The 2009 edition of the PricewaterhouseCoopers reports ‘Indian Entertainment and Media outlook 2009’ and ‘Global Entertainment and Media Outlook 2009-13’ have in-depth forecasts and analysis of India as well as global entertainment and media industry. India’s E&M industry witnessed remarkable growth in recent years having consistently outpaced growth in domestic GDP. While annual average growth in nominal GDP was 14.48 per cent over the period 2004-08, overall E&M growth in 2008 slowed, reflecting weaker overall economic conditions. This is expected to continue in 2009.
The slowdown in growth requires the E&M industry to revisit their short term business plans and strategies. However, double digit growth is expected to return over the forecast period with India recording one of the highest growth in the E&M industry as well as in advertising spending in the world, along with China.
After registering a growth of around 16.6 per cent compounded annually over the period 2004-08, growth in the E&M industry is set to decelerate to 8.0 per cent in 2009. This has largely been influenced by a marked slowdown in advertising spending, which is expected to touch 9.2 per cent in 2009 after having posting a CAGR of close to 17.3 per cent during 2004-08.
Growth rates will increase in 2010 to 10.4 per cent as economic conditions are expected to gradually improve. For the remaining years of the forecast period, the industry will continue to grow at increasing rates, resulting in the overall compound annual growth rate for the period 2009-13 of 10.5 per cent.
Outlook for major segments of the Indian E&M industry (2009-13)
The film industry particularly is projected to grow at a CAGR of 11.6 per cent over the next five years, reaching to Rs 185 billion in 2013 from the present Rs 107 billion in 2008. The relative shares of the film industry are expected to shift marginally from the traditional revenues to the new emerging revenues.
The key growth driver for the music industry over the next five years will be digital music, and its share is expected to move from 16 per cent in 2008 to 60 per cent in 2013. Within digital music, mobile music will continue to increase its share and maintain its dominance.
Given the trends of increased internet usage, internet advertising is projected to grow by 32 per cent over the next five years and reach an estimated Rs 20 billion in 2013 from the present Rs 5 billion in 2008. The share of the online advertising too is projected to grow from 2.3 per cent in 2008 to 5.5 per cent in 2013 of the overall advertising pie.
The estimated size of Out of home (OOH) advertising spend is Rs 15 billion in 2008, which is projected to become almost twice its current size in 2013 (i.e., Rs 25 billion). Its share in the total ad pie is expected to go down marginally to 6.8 per cent in 2013 from a current level of 6.9 per cent in 2008.
Animation, gaming and VFX industry will continue to maintain its growth pace and is projected to grow at a CAGR of 22 per cent to Rs 42.5 billion in 2013 from its current size of Rs 15.6 billion. In the animation space, domestic demand will create the fillip in its growth, as well as contribution from international co-productions, in the film and television space.
Outlook for Indian Advertising spending (2009-13)
Owing to the economic slowdown, the growth in advertising spending has slowed after a period of robust growth. In 2008, overall advertising spending recorded a growth of 11.3 per cent, over the previous year which is much lower than the growth rate of 20.7 per cent in the earlier year. Overall spending expected to increase from the present size of Rs 216 billion in 2008, to Rs 366 billion in 2013 (a cumulative growth of 11.1 per cent on an overall basis).
Against the backdrop of volatility in advertising spending, we are also experiencing increased fragmentation of media and its audiences. This will result in a structural change in the advertising world with advertising becoming more targeted, interactive and accountable.
While on-line is currently the smallest component of total advertising spend, it will experience the highest growth over the next five years, growing at a compound rate of 32 per cent. As a consequence its share of total advertising spend will increase to 5.5 per cent in 2013 from 2.3 per cent in 2008. The next highest growth over the period 2009-13 is expected by the radio industry at 18 per cent – estimated to reach Rs19 billion in 2013, from Rs 8.3 billion in 2008. The share of the print advertising spend is expected to decline from 47.9 per cent to 41.5 per cent. Television, the other large contributor in the segment is expected to grow marginally from 39 per cent to 41 per cent.
Though operating in challenging and fast-moving times, there has never been such an exciting time for the industry. The onset of increased digitisation will expose the industry to new business models and dynamics. In order for each of the industry’s diverse segments to participate fully in this growth, they will first need to embrace the digital future. This is as true in India as in the other important entertainment and media markets globally.
Globally, the entertainment and media market is expected to grow 2.7 per cent compounded annually over the five year forecast period to US$1.6 trillion in 2013 Initially, we expect to see a 3.9 per cent drop in 2009 and a mere 0.4 per cent advance in 2010, followed by a much faster growth during the remaining period to 7.1 per cent in 2013.
Global advertising will fall to 12.9 per cent in 2009 with a further drop of 2.7 per cent in 2010 and returning to just under 2008 levels in 2013. Video game ads are expected to outpace the rest of the advertising industry (albeit from a low base) at 13.8 per cent compounded annually compared to an overall advertising industry de