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CONTINUOUS ASSESSMENT FILE - Satyam
CONTINUOUS ASSESSMENT FILE - Satyam
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The Indian media and entertainment (M&E) industry is one of the fastest growing industries
in the country. Its various segments—film, television, advertising, print and digital among
and Industry (FICCI) and KPMG, the media and entertainment industry in India is likely to
grow 12.5 per cent per annum over the next five years and touch US$ 20.09 billion by 2013.
With a majority of the population below the age of 35, and increasing disposable income in
Indian households, the average spend on media and entertainment industry is likely to grow
Television
According to the study by FICCI and KPMG, the television industry, which is currently
valued at about US$ 4.63 billion, will expand by 14.5 per cent between 2009 and 2013.
According to a PwC report, the television advertising industry is expected to account for a
share of 41.0 per cent of the advertising industry in 2013, up from the present share of 39.0
per cent.
Digital distribution platforms such as direct-to-home (DTH) and Mobile TV are transforming
the industry. Mobile TV—where content will stream in on mobile phones—is poised to grow
big with the advent of 3G, according to experts. With the DTH industry estimated to grow by
almost 100 per cent in the current financial year—from US$ 310.16 million in 2008-09 to
anexpected US$ 620.25 million in 2009-10—leading DTH firms such as Sun Direct, Bharti
Airtel DTH and Big TV have increased their marketing budget by 20-25 per cent in fiscal
year 2010.
Further, television channels such as Cartoon Network, Pogo, Disney, MTV and Star Plus are
expanding their product range to tap India's growing US$ 125.9 million licensing and
merchandise market.
The television distribution industry is expected to reach US$ 5.2 billion in 2013 from the
estimated size of US$ 3.12 billion in 2008, which translates into a growth of 12.2 per cent on
ministry.
Music
Industry experts estimate that the current size of the music industry is about US$ 149 million.
According to a PwC study, the industry is likely to grow to become a US$ 164.56 million
industry by 2012.
While cassettes and compact discs (CDs) have traditionally accounted for most of the sales,
future growth will come from non-physical formats such as digital downloads and ringtones,
among others. Digital music sales are expected to account for 88 per cent of the total music
will be digital music, and its share is expected to move from 16 per cent in 2008 to 60 per
cent in 2013. Also, within digital music, mobile music is expected to continue to increase its
Radio
The cheapest and oldest form of entertainment, reaching 99 per cent of the population, this
According to a PwC study, the radio industry is forecast to grow at a compound annual
growth rate (CAGR) of 18 per cent over 2009-13, reaching US$ 391.15 million in 2013 from
the present US$ 170.87 million in 2008. That's more than double its present size. In terms of
its share of the advertising pie, it is projected that the radio advertising industry will be able
to increase its share from 3.8 per cent to 5.2 per cent between 2009 and 2013.
The government earned US$ 11.05 million from private radio channels during 2008-09.
Advertising
The number of brands advertised on television witnessed an 82 per cent increase during 2008
compared to 1999, according to a survey by AdEx India, a division of Tam Media Research.
The television advertising industry is expected to reach US$ 3.12 billion in 2013 from the
estimated size of US$ 1.75 billion in 2008, which translates into a growth of 12.2 per cent on
emerge as the medium of choice for advertisers. According to a FICCI-PwC report, online
Digital advertising on newspaper web sites will increase at a 6.8 percent compound annual
rate to US$ 8.3 billion in 2013 from US$ 6 billion in 2008, increasing its share of total
newspaper advertising to 9.1 per cent from 5.4 per cent in 2008, as per a PwC report on the
According to a PwC report, Internet advertising is projected to expand by 32 per cent over the
next five years to reach US$ 411.74 million in 2013 from US$ 102.94 million in 2008. Also,
the share of online advertising is projected to grow from 2.3 per cent in 2008 to 5.5 per cent
in 2013. The report estimates the size of the Out of home(OOH) advertising spend to be
US$308.8 million in 2008. This figure is projected to almost double in 2013 to US$ 514.67
million.
