Entertainment AUGUST For updated information, please visit

Transcription

1 Entertainment AUGUST 1

2 Contents Advantage India Market overview and trends Growth drivers Success stories: UTV, SUN TV Opportunities Useful information 2

3 Entertainment AUGUST Advantage India Growing demand Rising incomes and evolving lifestyles have led to higher demand for aspirational products and services Higher penetration and a rapidly increasing young population will provide further boost to demand Higher investments Higher FDI inflows Advantage India Opportunities Industry is set to grow at a CAGR of 15 per cent over , one of the highest rates globally Television and AGV segments expected to lead industry growth; opportunities in digital technologies as well Policy support Policy sops, increasing FDI limits 2016E Market Size: USD10.4 billion 2011 Market Size: USD15.2 billion Increasing M&A activity More big-ticket deals such as Walt Disney- UTV, Sony-ETV and Zee- Star Measures such as digitisation of cable distribution to improve profitability and ease of institutional finance Increasing liberalisation and tariff relaxation Source: KPMG report, Aranca Research Notes: AGV- Animation, Gaming and VFX, VFX- Visual Effects, M&A- Merger and Acquisition, CAGR- Compound Annual Growth Rate, FDI- Foreign Direct Investment, E- Estimate ADVANTAGE INDIA 3

4 Contents Advantage India Market overview and trends Growth drivers Success stories: UTV, SUN TV Opportunities Useful information 4

5 The sector is split into seven segments Television Others Print Entertainment Music Film Radio AGV Source: : KPMG report, Aranca Research Notes: AGV- Animation, Gaming and VFX, VFX- Visual Effects MARKET OVERVIEW AND TRENDS 5

6 The Indian entertainment industry is growing rapidly (1/2) The total market size grew from USD9.2 billion in 2006 to USD15.1 billion in 2011, a CAGR of 10.6 per cent Market size (USD billion) The industry recorded one of the highest growths in the world in 2010 (11.2 per cent); in 2011 growth picked up even further to touch 12.6 per cent Notes: CAGR Compound Annual Growth Rate CAGR 10.6 % Source: : KPMG report, Aranca Research MARKET OVERVIEW AND TRENDS 6

7 The Indian entertainment industry is growing rapidly (2/2) During , television revenues expanded at a CAGR of 11.4 per cent to USD6.9 billion Size of major industry segments (USD billion) Advertising revenue growth has been behind the consistent rapid growth of the television industry Television Over the same period, revenues in the print segment expanded to USD4.4 billion, a CAGR of 10.0 per cent The fastest growth during this period was however in the AGV segment; it s CAGR was 16.6 per cent Print Film AGV Source: : KPMG report, Aranca Research Notes: AGV- Animation, Gaming and VFX; VFX- Visual Effects MARKET OVERVIEW AND TRENDS 7

8 TV has the highest share in the sector; AGV is one of the fastest growing Total market size in 2011 was USD15.2 billion Segmental composition of entertainment (2011) The entertainment industry continues to be dominated by television, print and films; together they have a 86.7 per cent market share 1.2% 1.6% 6.3% AGV has emerged as one of the fastest growing segments with revenues growing by about 31 per cent 12.8% during % 4.3% 28.7% Television Print Film AGV Radio Music Others Source: : KPMG report,aranca Research Notes: AGV- Animation, Gaming and VFX, VFX- Visual Effects MARKET OVERVIEW AND TRENDS 8

