The globalization of Indian cinema is only the beginning of a booming media and entertainment market, which has witnessed tremendous growth in the television, Internet, advertising, music and animation industries.
With growth forecast at 17-18% for next year alone, what must be done to increase access to investment and lower regulatory barriers?
Key Points
• The Indian government is pushing for reform in the media and entertainment sectors
• India’s media industry has an opportunity to leapfrog and avoid the mistakes of mature markets, such as in the US
• The advertising sector can grow as the economy expands
• Parts of the media are likely to see consolidation; only the best content will survive
Synopsis
The current government in India has been proactive in its FDI policy with regard to the media. The Press and Registration of Books Act of 1867 will be amended by the end of 2009 to allow, among other things, foreign newspapers to enter the market or have their Indian editions printed locally.
The government is working to improve the advertising rate structure. Some areas previously considered taboo, such as broadcasting news on private channels, are likely to be allowed. The third auctioning phase of radio stations will begin soon, with FDI in the sector increasing from 20% to 26%. The government is also encouraging foreign filmmakers to make films in India, offering incentives to the nascent but fast-growing animation and gaming industry.
The opportunity that the growing Indian market offers is huge, but it will not last forever. Indian media should take a cue from foreign conglomerates. They should aggregate the various types of media and prepare a digital platform for the future where content can be profitably monetized.
India is one of the most under-advertised and under-branded markets in the world; it spends about 0.5% of its GDP on advertising. The reason: the economy is dominated by the services sector, which is a very reluctant advertiser. However, manufacturing is increasing its market share and, as its branding needs increase, demand for advertising will rise. There are some 470 television channels in the country, yet about 70 of them monopolize the advertising revenue. Yet, content by and large is qualitatively mediocre, as the share in revenue of the content producer/creator is small. It is difficult to make advertisers pay “good money for poor content”, which further hinders growth of advertising.
Of the many channels on air, merely 10% break even; few make a profit. Due to the way the broadcast industry has grown in India, subscription is not part of broadcast economics, whose business model remains advertising-based. Increasingly, there is realization that for all media – especially news media – quality must match quantity. This will entail investment in training professionals to create quality content.
Some panellists opined that the Indian media industry is in for a period of consolidation based on quality content – where quality is driven by competition, and content by quality. The entry of foreign media could encourage consolidation through joint ventures and collaborations, which could raise the bar for the entire industry.
Happy Reading..!!
No comments:
Post a Comment