Entertainment Industry in India comprises of Film Industry and Television Industry. The
Indian entertainment industry is among the fastest growing sectors in the country. In the past
two decades entertainment industry in India has witnessed explosive growth. In television
alone, from a single state owned television network, Doordarshan in 1991, today there are
over 300 national, regional and local channels being beamed across the country. Indian film
industry is the largest film industry in the world, producing on an average, close to a thousand
films a year in all languages. In terms of film production India exceeds Hollywood's
production volume by over three times. Some of the fastest growing segments in the Indian
entertainment industry include music, cable and satellite television, animation and FM.
According to an estimate by FICCI and Ernst and Young Indian entertainment industry
would worth more than Rs. 400,000 million in 2008. Several positive developments like the
accordance of the 'industry' status to the film industry, satellite channel penetration, the retail
boom in the channels for music sales (Music World & Planet M), the use of digital
technology in all spheres of entertainment and the growth of multiplexes have contributed to
between films, music and television are fast disappearing. Skills and resources are being
industry is also witnessing rapid development of state-of-the-art studios and post production
facilities.
In terms of employment, an estimated 6 million people earn their livelihood from the
entertainment industry and this number is all set to grow. Entertainment industry in India is
projected to be one of the major economic driving forces of the country. In India, television is
the major segment of entertainment industry. Presently, India has the third largest television
market in the world behind only china and the USA. Today, television reaches about hundred
million Indian households. India has the world's biggest movie industry in terms of the
number of movies produced. Presently, the technology of film-making in India is perhaps the
best among all developing countries. Indian film industry is now increasingly getting
professional and a lot of production houses such as Yash Raj Productions, Dharma
of the country. Indian television channels and films are viewed and enjoyed across the entire
South Asia. Across the Middle East, parts of South East Asia and Africa, large expatriate
populations ensure that Indian TV channels and films are a regular part of their entertainment
bouquet. In UK and North America (USA and Canada), Indian TV channels and films are
increasingly finding a foothold beyond the expatriate pockets as the audience there has
started to enjoy and identify with the contemporary Indian culture. Quite a few of Indian
The future prospects of Indian entertainment industry look to be extremely good. As India's
profile rises on the global stage outside interest in India's culture and entertainment industry
Note: The above information was last updated on 21-07-2007 Indian entertainment industry
Focus 2010
On Radio
Radio is a mass medium and therefore ideally suited for India - leveraging its twin
advantages of wide coverage and cost effectiveness. It is dominated by the state owned All
India Radio (AIR), which covers 91 percent of India's area and reaches 99 percent of the
population, through a wide network of broadcasting centres and transmitters. Apart from
AIR, there are 21 privately-owned FM stations in 12 major cities, all of whom have been
granted licences over the past 3-4 years. Advertising is the sole source of revenue for radio in
India. Currently, the sector generates annual revenues of INR 2.2 billion and is growing at
around 20 percent annually. This implies a marginal rise in radio's share in the advertising pie
to around 1.9 percent. Given that commercialisation of radio is still in a nascent stage in
As a result of unsustainably high licence fees, the sector has been reeling under heavy losses.
A few FM stations have been forced to shut down, as they could not afford to pay the annual
license fees, set at levels significantly above their earning capacity. If one considers the
private sector FM market in Mumbai, four players cumulatively generate annual revenues
around INR 250-300 million, against total operating costs of around INR 550-600 million.
Given that a significant portion of the operating costs is the licence fee, which is set to
increase at 15 percent per annum, revenues would need to grow at over 40 percent annually
Globally, radio is enjoying a renaissance based on the support of the youth. They seem to
prefer it since, unlike television, it is more compatible with their lifestyle. Research trends in
Australia indicate that radio enjoys a higher level of popularity among the 15-29 age group.
Today's busy teenagers love radio because it complements a faster-paced lifestyle - they can
listen to music and get information on the move. Younger audiences, particularly those below
the age of 25, also have access to new technology like mobile phones. They have taken very
quickly to interacting with their favourite radio stations and RJs via email and SMS for song
India has an estimated 180 million radio sets, reaching over 99 percent of its one billion
inhabitants - a clear indication of the vast commercial potential in India for this medium.
Plainly, the radio sector cannot and should not be satisfied with a growth rate in the low 20s.