9 Key players in the entertainment industry-television Company Business description Star India Pvt Ltd Fully owned subsidiary of News Corporation Portfolio includes 35 channels in seven languages across various categories such as soaps, reality, news and films Also manages a portfolio of business ventures including DTH operator Tata Sky, cable system Hathway, channel distributor STAR Den, news channel operator MCCS, the film production and distribution business Fox STAR Studios India and STAR CJ Home Shopping Zee Entertainment Enterprises Ltd Fully owned subsidiary of Essel Group and first listed media company in India One of the largest producers and aggregators of Hindi programming in the world An estimated reach of more than 500 million viewers across 167 countries Pioneer of television entertainment industry in India; launched Zee TV-the country s first Hindi satellite channel Range of businesses across the value chain in the M&E industry Multi Screen Media Pvt Ltd Fully owned subsidiary of Sony Pictures Entertainment Comprises of Sony Entertainment Television (SET) and SAB, leading Hindi general entertainment television channels; MAX, a movies and special events channel; and PIX, a channel that airs Hollywood movies Its programming spans across various genres including drama, reality, comedy, horror, Bollywood and live events Source: Company Websites, Business Week, KPMG report Aranca Research Notes: M&E- Media and Entertainment MARKET OVERVIEW AND TRENDS 9

10 Key players in the entertainment industry-print Company Business description Bennett, Coleman and Co Ltd Largest media conglomerate in India Publishes world s most widely circulated English broadsheet daily The Times of India and second most widely circulated financial daily Economic Times Other prominent publications include magazines such as Zigwheels, Filmfare, Femina and Top Gear and Hindi dailies such as Navbharat Times and Sandhya Times The group has also diversified into radio and television business HT Media Ltd Hindustan Times is the second most widely read English daily in India Other prominent publications include the business daily Mint and the Hindi daily Hindustan The group has also forayed into many adjacent businesses such as print and digital services, internet, radio, and events and marketing solutions The company s job portal has over 7 million registrations Living Media India Ltd India Today and Readers Digest are among India s most circulated magazines Other prominent magazine publications include Business Today, Cosmopolitan, Time, Golf Digest, Design Today, Money Today and The Chartered Accountant The group has interests in various other businesses such as radio, events, printing, music, television, education and publishing Source: Company Websites, The Times of India, Aranca Research Notes: CAGR- Compound Annual Growth Rate, FY- Financial Year MARKET OVERVIEW AND TRENDS 10

11 Key players in the entertainment industry-film Company Business description Yash Raj Films Studios The only privately owned film studio in India Apart from film production, the company has also expanded into distribution of films and music, home entertainment, production of television software, ad films, documentaries and private label music production The company launched a youth films studio Y-Films in 2011 to connect with the large young population of the country Eros International Media Ltd Strong distribution network spanning across 50 countries and over 27 dubbed foreign languages One of the largest content owners in the industry having a film library of over 2000 films, thus ensuring stable, recurring cash flows The company is diversifying into Marathi, Punjabi, Tamil and other regional language films to leverage upon the growing demand for regional cinema Red Chillies Entertainments Pvt Ltd Founded in 2002 as a film production house, the company has branched into TV shows and advertisement, visual effects and multi-media production equipment leasing Its latest venture 'Ra.one is Bollywood's most expensive movie and very first Sci-fi movie It also owns the Kolkata Knight Riders cricket franchise in the Indian Premier League Source: Company Websites, Business Week, Aranca Research MARKET OVERVIEW AND TRENDS 11

12 Key players in the entertainment industry-music Company Business description Music Bharti A wholly owned subsidiary of Bharti Airtel The largest music company in terms of revenues Provides mobile-based value-added music services (VAS) such as hello tunes, call back tunes, music on demand, Mirchi mobile and Airtel radio Saregama India Ltd The company owns the largest music archives in India, one of the largest in the world It uses the music labels Saregama, RPG Music and HMV The company is making efforts to digitise its catalogue to make inroads into the digital music market and counter declining physical music sales Super Cassettes Industries Ltd The company owns the rights to over 2,000 video and 35,000 audio titles, comprising of nearly 24,000 hours of music The company has diversified into film production, consumer electronics and mobile phones manufacture Tips Industries Ltd The company owns 3,500 titles of which a minimum of 25 have been sold over a million copies, with another 10 selling over 10 million copies Since 1981, Tips has the highest number of gold and platinum discs to their credit in India Tips also holds soundtrack copyrights of over 50 Hindi movies and has also ventured into film production Source: Company Websites, Business Week, Aranca Research Notes: VAS- Value Added Services MARKET OVERVIEW AND TRENDS 12

