Overview:

               In a country like India, Media and entertainment industry is having a huge opportunity to grow better than other countries because of majority are interested towards electronic media and entertainment and internet with huge population base (say more than 130 crore). This industry has been largely driven by increasing digitization over a decade and the internet became as a mainstream for the majority people. The size of the industry grew to Rs.1436 billion for the FY-18 with compounded average growth rate of 10.90 per cent, employs 3.5 to 4 million in 2017, Print media grew 40 per cent in 2017 and most growing segments is advertising, stood at second after China.

Entertainment Sector Segments:

• Television
• Online Gaming
• Animation and VFX
• Out of Home (OOH)
• Music
• Digital Advertising
• Films
• Print
• Radio

The media and entertainment sector reached Rs.1.5 trillion in 2017, a growth of almost 13 percent over 2016.

Growth Phase:

Day-by-day digital advertising industry shows spectacular growth. In 2017 digital advertising market has reached Rs 8,202 crore (US$ 1.27 billion) in 2017 and is forecasted to grow at a CAGR of 32 per cent to reach Rs 18,986 crore (US$ 2.95 billion) by 2020. Expenditure on digital advertisements is expected to increase at CAGR of 30.8 per cent between 2016-21, as internet penetration and data consumption increases in the country.

P-Projected

FDI inflows into information and broadcasting sector

Favorable conditions:

• Higher demand for operational products and services and became a part of their lifestyle.
• Individuals are coupled with smart phones and usage of fast networking.
• Broadcasting companies are dealing with foreign players like Walt Disney and country wide players like Sony, ZEE, etc.,
• Entertainment Industry is set to expand at a CAGR of 13.10 per cent over 2018-23, one of the highest rates globally.
• The Government of India has increased the FDI limit from 74 per cent to 100 per cent.
• Increasing liberalization and tariff relaxation.

Barriers:

• Some industry members are of the view that converting the current cap on foreign institutional investment (FII) investment to foreign direct investment (FDI) is not a very encouraging move by the government.
• A major issue pertains to taxation of satellite segment usage fees paid by broadcasters to foreign satellite companies. Tax assessing officers have attempted to treat such a payment as royalty income and tax the same on source rule basis. Such satellite companies do not have any office or presence in India. Tax assessing officers has been arguing that foreign telecasting companies must have a permanent establishment (PE) in India on account of their agents selling airtime space to India advertisers.
• Most sectors of the Indian E&M industry have traditionally operated under various agencies of the Indian government, which were later opened to the private players in various stages. FM radio is one such example where the incumbent All India Radio (AIR) was the sole player in the medium of both AM and FM radio broadcasting. Limited frequencies of FM broadcasting have been opened to the private players, but with a license fee, which is not currently applicable to the incumbent AIR. Similarly, in television segment, all terrestrial broadcasting rights continue to be with the incumbent Door Darshan.

SWOT Analysis:

Strengths:

• In India, there is a huge customer base to grow well in the media and entertainment industry like TV, film industry, media, etc.
• Day-by day people cost of living and taste & preferences are increasing.
• Change in life style and sending patterns of the Indian masses on entertainment.
• We have to say that technological innovations created a digital revolution in the entertainment industry.
• Across the world, Indian film industry is the top in films producing and tickets sold and 2nd largest industry globally.

Weaknesses:

• This industry is highly fragmented.
• Media penetration is low in socioeconomic classes.
• Digital network is expensive, which can’t bear by low income groups.
• Government rules and regulations on electronic and print media.

Opportunities:

• In India, most are of the people entertained by media and entertainment like TV, Film, Event and parties which are growing tremendously year on year.
• Global investors are attracted towards investments in this sector.
• People are stepping towards modern things rather than cost.
• Rapid de-regulation in the industry.
• Technological advancements like animation, multiplexes, internet or at customers door step.
• In the nascent stage of the new distribution channels offers an opportunity for development.

Threats:

• Anti-social activities like piracy, violation of intellectual property rights.
• Market players need to upgrade for every new advancement to grow.

Government Initiatives:

• To boost the broadcasting sector, Government took measures to deal along with concerned ministries and Telecom regulatory of India.
• The Government of India has agreed to set up the National Center of Excellence for Animation, Gaming, Visual Effects and Comics industry in Mumbai.
• FDI limits relaxed depends on the segment through automatic and non-automatic route.

Source: Department of Industrial Policy and Promotion (DIPP), KPMG report, IBEF