'Digitisation key to media sector growth'

Last Updated: Sun, Mar 10, 2013 19:33 hrs

The growth of the media and entertainment (M&E) sector in India wouldl depend on the success of digitisation and the general economic condition, said Uday Shankar, chairman of the Federation of Indian Chambers of Commerce and Industry’s committee on the segment.

“Year 2012 was one of the toughest in the past 10 years. But, it has also been a landmark year for the sector, with significant progress in all verticals,” he said.

Digitisation will fundamentally change broadcasting but without successful digitisation, coupled with an economic condition like 2012, the industry will again have “crippling growth” this year, said Shankar, also chief executive of STAR India. The first phase of digitisation was the pilot project for the investment community, content community and the entire ecosystem, he added.

With a lot of commercial hit films having crossed the Rs 100 crore mark in revenue, film companies have scaled up their ambitions, and radio and print continue to defy global trends, he added.

According to the Ficci-KPMG M&E 2013 report, the sector in India is estimated to touch Rs 91,700 crore in 2013, up 11.8 per cent over the Rs 82,000 crore in 2012, backed by digitisation, growing regional media and the coming elections, among others. It is expected to touch Rs 166,100 crore by 2017, it added.

“If the economy doesn’t turn around, there will be an impact. Economic hardship is used as a tool to bring down yields, as advertisement rates are compromised,” said Shankar. It will come when multiple system operators are able to create a business discipline and pump money back into the business.

Advertisement revenue has been witnessing slower growth and without better economic conditions, no company would be able to buck the trend. “Smaller players will face bigger challenges unless the economic condition improves,” he added.

The Ficci-KPMG report has said television would continue to be the dominant segment but new media sectors are growing at a faster rate. Films and music have also making a comeback, on the back of strong content and the benefits of digitisation.

“The industry should not only depend on advertising (about 70 per cent of the broadcast industry's revenue comes). Distribution breakthrough is needed. Advertisers only pay for the number of eyeballs a channel generates. Also, segmentation of Hindi-speaking markets is yet to take place, as there are limitations in distribution,” said Shankar.

The report said advertising spending across media grew nine per cent in 2012 to Rs 32,740 crore. It grew about 13 per cent during 2011 and 17 per cent in 2010. Of this, print accounts for 46 per cent, at Rs 15,000 crore, added the report.

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