13 Notable trends in the entertainment industry (1/2) Television The television industry has been aided by strong growth in advertising Television subscription accounts for around 65 percent of revenues in 2011 whereas advertising accounted for the rest The share of subscription to the total revenue is expected to increase to 69 per cent by 2016 Print Unbundling of products to increase profitability Increasing income levels and evolving lifestyles have led to robust growth in niche magazines segment Increasing literacy levels leading to a rise in the readership base Rising circulation of English, Hindi as well as regional language dailies Film Growth to be fuelled by multiplex chains, increasing footfalls of consumers and higher quality content Increasing share of Hollywood content in the Indian box office 3D cinema is driving the growth of digital screens in the country The Indian film industry is largest producer of films globally with 400 production houses and corporate houses involved in film production Source: KPMG report, Economic Times, Aranca Research Notes: DTH- Direct to Home, 3D- Three Dimension MARKET OVERVIEW AND TRENDS 13

14 Notable trends in the entertainment industry (2/2) Animation, Gaming and VFX (AGV) Radio Growing focus on the kids genre and rise in dedicated channels for them Increase in animation movies in theatres and use of animation and VFX in TV advertising Growing outsourcing of VFX and gaming to India Content localisation by Indiagames (by launching T20fever.com) and by Zapak (by launching ICC World Cup 2011 games) Increasing FM enabled radio phones and car music systems During 2010, there were a total of 245 channels operating across India Favourable government guidelines for expansion of the third phase of FM radio broadcasting services Earlier only educational institutions were permitted to set up a community radio; in 2008 liberalisation of policy on community radio took place and currently 29 community radio stations are operational in the country Music The Indian music industry is a consortium of 142 music companies Players are looking at new ways and mediums to monetise music, such as utilising social media to promote music Mobile phones, ipods and mp3 players devices that enable music on-the-go are becoming the primary means to access music Digital music on mobile continues to drive music industry revenue Source: PwC India Entertainment and Media Outlook 2011, KPMG report Economic Times, Aranca Research Notes: AGV- Animation, Gaming and VFX, 3D- Three Dimension; VFX- Visual Effects, FM-Frequency Modulation MARKET OVERVIEW AND TRENDS 14

15 Contents Advantage India Market overview and trends Growth drivers Success stories: UTV, SUN TV Opportunities Useful information 15

16 Strong demand and policy support driving investments Growing demand Policy Strong support government support Increasing investments Higher real incomes and changing lifestyles Inviting Policy sops, favourable FDI climate Resulting in Higher FDI inflows Falling prices, increasing penetration Measures to improve profitability across segments Increasing M&A activity Growing, young consumer base Increasing liberalisation, tariff relaxation Increasing deal sizes Source: ICRA, PwC, Business Standard, Business Today, Aranca Research Notes: M&A- Merger and Acquisition, FDI- Foreign Direct Investment GROWTH DRIVERS 16

17 Multiple factors will drive growth in demand (1/2) Incomes have been rising at a brisk pace in India and will continue to do so given the country s strong economic growth prospects; nominal per-capita income is estimated (IMF) to have recorded a CAGR of 11.5 per cent over Rising incomes, with its positive impact on the consumer base, will be the key growth driver for the entertainment industry (across the country) As the proportion of working age population in total population increases, per-capita income and GDP are expected to grow higher Rising per-capita income in India E 2013F 2015F 2017F 30% 25% 20% 15% 10% 5% 0% -5% Per capita income, USD, LHS Annual growth rate, RHS Source: IMF, Aranca Research GROWTH DRIVERS 17