In India too, it is the younger generation that is the key target audience vis-à-vis radio. While
consumption in India is still largely at home, 'the radio on the move' trend is catching on in
urban and semi-urban areas. The easy availability of FM radio sets at affordable price points
According to market research, in Mumbai and Delhi, FM penetration is the highest in the
SEC A segment and least in SEC D. Further, 70 percent of radio listeners in these cities listen
to FM radio all seven days of the week. However, this sector has not been able to monetise its
hold on the listener’s eardrums. In spite of such attractive statistics, in terms of its advertising
spend, radio remains a laggard. It has less than 2 percent share of the total advertising pie in
India, compared to a global average of 8 percent. In the US, radio has a 13 percent share, in
Spain 9 percent and closer to home, in Sri Lanka, radio has a 21 percent share of the
advertising spend. Universally, media categories in the growth stage have a share of around 5
per cent and mature categories average around 10-12 percent of the total advertising
expenditure across various media. We estimate that if its real potential is unlocked in India,
commercial radio could account for approximately 8 percent of media spends in the short to
Due to the public-broadcaster nature of AIR and its socio-economic rather than a commercial
focus, its ad revenues are expected to grow at a moderate pace. Since the private FM channels
need to survive in a commercial and competitive environment, they have focussed on mass
entertainment to gather listeners. Hence, it is expected that the private FM channels will drive
the future growth of the sector. To exploit the true potential of this sector, FM radio needs to
grow from the current 21 stations in 12 cities to at least 300 stations in 100 cities. At an
investment of INR 40 million per radio station frequency, the total additional investment
required will be INR 11 billion. In its current form and structure, the radio industry will not
TRAI, the designated regulatory body for radio, has proposed a transition from the existing
license fee regime to a revenue sharing one, to help the radio industry curb it losses. It is
hoped that clarity on revenue-sharing emerges, soon. The industry, on its part, needs to
develop strategies to expand across the country and enhance business performance, thereby
turning India's promise into reality. In other words, the challenge confronting radio is to
bridge the gap between the current growth trend and potential growth expectations.
Local mantra
The sales and marketing efforts of the major FM radio stations have focussed on the large
some of the managers and partly due to the sales strategy of the multi-media groups that own
most radio stations. However, radio is a unique medium and the focus on large advertisers
seems to be at the cost of its largest potential benefactor - the local retailer. The retail
segment globally constitutes a large part of radio's clients and sales, but currently in India
accounts for a small portion of the radio revenue pie. For example, in USA, 70 percent of all
radio revenues come from local retailers, and only 30 percent comes from either national or
message over a small geographical area. The retailer, with city/ localityspecific target groups,
can be a major beneficiary of radio advertising. Clearly, there is a need to unlock the
advertising potential in the retail segment. Radio stations offer high frequency ‘opportunity to
hear’ for the advertiser. International research indicates that radio has 60 percent of
year old radio listeners. However, advertising on radio costs just 15 percent that of television.
While the price relativity for other audiences will vary, the achievement of 60 percent of the
result at 15 percent of the cost makes radio significantly more cost effective than television.
The price differential between radio and television will vary depending on the area and the
audience. In India, where the cost of television advertising is more than seven times that of
radio advertising, the cost effectiveness of radio advertising will be even more acute, which
can be a great proposition for local retailers. A high frequency combined with a moderate
card rate (effective rates average between INR 500 to INR 900 per 10 seconds) provides an
opportunity for retail players to promote their products and services cost effectively without
Presently, the advertiser base of FM radio is highly skewed, with around 11 percent of
advertisers contributing 60 percent of their revenues. This should not be the case in a
localised, mass-medium like radio. Ideally, the advertiser base should be broad-based with a
large number of local advertisers promoting their products. While some radio stations are
waking up to this reality, this potential is largely untapped. It is important for the radio
stations to highlight the effectiveness of using radio for local level promotions and region
specific ad campaigns. Moreover, since many FM players are associated with larger,
vertically integrated media corporations, cross media promotions could be an added incentive
Most of the programming currently being aired, whether music or not, has little or no library
value. Very little programming is developed to create any strategic intellectual property.
Creating specific IP whether in the form of RJs, programme formats or around content areas
could have the dual advantage of being re-usable in the future and being syndicated across
other channels. Interactivity is a major content driver within the radio programming strategy.
