Low average revenue and piracy hamper India’s Media and Entertainment sector

LONDON | India’s Media and Entertainment (M&E) industry registered revenues of $16.3 billion in 2010, which are expected to be in excess of $25 billion in the next four years, according to Ernst & Young’s report ‘Spotlight on India’s Entertainment Economy‘. The study shows that India’s growing digital media consumption and favorable demographics are key drivers for the media and entertainment industry’s future growth.

But John Nendick, Global Media and Entertainment Leader at Ernst & Young, said:

“The growth strategies in most companies in the US and Western Europe are linked to India and other emerging markets. However, to succeed in India, global media and entertainment companies need to navigate unique challenges in the areas of content localization, distribution and pricing, regulations and piracy.”

According to the report, the two greatest challenges faced by media and entertainment companies doing business in India are, on one hand, low average revenues, with the Indian average revenue per user among the lowest in the world; and piracy, which is rampant in India and accounts for in excess of $4 billion per year.

Nevertheless, enticed by economic liberalisation, near double-digit annual growth, a fast-growing middle class and a huge volume of demand for leisure and entertainment, the Indian media and entertainment industry now finds itself at a new turning point: digital media. A surge in mass broadband adoption is expected, led by the launch of 3G and 4G services. By 2015, 90% of India’s projected 187 million broadband subscribers will access the net through wireless devices.

This presents global M&E companies with exciting opportunities to develop anytime, anywhere content that caters to a new generation of Indian digital consumers. Farokh Balsara, Ernst & Young’s media and entertainment leader for Europe, Middle East, India and Africa, said:

“Having one of the world’s youngest populations, high volumes of content consumption, a favorable regulatory framework and growing digital adoption, makes India an attractive investment destination.”

Key findings from the report include:

  • The country has more than 600 television channels, 100 million pay-television households, 70,000 newspapers and produces more than 1,000 films annually.
  • India’s favorable regulations and reforms are creating investment opportunities for global media and entertainment companies.
  • The newspaper industry, which is facing declining readership in many international markets, continues to thrive in India, driven by increasing literacy rates, consumer spending and the growth of regional markets and specialty newspapers. Newspapers account for 42% of all advertising spend in India, the most of any medium.
  • The mandatory digitisation of India’s television distribution infrastructure is driving growth of digital cable and DTH and creating a need for these companies to fund expansion.
  • The third phase of radio license auctions, expected soon, will see radio networks expanding their reach to add around 700 radio stations across the country.

Ernst & Young is a global leader in assurance, tax, transaction and advisory services.

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