18 Multiple factors will drive growth in demand (2/2) Apart from the impact of rising incomes, widening of the consumer base will also be aided by expansion of the middle class, increasing urbanisation, and changing lifestyles The entertainment industry will also benefit from continued rise in the propensity to spend among individuals; empirical evidence points to the fact that decreasing dependency ratio leads to higher discretionary spending on entertainment Changing income dynamics over the years Million households Aspirers : annual income INR90, ,000 Deprived : annual income < INR90,000 Seekers : annual income INR200, ,000 Strivers : annual income INR500, ,000 Globals : annual income > INR1000, Deprived Globals Aspirers Strivers Seekers Source: McKinsey Quarterly Report, Aranca Research GROWTH DRIVERS 18

19 Policy support aiding sector growth (1/2) Television Film Radio Digitisation of the cable distribution sector to attract greater institutional funding, improve profitability and help players improve their value chain FDI limit increased from 49 per cent to 74 per cent for broadcast carriage service providers who upgrade to digital and addressable environments No restriction on foreign investment for uplinking and downlinking of TV channels other than news and current affairs Co-production treaties with various countries such as Italy, Brazil, UK and Germany to increase the export potential of the film industry Granted industry status in 2001 for easy access to institutional finance FDI upto 100 per cent through the automatic route has been granted by government Entertainment tax to be subsumed in the GST; this would create a uniform tax rate regime across all states and will also reduce the tax burden FDI limit in radio increased to 26 per cent from 20 per cent Private operators allowed to own multiple channels in a city, subject to a limit of 40 per cent of total channels in the city. Private players allowed to carry news bulletins of All India Radio Further boost may be given to the radio sector by charging licence fees on the basis of net income so as to provide relief to loss making radio players Source: ICRA, PwC India Entertainment and Media Outlook 2011, KPMG report, Aranca Research Notes: GST Goods and Services Tax, FDI- Foreign Direct Investment GROWTH DRIVERS 19

20 Policy support aiding sector growth (2/2) Print FDI/NRI investment upto 26 per cent in an Indian firm dealing with publication of newspaper and periodicals FDI/NRI investment upto 26 per cent in publications of Indian editions of foreign magazines FDI/NRI investment upto 26 per cent in publications of scientific and technical magazines/ specialty journals/ periodicals Music Parliamentary approval on the Copyright Act (Amendment) Bill,, which strengthens the royalty claims of musicians, lyricists and others in the field Policies are adopted against digital piracy and file-sharing; steps have been taken to block illegal music websites Adoption of revenue sharing model by Copyright Board requiring FM radio companies to share 2 per cent of their net advertising revenues with music companies Animation, Gaming and VFX (AGV) 100 per cent FDI allowed in the sector through automatic route provided it is in compliance with Reserve Bank of India guidelines Source: PwC India Entertainment and Media Outlook 2011, KPMG report,aranca Research Notes: GST Goods and Services Tax, FDI- Foreign Direct Investment, NRI Non Resident Indian GROWTH DRIVERS 20

21 Increasing investments in the sectorkey deals and FDI inflows (1/2) Consolidation will be the major route to grow inorganically for entertainment companies in order to expand their portfolios and enter into new regions A few big deals have come about, the most notable ones being Walt Disney-UTV and TV18-ETV (together amounting to around USD700 million) Mergers and Acquisitions (M&A) deals during Acquirer Target Deal date Deal value (USD million) TV18 Eenadu Group Jan 395 Walt Disney UTV Feb- 300 Educational Trustee Company Metronation Chennai Television Mar- 3.2 Blackstone Jagran Media Network Jul Source: Company s news, KPMG report 2011, Aranca Research GROWTH DRIVERS 21

22 Increasing investments in the sectorkey deals and FDI inflows (2/2) FDI inflows into the entertainment sector between April 2000 and February stood at USD2.9 billion By February, the share of FDI in Information and Broadcasting was 1.8 per cent of total FDI inflows into the country Demand growth, supply advantages, and policy support have been the key drivers in attracting FDI Cumulative FDI inflows into Information and Broadcasting from April FY08 FY09 FY10 FY11 FY12* Source: DIPP, Aranca Research Notes: DIPP- Department of Industrial Policy and Promotion, *For FY12, the figures are till February whereas for others it is till the end of the financial year (i.e. March) GROWTH DRIVERS 22