However, if the topics discussed are not affected by the 'recency' factor, there is enough
potential to create a library of recordings that can be used beyond a single show. Such
content, when re-broadcast, saves the cost of producing new content and generates newer
revenues by offering brand association with such a property at reasonably low rates. Besides,
such content can be exported for broadcast in other countries where the demand for Indian
Niche programming
Internationally, content specialisation has been a distinct trend in the evolution of radio,
ethnic or combination of factors, like a radio station that caters to the African-American
population of New York or a Malayalam channel with Indian content for expatriate Indians in
the Middle-East. Being localised, these channels also meet the demands of local advertisers.
Initially, most radio stations in India started off with a defined niche as well. Between them,
they provided the listener with a choice of English, Hindi and mixed content. However, the
pressure to sell airtime forced them to resort to the lowest common denominator - Hindi film
music. Very few have held on to the English format or even non-film content. Channels that
started out with English programming as a key differentiator have drastically reduced the
total airtime dedicated to it. Since there is very little to differentiate between the various
channels, the resultant effect is constant channel swapping by listeners. Radio stations have
not been able to generate any significant channel loyalty. In fact, a closer look reveals that
even programme loyalty does not exist, with listeners simply switching from song to song.
This me-too approach towards content has a direct implication on the marketing of the radio
channels as any message or campaign carried by it runs the risk of being lost in the clutter.
It may also require a shift from mass marketing of the radio channels to marketing
enable differentiated client targeting with unique value propositions. With limited sponsored
market research done in this area, radio stations find it difficult to market their USP.
However, these radio stations need not look beyond their walls to get valuable listener data.
The innumerable contests and interactive sessions on air bring in close to 30,000 callers every
day for a single channel in a city like Mumbai - a valuable database that is currently under
leveraged. Radio stations will need to start finding their own niche. Channels that address
Manpower
The most conspicuous item on the expense list is 'salaries'. The salary structure in radio is
comparable to that of other larger media units. This is driven by the fact that radio stations
hire people from high wage industries like television, FMCG marketing or advertising. This
has led to the creation of a people-cost structure that is incompatible with the current size and
revenue earning capacity of the radio industry. While it is necessary to incur reasonable
manpower costs in order to stay competitive and attract the best talent, innovative cost
management solutions such as the right mix between live and recorded music could reduce
Branding
Branding plays an important role in establishing a strong channel and programme association
amongst listeners. The key word is 'association'. What the listener associates with is the
quality of content. Brands that have spent more on marketing have a higher recall, but that
does not necessarily translate into higher listenership, particularly in a market where lack of
niche programming has resulted in constant surfing for songs of choice. Some private FM
stations have incurred large costs on building merely 'Top of Mind Recall' for all listeners,
irrespective of their preference or affinity to the station. But as the market matures and niche
channels develop with defined target groups and unique value propositions, branding
exercises will become more meaningful. Channel brands and programmes will be associated
with niche content and specific listener profiles that can be sold to potential advertisers.
There is no doubt about the effectiveness of radio when it comes to building brands for its
clients. For example, brands like Binaca / Cibaca and Bournvita were built on radio. These
therefore, radio stations with limited budgets need to make a choice between channel
branding and programme branding. What could work better for them would be a combination
of two. Programmes that are aligned to channel positioning can ride on the channel branding,
while other programmes should develop their individual brands, without diluting the channel
positioning.
Conclusion
India's radio industry has a strong growth potential if mechanisms and policies are put in
place to provide it with appropriate support. India, with its diverse regional influences, is in a
prime position to take advantage of the growth potential of this segment. With privatisation
gathering momentum, the increased number of private radio channels across the country is
likely to transform commercial radio from an urban phenomenon to a national one, as has
India has the world's biggest movie industry in terms of the number of movies
a per-movie basis, the risk spreads out across a number of films. However, the
domestic film-making industry, despite its prolificacy, is yet to acquire the
This was just one year after the Lumière brothers (inventors of cinematography)
monkeys. Both these shorts were made in 1897 and were publicly exhibited for
the first time in 1899 using Edison's projecting kinetoscope inside a tent which
India's first feature film – named "King Harishchandra" – was released in 1913.
1944). This was a silent movie. By 1920, film making had taken the shape of an
industry.
