@FICCI-MEBC: South Side Story by Deloitte

30 Oct,2013

 

Executive Summary of The Digital March – Media & Entertainment in South India

by Deloitte Touche Tohmatsu India Pvt Ltd (DTTIPL)

 

The South Indian Media and Entertainment (M&E) industry is growing in size, driven by the popularity of vernacular content among the region’s populace. While the popularity of film stars remains the most powerful trigger for films, digitization in the television sector is providing consumers access to a higher number of TV channels, a better viewing experience, and other

 

value added services. Print, both in its English and vernacular forms, is widening its portfolio and markets to capitalize on the readership base in South India.

 

As listeners become more selective, the radio industry in the South is tuning its programming towards local preferences, thus becoming a more integral part of life in South India. In fact, listeners in South India spend more time on radio as compared to those in other parts of the country.

 

With a rich M&E industry driven by strong local demand, South India is poised to attain a greater position of strength in the coming years. Converting this potential into reality depends on the industry’s ability to continue to develop quality content as well as to deliver it through best-in-class platforms, both within India and abroad.

 

Overview of the South Indian market

In FY 2013, the overall South India M&E industry was pegged at INR 23,900 crore. Owing to the evolving ecosystem and demand, the market is expected to grow at a CAGR of 16% to reach INR 43,600 crore by FY 2017.

 

Television constitutes the largest segment of the South Indian M&E industry and is currently estimated at INR 13,470 crore accounting for the largest share of the overall market at 56%. The medium is expected to grow at a CAGR of 20% over the next four years due to benefits of digitization being realized. Print is the second largest segment accounting for 28% of the overall market in FY 2013 at INR 6,680 crore. With players identifying innovative ways to reach out to their readers.

 

Print industry is also expected to see steady growth going forward. Film, buoyed by an ardent fan following in the South, is the third largest segment at INR 2,680 crore. Radio, with the upcoming Phase III auction and New Media, propelled by the consumer’s demand to access content ‘anytime, anywhere’, are expected to grow at a CAGR of 19% and 23% respectively, over the next four years.

 

Table 1.1: South India Media and Entertainment market 2013-2017 – Media wise; E: Estimated (INR crore)

Tamil Nadu and Andhra Pradesh constitute 70% of the South Indian M&E industry. The M&E industry in Tamil Nadu is expected to grow at a slightly higher rate than the other states of the region, with all four media platforms expected to grow faster in the state.

 

 

Key emerging trends

Film

The South Indian film industry with 831 films, accounted for over 50% of total films certified across India. The number of films certified increased by 36% over 2011, primarily driven by a spike in Cable & Satellite (C&S) rights’ prices. However, the number of films released increased by only 8%2 during the same period as some producers chose not to release their films due to the high marketing costs associated, and as a result of a correction in the C&S rights’ prices in some of the markets.

 

With over 90% of exhibitors using digital projection, filmmakers are more inclined to shoot their films digitally. The industry continues to embrace technology in other parts of the ecosystem as well, be it experimenting with scouting talent through social media, adopting newer film making technologies in terms of sound and filming, distributing films digitally or embracing e-ticketing platforms. Furthermore, with the onset of digital prints, increase in C&S and remake rights’ revenue, the producers are getting opportunities to recoup their costs in a shorter duration.

 

Television

The Television industry in South India is on a transformation path, driven by the Government’s digitization mandate. It is one of the most flourishing regional media segment in terms of availability of content, reach and distribution. Over the years, it has seen increased action from regional as well as national advertisers. In fact, regional advertisers now contribute almost 40% of the TV industry’s advertisement revenues in states such as Tamil Nadu and Kerala. The industry is also leveraging technology to enable multi-screen viewership of television content for viewers who are constantly on the move. Producers and broadcasters are looking to shoot as well as telecast content in high definition (HD) formats. Going forward, developing innovative programming content, identifying niche genres and expanding markets through new content delivery platforms, is expected to drive the South India TV industry.

 

Print

South India, driven by a high literacy rate and a sizable vernacular readership base (30% of total readership in India) is one of the strongholds of the Indian print industry. Amongst the four regional states, Tamil Nadu and Andhra Pradesh account for ~58% of the total revenue. Most of the markets in the region are dominated by English print in terms of revenue except Kerala, where vernacular prints accounts for nearly 90% of the revenue. However, the advertising revenue from vernacular print in the region is estimated to grow at twice the pace of that of English, largely driven by local advertisers and increasing focus of national advertiser’s beyond Tier 1 cities. Hence, some of the English players are now launching vernacular dailies to not only consolidate their presence in South India but also partake in vernacular growth.

 

The industry is testing various business models to identify the right monetization opportunities in online space by developing mobile applications and mobile optimized websites. However, the future depends on how well the industry deals with the weak economic environment as well as the key issues of sustaining subscription revenues, monetizing online content and giving advertisers innovative ways to reach out to the readers.

 

Table 1.2: South India Media and Entertainment market 2013-2017 – State wise split; E: Estimated (INR crore)

Radio

The radio industry enjoys greater acceptance in the South than in the rest of the country and thus stands out amongst its peers. This is indicated by relatively higher average radio listenership in cities like Bengaluru where people spend about 20 hours / week on radio while those in Delhi and Mumbai spend 13-14 hours / week5.

 

The cultural diversity of cities in the South has fueled demand for localized content on radio. This has led to innovations in the type of content as well as the way in which content is being offered, so as to attract and retain audiences in a marketplace which is increasingly becoming crowded. Increasing presence of radio on the digital medium is also enabling it to reach listeners across the globe. With Phase III auction expected in FY 2014, the industry’s horizon will continue to expand. 229 of the 839 frequencies being auctioned are in 83 cities of the four Southern states. Phase III is expected to result in 294 frequencies (existing plus planned) in South India alone6.

 

 

New Media

The internet continues to have a profound effect on consumers’ viewing habits and the proliferation of devices is altering their media consumption behaviour. With the increasing popularity of mobile broadband (3G) and the impending launch of 4G LTE services, mobile phones are expected to emerge as the preferred platform for consuming content. India already has over 65 Million smartphone users currently.

 

Utilization of existing bank of vernacular content, development of vernacular apps and improvement in connectivity infrastructure would define the growth trajectory of New media in South. The shift of users to web and mobile platforms for media consumption is expected to have a direct impact on growth of digital advertising as well. This is expected to grow at a CAGR of about 23% over the next four years. It would be exciting to see how players across M&E sectors experiment and innovate to effectively utilize and monetize new media platforms.

 

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