23 Contents Advantage India Market overview and trends Growth drivers Success stories: UTV, SUN TV Opportunities Useful information 23

24 UTV - One of the largest media conglomerates Disney becomes a majority share holder with a stake of 32.1% Interactive Broadcasting Games content Motion pictures Started as a content provider for Doordarshan Ventured into internet content creation and aggregation Launched IPO as UTV Software communications Ltd Launched Hungama TV Acquires Indiagames Ltd, enters gaming software and content Became world s first company to record over 100 million downloads on Nokia store Television content Deal with Disney to dub its content into Indian languages Source: Company annual report, Company website, Aranca Research Notes: IPO- Initial Public Offering SUCCESS STORIES: UTV, SUN TV 24

25 SUN TV : The South-Indian behemoth Magazine Newspaper Radio Launches a slew of other channels in various South Indian languages Acquires Dinakaran newspaper, Tamil Nadu s leading daily Enters Film Production and Distribution through SUN Pictures Launches SUN Direct to provide Direct -to Home (DTH) services Launches three pay channels and four ad-free action movie channels Motion pictures Direct to Home Broadcasting Founded as Sumangali Publications SUN TV is launched with daily three hours of programming Starts its first FM Channel Sumangali FM Source: Company website, Aranca Research Notes: FM-Frequency Modulation SUCCESS STORIES: UTV, SUN TV 25

26 Contents Advantage India Market overview and trends Growth drivers Success stories: UTV, SUN TV Opportunities Useful information 26

27 The entertainment industry is slated for rapid growth (1/2) Over , the total market size is expected to rise at a CAGR of 14.9 per cent to USD30.4 billion The next five years will see digital technologies increase their influence across the industry leading to a sea change in consumer behaviour across all segments Market size (USD billion) 17.3 CAGR 14.9 % E 2013E 2014E 2015E 2016E Source: KPMG report,pwc India Entertainment and Media Outlook 2011, Aranca Research OPPORTUNITIES 27

28 The entertainment industry is slated for rapid growth (2/2) Television will continue to be the lead contributor to overall industry growth; the segment is estimated to grow in size to USD15.3 billion by 2016 (CAGR of 17.3 per cent since 2011) Television Size of major industry segments (USD billion) Animation, Gaming and VFX (AGV) is likely to witness the fastest growth a CAGR of 27.2 per cent ( ); its size is set to touch USD2.0 billion in 2016 Print Film Notes: AGV- Animation, Gaming and VFX; VFX- Visual Effects AGV Source: KPMG report,pwc India Entertainment and Media Outlook 2011, Aranca Research OPPORTUNITIES 28

29 Opportunities across segments in the entertainment industry (1/2) Television Television distribution is projected to garner a share of 62 per cent in the television pie by 2015 (as addressable digitisation is expected to cover the entire country by then) Television advertisement is also expected to witness robust growth; its share in the advertising industry is expected to touch 42.5 per cent by 2015 from 41 per cent in 2010 AGV The Indian animation industry was worth USD511 million in 2010 and is expected to grow at CAGR of 23 per cent to USD961 million by 2013 Growth in international animation films, especially 3D productions, and the subsequent work for Indian production houses will help growth in this segment Print Newspapers and niche magazines are likely to drive industry growth Accelerated growth is forecasted in regional print and local news segments Source: KPMG Report,PwC India Entertainment and Media Outlook 2011, Aranca Research Notes: 3D- Three Dimension, AGV- Animation, Gaming and VFX; VFX- Visual Effects OPPORTUNITIES 29

30 Opportunities across segments in the entertainment industry (2/2) Size of the Indian film industry is expected to touch USD3.1 billion by 2016, up from USD1.9 billion in 2011 Film Increasing digital screens and 3D films are expected to help industry growth Big ticket releases lined up for the next couple of years are also expected to boost revenues Radio Phase III of e-auctions for FM radio licences will provide an impetus to the segment Radio advertising is another area likely to experience accelerated growth Music Mobile VAS and arrival of 3G are likely to lead to a surge in paid digital downloads Phase III radio licensing will also help in increasing music revenues from radio Source: KPMG report,pwc India Entertainment and Media Outlook 2011, Aranca Research Notes: 3D - Three Dimension OPPORTUNITIES 30