The first talkie made in India was "Alam Ara" (produced by Imperial Film
dominated the film industry. Artistes and technicians were either their
employees or were contracted on long-term basis. Since the 1960s, however,
most performers went the freelance way, resulting in the star system and huge
escalations in film production costs. Financing deals in the industry also started
becoming murkier and murkier since then. CURRENT AFFAIRS India has the
(around 800 movies annually, mostly in the Hindi language. Tamil, Telegu,
Bengali and Malayalam are the languages in which most of the non-Hindi films
are made).
Today, the technology of film-making in India is perhaps the best among all
Superior movies, in thematic and creative terms, are made in many developing
billion). It employs more than 6 million people, most of whom are contract
The above statistics cannot however be used to calculate the movie industry's
has since been recognised as an industry, banks and other financial institutions
continue to avoid the industry due to the enormous risks involved in the
business. Two banks, Canara Bank and Indian Bank, have reportedly lost heavily
by financing films. However, the prospects of bank financing and risk insurance
are becoming brighter, albeit at a slow rate (as explained further down this
report).
Surprisingly, however, the oft-murky world of film industry’s finances has not
tainted the film industry’s perception in the general public eye or in the
government’s attitude. Even though many famous people from the movie
seats in federal and state parliaments, none of them have cared to reveal – or
have been under pressure to reveal – the truth about the industry's finances.
Some developments in the years 2000 and 2001 – including the arrest of a
leading financier, Bharat Shah for his alleged links with a fugitive gangster –
have not yet brought to public knowledge the inside economics of the industry.
The rot or financial amorality of India's film industry seems to have set in since
the 1960s. Until the 1960s, film producers would get loans from film distributors
against a minimum guarantee: this meant that the distributors had to ensure
that the film was screened in cinemas for a fixed minimum period. If this
minimum guarantee was fulfilled, the producers had no further liability. Profit or
(There are exceptions, however. India's most celebrated film-maker, the late
Satyajit Ray, is known to have pawned his wife's jewellery to part-finance his
first film).
changed since the 1960s when the studio system collapsed and 'freelance'
performers emerged. This gave rise to the 'star system' in which actors and
film production firm (such as the now defunct Bombay Talkies, New Theatres and
in proportion to the box office performance of their recent films. This increased
costs of film production since the more successful actors and actresses hogged
In the changed system, distributors would pay 50 per cent of the film-making
cost leaving it to the producer to get the rest from other sources.
annually);
– promissory note system (locally called 'hundi' system): this is the most widely
Film production thus became a risky business and the relationship with usurious
As at the start of 2001, a reasonable budget film in Hindi could cost US$1.75
million. A low budget Hindi film can be made for even as low as Rs. 15 million.
A big budget Hindi movie can cost in excess of US$30 million. The 'bigness' of
the budget is attributable mainly to the high fees paid to 'stars', celebrated
At the time of writing, it is believed that 'stars' like Shah Rukh Khan and Salman
Khan are paid Rs. 20 million (US$440,000) per film. In contrast, script writers
and film editors remain poorly paid. In an interview, India's so-called 'superstar'
attributed the lack of strong storylines to the poor money paid to writers.
India has a National Film Development Corporation (NFDC) which finances some
films. A few film makers, who would find it hard to obtain finance from the
regular sources, have been financed by the NFDC. However, NFDC cannot be
considered to play a central role in the film industry because it finances too few
films which, too, are not of the type that has made the Indian film industry so
vibrant. It however goes to the NFDC's credit that, without it, some of India's
competition from local cable operators who illegally beam newly released movies
FUTURE
will change the culture of the film industry too. Some film production companies,
such as Mukta Arts, have made public share issues, thus keeping out of the
The Film Federation of India is actively seeking to make film financing a viable
proposition for banks. It is likely that films would also be insured to offset
The granting of industry status to the film industry will eventually allow
overboard financing of films, though this will result in production of fewer films
than at present.
Stricter enforcement of copyright law will help the film industry in its fight with
cable operators.
Foreign entertainment companies, with steady revenue streams, can do good
business if they invest in Hindi and other Indian language films. Despite high
risks on a per-movie basis, the risk spreads out across a number of movies.