportunities

Key Players - Indian Film Industry

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Advantage India & business opportunities

Key Players -
Indian Television & Radio Industry
Doordarshan is the largest TV network in India with 19 channels reaching 90%
of the population through 1400 transmitters

News Corporation owned Star TV Network entered India in 1991 and offers more than
10 channels in mass entertainment, sports, news,, music, movies etc.

Zee is one of the pioneers of the Indian Television industry with 22 channels in its
bouquet. It is present in broadcasting, cable distribution, production and distribution
of films, creation of animation software among others

Sony Pictures Entertainment is present in India with 3 channels focusing on

Hindi entertainment and sports

Sun Network is based in South India with 14 channels in four languages and a focus on
entertainment, news, movies, music, kids shows among others. Also present in FM Radio

Walt Disney is present in India through two kids channels and has recently
bought one more kids channel

All India Radio, owned by Government of India is the largest radio network in India
with 214 broadcasting centres covering more than 99% of the Indian population
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Advantage India & business opportunities

Key Players -
Indian Music Industry
BMG is one of the earliest music companies to enter India in a joint venture with
Crescendo, an Indian company

EMI owned Virgin Records is another international music company operating in India

Universal is one of the leading names in Indian music industry with a strong
presence across all genres

Sony is one of the leading music companies of India with a presence in both
Indian and International albums

Saregama, formerly known as The Gramophone Company of India Ltd. is India’s

oldest music company with largest repertoire of music across all genres and languages
including top-recording artistes of the past hundred years
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Advantage India & business opportunities

Key Players -
Indian Print Media Industry
One of the leading English dailies owned by Bennett, Coleman & Co, a leading
media group of India

Another leading English newspaper with multiple editions published from

many states in India

One of the oldest newspapers with a strong presence in South India

Hindustan Times is another leading English newspaper with more than 4 million
readership mostly in North India

Published in English and Malayalam, this newspaper enjoys a strong readership in

South India. It also publishes a large number of well known magazines in English
and regional languages
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The India Brand Equity Foundation is a public-private partnership

between the Ministry of Commerce & Industry, Government of India
and the Confederation of Indian Industry. The Foundation’s primary
objective is to build positive economic perceptions of India globally

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Tel +91 124 401 4087, 4060 - 67
Fax +91 124 401 3873
Email j.bhuyan@ciionline.org
Web www.ibef.org
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ICRA Management Consulting Services Limited

Disclaimer
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Equity Foundation (“IBEF”).

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