31 Contents Advantage India Market overview and trends Growth drivers Success stories: UTV, SUN TV Opportunities Useful information 31

32 Appendix: Brief overview of the animation industry in India Animation encompasses three key segments; these are Animation Entertainment, Visual Effects (VFX) and Custom Content Development India s animation industry has been growing at a brisk pace; from a size of USD177 million in 2005, the sector is forecasted to post a CAGR of 23.6 per cent over (to USD961 million) Size of the animation industry in India (USD million) Share of sub-segments in India s animation industry CAGR 23.6% % 16% 20% Animation VFX Animation Entertainment Custom Content Development E 2013E Source: Media and Entertainment in India: Digital Road Ahead by Deloitte, Aranca Research; Note: E Estimates, VFX Visual Effects USEFUL INFORMATION 32

33 Appendix: Gaming in India and opportunities for domestic firms Gaming can be classified under three segments Personal Computer Games (PC), Mobile Games, Console Games and Online Games In 2010, Console Games (USD88 million) recorded the highest revenue among different segments of the gaming industry in India, followed by Mobile Games (USD60 million) Opportunities* for Indian gaming firms across the segment s value chain Concept Creation Pre-production Development Post- Production and Testing Final Testing Console Very Strong Strong Good Good Good Mobile Good Good Good Good Good PC Strong Strong Good Good Good Online Strong Strong Good Good Good Source: Media and Entertainment in India: Digital Road Ahead by Deloitte, Aranca Research; Notes: *We have portrayed the intensity of opportunities in each segment based on the extent of Indian players current presence in that segment USEFUL INFORMATION 33

34 Industry Associations (1/2) Indian Motion Picture Producers Association (IMPPA) "IMPPA HOUSE, Dr Ambedkar Road, Bandra (West), Mumbai Tel: /45/1760 Fax: Website: The Film and Television Producers Guild of India G-1, Morya House, Veera Industrial Estate, Off Oshiwara Link Road, Andheri (W), Mumbai Tel: Fax: guild@filmtvguildindia.org Website: Newspapers Association of India (NAI) A -115, Vakil Chamber, Top Floor, Vikas Marg, Shakarpur, Delhi Tel: , contact@naiindia.com Website: USEFUL INFORMATION 34

35 Industry Associations (2/2) Association of Radio Operators for India (AROI) 304, Competent House, F-14, Connaught Place, New Delhi Tel: info@aroi.in Website: The Indian Music Industry (IMI) Crescent Towers, 7th Floor B-68, Veera Estate, Off New Link Road, Andheri West, Mumbai Tel: /02/03 Fax: sudhir@indianmi.org Website: USEFUL INFORMATION 35

36 Glossary AGV: Animation, Gaming and VFX CAGR: Compound Annual Growth Rate DIPP: Department of Industrial Policy and Promotion, Ministry of Commerce and Industry DTH: Direct to Home FDI: Foreign Direct Investment FM: Frequency Modulation FY: Indian Financial Year (April to March) So FY10 implies April 2009 to March 2010 GST: Goods and Service Tax IPO: Initial Public Offering M&A: Merger and Acquisition M&E: Media and Entertainment PPP: Purchasing Power Parity USD: US Dollar Conversion rate used: USD1= INR 48 VAS: Value Added Services VFX: Visual Effects Wherever applicable, numbers have been rounded off to the nearest whole number USEFUL INFORMATION 36

37 Disclaimer India Brand Equity Foundation (IBEF) engaged Aranca to prepare this presentation and the same has been prepared by Aranca in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Aranca and IBEF s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Aranca and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Aranca nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation. DISCLAIMER 37